NotesFAQContact Us
Search Tips
Peer reviewed Peer reviewed
Direct linkDirect link
ERIC Number: EJ987551
Record Type: Journal
Publication Date: 2012
Pages: 10
Abstractor: ERIC
Reference Count: 39
ISSN: ISSN-0276-8739
Policy Responses to the Recent Poor Performance of the U.S. Labor Market
Haveman, Robert; Heinrich, Carolyn; Smeeding, Timothy
Journal of Policy Analysis and Management, v31 n1 p177-186 Win 2012
Since the onset of the Great Recession, the U.S. labor market has been reeling. Public concern has largely focused on the unemployment rate, which rose to double digits and has since been stalled at just over 9 percent. This rate is unacceptably high, and macroeconomic policy efforts have been unsuccessful in bringing it down. The overall unemployment rate, however, masks more fundamental and troublesome developments. Perhaps the most serious is the precarious situation of working-age men with modest education and few job skills, who increasingly find themselves unemployed, underemployed, or out of the labor force. Underlying these developments is the direction of technological change and workplace organization, with less-skilled workers being replaced by machines and more-skilled workers to run and repair the machines. Many in lower-paying jobs have taken pay cuts and see few career possibilities and stingy nonwage benefits. Wage gaps between higher- and lower-skilled workers have increased, due to falling demand for modest-skill workers and the failure of the nation's higher education system to generate the more highly educated and skilled workers needed for the growing high-skill sector. This deep labor market polarization problem reflects two developments. The first is an increase in high-skill, high-wage jobs (and, to a smaller extent, low-wage, low-skill jobs), which has reduced relative opportunities for workers with some schooling but few technical skills who in prior years held routine-task production and clerical middle-wage jobs (Autor, 2010). The second is a flat high school graduation rate and poor college graduation rates--particularly among men. Some combination of fiscal stimulation and monetary easing are two main tools in the kit that both economists and policymakers bring to the table in circumstances like these. Unfortunately, neither of these options currently offers much potential. The U.S. Federal Reserve has unleashed much of its stimulus arsenal, including U.S. Treasury bond buybacks, and has driven interest rates to unprecedentedly low levels. There is little interest in fiscal stimulation, given the current budget situation. Neither cuts in public spending nor increases in taxes will offer the sort of stimulation necessary to improve the U.S. labor market. Both approaches reduce demand for goods, services, and workers. Clearly, the menu of possible policies designed to improve imbalances and address the labor market polarization problem is much larger than that which the United States is currently pursuing. In this paper, the authors mention the most prominent of these, drawing from both past U.S. experience and measures undertaken in other countries. (Contains 7 footnotes.)
Wiley-Blackwell. 350 Main Street, Malden, MA 02148. Tel: 800-835-6770; Tel: 781-388-8598; Fax: 781-388-8232; e-mail:; Web site:
Publication Type: Journal Articles; Opinion Papers
Education Level: N/A
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A
Identifiers - Location: United States
Identifiers - Laws, Policies, & Programs: American Recovery and Reinvestment Act 2009; Workforce Investment Act 1998