News & Commentary

October 16, 2015

As previously reported, the White House hosted the Summit on Worker Voice last week, emphasizing the importance of increased union membership to the goal of revitalizing the “worker voice” and securing more favorable wages for middle class employees.  This morning, the Wall Street Journal issued what what can be fairly described as a cynical response to President Obama’s claim that eased access to worker unions is the key to strengthening the middle class.  The Journal reports that the real problem is a shortage of jobs.

The Journal founds its assertion in statistics — in September, the labor-force participation rate hit 62.4%, its lowest level since the Carter Administration almost 40 years ago, while the rate for prime working-age Americans (ages 25-54) similarly sat at a mere 80.6%, its lowest level since 1984.  Although the “recovery” period since 2007 has seen an increase in the number of workers employed by about 2.5 million, this hardly scratches the surface since the employable population has increased by about 18 million people.  Furthermore, statistics suggest that even this proportionally small increase in employment is largely attributable to a rise in the involuntary part-time employment of workers unable to secure full-time jobs.  Ultimately, the Journal suggests that rather than relying on unions to shoulder the tasks of creating new jobs and negotiating more favorable wages and benefits, the government should aim to aid companies in job creation through tax code simplifications and legislation aimed at producing economic opportunity.

Despite obvious difficulties with unemployment, the Labor Department said yesterday that the number of Americans filing for first-time unemployment benefits in recent weeks has also fallen to its lowest level in over 40 years. The 255,000 jobless claims filed last week fell short of the 270,000 originally projected.  Although this may signify a tightening in the labor market and a reluctance to lay off workers, the question still remains: why aren’t these trends coinciding with stronger hiring?

The New York Times suggests that the jobs that have been hit the hardest by the slowdown in economic growth are those that do not require the exercise of strong social skills.  In other words, while technology has eliminated the need for some jobs, machines are inadequate substitutes for employees in professions that require both thinking and socializing, such as doctors, engineers, lawyers, and child-care workers.  Because professions that involve this combination of technical skills and interpersonal skills are far less likely to be automated than those that are based solely on technical skills, these jobs have fared the best in recent years both in terms of wages and growth.

Finally, the Wall Street Journal reports that, abroad, Indonesia has introduced a new wage formula with the hopes of stabilizing employment and reversing its own slow wage growth.  The formula will link mandatory minimum wage calculations in each province to inflation and gross domestic product growth.  Though intended to improve employment figures, several labor unions have criticized the initiative as decreasing workers’ ability to negotiate higher minimum wage increases.

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