The Workweek: A Round-Up of Labor Market Links for the Week Ending 8/25/17
Welcome back to The Workweek, the Indeed Hiring Lab’s round-up of the latest research, news, and perspectives that made us think deeply or differently about the labor market this week. It’s your guide to the most important new insights about work.
Here are our picks for this week:
Construction is behind schedule and over budget
Here’s a depressing statistic: Americans in hard hats built more per hour of work 50 years ago than they do today. Of all industries, construction has posted the lowest productivity improvements. And it’s not just a US problem—even in super-efficient Germany and Japan, construction productivity has flatlined. Why? Don’t blame burdensome regulations. Instead it seems to reflect the absence of the key drivers of productivity growth in other industries: capital investment and consolidation. Because the real estate market is volatile, builders are reluctant to invest in labor-saving technology. At the same time, mergers and acquisitions haven’t happened much among construction outfits because the customized nature of most projects limits scale. All this keeps construction small, local and inefficient. [The Economist]
Slowing wage growth? Blame the Baby Boomers
US unemployment is at a 16-year low and many industries are clamoring for new workers. So why, economists wonder, have wages been rising at a slowing rate? It may be that retiring Baby Boomers are the culprits. New research from the San Francisco Fed finds that changes in the age composition of workers explain tepid wage growth. As older Baby Boomers retire, they’re being replaced by less-experienced—and cheaper—younger workers. Correcting for this by examining continuously employed full-time workers shows that wages have climbed rapidly over the past three years. [Wall Street Journal]
Higher minimum wages may speed automation—and that’s good for the economy
Minimum wages have gone up in a number of states and localities in recent years. So does that mean burger flippers will be replaced by robots? Maybe so, according to new research by David Neumark, an economist skeptical of the minimum wage. But Noam Smith argues this actually could be a good thing. In the long-run, Smith says, the incentive to replace workers with machines is a plus for the economy. The high wages of British workers in the 1700’s spurred mines, farms and factories to adopt new technologies, jump-starting the Industrial Revolution. Similarly, higher minimum wages today are good if they encourage automation, provided that low-wage workers are able to find other jobs. [Bloomberg View]
Is Britain’s Jobs Recovery Bad for Some Workers’ Health?
The UK has seen a remarkable decline in joblessness, with its unemployment rate falling to 4.4% and proportionally fewer working-age people out of the labor force than in the US. Policymakers credit the UK’s “active labour market policy,” which encourages unemployed workers to find a job—any job—and penalizes them if they hesitate. But new research shows that when jobless people take poor quality jobs—with low pay and high insecurity—their health suffers more than when they were out of work. So some jobs may be worse than no job at all. [Financial Times]
Occupational Licenses Help Fight Discrimination
Are occupational licenses—the training and fees required to do certain kinds of work—job killers? Many economists worry that these licenses are artificial barriers to employment, depressing job growth by imposing unnecessary, time-consuming, and expensive requirements. For example, should a $22,000 cosmetology license be needed to braid hair in Iowa? But, in one respect, occupational licenses may be good: They help fight race and sex discrimination. New research shows black men’s wages rose 12.5% in jobs requiring a license, more than for white men—narrowing the racial gap. A similar effect occurred for women in licensed jobs, shrinking the gender wage gap. Such licenses also seem to boost job prospects for ex-cons, signaling to potential employers that inmates worked hard while they were incarcerated. [Quartz]
Andrew Flowers is an Economist at the Indeed Hiring Lab, focusing on the US labor market. Previously he was the quantitative editor and economics writer at FiveThirtyEight, Nate Silver’s data-driven news site; and before that, he was an economic analyst for the Federal Reserve Bank of Atlanta. As a freelance journalist, he has written for The Economist. He has a B.A. in economics from the University of Chicago.