Good Jobs: Three Reasons There Aren’t More
Far too many American adults work in low-wage jobs. In 2010, 20 percent of adults earned a wage that would put a family of four below the poverty line. Twenty-four percent of adults earned less than two-thirds of the median wage, another widely used international standard for gauging low-wage work.
Better jobs seem the obvious solution. The government could raise and enforce labor standards and push firms to invest in training and to create advancement opportunities for low-wage workers. Unions can also play a key role by advocating for increased wages and training opportunities within firms. These steps would be effective, but they would face enormous resistance, even among liberals, because they intervene directly in the job market.
The conventional wisdom focuses almost entirely on two strategies: educating people so they can escape the low wage-job trap and, for those who cannot, providing some level of support through programs such as the Earned Income Tax Credit, an income supplement conditioned on work. The idea is to let the economy generate jobs of whatever quality firms choose and then, if necessary, compensate by enabling people to avoid the bad ones or by shoring up people who are stuck. The nature of available jobs is a given.
In practice this restrictive framework condemns millions to low wages and poor working conditions. And it continues to be the norm thanks to three myths: 1) economic growth and high rates of upward mobility will solve the problem; 2) policy efforts to alter the distribution of economic rewards inevitably slow down growth and damage labor market efficiency; 3) education alone is enough to help low-wage workers get better jobs.
None of these claims holds water when confronted with data. That’s good news because it opens the door to serious consideration of the low wage-jobs problem and how to fix it.