In a refreshing series of posts, financial blogger Felix Salmon talks about the jobs situation. It's not refreshing because Salmon is optimistic about decreasing unemployment -- far from it -- but because Salmon makes an argument for higher minimum wages and yes, stronger unions that are able to transform the kind of service-industry jobs we're creating in America into jobs that provide a decent income and financial stability.
[I]t’s high time to start giving labor unions more recognition and power. That might seem a bit counterintuitive — unions have never been very good at improving employment numbers, as opposed to improving the plight of the employed. But if workers at places like Wal-Mart start being paid a decent living wage, that is surely a significant improvement on where we are now. And if we raise the minimum wage to a point where employees are less likely to quit and more likely to learn reasonably high-level skills, that will help get us to Richard Florida’s promised land. Without unions and minimum-wage laws, corporations compete on who can pay the least. With them, they compete on who has the best employees and they invest significantly in those employees. Which is exactly what we want, especially since raising the minimum wage is unlikely in and of itself to increase unemployment visibly.
Here's the Florida piece Salmon is riffing off (incidentally, you should also read Alex MacGillis' convincing takedown of Florida). What's clear from the current discussion, however, is that policy-makers need to think more about ensuring that the jobs held by a majority of Americans pay enough to support a family. Otherwise, creating more jobs will do us no good.
That's not just for reasons of equity but also for reasons of economic growth: Data suggests that unequal income distribution helped contribute to the financial crisis, when a savings and investment glut among the wealthy combined with increasing debt for middle- and low-income Americans in a financial firestorm. On the other hand, shared prosperity seems to lead toward sustainable growth. We just need the institutions to make it happen.
-- Tim Fernholz
Pic via.
