Jobs for the Poor

Jobs for the Poor: Can Labor Demand Policies Help?

Timothy J. Bartik
Copyright Date: 2001
Published by: Russell Sage Foundation
Pages: 488
https://www.jstor.org/stable/10.7758/9781610440288
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    Jobs for the Poor
    Book Description:

    Even as the United States enjoys a booming economy and historically low levels of unemployment, millions of Americans remain out of work or underemployed, and joblessness continues to plague many urban communities, racial minorities, and people with little education. InJobs for the Poor, Timothy Bartik calls for a dramatic shift in the way the United States confronts this problem. Today, most efforts to address this problem focus on ways to make workers more employable, such as job training and welfare reform. But Bartik argues that the United States should put more emphasis on ways to increase the interest of employers in creating jobs for the poor-or the labor demand side of the labor market.

    Bartik's bases his case for labor demand policies on a comprehensive review of the low-wage labor market. He examines the effectiveness of government interventions in the labor market, such as Welfare Reform, the Earned Income Tax Credit, and Welfare-to-Work programs, and asks if having a job makes a person more employable. Bartik finds that public service employment and targeted employer wage subsidies can increase employment among the poor. In turn, job experience significantly increases the poor's long-run earnings by enhancing their skills and reputation with employers. And labor demand policies can avoid causing inflation or displacing other workers by targeting high-unemployment labor markets and persons who would otherwise be unemployed.

    Bartik concludes by proposing a large-scale labor demand program. One component of the program would give a tax credit to employers in areas of high unemployment. To provide disadvantaged workers with more targeted help, Bartik also recommends offering short-term subsidies to employers-particularly small businesses and nonprofit organizations-that hire people who otherwise would be unlikely to find jobs. With experience from subsidized jobs, the new workers should find it easier to obtain future year-round employment.

    Although these efforts would not catapult poor families into the middle class overnight, Bartik offers a powerful argument that having a full-time worker in every household would help improve the lives of millions.Jobs for the Poormakes a compelling case that full employment can be achieved if the country has the political will and adopts policies that address both sides of the labor market.

    Copublished with the W. E. Upjohn Institute for Economic Research

    eISBN: 978-1-61044-028-8
    Subjects: Business, Sociology

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Acknowledgments
    (pp. vii-viii)
  4. About the Author
    (pp. ix-x)
  5. 1 THE CASE FOR LABOR DEMAND POLICIES
    (pp. 1-18)

    How can public policy in the United States be most effective in helping low-income Americans increase their employment and earnings? Current U.S. antipoverty policies emphasize “labor supply policies.” Labor supply policies are characterized by direct interactions with the poor to increase the quantity or quality of their labor supply or the wages they receive. Labor supply policies include welfare reform policies that make welfare benefits more difficult to receive as well as job training and education programs.

    Current U.S. antipoverty policies place little emphasis on “labor demand policies.” Labor demand policies are characterized by direct interactions with employers to provide...

  6. 2 LABOR SUPPLY AND DEMAND POLICIES: DESCRIPTIONS, CLASSIFICATIONS, CROSS-NATIONAL COMPARISONS, AND HISTORY
    (pp. 19-32)

    This chapter describes some of the fundamental features of U.S. labor supply and labor demand policies to increase the employment and earnings of lower-income Americans. This description includes some key distinctions between different types of labor supply and labor demand policies, and comparisons in the scope of labor supply and demand policies between the United States and other countries, and between the United States today and the United States in the past. These descriptions and comparisons provide a context for the discussion of specific labor supply and demand policies in subsequent chapters.

    The distinction between labor supply and labor demand...

  7. 3 THE LOW-WAGE LABOR MARKET
    (pp. 33-68)

    An understanding of the effectiveness of labor supply and demand policies to reduce poverty requires an understanding of the low-wage labor market. In this chapter I consider some key features of the low-wage labor market that influence whether and how labor supply and demand policies can increase the employment and earnings of the poor.

    This chapter’s discussion of the low-wage labor market is divided into five sections:

    1.The overall employment situation:Are there enough jobs available, and will jobs reduce poverty?

    2.Labor supply:Can the poor readily supply productive labor in response to increased demand?

    3.Labor demand:Will employers’ demand...

  8. 4 THE LABOR MARKET EFFECTS OF LABOR SUPPLY PROGRAMS
    (pp. 69-111)

    This chapter considers programs that increase the employment or earnings of low-income Americans by increasing the quantity or quality of their labor supply or providing earnings supplements. The programs considered include welfare reform, the Earned Income Tax Credit (EITC) and other wage supplements, and education and training. What effects do these programs have on employment, earnings, and income? What spillover effects do they have on the employment and wages of those who are not program participants? How can these programs be more effective?

    In this chapter, I argue that it is difficult for labor supply programs, by themselves, to increase...

  9. 5 THE EFFECTS OF INCREASED LABOR DEMAND
    (pp. 112-148)

    This chapter examines what increased labor demand can do for the poor. Before considering specific labor demand policies, it is appropriate to ask whether an increase in labor demand—assuming policy can bring it about—will in fact yield significant increases in the employment and earnings of the poor. Although this chapter sometimes uses evidence from specific labor demand programs, this evidence is used only to provide insights into the effects of increased labor demand. Later chapters consider the pros and cons of specific labor demand programs.

    Looking at the effects of labor demand raises the following issues: What do...

  10. 6 ARE LABOR DEMAND POLICIES INFLATIONARY?
    (pp. 149-161)

    An important concern about policies that dramatically increase the employment of the poor through increased labor demand is that such policies might lead to an inflationary spiral. Lower unemployment might cause price inflation (the rate of change in prices over some time interval) to increase, resulting in an increase in inflationary expectations and, in turn, in still further increases in inflation. Inflation would continue to accelerate until unemployment increases, perhaps owing to the Federal Reserve reacting to the accelerating inflation by taking actions to increase interest rates and restrain money supply growth.

    Most economists assume that although an unemployment rate...

  11. 7 PUBLICLY FUNDED JOBS FOR THE POOR
    (pp. 162-203)

    This chapter and chapters 8 and 9 consider specific labor demand programs that seek to target the poor for increased labor demand. Here we look at publicly funded jobs.¹ Chapter 8 considers wage subsidies to private employers, and chapter 9 discusses economic development programs, labor market intermediary programs, minimum-wage regulations, and efforts to reduce employment discrimination.

    Although the issues analyzed in chapters 7 through 9 vary with the program, some of the questions addressed are similar. What are the shortrun and long-run effects of these programs on the employment and earnings of the poor? What effects do these programs have...

  12. 8 WAGE SUBSIDY PROGRAMS
    (pp. 204-248)

    An alternative to the “big government” solution of public-service jobs for the disadvantaged is the “market” solution of subsidizing private for-profit employers to hire or employ the disadvantaged. As we will see, in practice the market solution may be effective only with considerable government management.

    In this chapter, I first introduce some of the issues involved in providing private employers with wage subsidies for the disadvantaged. I then consider the history of wage subsidy programs in the United States before going on to discuss research findings and analyze some proposed wage subsidy programs.

    Wage subsidies for the disadvantaged provide private...

  13. 9 OTHER LABOR DEMAND POLICIES THAT MAY AFFECT THE POOR
    (pp. 249-285)

    This chapter considers several labor demand policies that have a primary purpose other than aiding the poor but that may nonetheless have potential for helping the poor. In contrast, the demand-side policies discussed in previous chapters—public—service jobs and employer wage subsidies—are primarily rationalized as ways of increasing the earnings of the poor and disadvantaged.

    The policies considered in this chapter include: state and local economic development policies, with special attention to enterprise zones; labor market intermediary policies; antidiscrimination policies; and minimum-wage and living wage policies. All of these policies would have plausible rationales even if they had...

  14. 10 A SUGGESTED PACKAGE OF LABOR DEMAND POLICIES
    (pp. 286-302)

    Given this book’s findings, what labor demand policies would most effectively increase the employment and earnings of low-income Americans? This concluding chapter focuses on answering this question. The demand policy proposed here emphasizes a program of short-term labor demand subsidies, to both public and private employers, that are targeted at low-income Americans who otherwise would be out of the labor force.

    As argued in this book, a labor demand policy to increase the employment and earnings of the poor is needed because current employment rates for the poor are much too low and labor supply policies by themselves cannot sufficiently...

  15. Appendices
    (pp. 303-406)
  16. NOTES
    (pp. 407-436)
  17. REFERENCES
    (pp. 437-464)
  18. Index
    (pp. 465-475)