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WP 2007-6 Charting U.S. Economic Performance with Alternative Labor Market Indicators: The Importance of Accounting for Job Quality

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Disciplines
  • Design
  • Economics

Abstract

Microsoft Word - LMI Working Paper_Revised July 19.doc SCEPA Working Paper 2007-6 Charting U.S. Economic Performance with Alternative Labor Market Indicators: The Importance of Accounting for Job Quality David R. Howell and Mamadou Diallo1 June 29, 2007 1 David Howell is a professor at the New School and Faculty Research Fellow at the Schwartz Center for Economic Policy Analysis (SCEPA) ([email protected]). Mamadou Diallo is a doctoral candidate at The New School for Social Research and is a Research Associate at SCEPA. This paper builds on earlier work by Howell (2005) and our project on alternative market indicators (with Jeff Madrick and Melissa Mahoney). We thank John Schmitt for invaluable advice and technical assistance. 2 Abstract Unemployment and employment rates are the conventional indicators used to measure economic and labor market performance. Their trends suggest that U.S. performance since 1979 has been exemplary, particularly in comparison to much of the rest of the developed world. But these “quantity” indicators do not reflect employment quality, a particularly important deficiency for judging U.S. performance because of high and rising wage inequality and an extremely high incidence of very low wage jobs. We present three alternative labor market indicators designed to measure some key dimensions of job quality: the low wage share of wage and salary employment (LWS), for which we use the widely accepted international threshold of two-thirds of the median wage for full-time workers; the underemployed share of the labor force (UER), which counts unemployed, low wage and involuntary part-time workers; and the adequately employed share of the working age population (AER), which measures those paid above the low wage threshold and not working involuntarily part-time. The low wage share of wage and salary employment has been fairly stable

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