Loss of Good Paying Jobs Could Just Be Due to High Unemployment Policy

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Wednesday, 11 June 2014 04:08

Thomas Edsall had a piece noting the deterioration of job quality since 2000 that many of us have been writing about in recent years. He discusses various possibilities going forward, but ignores an obvious one.

For most of the period since the 2001 recession the economy has been below full employment by almost anyone's definition. In such situations, it should not be surprising that there would be a deterioration in job quality as workers have to slide down the skills ladder in order to find employment. This is the sort of story that Jared Bernstein and I highlight in our book, Getting Back to Full Employment (free download available).

If Jared and I are correct then the problem is simply the government's high unemployment policy. This could be reversed by either larger government deficits (i.e. increased spending and/or tax cuts to people who will spend them), a lower trade deficit from a lower valued dollar, or a reduction in the length of the average work year through policies like work sharing. This would suggest that the deterioration of job quality is a problem that we know how to solve, even if there may not be the political will to do it.