Friday, December 14, 2012

More Jobs or Higher Wages?

Krauthammer on "right to work" laws:
Let’s be honest: Right-to-work laws do weaken unions. And de-unionization can lead to lower wages.

But there is another factor at play: having a job in the first place. In right-to-work states, the average wage is about 10 percent lower. But in right-to-work states, unemployment also is about 10 percent lower.

Higher wages or lower unemployment? It is a wrenching choice. . . .
To this conservative, the middle class America of the post-World War II period was a lucky fluke:
Today’s angry protesters demand a return to that norm. Except that it was not a norm but a historical anomaly. America, alone among the great industrial powers, emerged unscathed from World War II. Japan was a cinder, Germany rubble. . .  For a generation, America had the run of the world. Then the others recovered.
In a world of global competition, Krauthammer argues, we can have high employment or high wages, but not both.

And he may be right. But if he is, the "American dream" is fading, and we are looking at a return to the Robber Baron era. I think we should try everything we can think of to avoid that.

1 comment:

leif said...

right-to-work laws in a state only weakly negatively correlate unemployment (-0.19). said in less cumbersome english, there's only a 0.19 correlation between reducing unemployment and a state "doing so" (per his argument) via right-to-work laws.

if he wanted to name things that actually had correlation scores worth looking into, he would have noted that % unemployment highly correlates robbery (0.60) and negatively correlates education (-0.52 for graduating from high school).

right-to-work states are notably missing population in the 45-64 year range (-0.57), do value their economic freedom (0.57) and their religion (0.61). unsurprisingly they favor electing republican senators (0.66) and don't seem to value saving for retirement (-0.50). they tend to report lower-than-expected illicit drug use (-0.54) and moderately correlate lower than expected income (-0.40 for average income, -0.43 for median AGI). right-to-work state citizens tend to be overeight and obese (0.42), whereas unemployment has no correlation to this (-0.01).

quite interestingly states with high unemployment seem to save better for retirement than right-to-work states (0.0) versus (-0.50). said another way, saving for retirement has nothing to do with unemployment when looked at state-by-state, but citizens in right-to-work states are less likely to have nest-eggs.

the most solid correlation of right-to-work states is their almost universal affiliation with voting for romney (0.918).