Professional Underemployment

Brynne VanHettinga, J.D., M.P.A., Ph.D.

What will be coveredWhat is underemployment and how bad is it?Economic ModelsPolitical FactorsMeaning of Work Popular movies and books look at underemployment

Post-Great Recession EconomyChanges in indicators 2009-2011

Payroll employment: no changeTotal civilian employment: 0.5%Real mean hourly earnings: 1.0%Real median weekly earnings: 1.0%Dow Jones Industrial average: 49.0%S&P 500: 45.8%Corporate profits: 40.8%

“both a jobless and a wageless recovery” Sum & McLaughlin, Center for Labor Market Studies, 2011

Teresa Sullivan’s 4-Part Labor Utilization Framework

Unemployment

Low Wages/Working Poor

Involuntary Part-Time

Overeducation/Overskilled

Official Employment Measures in the U.S. Census and Bureau of Labor Statistics

U-1 : # persons unemployed 15 weeks or longer.U-2: # persons who just lost a job or completed temporary assignment.U-3: “Total unemployed,” Officially reported unemployment rate.U-4: Adds “discouraged workers” = given up looking/job marketU-5: Adds “marginally attached” = looked for work in past 12 monthsU-6: Involuntary part-timers.Anyone who works at least one hour a week, works at least 15 hours for free in a family business, or takes a “survival job” is considered fully employed.

The High Public Cost of Low Wages % of Recipients who

Program are Working Families

Medicaid/CHIP 61%

TANF 32%

EITC 74%

SNAP 36%

From an April 2015 Research Brief by UC Berkeley Labor Center

Probability of Being Underemployed (Credential) over Course of Career

Professional Underemployment and Recession

Survey Reasons Given for Underemployment

BLS Statistics are Missing a Lot of Underemployment

Recent Findings from the Federal Reserve

Underemployment (defined as persons with college degrees working in jobs that do not require them) has remained at a fairly uniform rate of 33% over the past two decades.”

Study by the Federal Reserve Bank (Abel, Deitz, & Su), 2014.

How much is un- and underemployment costing us?

• Assume a work career of 45 years (age 20-65).

• Average job tenure is 5 years (from BLS, 2014, optimistic).

• Average job search for person over age 55 is 55 weeks (AARP).

• Average job search for person under age 55 is 35 weeks (AARP).

How much is un- and underemployment costing us?

• Conservatively assume job search is going to take 40 weeks.

• Over “average” career, there will be 9 job changes/transitions.

• Assume that half (50%) of job changes are “voluntary” (that is, they do not involve a period of unemployment).

• Assume median individual income (over 45 years) is $46,000.• (SSA median individual income in 2014)

How much is un- and underemployment costing us?

• The “average” person will spend 7.8% of their working life involuntarily unemployed!

• This represents a lifetime loss of $161,460!

• This may be offset by UI benefits. However, it may also result in devastated savings, delayed retirement, inability of families to plan for the future.

Human Capital TheoryGary Becker, 1964.

Wealth of nations is based on aggregate skills, education and ability.

Recognized that it could be viewed as exploitative.

Human Capital TheorySupply-side view of skills.

Much support in empirical data: Educated workers earn more, even

in lower-level jobs. Educated workers have lower rates

of unemployment.

Human Capital Theory

Accommodates wage differentials for non-skill “status” factors (i.e., discrimination).

Does not explain bifurcated labor markets or underemployment.

Labor Degradation/Process Theory

Harry Braverman, 1974

Jobs are deliberately designed to be “deskilled” in order to cheapen work and disempower workers.

Taylorist Scientific Management

Labor Degradation/Process Theory

Issue was not technology, but work process structures.

Typewriter vs typing pool.

Jobs bifurcated into “good” jobs with autonomy and decisional authority and “bad” jobs that were mere functions.

Labor Degradation/Process Theory

Bifurcated labor markets are expected, and not an aberration.

Does not explain increasing demand for education in spite of decreasing returns.

RationalizationMax Weber, 1864-1920

Formal rationality is institutionalized in bureaucracy, modern law, and capitalist economy.

Sometimes called “McDonaldization,” the objective of rationalized systems are efficiency, calculability, predictability, and replacing people with non-human technologies.

“The system robs workers of their basic humanity by enslaving them in a world denuded of human values.” Professor George Ritzer, U.Md., has termed the phenomenon “masterless slavery.”

Credentialism

More credentials required to perform same jobs—sociological equivalent of inflation.

Supported by empirical evidence.

Makes screening easier when there are many more applicants than jobs.

Credentialism “…A degree may get you the job but not more money than the original salary guidelines.”

“The value of a Bachelor’s degree has declined since there are so many prospective employees with graduate degrees looking for jobs and willing to accept a position and salary that would have been filled by someone with a Bachelor’s degree a few years ago.”

“A Bachelor’s is needed to get in the door. It’s the new HS diploma.”

From a 2012 Chronicle of Higher Education/American Public Media employer survey

CredentialismPushes workers without formal education farther down the job queue and increases pressure for job training.

Paradox: higher education enrollment increases faster when employment demand is lowest.

Boom & Bust CyclesA transitioning IT engineer describes the economy in the Seattle, Washington area:

Constant need for retraining in the tech industry produced a local cottage industry of tech certificate providers.

“It’s a vicious cycle, there’s huge pools of skilled workers in areas you no longer need.”

Workforce development programs scramble to meet the demands of employers, but who is looking at what is happening to workers?

Dual or Bifurcated Labor Markets

“Good” jobs vs “bad” jobs.

Middle earners experienced the greatest wage loss from past two recessions.

Major contributor to wage stagnation and income inequality.

Job Competition Model“the skills…for which [workers] are rewarded are partly a function of the jobs employers offer, rather than the intrinsic capacities of individuals acting as a kind of hard restraint….”

“…the absence of better-paid employment partly reflects the structural shifts in the kinds of jobs the economy generate rather than the intrinsic limits of potential workers.”

Handel, Skills mismatch in the labor market, Annual Review of Sociology, Vol. 29, #1, (2003).

Assignment ModelsDeveloped by Michael Sattinger (1993).

Job market is represented by a group of N dogs presented with n bones delivered by a dump truck.

Each dog can only receive one bone and that the bones can be assigned a value. Equilibrium is established when every dog has a bone that is not desired by any other dog that could take it away.

The “value” of any dog’s bone is a function of both the assortment of bones available and the individual dog’s ability to compete for them.

The Best Congress Money Can Buy

“Whenever the legislature attempts to regulate the differences between masters and their workmen, its counsellors are always the masters. When the regulation, therefore, is in favor of the workmen, it is always just and equitable; but it is sometimes otherwise when in favor of the masters.”

Adam Smith, The Wealth of Nations, p. 195

Who gets heard about workforce issues?

“Businesses…are complaining to me almost daily about the lack of a trained workforce here in Texas.”

Former Lt. Governor David Dewhurst to an Austin American-Statesman reporter, December 7, 2012.

Who gets Heard/Frames the Debate?“The masters, being fewer in number, can combine much more easily…and in all disputes…can hold out much longer. Masters are always and everywhere in a sort of tacit but constant and uniform combination not to raise wages above their actual [natural] rate…[and upon occasion] even below this rate.”

“We seldom, indeed, hear of this combination because it is the usual…natural state of things… These are always conducted with the utmost silence and secrecy till the moment of execution, and when the workmen yield, as they sometimes do, without resistance…They [employer efforts to reduce wages] are never heard of by the people.”

“Such combinations, however, are frequently resisted by a contrary combination of workmen…But whether [the workers’] combination be offensive or defensive, they are always abundantly heard of.”

Adam Smith, The Wealth of Nations, pp. 94-95

What is the real story about the skills shortage?

Peter Capelli has coined the terms “pink unicorn” and “purple squirrel” to describe the elusive hypothetical perfect job candidate.

If there’s a shortage, how can engineers be bought so cheaply? J. Dwyer in IET Engineering Management (2007).

Tech industry’s persistent claim of worker shortage may be phony.Michael Hiltzik, Los Angeles Times, August 1, 2015.

Academics weigh in on the “skills shortage”

…”the absence of better-paid employment partly reflects structural shifts in the kinds of jobs the economy generates rather than the intrinsic limits of potential workers.”

M.J. Handel, Annual Review of Sociology, 2003

“…the lack of decent jobs is the obvious, basic problem.”Dewitt & Steijn, Work, Employment & Society, 2000.

History of Work Economics

TribalismFeudalismCraft ProductionMercantilismManufacturing CapitalismFinancial CapitalismPost-industrial “Information Age”

Abraham Maslow’s Hierarchy of Needs

Jobs are Failing Us in More than Just Pay

Engaged Disengaged Unhappy

East Asia 6% 68% 26%

USA 30% 52% 18%

Panama 37% 51% 12%

2013 Gallup Poll

Assumptions of Competitive EquilibriumInfinite number of buyers and sellers, none of which has any degree of market control.

Absolute perfect information—infinite computational capacity.

Everyone has identical and correct beliefs about prices.

Equality of bargaining power.

What does this mean for our freedoms?“Necessitous men are not free men.”

Franklin Delano Roosevelt, January 1944

“Such dependence of the mass of the people for all of their income is something new in the world. For our generation, the substance of life is in another man’s hands.”

F. Tannenbaum, a Philosophy of Labor, 1951

“Our cultural values of freedom, independence and equality make the necessity of working for someone else seem undemocratic, even un-American.” Joanne B. Ciulla, The Working Life: The Promise and Betrayal Of Modern Work, 2000

Economic Growth in the U.S. is created by:

Extraction

Expropriation

Externalization

Exploitation

Rapidly changing rationalized “job” market

Profits fromEfficiency Gains

Castoffs

“We the People”Un- and Underemployed

Taxpayers

Costs of Constant Retraining

The False Choice of Job Creation

The Job MarketIs Failing

Us

F

FF

Hollywood Looks at Job Loss

The Company Men(2010)

Stars Ben Affleck, Tommy Lee Jones, and Chris CooperExamines financial and emotional effects of layoff

View FREE on YouTube

Falling DownStars Michael Douglas, 1993

What to expect if you have to take a “survival” job.

Ehrenriech found that such jobs were more complex and physically strenuous than the jobholder is given credit (or paid) for.

Ehrenreich’s job search probably looks a lot like your own…

and this was in pre-Great Recession 2006.

1999 national study of Canadian workers.

Workers continuously improve themselves but the jobs do not.

Workers in the aggregate will always have more skills than the jobs will ever use…or pay for.

Skill accumulation as a defensive necessity.

Historical examination of the meaning of work and modern management practices.

People increasingly look to work to provide not just a livelihood, but meaning, community, identity and self-fulfillment.

Employees sacrifice lives outside of work and define themselves by jobs that could be gone in a heartbeat—through no fault of their own.

American society has become “a great salesroom, an enormous file, an incorporated brain, a new universe of management and manipulation.”

Prescient description of how a rationalized technocracy is destroying our freedoms…and probably our souls as well.

Nearly 75 percent of employees around the world feel disengaged at work every day.

The ethic of "more, bigger, faster" exacts a series of silent but pernicious costs at work, undermining our energy, focus, creativity, and passion.

We’re neglecting the four core needs that energize great performance: sustainability (physical); security (emotional); self-expression (mental); and significance (spiritual).

Students enter graduate schools with high hopes of public service and “making a difference.”

The reality is they take jobs they hate serving the corporate elites solely to have a life…a mortgage, a family and paying off educational debt!

The Precariat by Guy Standing

Neither working class nor working poor, but experience fragmented employment with no secure identity or career trajectory.

Elites view precariate as requiring external pressure to take degraded jobs, which justifies the surveillance state.

Politics becomes angry and subject to demagoguery.

“The property which every man has in his own labor, as it is the original foundation of all other property, so it is the most sacred and inviolable.”

Adam Smith, The Wealth of Nations, 1776, p. 168

What should be the objective of economics?

Workers and Families Markets