tag:blogger.com,1999:blog-8764541874043694159.post5607212673064512921..comments2024-03-29T07:36:55.897+00:00Comments on Coppola Comment: Risk pricing in labour marketsFrances Coppolahttp://www.blogger.com/profile/09399390283774592713noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-8764541874043694159.post-19398255474230157432014-01-23T18:01:54.597+00:002014-01-23T18:01:54.597+00:00Re: "Employers report skills shortages and co...Re: "Employers report skills shortages and complain about being unable to fill vacancies at the same time as there is high unemployment not only among the unskilled, but also among those with advanced qualifications but little work experience."<br /><br />Perhaps that is the case on your side of the pond but in the US there is significant unemployment and even more UNDERemployment among the skilled and experienced. I speak from experience as a 57 year old mechanical engineer.<br /><br />Anecdotal claims from employers about having difficulty finding "good people" should be taken with a grain of salt. Every employer I worked for complained about how hard it was to find "good people," yet there was never a shortage of applicants with the desired qualifications -- it's just that the applicants were not perfect enough to suit the employer. <br /><br />In the US, JOLTS data showing the number of unemployed vs. the number of job openings for each job category dispels the myth that there is a shortage of STEM workers, for example.<br /><br />To sum things up, skilled workers experience unemployment and UNDERemployment, too, and skilled workers need job creation programs and economic security, too. <br /><br />That not the main point of your post but nonetheless I felt obliged to point it out.<br /><br />Dan Lynchhttps://www.blogger.com/profile/11189866002273597534noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-15572930890616762802014-01-14T22:50:03.949+00:002014-01-14T22:50:03.949+00:00It's all about the bargaining power (not the r...It's all about the bargaining power (<i>not</i> the risk versus return or anything else), which is why UBI is so relevant. One important caveat, however: UBI by definition is offered with no strings attached, so the UBI recipient cannot <i>legally</i> be required to work as a condition of receiving a particular level of UBI. (Nor can the recipient legally be required <i>not</i> to work, as in the “benefits trap”.) However, the <i>legal</i> right to quit is not enough to change the balance of bargaining power; for that to happen, the UBI also needs to be <i>large enough</i> that quitting waged work is a more realistic option than it would be without UBI. In other words, the UBI needs to be <i>livable</i>.<br /><br />Any UBI large enough to change the balance of bargaining power is known as <i>Unconditional Livable Income</i> (ULI). The ULI would be expected to increase wages and decrease the labor supply. The Marxian “industrial reserve army of the unemployed” would cease to exist as such, even though the “unemployed” would be more numerous, since they would no longer be desperate to find work. Instead, the lowest-paid workers would become a “people's industrial reserve army of the <i>employed</i>”, perpetually ready to quit and rely on UBI alone if abused or underpaid, forgoing the additional income from wages. Worker discipline would be replaced by employer discipline. <i>All</i> workers would enjoy the bargaining-power advantage that presently belongs only to the highest-paid. Their pay might even begin to correlate with the value of what they produce, rather than with their survival needs. In effect, ULI would serve as a rolling strike fund for the entire population, making labor strikes on an <i>individual</i> basis a practical possibility.<br /><br />By contrast, an inadequate UBI (below the level of ULI) would be worse than useless. Instead of offering workers the option to quit, the inadequate UBI would allow employers to pay workers less for the same work. The entire amount of the UBI would be captured by employers as a subsidy to wages, just as occurs with stingy welfare-type benefits under the current regime (such as food stamps for Walmart employees). I would expect to see a U-shaped or even V-shaped relationship between the level of UBI and the lowest level of prevailing wages, with a relatively sharp change of regime (in the engineering sense) as inadequate UBI, subject to employer subsidy capture, shaded into empowering ULI.<br /><br />ULI is the only kind of UBI worth considering, and quantitative analysis of its approximate minimum is of vital importance for any plan to implement UBI.Douglas D. Edwardshttp://dedicto.com/noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-71108179032441237782014-01-14T22:08:34.863+00:002014-01-14T22:08:34.863+00:00It's all about the bargaining power (not theIt's all about the bargaining power (<i>not</i> the Douglas D. Edwardshttp://dedicto.com/noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-49810222305654382182014-01-14T11:37:21.658+00:002014-01-14T11:37:21.658+00:00Universal basic income funded by location value ta...Universal basic income funded by location value taxation http://wealthoflabour.wordpress.comAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-11727044182147122162014-01-13T15:34:03.821+00:002014-01-13T15:34:03.821+00:00Cig, yes I agree, my comment is too simplistic. Re...Cig, yes I agree, my comment is too simplistic. Really the question of risk versus return in labour markets is a whole post on its own anyway (and there is an academic paper on it that someone sent me after reading this). However, I completely agree with you about UBI. Funny how all roads seem to lead in that direction at the moment. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-12649738849063147722014-01-13T10:43:56.832+00:002014-01-13T10:43:56.832+00:00Excellent post. The value of this implicit safety...Excellent post. The value of this implicit safety asset is very significant, but generally overlooked.Nick Edmondshttps://www.blogger.com/profile/15342983814699700396noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-13469439416981177562014-01-13T09:39:56.790+00:002014-01-13T09:39:56.790+00:00The article is very good (kudos for getting the gr...The article is very good (kudos for getting the gridlock issue that most people starting where you start miss), until the last paragraph.<br /><br />In the financial world, higher returns do *not* come from taking higher risk. The idea is totally discredited and your less sophisticated readers should not be mislead into believing it. Please, please, read "The Missing Risk Premium" from Eric Falkenstein, or any of the now copious stack of academic papers on the same topic.<br /><br />Then on the idea that employers should "price" job safety: under competition, individual employers *cannot* do that, they'd just be competed away. It's a sticky stable equilibrium which is hard to move out of.<br /><br />Policies that would help should make it easier for low/wrong skill workers to get high demand skill, basically trying to get a more "equal skill" workforce (in demand adjusted terms, which fortunately doesn't require everybody to become a brain surgeon). You can try from both ends: making the training/bootstrap experience system better (which is hard, unfortunately), and making it cheaper for workers to be able to afford retraining/adapting.<br /><br />A universal basic income would probably help here, giving more leeway for people to retrain and blurring the line/stigma between employment and unemployment status, thus diminishing employers' bargaining power. (It reduces the "spread" between work and non-work.)cighttp://commentisglee.wordpress.com/noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-85422581828633569932014-01-12T22:34:49.516+00:002014-01-12T22:34:49.516+00:00Very well done, good of you to recognize the diffe...Very well done, good of you to recognize the differing dynamics of a bifurcated labor force. Ridiculous to expect lower skilled workers to be able to maintain demand without some socially created wage stickiness, via public welfare or private wage controls.Jason Richardsonhttp://editengine.tumblr.com/noreply@blogger.com