Transcript Professional Underemployment

Professional Underemployment
Brynne VanHettinga, J.D., M.P.A., Ph.D.
What will be covered
What is underemployment and how bad is it?
Economic Models
Political Factors
Meaning of Work
Popular movies and books look at
underemployment
Post-Great Recession Economy
Changes in indicators 2009-2011
Payroll employment: no change
Total civilian employment:
0.5%
Real mean hourly earnings:
1.0%
Real median weekly earnings:
1.0%
Dow Jones Industrial average:
49.0%
S&P 500: 45.8%
Corporate profits:
40.8%
“both a jobless and a wageless recovery”
Sum & McLaughlin, Center for Labor Market Studies, 2011
Teresa Sullivan’s 4-Part
Labor Utilization Framework
Unemployment
Low Wages/Working Poor
Involuntary Part-Time
Overeducation/Overskilled
Official Employment Measures in the U.S.
Census and Bureau of Labor Statistics
U-1 : # persons unemployed 15 weeks or longer.
U-2: # persons who just lost a job or completed temporary assignment.
U-3: “Total unemployed,” Officially reported unemployment rate.
U-4: Adds “discouraged workers” = given up looking/job market
U-5: Adds “marginally attached” = looked for work in past 12 months
U-6: Involuntary part-timers.
Anyone who works at least one hour a week, works at least 15 hours
for free in a family business, or takes a “survival job” is considered fully
employed.
The High Public Cost of Low Wages
Program
% of Recipients who
are Working Families
Medicaid/CHIP
61%
TANF
32%
EITC
74%
SNAP
36%
From an April 2015 Research Brief by UC Berkeley Labor Center
Would Adam Smith be in favor of or against a
minimum wage?
“A man must always live by his work, and his
wages must be at least sufficient to maintain
him. They must even upon most occasions be
somewhat more; otherwise it would be
impossible for him to bring up a family, and
the race of such workmen would not last
beyond the first generation.”
Adam Smith, The Wealth of Nations, p.96
Probability of Being Underemployed (Credential) over
Course of Career
Professional Underemployment and Recession
Survey Reasons Given for Underemployment
BLS Statistics are Missing a Lot of Underemployment
Recent Findings from the Federal Reserve
Underemployment (defined as persons with
college degrees working in jobs that do not
require them) has remained at a fairly uniform
rate of 33% over the past two decades.”
Study by the Federal Reserve Bank (Abel, Deitz, & Su), 2014.
How much is un- and underemployment costing us?
• Assume a work career of 45 years (age 20-65).
• Average job tenure is 5 years (from BLS, 2014, optimistic).
• Average job search for person over age 55 is 55 weeks (AARP).
• Average job search for person under age 55 is 35 weeks (AARP).
How much is un- and underemployment costing us?
• Conservatively assume job search is going to take 40 weeks.
• Over “average” career, there will be 9 job changes/transitions.
• Assume that half (50%) of job changes are “voluntary” (that is, they
do not involve a period of unemployment).
• Assume median individual income (over 45 years) is $46,000.
• (SSA median individual income in 2014)
How much is un- and underemployment costing us?
• The “average” person will spend 7.8% of their working life
involuntarily unemployed!
• This represents a lifetime loss of $161,460!
• This may be offset by UI benefits. However, it may also
result in devastated savings, delayed retirement, inability of
families to plan for the future.
Human Capital Theory
Gary Becker, 1964.
Wealth of nations is based on aggregate skills,
education and ability.
Recognized that it could be viewed as
exploitative.
Human Capital Theory
Supply-side view of skills.
Much support in empirical data:
Educated workers earn more, even in
lower-level jobs.
Educated workers have lower rates of
unemployment.
Human Capital Theory
Accommodates wage differentials for non-skill
“status” factors (i.e., discrimination).
Does not explain bifurcated labor markets or
underemployment.
Labor Degradation/Process Theory
Harry Braverman, 1974
Jobs are deliberately designed to be
“deskilled” in order to cheapen work and
disempower workers.
Taylorist Scientific Management
Labor Degradation/Process Theory
Issue was not technology, but work process
structures.
Typewriter vs typing pool.
Jobs bifurcated into “good” jobs with
autonomy and decisional authority and “bad”
jobs that were mere functions.
Labor Degradation/Process Theory
Bifurcated labor markets are expected, and
not an aberration.
Does not explain increasing demand for
education in spite of decreasing returns.
Rationalization
Max Weber, 1864-1920
Formal rationality is institutionalized in bureaucracy, modern
law, and capitalist economy.
Sometimes called “McDonaldization,” the objective of
rationalized systems are efficiency, calculability, predictability,
and replacing people with non-human technologies.
“The system robs workers of their basic humanity by enslaving
them in a world denuded of human values.” Professor George
Ritzer, U.Md., has termed the phenomenon “masterless slavery.”
Intersection of General Law of Capital Accumulation and
Weberian Rationalization/Bureaucracy
Need for ever greater efficiencies
small firms are
cannibalized by larger ones
increases the amount of
capital necessary to carry on a business under its normal
conditions
increasing firm size
decreases
opportunity for smaller competitors to enter the market
increases the need for control over workers.
Danger of interlocking rationalized systems under the control
of a small group of individuals who exercise enormous
control over society. “McDonaldization” has authoritarian
and totalitarian possibilities.
Credentialism
More credentials required to perform same
jobs—sociological equivalent of inflation.
Supported by empirical evidence.
Makes screening easier when there are many
more applicants than jobs.
Credentialism
“…A degree may get you the job but not more money than
the original salary guidelines.”
“The value of a Bachelor’s degree has declined since there
are so many prospective employees with graduate degrees
looking for jobs and willing to accept a position and salary
that would have been filled by someone with a Bachelor’s
degree a few years ago.”
“A Bachelor’s is needed to get in the door. It’s the new HS
diploma.”
From a 2012 Chronicle of Higher Education/American Public Media employer survey
Credentialism
Pushes workers without formal education
farther down the job queue and increases
pressure for job training.
Paradox: higher education enrollment
increases faster when employment demand is
lowest.
Boom & Bust Cycles
A transitioning IT engineer describes the economy in the
Seattle, Washington area:
Constant need for retraining in the tech industry
produced a local cottage industry of tech certificate
providers.
“It’s a vicious cycle, there’s huge pools of skilled
workers in areas you no longer need.”
Workforce development programs scramble to meet the
demands of employers, but who is looking at what is
happening to workers?
Dual or Bifurcated Labor Markets
“Good” jobs vs “bad” jobs.
Middle earners experienced the greatest
wage loss from past two recessions.
Major contributor to wage stagnation and
income inequality.
Job Competition Model
“the skills…for which [workers] are rewarded are partly a function of
the jobs employers offer, rather than the intrinsic capacities of
individuals acting as a kind of hard restraint….”
“…the absence of better-paid employment partly reflects the
structural shifts in the kinds of jobs the economy generate rather than
the intrinsic limits of potential workers.”
Handel, Skills mismatch in the labor market, Annual Review of
Sociology, Vol. 29, #1, (2003).
Assignment Models
Developed by Michael Sattinger (1993).
Job market is represented by a group of N dogs presented with
n bones delivered by a dump truck.
Each dog can only receive one bone and that the bones can be
assigned a value. Equilibrium is established when every dog has
a bone that is not desired by any other dog that could take it
away.
The “value” of any dog’s bone is a function of both the
assortment of bones available and the individual dog’s ability to
compete for them.
The Best Congress Money Can Buy
“Whenever the legislature attempts to regulate the
differences between masters and their workmen, its
counsellors are always the masters. When the
regulation, therefore, is in favor of the workmen, it is
always just and equitable; but it is sometimes
otherwise when in favor of the masters.”
Adam Smith, The Wealth of Nations, p. 195
Who gets heard about workforce issues?
“Businesses…are
complaining to me almost
daily about the lack of a
trained workforce here in
Texas.”
Former Lt. Governor David
Dewhurst to an Austin AmericanStatesman reporter, December 7,
2012.
Who gets Heard/Frames the Debate?
“The masters, being fewer in number, can combine much more
easily…and in all disputes…can hold out much longer. Masters are always
and everywhere in a sort of tacit but constant and uniform combination
not to raise wages above their actual [natural] rate…[and upon occasion]
even below this rate.”
“We seldom, indeed, hear of this combination because it is the
usual…natural state of things… These are always conducted with the
utmost silence and secrecy till the moment of execution, and when the
workmen yield, as they sometimes do, without resistance…They
[employer efforts to reduce wages] are never heard of by the people.”
“Such combinations, however, are frequently resisted by a contrary
combination of workmen…But whether [the workers’] combination be
offensive or defensive, they are always abundantly heard of.”
Adam Smith, The Wealth of Nations, pp. 94-95
What is the real story about the skills shortage?
Peter Capelli has coined the terms “pink unicorn” and “purple
squirrel” to describe the elusive hypothetical perfect job candidate.
If there’s a shortage, how can engineers be bought so cheaply?
J. Dwyer in IET Engineering Management (2007).
Tech industry’s persistent claim of worker shortage may be phony.
Michael Hiltzik, Los Angeles Times, August 1, 2015.
Academics weigh in on the “skills shortage”
…”the absence of better-paid employment partly reflects
structural shifts in the kinds of jobs the economy generates
rather than the intrinsic limits of potential workers.”
M.J. Handel, Annual Review of Sociology, 2003
“…the lack of decent jobs is the obvious, basic problem.”
Dewitt & Steijn, Work, Employment & Society, 2000.
History of Work Economics
Tribalism
Feudalism
Craft Production
Mercantilism
Manufacturing Capitalism
Financial Capitalism
Post-industrial “Information Age”
Abraham Maslow’s Hierarchy of Needs
Jobs are Failing Us in More than Just Pay
Engaged
Disengaged
Unhappy
East Asia
6%
68%
26%
USA
30%
52%
18%
Panama
37%
51%
12%
2013 Gallup Poll
Assumptions of Competitive Equilibrium
Infinite number of buyers and sellers, none of which
has any degree of market control.
Absolute perfect information—infinite
computational capacity.
Everyone has identical and correct beliefs about
prices.
Equality of bargaining power.
What does this mean for our freedoms?
“Necessitous men are not free men.”
Franklin Delano Roosevelt, January 1944
“Such dependence of the mass of the people for all of their income
is something new in the world. For our generation, the substance of
life is in another man’s hands.”
F. Tannenbaum, a Philosophy of Labor, 1951
“Our cultural values of freedom, independence and equality make
the necessity of working for someone else seem undemocratic, even
un-American.”
Joanne B. Ciulla, The Working Life: The Promise and Betrayal Of
Modern Work, 2000
Economic Growth in the U.S. is created by:
Extraction
Expropriation
Externalization
Exploitation
Castoffs
Profits from
Efficiency Gains
“We the People”
Un- and Underemployed
Taxpayers
Rapidly changing rationalized
“job” market
Costs of Constant
Retraining
The False Choice of Job Creation
F
The Job Market
Is Failing Us
Hollywood Looks at Job Loss
The Company Men
(2010)
Stars Ben Affleck, Tommy Lee Jones, and Chris Cooper
Examines financial and emotional effects of layoff
View FREE on YouTube
Falling Down
Stars Michael Douglas, 1993
What to expect if you
have to take a
“survival” job.
Ehrenriech found that
such jobs were more
complex and
physically strenuous
than the jobholder is
given credit (or paid)
for.
Ehrenreich’s job
search probably
looks a lot like
your own…
and this was in
pre-Great
Recession 2006.
1999 national study of
Canadian workers.
Workers continuously
improve themselves but the
jobs do not.
Workers in the aggregate
will always have more skills
than the jobs will ever
use…or pay for.
Skill accumulation as a
defensive necessity.
Historical examination of the
meaning of work and modern
management practices.
People increasingly look to work
to provide not just a livelihood,
but meaning, community, identity
and self-fulfillment.
Employees sacrifice lives outside
of work and define themselves by
jobs that could be gone in a
heartbeat—through no fault of
their own.
American society has
become “a great salesroom,
an enormous file, an
incorporated brain, a new
universe of management and
manipulation.”
Prescient description of how a
rationalized technocracy is
destroying our freedoms…and
probably our souls as well.
Nearly 75 percent of employees
around the world feel disengaged at
work every day.
The ethic of "more, bigger, faster"
exacts a series of silent but
pernicious costs at work,
undermining our energy, focus,
creativity, and passion.
We’re neglecting the four core needs
that energize great performance:
sustainability (physical); security
(emotional); self-expression
(mental); and significance (spiritual).
Students enter graduate
schools with high hopes
of public service and
“making a difference.”
The reality is they take
jobs they hate serving
the corporate elites
solely to have a life…a
mortgage, a family and
paying off educational
debt!
What should be the objective of economics?
Workers and Families
Markets
“The property which every man has
in his own labor, as it is the original
foundation of all other property, so
it is the most sacred and inviolable.”
Adam Smith, The Wealth of Nations, 1776, p. 168