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?
The point you make in your second paragraph is one you’ve made several times. You’ve mentioned seeing it in your consulting work, too. Is there any way to quantify that effect?
Shadow unemployment rocks, by the way. Because we’ve got nothing better to do, than watch T.V. and have a couple of brews.
As God is my witness I sat in the boardroom of the Bank of New York while the CEO explained to me that their corporate strategy was to avoid automation as much as possible and divide every job into pieces that could be performed by minimum wage (or sub-minimum wage) employees. If they demanded higher pay, they could always fire them and get more.
At least half a dozen banks told me the same thing.
I believe you, and it partially matches * what I saw in my nearly forgotten work career. I’m just wondering how or if it could be quanticized.
* Not completely applicable to what I saw but certainly matches the attitude. Much better to hire five surly, uncaring part-timers than two good (but well-compensated) full-timers.
I can’t comment on BONY but if Dave says it’s so that’s good enough for me. However, coming as I did in a prior life from a process engineers position (cost, quality, productivity), I never saw such a thing. More recently, we routinely replace the ass end of packaging lines with automation rather than hire a couple low paid dweebs. You would be a fool not to.
Maybe it tells one about the state of a subsidized industry.