New RSF Journal Issue: Improving Employment and Earnings in Twenty-First Century Labor Markets

November 7, 2019

Modest real wage growth, rising wage inequality, and decreasing labor force participation among less-educated workers have characterized the labor market for several decades. Economists Erica Groshen and Harry Holzer, and other labor market experts present new evidence on the prevalence, causes, and future of these challenges in the December 2019 issue of the RSF journal, copublished with the Alfred P. Sloan Foundation. In their introduction to the issue, Holzer and Groshen outline the growing disparities among American workers. The figure below shows how significant real wage growth has been limited to those at the top of the earnings ladder. 

George Borjas and Richard Freeman analyze how the introduction of industrial robots and the influx of immigrants have affected jobs and earnings in the manufacturing industry. They find that the effects of robots are greater than those of immigrants in terms of depressing earnings and reducing employment, suggesting the need for policies that can help workers adjust to automation.  Thomas Kochan and William Kimball note the declining density of unions and their declining effects on wages and working conditions, even as surveys show strong worker preference for union representation and other forms of worker “voice.” Kochan and Kimball’s findings are timely in light of the emergence of union-led strikes among both autoworkers and teachers in the Midwest. Their research (see figure below) demonstrates that a growing number of workers are interested in joining unions.

Informal work, including traditional activities like babysitting and newer ones like driving for online platforms, provide an alternative means of helping families make ends meet. Katharine Abraham and Susan Houseman show that over a quarter of the workforce hold jobs aside from their main employment, and a higher share of less-educated, minority, low-income, and unemployed workers rely on informal work. Lawrence Katz and Alan Krueger show a modest upward trend in the share of the workforce in alternative work arrangements over the last twenty years; they also demonstrate that current survey tools miss many instances of multiple job holding. 

The U.S. is the only industrialized country that does not provide paid leave for new parents, and low-income families with children spend 30 percent or more of their incomes on childcare expenses. Elizabeth Doran, Ann Bartel, and Jane Waldfogel propose both a payroll tax to support family-friendly policies, such as paid leave and child care, and employer mandates for scheduling control and flexibility. 

Editors Groshen and Holzer provide evidence-based policy recommendations that include greater support for public higher education; adjusting federal wage and hour laws; limiting the effects of past incarceration on workers; and stronger youth employment programs. American workers face considerable challenges, but there are many policies analyzed in this issue that could improve their employment and earnings.

Click here to access this issue of RSF.

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