economics

Where the Jobs Are

/ The Old Crank

Drives me little crazy when on the one hand you read about all these jobs that are going to be taken over by robots leaving people unemployed, and then you read stuff like this:

In surveys, people say overwhelmingly that they want to remain at home as they age. To enable that, the country will need another 633,000 home care workers by 2024, P.H.I. projects.

The generation behind the aging boomers is smaller, however. Given the low pay, scant benefits and high injury rates, will enough workers materialize? “We’re reaching a breaking point,” said Abby Marquand, P.H.I.’s director of policy research.

The “care” economy is going to be growing like crazy for the foreseeable future, even if the generation behind the baby boomers is smaller: people are living longer and medical advances are not only prolonging life but making it possible for more people to live at home as they age. While technology may eliminate certain kinds of jobs, it’s not going to eliminate these kinds of jobs, which by definition require human interaction that machines cannot replicate.

It’s similar to my frustration with crumbling infrastructure. We have bridges falling down and old people to take care of. There should be plenty of jobs for everyone. That’s assuming that we invest in the infrastructure and, especially on the caregiver side, (as this article makes clear) create policies that support decent pay, hours, benefits etc. And in all cases training people to do those jobs well.

At least that’s what I would do if you put me in charge. That plus outlawing reserve seating at movie theaters. Also, there shouldn’t be NHL teams in places like Arizona. #commonsensereforms

Shifting Corporate Attitudes

/ The Old Crank

One of the problems with the minimum wage debate (whether to raise it, by how much, what will the effects be on hiring, etc.) is that it pushes this much more fundamental issue into the background. I don’t personally understand why it’s not a given that it’s immoral to pay your employees so little that they can’t afford to eat, and why this is not a major topic of public discussion.

But I also think we have to deal with the fact that that’s apparently where we are.

Cappelli’s argument is focused on wages, but it seems to me that the shift he describes is reflected in corporate attitudes towards employee education and training as well. Corporations increasingly don’t see this as their problem. Likewise, Cappelli contends that corporations’ former sense of obligation to pay employees a decent wage had both strategic and altruistic motivations, and I think that was probably true about training as well. But whatever altruistic motivation there was behind some corporate training investments in the old days has all but disappeared. Corporate leadership today more typically looks at training exclusively in terms of return on investment back to the corporation.

You can be morally outraged by all this—or not—but either way, it does have an impact on policy. What is the role of government in an environment where corporations see less of a moral obligation to their employees—not just in terms of wages, but in terms of supporting the education and training needs of our workforce?

Structural Unemployment

/ The Old Crank

(Updated Below)

A lot of economists have been making the case for a while (I’ve documented some of it on this blog), but like Krugman, I’ve noticed that more and more economists are falling off the structural unemployment bandwagon.

But it’s not just the pundits who are stubbornly resisting this growing consensus, but people involved in actual policy (in and out of government). For example, a lot of workforce investment policy arguments are predicated on the idea that high unemployment is largely structural. I get that many economists (and political progressives) are frustrated by this because they believe it discourages action on more critical areas of economic policy. But it’s worth noting that there are also a lot of good policy goals (like investing more in adult education) that are (in part) supported by the idea that continued high unemployment is mainly a structural problem. It’s a bit of a conundrum.

UPDATE 8/8/13: An additional thought on this. There really isn’t any reason why an argument for offering Americans the opportunity to upgrade their skills should be dependent on the idea that our high unemployment levels are structural. I think the problem only comes when you suggest that improving skills alone will solve the problem of high unemployment/good jobs. But to suggest that there aren’t real adult education or worker training needs, or good policy reasons behind trying to improve people’s education and skill attainment—that it’s all just a scam—is just as facile an argument.

The Wages and Productivity Debate

/ The Old Crank

Interesting post here by James Tankersley on a study conducted by James Sherk, a senior policy analyst at the Heritage Foundation on the perceived wage/productivity gap. Sherk argues that total compensation (not just wages), if properly adjusted for inflation, has actually kept pace with productivity over the last 40 years, even wages have haven’t grown much since the 1970s.

Sherk argues that you have to take into account the growing share of compensation going to health care benefits—not just wages—and then makes some seemingly valid adjustments to the way productivity is measured and how inflation should be tracked for real wages and output. This results in what appears to be a much smaller gap between productivity and pay.

Tankersley writes:

The real problem, [Sherk] says, is that far too many workers are stuck in low-productivity jobs, particularly in the health-care sector; he argues policymakers should be focused on helping those workers gain more skills and move into more productive sectors — specifically, by looking for ways to reduce the cost and increase the accessibility of higher education. (my emphasis)

According to Tankersley, Sherk blames market forces for pushing lower-skilled workers into low-productivity jobs: “If those workers could more easily and cheaply gain more skills — say, through widely available, low-cost online education — they could compete for higher-productivity jobs.”

But this points again to an issue I’ve never been able to figure out (actually two issues, but I’m going to put aside my question about how to best measure productivity among health care workers*):

If everyone currently in a low-skilled/low pay job was to gain the skills they need to move out of those jobs and into a better one (this assumes, of course, that enough of those better jobs are actually out there), in most cases we’ll still need people to do those low-skilled jobs. This is particularly true in the health care sector that Sherk cites here, where the demand for low-skilled workers, like home health aids, is pretty high. Training people out of low-skilled jobs doesn’t eliminate the low-skilled jobs. I just think at some point you’ve got to address wages at the low end even as we expand education and training opportunities for those workers. (And as I’ve argued before, raising wages probably increases the likelihood that people in those low skilled jobs can take advantage of the education and training opportunities that are available.)

Anyway, for those who find Sherk’s research compelling, I’d suggest checking out Dean Baker’s response to Tankersley’s post, in which he essentially agrees that, yes, the problem has been not so much a wage/productivity gap, but an “upward redistribution from middle and lower income workers to those at the top, doctors, lawyers, and especially Wall Street types and CEOs.” He also argues that a wage/productivity gap does appear to have emerged in the years since the crash.

None of this suggests that low wages aren’t a problem. There’s some really good data, for example, in this post by Janelle Jones and John Schmitt at CEPR that shows how the minimum wage has lagged behind inflation. And in this post, Felix Salmon makes about as cogent argument in favor of raising the minimum wage I’ve ever read. His point about how the government essentially subsidizes companies that pay lousy wages is a good one, especially in light of the living wage controversy here in the District.

*I’m also ignoring Sherk’s obligatory plug for online learning.