Category Archives: Labor and Workforce Policy

The Populist Agenda: Jobs and Inequality

Paul Krugman links jobs and inequality in yesterday’s New York Times column.  He notes that job instability has led to deepening inequality because workers do not feel confident to search for higher paying employment.  At the same time he points to the work of Steven Fazzari that shows that inequality was a contributor to the economic collapse in 2007.  Fazzari shows that simple job creation — especially at the bottom of the income distribution — led to significant increases in debt and the ultimate crash.

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).

Counterpoint to Friedman’s Assessment of PISA

Thomas Friedman, in the New York Times, has noted that the United States continues to trail other countries on the PISA assessment of student learning in primary and secondary school.

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.

Friedman is also correct that students who do best on PISA tests feel some ownership over their education.  America could build more student “ownership” over education by providing more than one track of learning.  This could happen by building out a significant career and technical training program in America’s schools.  The Harvard Graduate School of Education makes a similar argument in its important Pathways to Prosperity report.

 

Encouraging Jobs Report

The recent jobs report shows that unemployment is down to 7.0 percent and that the economy grew by 203K jobs.  The most encouraging part of the report is that unemployment was down because of increased hiring, not because the labor force shrunk.  More people who wanted work had it rather than people giving up on finding work.  455K people joined the workforce in November.

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 New Article @PlannersWeb

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.

Texas Technical Colleges to Receive State Funding Based on Students’ Post Enrollment Earnings Starting 2015

The Chronicle of Higher Education reports that starting in 2015, state technical colleges will receive funding based on the post enrollment wages that students earn.  (Link requires subscription – if you don’t have one, your library may have one!)  Traditional funding metrics like degrees granted, credit hours taught, and total enrollment will be out the window (just for these technical colleges).  Instead, funding will be given out based on how much students make afterwards.  Students who complete about three classes will be considered in the formula, not just degree earning students.  This model will ensure that short term certificate students are also considered.

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).

Earlier this summer, Oregon considered parallel plan, where university students would pay off tuition as a percentage of their income – no matter how high or low – for a number of years after graduation.  Under the Oregon proposal, a bachelor’s degree earner would pay about 3 percent for 20 years.

Follow Up on Living Wage and Inequality – Neal Peirce in @citiwire

Neal Peirce discusses the challenges of poverty wage jobs at major chains – linking severe inequality with these jobs.  Given the recent debate in DC over its living wage job and recent reporting on inequality, the article is apropos.

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.

Is Harvard Business School a Microcosm of American Inequality?

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.

Paul Krugman commented on the article today in the New York Times.  He suggests that wealth inequality is moderating the benefits of education, making upward mobility more difficult.