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Failing on Two Fronts: The U.S. Labor Market Since 2000

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  • John Schmitt

Abstract

This report argues that a key driver in rising inequality and a decline in the employment to population ratio is conscious economic policy, with a particularly important and under-appreciated role for macroeconomic policy. The paper first demonstrates the remarkable “flexibility” of U.S. labor markets relative to the situation in other rich economies. The paper then links this policy-induced flexibility to high and rising inequality and shows that such flexibility ceased long ago to contribute --if it ever did-- to greater job creation.

Suggested Citation

  • John Schmitt, 2015. "Failing on Two Fronts: The U.S. Labor Market Since 2000," CEPR Reports and Issue Briefs 2015-05, Center for Economic and Policy Research (CEPR).
    • Handle: RePEc:epo:papers:2015-05
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    References listed on IDEAS

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    3. Baker,Dean, 2007. "The United States since 1980," Cambridge Books, Cambridge University Press, number 9780521677554.
    4. David H. Autor & Alan Manning & Christopher L. Smith, 2016. "The Contribution of the Minimum Wage to US Wage Inequality over Three Decades: A Reassessment," American Economic Journal: Applied Economics, American Economic Association, vol. 8(1), pages 58-99, January.
    5. Maarten Goos & Alan Manning, 2007. "Lousy and Lovely Jobs: The Rising Polarization of Work in Britain," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 118-133, February.
    6. Saez, Emmanuel & Zucman, Gabriel, 2014. "Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data," CEPR Discussion Papers 10227, C.E.P.R. Discussion Papers.
    7. Howell, David (ed.), 2004. "Fighting Unemployment: The Limits of Free Market Orthodoxy," OUP Catalogue, Oxford University Press, number 9780195165852, Decembrie.
    8. Baker,Dean, 2007. "The United States since 1980," Cambridge Books, Cambridge University Press, number 9780521860178.
    9. David S. Lee, 1999. "Wage Inequality in the United States During the 1980s: Rising Dispersion or Falling Minimum Wage?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 977-1023.
    10. Howell David R. & Baker Dean & Glyn Andrew & Schmitt John, 2007. "Are Protective Labor Market Institutions at the Root of Unemployment? A Critical Review of the Evidence," Capitalism and Society, De Gruyter, vol. 2(1), pages 1-73, May.
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    More about this item

    Keywords

    jobs; employment; labor market; inequality; economic policy;
    All these keywords.

    JEL classification:

    • J - Labor and Demographic Economics
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

    NEP fields

    This paper has been announced in the following NEP Reports:

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