Get a Job!

Get a job and keep it! High school employment and adult wealth accumulation

Matthew Painter, Research in Social Stratification and Mobility, June 2010, Pages 233-249

Abstract: Wealth inequality receives substantial scholarly attention, but mounting evidence suggests that childhood and adolescent traits and experiences contribute to financial disparities in the United States. This study examines the relationship between adolescent labor force participation and adult wealth accumulation. I argue that employed high school students gain practical life skills, abilities, and knowledge from work experience and business exposure that shape investment decisions and affect overall net worth. I use the National Longitudinal Survey of Youth, 1979 cohort, to empirically explore this idea. This study extends the wealth literature by
identifying adolescent employment as an important mechanism that improves adult net worth and financial well-being.

Plausible, but it may confuse cause and effect. If you get a job in high school, you are likely a bit more ambitious. Those jobs are NOT fun (not even if you are "Welder / Union Steward Angus"), and anyone who sticks it out is pretty tough, and willing to work hard.

Still, it is likely to staying with a job teaches you to be more hard-working, also.

(Nod to Kevin L)

Robert Reich: you cannot be serious!

So I was looking through Mark Thoma's links and found this amazing piece by Robert Reich, which begins as follows:

"One out of four homeowners is now under water, owing more on their homes than the homes are worth. Why? The biggest single factor behind the housing crisis is rising unemployment. According to the latest ABC-Washington Post poll, one out of every three Americans has either lost their job or lives in a household with someone who has lost a job. Today it takes two and sometimes three incomes to buy the groceries and pay the mortgage or the rent. So if one of those incomes is gone, a homeowner can't make the payment."

Yikes and double Yikes!

Let me get a tad personal here.

Robert, even the dimmest of bulbs can surely recognize that it's the housing crisis that caused the unemployment, not the other way 'round! 

And even a burnt out bulb should realize that being underwater is not coming from unemployed workers being unable to pay their mortgages. While that is a bad and concerning thing, it has basically nothing to do with being underwater. 

Being underwater is owing more than your home is worth. Robert, you even give the correct definition of underwater in your first sentence but then go hideously off the rails thereafter. 

So Robert, or the typing gibbon who is writing these posts under your name, please get your shit together and try to make a little bit of sense. After all you were our nation's 22nd Secretary of Labor!

O Minimum Wage, Thy Name is Discrimination!

In my recent podcast with Russ ("DJ Yiddisher Kop" is his rap name) Roberts, we discussed the problems caused by minimum wage. In particular, economic theory would clearly imply that forcing a higher than equilibrium wage would allow, in fact encourage, employers to take it out on employees on other margins. Abuse, discrimination in hiring, overwork, bad scheduling, etc.

And...well, what do you know?

Discrimination in a Low-Wage Labor Market: A Field Experiment

Devah Pager, Bart Bonikowski & Bruce Western
American Sociological Review, October 2009, Pages 777-799

Abstract:
Decades of racial progress have led some researchers and policymakers to doubt that discrimination remains an important cause of economic inequality. To study contemporary discrimination, we conducted a field experiment in the low-wage labor market of New York City, recruiting white, black, and Latino job applicants who were matched on demographic characteristics and interpersonal skills. These applicants were given equivalent résumés and sent to apply in tandem for hundreds of entry-level jobs. Our results show that black applicants were half as likely as equally qualified whites to receive a callback or job offer. In fact, black and Latino applicants with clean backgrounds fared no better than white applicants just released from prison. Additional qualitative evidence from our applicants' experiences further illustrates the multiple points at which employment trajectories can be deflected by various forms of racial bias. These results point to the subtle yet systematic forms of discrimination that continue to shape employment opportunities for low-wage workers.

Now, it's the ASR, so they would never make the connection. But discrimination and abuse is caused by the minimum wage. At the competitive wage, there would be NO economic space for discrimination. But the minimum wage creates a space for discretion.

The usual story is this: sure, MW may cause some unemployment, but the people who have jobs, they are better off, right?

Um, no. Back to school. Back to Econ 101.