In my previous post on "good" jobs and "bad" jobs, I reviewed the major strains of contemporary thinking seeking to explain why some jobs are pleasant and well-paid, while others are unpleasant and poorly paid. Worse than the glaring inequality of living conditions produced by this inequity, the dynamics of the labor market seem to exacerbate (rather than moderate) these tendencies.
is directly counter to the predictions of mainstream economics. Most
economists - who tend to fit observed realities to their models, rather
than the other way around - simply explain away these trends, or devolve
into thinly-veiled moralisms (along the lines I describe in the earlier
post). Even the best of them do not seem to deal with the subject
square-on, or come up with accessible explanations which can be
Thus, Joeseph Stiglitz, when
describing the deplorable fate which has befallen the majority of
wage-earners over the last 4 decades (!), resorts to either an overly
general theory of "over-supply of unskilled labor" (as in his recent book), or the rarefied notion of "asymmetric information."
we are to break out of the ideological shackles of "inequality of
access" or the liberal/conservative debate around "equal opportunity"
(see the previous post), we are going to need sturdier tools than this.
put, the basic conclusion that we are led to by the real dynamics of
work suggest that workers, rather than being denied access to the
Elysian Fields that are made available to those with superior social
value, are, in fact, imprisoned within their workplaces, locked-in to bad and worsening conditions. Or, to say it another way - they are trapped in work relations of increasing exploitation.
Does that put it bluntly enough? Read on, and I think I can sharpen this analysis...
Friday, August 17, 2012
In a recent post here Venerable sage Neil talbot Hits a four bagger Trust wage earners to spend their wages themselves And raise the share of wages in national income How? Heat up job markets with Vickrey macro And lower the imperial dollar to half mast
Posted by Owen Paine at 5:15 AM
Wednesday, August 15, 2012
Saturday, August 11, 2012
"Back in the 1970s, Americans who’d attended college but didn’t receive a degree earned about 15% more than those with just a high school diploma. For college graduates, the wage premium was about 40%. Three decades later, the premium for college graduates has shot up to more than 80%. For those with just “some college” (but no degree), the premium has stayed relatively stagnant, rising to just about 20%. That “college graduates” category is still pretty broad, though, so Mr. James takes the next step, splitting out those with advanced degrees. For workers with just a bachelor’s degree, the wage premium over high-school graduates has risen from a bit over 30% in 1977 to more than 60% in 2010. But interestingly, the premium hasn’t grown significantly over the past decade. These days, really getting ahead requires an advanced degree, which boosts earnings some 30% versus having a bachelor’s degree (and by a whopping 120% versus having just a high school diploma)."
Posted by Owen Paine at 8:17 AM
Sunday, August 5, 2012
"Prosperity Economics: Building an Economy for All," by Jacob Hacker and Nate Loewentheil, and supported by the Economic Policy Institute provides a useful manifesto to contrast with the prevailing Austerity Economics. But it is misnamed: it is focused more on improving the lot of the middle class than that of ordinary working Americans. (To contrast with the wealthy, the manifesto uses the term "middle class," not the more accurate "working class" or "working Americans.") And it relies too much on government spending; it does not seem to trust workers with the fruits of their own labor.
A better approach to the current economic malaise is to identify the problem of low wages as being fundamental, affecting not only the living standards of poorer Americans, but also directly being the cause of the insufficiency of aggregate demand to achieve fuller employment – the crux of our current lingering recession. What we are suffering from in the current recession, like the Great Depression, is "under-consumption as a result of extremely unequal distribution of income."
The problem should be faced directly: the political economy of wage-setting should be completely changed over time, reversing the trends of recent decades. Nothing short of this sweeping goal will fix the problems of unemployment and the working poor. The elements of a new labor policy would include setting and indexing a general living wage, shifting the collection of Social Security and Health costs from employers and employees, eliminating payroll taxes, strengthening and enforcing labor laws, and mortgage debt relief for struggling households. Note that this would put more money into the hands of ordinary working Americans, not into the hands of government.
Admittedly, on page 41 of "Prosperity Economics" there is a policy recommendation to raise the minimum wage so that "Americans who work are able to support themselves and their families." But this is lost in the welter of recommendations, such as expanding support for housing (which would involve government money), expand job training (government money again), economic revitalization strategies (government money), create pathways out of low-wage work (government money), a national innovation foundation (government money), expand the Manufacturing Extension Program (government money), augment investments in clean energy (government money), and increase federal investments in R&D by 50% (government money again). Would measures like these truly be conducive to full employment in the short run -- or effective in the long run? Do they place enough trust in businesses large and small to figure out what to invest in and how?
One area where we believe that government taxation is essential is to pay for universal, more cost-effective, single-payer health insurance. There are two reasons for this. One is to remove the cost of health care off employment. This single measure would dramatically increase the competitiveness of U.S. manufacturers and be an important component of a full-employment economy. The other reason is to provide a pathway to reducing health costs and making the health care industry more efficient. Health services would be provided by private providers, but with improved government regulation of the cost. Generally, however, we believe that ordinary working Americans are the best repositories of the income they have generated.
The title "Prosperity Economics" is inspiring and sets the right tone for the many constructive policy proposals in this manifesto, but we believe it would be strengthened by a more fundamental focus on the workplace conditions being experienced by the vast majority of Americans.