4 comments in reply to "Technology, Skills, Jobs and Wages"

  1. Robert Salzberg says:

    According to a report from the ILO, in developed countries, the decline in labor’s share of income was reduced by 10% for technology but by 46% for financialization. Technology gets the headlines but financialization is the real problem.

    In the past few decades, we should have seen rapid declines in transactional costs due to technology. Instead deregulation has lead to a situation where the transactional costs to a restaurant for a credit card purchase are roughly equal to profit margin in many full service restaurants. Despite inroads from companies like Square and PayPal, monopolistic practices by credit card companies are the biggest contributor to wage stagnation.

    http://www.ilo.org/wcmsp5/groups/public/—dgreports/—dcomm/—publ/documents/publication/wcms_194843.pdf


    • Robert Salzberg says:

      Correction to my previous post: monopolistic practices by financial institutions like credit card companies are the biggest contributor to wage stagnation.


  2. readerOfTeaLeaves says:

    Nice article.
    Puts me in mind of the fact that since Greenspan was elevated at the Fed in ’87, things have continued to become increasingly bad for labor. And since 1987, the rise of Leveraged Buyouts and Private Equity have added a double-whammy in terms of job destruction.

    The Fed has lowered the cost of capital*.
    Over the period in which the Fed has kept the price of capital low, the financial gaming (i.e. “financialization”) involved in junk bonds, leveraged buyouts, and stock buybacks have proliferated. They have anything to do with employing people, but a lot to do with putting them out of work.

    Add onto that dynamic a tax disparity in which labor is taxed at 35%, whereas capital is taxed at 15% (if at all), and the dynamic accelerates.

    Technology is blamed, but I’m with the previous commenter Robert S: financialization, rathe than technology, is by far the biggest culprit. But the Fed has been the handmaiden of the financialization. Pity.

    Not only is our tax system producing bizarre outcomes, it also appears that having a central bank keep the price of capital at an absurdly low level is contributing to the kinds of activities that view labor as pure expense, and capital accumulation as the primary economic objective.
    ———————-
    *capital defined as intellectual property, real property, bonds, licenses, financial and professional capital (dental offices, billing infrastructures, ATM networks, communication networks).


  3. Kevin Rica says:

    A very good article indeed!

    In fact, if one reads the academic literature: not literature by academics, but literature about the academic job market (The Chronicle of Higher Education or Higher Ed Jobs) one finds ample confirmation that high skill and education levels offer no premium. It’s full of articles about adjuncts on food stamps and adjuncts working for minimum wage and no benefits.

    On again can’t help notice the disconnect between actual job market conditions and the anxiety expressed by business and their progressive allies over the chronic shortages of labor that requires mass immigration.


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