Saturday , October 21 2017
Home / CEPR Blog / The Wage Dividend from Low Unemployment

The Wage Dividend from Low Unemployment

Summary:
While the benefit from lower unemployment in terms of more people having jobs is pretty straightforward, there is also a benefit to workers in the form of higher wages. The basic story is that lower unemployment means a tighter labor market and therefore more rapid wage growth. The relationship between low unemployment and more rapid ...

Topics:
Dean Baker and Daniella Zessoules considers the following as important:

This could be interesting, too:

Daniella Zessoules writes A Warning for Trump: Warsh and Taylor Would Stunt Our Chance at Full Recovery, Especially for Those Who Are Less Educated

Eileen Appelbaum writes Demographic Trends in Healthcare Have Led to a More Diverse Workforce

David Rosnick writes The Dollar Does Matter for Trade

Dean Baker writes Employment Falls for the First Time in Seven Years

While the benefit from lower unemployment in terms of more people having jobs is pretty straightforward, there is also a benefit to workers in the form of higher wages. The basic story is that lower unemployment means a tighter labor market and therefore more rapid wage growth.

The relationship between low unemployment and more rapid wage growth shows up most clearly for more disadvantaged workers. When the economy goes into a slump, it is more likely that a retail clerk or person on the factory floor will lose their job, than a manager or a highly educated professional, like a doctor or dentist.

This means that when the unemployment rate soars, as it did in the Great Recession, it is the workers at the bottom of the ladder who are at greatest risk of losing their jobs. They are also the ones who see the largest loss in pay, as their bargaining power diminishes with their employment opportunities.

Read More ...

Leave a Reply

Your email address will not be published. Required fields are marked *