The relationship between inequality and jobs is “bi-directional” where changes in one influence the other and likely create a reinforcing feedback. Wages cannot be so unequal that lower income workers have to borrow to get by — when households reach their borrowing maximum, recessions happen (part of Fazzari’s point). We need a job creation system to get people back to work as well as an inequality strategy that helps workers benefit from economic growth.
Getting people back to work isn’t enough, nor is simply solving inequality. Jobs and inequality are hand in glove. The goal, as daunting as it may sound, is to “grow the pie” to solve unemployment and inequality, not just “re-slice the pie” (borrow the analogy from Chris Benner and Manuel Pastor’s Just Growth).
One important note on the PISA tests, and other international benchmarks of student learning, is that the United States has never led the globe in student achievement — it has always been about where it is today, sitting around 15th place internationally, yet we have the largest GDP and most productive workforce. This suggests that educational achievement is the only factor in productivity and employment. As Friedman notes, this is partly due to the fact that we once had an economy rich in manufacturing — which required less skill in the workforce. Some believe the preference toward education and skill is overstated though. Harry Holzer and labor economists have shown that there is still, and will continue to be, a significant middle skill job sector in America. What they find is that these middle jobs will require some postsecondary training — in programs that may only be a few weeks or months at venues like community colleges.
Most American workers (about 70 percent currently) do not work in jobs that require a college degree (nor does 70 percent of the population hold the degree). Even as the country becomes more “high tech” and more “new economy” only 40 percent of workers (in the highest of estimates) will need a college degree. The major gap in learning is for workers who will need “some” postsecondary training, but not a degree. Our educational system doesn’t address the educational needs for future non-degree holding workers as well as it does for those continuing to a four year college.
203K jobs is steady (if not grand) improvement in hiring. The Washington Post suggests that this report shows that the government shut down had little effect on the economy and that the Federal Reserve could consider pulling back its bond buying program to support economic recovery. They also suggest that holiday sales will be 3 percent higher than last year – another sign of recovery.
Check out my article at PlannersWeb on jobs for young adults. Titled, “It’s All About Jobs” the article is part of the Across Generations: Young and Old series, which is a year long conversation on planning issues related to young adults and seniors. Jennifer Wallace-Brodeur, of the AARP and fellow Across Generations columnist, reacts to the article.
Some are concerned about how state funding will account for other issues related to unemployment – particularly local structural unemployment or cyclical unemployment. While valid concerns the leaders of the technical colleges sound up to the test saying, “[T]he major thrust of what we do is employability. It doesn’t scare us.” (Michael Reeser, the system chancellor – reported by Eric Kelderman in the article linked above).
Peirce notes that Los Angeles hotel workers near Los Angeles International Airport (with support from service unions) got a living wage law passed and are now paid $12 an hour. Further efforts in LA are underway to expand the law.
Peirce also highlights the negative social and psychological effect on children of low wage workers who feel helpless, which may be one of the most lasting and damaging side effects of inequality.
There is hope – Bill de Blasio, now the frontrunner in the NYC Mayoral race, has taken low wage work up as a campaign platform. Peirce quotes de Blasio’s exasperation over a minimum wage of $7.25 an hour. He has been surging in the polls – maybe the economic populism has something to do with it.
Jodi Kantor, writer for the New York Times, chronicles class division and inequality at Harvard Business School. In addition to $50,000 plus a year tuition, students are expected to spend significant amounts of money for extracurricular events and activities. Some students interviewed in the story estimated that the costs of social events were upwards of $20,000 over the program. Kantor also noted increasing division between students of middle and lower socioeconomic status and students (both domestic and international) who come from incredibly wealthy backgrounds.