Bailout

Can America improve its bad jobs?

By Felix Salmon

The problem of falling wages for people without a high-school diploma is well presented by Richard Florida, in an op-ed headlined “America needs to make its bad jobs better”:

The problem is that on average, service workers earn only half of what factory workers make ? and only a third of what professional, technical and knowledge workers are paid. The key is to upgrade these jobs and turn them into adequate replacements for the higher-paying blue-collar jobs that have been destroyed.

I’m less impressed with Florida’s proposed solutions, such as they are.

He first points to a handful of companies (Whole Foods, Zappos) which pay more than average for hourly workers, although they don’t pay anything like the sort of money that blue-collar factory workers can command. But it’s simply a statistical certainty that some companies will pay high wages and be successful, just as others (like Wal-Mart or most hotels) will pay low wages and be successful, and others still will fail no matter what they pay. Demanding that the entire service sector should gravitate to one particular quadrant is, I think, unhelpful and unrealistic.

Florida also reckons we can apply some smart technology here:

Service jobs are the last frontier of inefficiency, providing abundant low-hanging fruit for the innovation and productivity improvements that can undergird higher wages.

Florida wants a service-sector equivalent to the kind of technical assistance that the government has long provided in manufacturing and agriculture. It’s not a bad idea, but it’s harder to implement in the service sector, because employers tend to be smaller and more heterogeneous, and because technical assistance aimed at a broad range of service-sector employers risks becoming a series of bland management mantras rather than anything specific and actionable.

What’s more, productivity improvements don’t necessarily result in higher wages for the less-skilled: they’re just as likely to result in greater returns to capital, as owners extract more profits from the business, or else to result in the jobs going to better-educated workers instead.

So while it’s undeniable that America needs to make its bad jobs better, it’s also, I fear, something which is too difficult to succeed at — certainly for any government bureaucracy. If it’s going to happen at all, it will happen from the bottom up, rather than from the top down. And so far there’s zero evidence that’s happening.

Full post as published by Macroprudential on July 07, 2010 (boomark / email).