In his column today Robert Samuelson muses over the reasons for sluggish wage growth. He lists four different theories:
- Shadow unemployment
- Job insecurity
- Delayed pay cuts
- More competition and less protection
I think it’s probably all of the above with the emphasis on the first. However, I would also add that confidence in a continuing stream of low wage, unskilled workers not only places downward pressure on wages but changes the decisions that managers will make. They’re more likely to take approaches that will require more cheap labor over ones that will take some capital investment in equipment and a smaller amount of more expensive labor.
I also think that the number of people who’ve been holding down two or even three part time jobs rather than one full-time job tends to skew the unemployment figures. If they lose one of their three jobs, are they unemployed? Two?