Why do so many people want to only pursue the expensive ways to fix job-quality?
John Schmitt and Janelle Jones have written an excellent paper on what it would take to improve job-quality in the U.S., backed with actual data, rather than hand-waving about training-this and skills-that. I would, however, slightly tweak one line in the press release for the paper: “The authors note that restoring the link between economic growth and job quality will be a heavy lift.”
I think a distinction is in order between things that are a heavy economic lift versus those that are a heavy political lift. Schmitt and Jones, for example, show that increasing the share of U.S. workers represented by a union by 25 percent would have a larger impact on boosting good jobs (and reducing bad jobs) than would boosting the share of U.S. workers with a 4-year college degree by 25 percent.
But boosting the share of workers with a 4-year college degree is indeed a heavy economic lift—it takes real resources (books, labs, classrooms and most expensively teachers) to provide the skills and education needed to qualify for a college degree. But boosting the share of workers with union representation really doesn’t cost much at all—there is really no serious research linking economy-wide productivity declines to increased unionization. Instead, boosting the share of union workers in the U.S. would redistribute money, but would not cost the U.S. economy anything in the aggregate. And given that so much of the decline in unionization seems to be policy-driven (PDF), the real lever to make this increase happen is essentially the costless act of changing the policy stance towards unionization (there is no CBO score, for example, for the Employee Free Choice Act because it doesn’t cost anything).
But of course we’re not going to see a more hospitable policy/legal environment for unionization anytime soon—it’s too heavy a political lift.
But this distinction between economics and politics really should be kept front and center. You will find many more policymakers and DC beltway think-tank types willing to salute the need to boost the share of U.S. workers with a college degree than willing to publicly say we need to make it easier for American workers to unionize—even though the college commitment is far more expensive and (as we now know thanks to Schmitt and Jones) will do quite a bit less for improving job-quality. This should be a real puzzle.
Earlier this year, two of my colleagues and John Schmitt presented an empirical paper at the American Economics Association (AEA) meeting that questioned the widespread belief that galloping technology was behind lots of the disappointing wage-growth faced by most American workers over the last generation. At the end of the talk, Adam Davidson of “Planet Money” asked why it mattered if it was technology or other things like declining unionization and other institutional and policy changes that drove inequality in the past. Do precise prescriptions change depending on one’s view of this?
Yes, they do.
And what’s particularly damaging is that it is the low-cost solutions that get crowded out by an incorrect interpretation of what is driving inequality.1 Because if you decide that only the interplay of technology and education matters for inequality, this leads you straight to the expensive-in-economics-terms policy of mobilizing resources to get more people through college as the sole (or dominant) policy focus. And this leaves a lot of low-hanging fruit unpicked. We think this low-hanging fruit is not just cheap in economics terms, but actually has even larger effects than grand, expensive-to-fight trends like “technological change.”
Universal health-care? Every other advanced country in the world has it and pays a lot less for often-better outcomes. We’re getting a lot closer to universal coverage soon, and this was a heavy political lift for sure, but it’s better than cheap from an economics perspective. Universal pensions? Again, this will be a heavy political lift, but is going to make nearly all Americans better off, and its true society-wide economic “cost” will be negative—even if it will be hard indeed on the wages and incomes of financial planners. Leveling the union/employer playing field and raising the minimum wage? These would take essentially no significant economic resources at all to make happen.
Economic analysts worth their name should be very interested indeed in low-cost ways to boost job-quality. The general lack of interest in these low-cost interventions, and the desire to restrict the conversation to only the most-expensive fixes to job-quality seem to me reflective mostly of the desire to not upset the status quo of who gets what in the U.S. economy.
1. Reflexive caveat alert: We at EPI are firmly in favor of getting more young adults the opportunity to go to and complete college (the reflexive policy prescription for those who think “technology did it” in driving wage-trends). But we think both economic and political heavy lifts should be done to counteract rising inequality.