Home Daily Blitz An Essential Part of Job Creation Policy Is Missing

An Essential Part of Job Creation Policy Is Missing


thefiscaltimes articleThe following is an excerpt from Mark Thoma | November 17, 2015 | Thefiscaltimes.com |

The presidential candidates from both parties have focused on the struggles of the working class, and rightly so. Inequality has been rising, jobs have been hard to find, and when jobs do appear they tend to pay low wages and offer few if any benefits. There is little security due to globalization and digital technology, and workers cannot count on adequate social insurance to insulate them from the high costs of unemployment.

Meanwhile, as wages for those who do have jobs stagnate, the costs of childcare, health care, housing, utilities, college, transportation, insurance, food, recreation (how many hours at the minimum wage are required to simply take a family of four to the movies?) and so on continue to rise making it harder and harder for families to make ends meet.

So the candidates have focused on how to create jobs that pay a decent wage. But there is an important facet of job creation that is being left out of these and other discussions, the opportunity for advancement. People are taught that if they play by the rules, do well in school, go to college, find a job, and then show up every day and work hard, they will be rewarded. Over time they will move up the job ladder, their income will rise, and a time will come when life won’t be such a struggle. That won’t happen to everyone, of course, but workers need to be able to see a path to a better life.

But the dream has faded. As recent work by economists Raven Molloy, Christopher Smith, and Abigail Wozniak shows, there has been a “a decline in the fraction of workers moving from job to job, changing industry, and changing occupation” that has occurred since the 1980s, reversing an earlier trend. The main reason for the decline in the movement to new, better jobs appears to be a decline in the wage offers that workers receive from outside firms.

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