Some Economics For Labor Day

For those who need the sweet and savory flavor of economics to accompany their end-of-summer Labor Day picnic (and really, don’t we all need that?), here are links to some posts on labor market topics, mostly from earlier this year.

1) Rebalancing the Economy Toward Workers and Wages (March 5, 2018)

I quote John Bates Clark, probably the most eminent American economist of his time in his 1907 book, Essentials of Economic Theory

“In the making of the wages contract the individual laborer is at a disadvantage. He has something which he must sell and which his employer is not obliged to take, since he [that is, the employer] can reject single men with impunity. … A period of idleness may increase this disability to any extent. The vender of anything which must be sold at once is like a starving man pawning his coat—he must take whatever is offered”.

Are there some ways to tip the balance a bit more toward workers? Jay Shambaugh and Ryan Nunn have edited an ebook, Jay Shambaugh and Ryan Nunn have edited an ebook, , with nine chapters on causes of wage stagnation and policy proposals to address it

2) “The Job Guarantee Controversy” (April 30, 2018)

With Senator Bernie Sanders in the forefront, some Democratic members of Congress are planning a bill to guarantee jobs that pay $15 per hour, not including mandatory benefits packages, for all Americans. Legislative details have not yet been announced (!), but several sets of plan have been published recently, including on the website of the Sanders Institute, which was founded by Jane O’Meara Sanders, wife of the senator. Here, let’s run through a couple of the more prominent plans, and then list on criticisms that have been bubbling up–with a focus on critiques from writers typically identified as being on the political left. … 

Ultimately, it feels to me as if proposals for a federal job guarantee proposal are a cry of despair, erupting from an exhausted patience. To me, the underlying message is: “Stop being distracted by small-scale arguments and day-to-day political compromises, drop the cautious incrementalism, and pay the money to help those who want to work. Stop quibbling, and just make it happen!” Righteous exasperation always has a rhetorical appeal. But the real world is full of costs and tradeoffs, and if the US political system wants to make some dramatic moves to help US workers, considerably better options than a federal job guarantee are available.

3) “The Rising Importance of Soft Skills” (January 30, 2018)

Leading tech companies like Google have found that their most productive and valuable employees are often not those with the most technical skills or cognitive ability. Instead, the most valuable employees have the soft skills in communication, teamwork, and seeing the big picture.

The evidence for the rising importance of soft skills goes beyond the anecdotal. David J. Deming provides an overview of economic research on this topic in “The Value of Soft Skills in the Labor Market” (NBER Reporter, 2017 Number 4). Deming cites evidence that for the US economy as a whole, the number of STEM (science, technology, engineering, mathematics) jobs rose rapidly from 1980 to 2000, but has declined since then. Moreover, the labor market returns to higher levels of cognitive skill have declined, too.