Skill deficiencies: Problems,policies, and prospects

What evidence points to a shortage of skills, a condition that keeps the U.S. economy off its “optimum” path? First, the literacy of job seekers, as surveyed by the Educational Testing Service, is inconsistent with acceptable alternative growth paths as projected inWorkforce 2000. Second, data on specific jobs show skill requirements increasing. Third, employers are paying more for higher education and workers with less education are being paid less. Integrating school and work, by applying the findings of the Secretary’s Commission on Achieving Necessary Skills (SCANS), is a way to lessen the shortage, an opportunity likely to be favored by the new administration.     

The Occupational Cost of Being Illegal in the United States: Legal Status,Job Hazards,and Compensating Differentials

Considerable research and pervasive cultural narratives suggest that undocumented immigrant workers are concentrated in the most dangerous, hazardous, and otherwise unappealing jobs in U.S. labor markets. Yet, owing largely to data limitations, little empirical work has addressed this topic. Using data from the 2004 and 2008 panels of the Survey of Income and Program Participation, we impute legal status for Mexican and Central American immigrants and link their occupations to Bureau of Labor and Statistics (BLS) data on occupational fatalities and occupational hazard data from the U.S. Department of Labor to explore racial and legal status differentials on several specific measures of occupational risk. Results indicate that undocumented workers face heightened exposure to numerous dimensions of occupational hazard – including higher levels of physical strain, exposure to heights, and repetitive motions – but are less exposed than native workers to some of the potentially most dangerous environments. We also show that undocumented workers are rewarded less for employment in hazardous settings, receiving low or no compensating differential for working in jobs with high fatality, toxic materials, or exposure to heights. Overall, this study suggests that legal status plays an important role in determining exposure to job hazard and in structuring the wage returns to risky work.     

The role of the health care sector in the U.S. economy

This Issue Brief discusses factors that contribute to the growth of health care expenditures and the reasons that many individuals, employers, and policymakers consider health expenditures too high. In addition, it describes various industries that make up the health care delivery system and their role in the U.S. economy as employers, producers, exporters, and suppliers of research and development. The report also discusses the economic implications of rising health care expenditures for individuals, employers, and the federal government and the potential impact of proposed health care reform on the health care sector and the U.S. economy as a whole. Health care delivery industries such as pharmaceuticals and medical equipment suppliers have higher than average research and development levels, in addition to a positive balance of trade. Moreover, while the total number of jobs in the private sector declined between 1990 and 1993, the number of jobs in the relatively high paid health services sector continued to grow. In aggregate, employer spending on health care represents only 6.6 percent of total labor costs. In comparison, wages and salaries represent 83 percent of total labor costs. Consequently, the growth rate of health care expenditures has a smaller impact on the growth rate of total compensation than does the growth rate in wages and salaries. Using job multipliers developed by the U.S. Department of Commerce, it is estimated that the 18,600 health care services jobs in Rochester, Minnesota in 1993 created another 32,000 jobs in the area. Any contraction of the health care sector in cities that have a large concentration of employment in health services would result in reduced employment in restaurants, retail stores, janitorial services, and other local businesses. EBRI's simulations estimated that between 200,000 and 1.2 million workers could become unemployed as a direct result of a mandate that employers provide health benefits to their employees, assuming that wages and salaries did not adjust at all. Others find that approximately 50,000 individuals would lost their jobs, assuming that wages and other labor costs adjust downward to completely account for increased costs. As is apparent, the estimates of job loss (and of the total costs of the policy) are extremely sensitive to the assumptions used in the simulation.     

Unemployment,immigration, and NAFTA: a panel study of ten major U.S. industries

We conduct a pooled cross-section and time-series analysis of the unemployment rates across ten major industries in the U.S. from 1983 to 1994 to assess the effect of NAFTA and immigration. Our results indicate that the output produced by the industry, unemployment benefit coverage, and interest rates are significant determinants of industry unemployment rates, but union presence does not affect industry unemployment. Both Canadian and Mexican immigrants appear to be complements to the U.S. labor force, with Canadian immigrants highly complementary to American labor. Finally, the Chow test provides no evidence that NAFTA has changed the structure of unemployment determination in these industries. We are indebted to Emily Hoffman and Matthew Higgins for their comments and suggestions. The usual disclaimer applies.     

MINIMUM WAGE EFFECTS WITH OUTPUT STABILIZATION

What are the effects of legal minimum wage rates on the U.S. economy? Does minimum wage legislation promote the economic self-interest of high wage union labor and impede the economic self-interest of capitalists as our earlier research [Cox and Oaxaca 1982] suggested? This paper uses a nine sector econometric/simulation model of U.S. industry from 1975–1978 to answer these questions in the context of stabilization policies which hold aggregate real output constant. While most simulated percentage effects are small, those for the unskilled workers themselves are not. A 15.7 percent increase in the average nominal wage rate of unskilled labor, as a result of minimum wage legislation, produced an 11 percent decrease in unskilled employment, 2.2 million jobs lost, while increasing the real wage of unskilled workers by 15 percent. Simulated changes in several key variables support our earlier observations that the self-interests of labor unions, with skilled workers, conflict with those of capitalists over the issue of minimum wage legislation.     

Technological change and employment in Brazil,Colombia and Mexico: Which workers are most affected?

This article adopts a task-based approach to analyse employment patterns in terms of skill distribution and occupations in the urban labour markets of Brazil, Colombia and Mexico during 2002–15. The results suggest that employment fell strongly for some medium-skilled occupations, and increased slightly for both low-skilled and high-skilled occupations. Decomposition results suggest that the decreasing share of employment of secretaries and stenographers is fully explained by changes within industries (routinization hypothesis), whereas the decrease in machinery operation and handicraft jobs is mainly explained by changes between industries. By socio-demographic group, technological changes negatively affected women but benefited younger workers and those with higher educational attainment.     

Intersections on the Class Escalator: Gender,Race, and Occupational Segregation in Paid Care Work

As U.S. manufacturing and production industries have declined, the growth of the care sector has increasingly become an important source of jobs for workers without a college degree. Often requiring some form of postsecondary credentialing, many care occupations can provide better wages, job stability, and possible upward mobility for less educated workers. However, employment patterns in paid care work are both gendered and racialized: women and workers of color are overrepresented in care occupations with fewer entry barriers, benefits, and lower pay. Although these patterns are well documented, the mechanisms producing them are less well understood. Using event history analysis and the National Longitudinal Survey of Youth (NLSY79), this study evaluates the explanatory power of neoclassical economic, status attainment, and social closure theories of occupational segregation for black women’s and men’s greater hazard or “risk” of entering care occupations, relative to white workers. Net of individual and closure mechanisms, significant residual effects suggest labor market discrimination remains a primary explanation for the over-representation of black workers in less credentialed care jobs with fewer benefits.     

Economic Restructuring and Changing Prevalence of Female-headed Families in America1

Abstract Industrial restructuring has altered economic circumstances in the U.S., but the influences of these changes on family structure are not clear. This study examines whether industrial restructuring influences female headship and whether these effects differ in nonmetro and metro counties. Results based on data from the 1980 and 1990 U.S. Census of Population and Housing Summary Tape Files indicate several conclusions. First, female headed households increased more rapidly in nonmetro than metro counties from 1980 to 1990, although there was a great deal of variation across counties. Second, industrial restructuring contributed to change in female headship in nonmetro and metro counties, and changes in various industries had differing effects on female headship. Third, overall gains in women's employment in a county had no influence on formation of female headed households, gains in men's employment deterred female headship, and gains for women in specific industries tended to slow formation of these households. Fourth, controlling for changes in median income and part-time work did little to reduce the industry-specific influences on change in female headship. The results suggest that linkages between industrial restructuring and family structure do exist, although the models are less able to explain changes in female headship in nonmetro than in metro counties.     

SOFT SKILLS,HARD SKILLS,AND THE BLACK/WHITE WAGE GAP

This study examines the relative importance of soft skills versus hard skills across occupations and its impact on the observed wage gap between Blacks and Whites in the United States. It posits that the Black/White pay gap may vary across occupations that require the use of different types of skills. We classify occupations into hard‐skill intensive versus soft‐skill intensive jobs using the skill content measures of different occupations from the Occupational Information Network (O*Net). We then use data from the National Longitudinal Survey of Youth (NLSY) and Current Population Survey (CPS) to investigate the impact of job skill type on the wage gap. Consistent with our theoretical predictions, we show that this wage gap in white‐collar jobs is smaller for hard‐skills jobs than it is for soft‐skills jobs. Moreover, we demonstrate that, in response to variations in the wage gap across different occupations, Blacks are more likely to self‐select themselves into hard‐skills jobs, ceteris paribus. This shows not only that discrimination against Blacks varies across occupations, but also that such discrimination induces the self‐selection of Blacks into certain occupations. Moreover, this finding highlights the role played by co‐worker/customer discrimination in explaining the racial wage gap in the U.S. labor market. (JEL J15, J31)     

Want Ads and Jobs for the Poor: A Glaring Mismatch

This study tested the claim that newspaper help-wanted sections list enough jobs for all who want work. We counted jobs listed in The Washington Post's help-wanted section, sorting them by skill, education, and experience to identify those available to the unemployed poor. Then we asked employers how many people had applied. Only 13% of all vacancies and only 8% of all full-time vacancies offered work for the unemployed poor. Although these menial jobs paid low wages and rarefy offered fringe benefits, they received an average of 21 applications and were quickly filled. The tight labor market for menial jobs portends great difficulty in securing paid employment for people now being evicted from the Aid to Families with Dependent Children program.     

Inequality of opportunity and (unequal) opportunities in the youth labour market: How is the Arab world different?

The Middle East and North Africa (MENA) labour market is emblematic of widespread youth unemployment and high discouragement rates, experiencing disproportionately high levels of unemployment among educated young people. Using ILO School-to-Work Transition Surveys for Egypt, Jordan and Tunisia, the authors explore whether this is related to inequality of opportunity or to deeper structural characteristics that create a mismatch between skill demand and supply on the labour market. The low availability of high-skilled jobs and the low value placed on skills gained through the system of vocational training are found to have high explanatory power.     

Local implementation of disability policies for “high incidence” disabilities at public schools in Japan and the U.S.

This study examines educators' responses to the local implementation of national special education policy changes for children with “high-incidence,” (mild cognitive and behavioral) disabilities. Sensitized by a sociocultural, developmental perspective, we examined Japanese and U.S. national educational policies for the support of children with high incidence disabilities and their implementation in local public schools. Twenty-six Japanese and 18 U.S. elementary school educators participated in individual interviews and discussed their experiences and perceptions of special education policies and their local implementation. Educators in both countries expressed common challenges, specifically, balancing legal requirements with everyday practices, adjusting to policy shifts, and negotiating support for children within and outside of their classrooms. Yet their experiences were culturally nuanced reflecting 1) relatively flexible (Japan) or fixed (U.S.) legal requirements, 2) shifts to more specialized (Japan) or more classroom-based (U.S.) support, and 3) established practices of classroom-based support (Japan) or pull-out support (U.S.). These cultural differences are examined in historical and sociocultural contexts, and implications are discussed for educators, social work practitioners, and policy makers in both Japan and the U.S.     

Civic Literacy and Social Work Education: Results From a Multi-Site Study

Given the decline in civic literacy among Americans, social work educators can no longer assume that students come prepared with the civic knowledge necessary for competent advocacy or policy practice. This article examines rates of civic knowledge among social work students at four social work education programs across the United States (U.S.). Findings indicate that although social work students score higher than the general U.S. adult population, their civic knowledge scores are still low, with nearly a third of these students falling in the failing range. Results suggest that social work students need additional content on civic knowledge.     

Shareholder Value and the Transformation of the U.S. Economy, 1984–20001

Using data from 62 U.S. industries for 1984–2000, this article explores the connections between shareholder value strategies, such as mergers and layoffs, and related industry‐level changes, such as de‐unionization, computer technology, and profitability. In line with shareholder value arguments, mergers occurred in industries with low profits, and industries where mergers were active subsequently saw an increase in layoffs. Industries with a high level of mergers increased investment in computer technology. This technology displaced workers through layoffs and was focused on reducing unionized workforces. Contrary to shareholder value arguments, there is no evidence that mergers or layoffs returned industries to profitability.     

Immigration and the earnings of youth in the U.S.

"This article reports findings that have emerged from an effort made at statistically measuring the effects of immigration on the earnings of U.S.-born youth. The presence of immigrants arriving before 1965 has a positive impact on youth earnings. Recently arrived immigrants impact negatively, however. These results are consistent with recent findings that the skill level of immigrants arriving within the last two decades is lower relative to that of immigrants arriving earlier. The results also show that the negative effects diminish as the youth ages, reflecting skill acquisition and job mobility of the young worker into jobs less vulnerable to competition from immigrant workers."     

Occupations,Human Capital and Skills

Economists have long recognized that occupations can be used as proxies for skills in wage regressions. Yet the potential existence of non-market factors such as discrimination and occupational choice (sorting) on the basis of job attributes that are separate from, but potentially correlated with, wages makes occupations an imperfect control for skills. In this paper, we consider whether inter-occupational wage differentials that are unexplained by measured human capital are indeed due to differences in unmeasured skill. Using the National Compensation Survey, a large, nationally-representative dataset on jobs and ten different components of job requirements, we compare the effects on residual wage variation of including occupation indicators and these skill requirements measures. We find that although these skill requirements vary across 3-digit occupations, occupation indicators decrease wage residuals by far more than can be explained by skill alone. This indicates that “controlling for occupation” does not equate to controlling for only these skill measures, but also for other factors. Additionally, we find that there is considerable within-occupation variation in skill requirements, and that the amount of variation is not constant across skill levels. As a result, including occupation indicators in a wage model introduces heteroskedasticity that must be accounted for. We suggest that caution be applied when using and interpreting occupation indicators as controls in wage regressions.     

INDUSTRIAL DYNAMICS AND THE NEOCLASSICAL GROWTH MODEL

This paper studies industry-level dynamics and demonstrates the ability of a modified neoclassical growth model to capture a range of empirical facts. The paper begins by using U.S. data to document skilled and unskilled labor trends within industry sector classifications as well as industry sector output trends. Using Current Population Survey data from 1968 to 2004, it is shown that the ratio of skilled workers to unskilled workers employed has risen in all industries. The absolute increase in this ratio was larger in the more skilled industries, while the growth rate was larger in the less skilled industries. Furthermore, using national income account data, it is shown that relatively high-skilled industries have accounted for an increasing share of output over time. A version of the neoclassical growth model is then constructed to match these observations. One important feature of this model is a structure that introduces new goods into the economy at each moment of time. The model is able to capture a rich set of labor market movements between sectors and between skill levels as well as changes in the relative output shares across industries, yet preserves many nice features of the neoclassical growth model. ( JEL E13, J20, 030)     

PARETO IMPROVING MINIMUM WAGE LAWS

By increasing the expected wage in low skill jobs, a minimum wage law can reduce the incentive for low skill workers to imitate high skill workers in the signalling process. The gain from reduced investment in the signal can more than offset the loss from unemployment among low skill workers so that total output increases. Moreover, with an appropriate poll tax on workers to compensate owners of capital, the law can make all workers and owners of capital better off.     

Enough Time for Housework? Low‐Wage Work and Desired Housework Time Adjustments

Although studies examine preferences for hours spent in paid employment, little attention has been given to preferences for hours spent in unpaid household labor. This study examines the extent to which women working in low‐paid retail jobs would prefer to spend more or less time on household work and how alignment between preferred and actual time on housework is related to characteristics of paid work. Using original survey data and company records on a sample of women working at a U.S. retail firm (N = 277), the authors found that mismatch between preferred and actual time on household work was common. Roughly 42% wanted more time on household work and 18% wanted less. Working multiple jobs, work schedule unpredictability, and nonstandard work timing contributed to wanting more time on housework. Findings add to understanding of how low‐wage, precarious employment shapes workers' ability to attend to necessary tasks of household management.     

Structural changes in the receiving country and future labor migration--the case of Kuwait

This article describes changes in the volume, age and sex composition, retention, productivity, types of occupation, and economic sector of the labor force in Kuwait. The focus is on the structural changes in the indigenous labor force. Data were obtained from censuses and labor force surveys during 1965-93. Policies after the 1990 invasion pertained primarily to security of public employment sector among natives. Over 98% of private sector employment is among non-Kuwaitis. Government programs support high fertility. Female illiteracy has declined, and the proportion of women with a higher education has increased. Natives comprised 20.4% of the total labor force in 1993. About 90% of native males work in the public sector. 45% of total male employment is in the production sector. Around 50% of non-Kuwaiti males have been employed in production work over the decades. Over 90% of Kuwaiti females in 1993 worked in professional or clerical work. Over 50% of total female labor force participation is in the service sector. Concentration in the public sector increased for Kuwaitis and declined for non-Kuwaitis. Labor force participation declined with increasing age. Retirement benefits encouraged early retirement. The private sector is experiencing the departure of long-term migrants and more rapid turnover of labor. Hours of work are longer in the private sector. Kuwait is still dependent on foreign workers in the production and service industries. It is likely that native male workers will replace foreign workers in professional work and administrative/clerical work. Policies that will assure future reliance on imported labor include the assurance of government jobs for Kuwaitis, retirement rules, and the profitability of the trade in labor.