Key Considerations In Employment Policy

1.  To have sustainable high wages you need both high productivity and employee bargaining power. Both are necessary. Neither is sufficient by itself.

Automation, for example, can increase productivity, which meets one of the conditions for higher wages for the employees that remain in a firm when a process is automated. But, this only actually translates into higher wages if the employees have enough bargaining power to secure some of the gains from higher productivity that the firm doing the automation would otherwise capture.

2.  Jobs are not a fixed resource. Unemployment is not due to a shortage of jobs. Beyond the unemployment level seen in "full employment" (by which economists mean the level of unemployment caused solely by natural transitions between one job and another by people seeking jobs), unemployment is a collective failure of entrepreneurship.  It happens because firms, collectively, haven't come up with any profitable way to use what people who don't have jobs have to offer in the short term.

A corollary of this is that immigration doesn't inherently "take" jobs. Immigration injects more resources into the system increasing the total pool of resources available, and this could increase or decrease unemployment, depending upon the ability of firms to find things for people in the labor force to do relative to what it could find for people to do in the pre-immigration situation. It is intimately related to Say's Law.

Likewise, it isn't really accurate to say that automation reduces the supply of jobs, collectively. It eliminates particular jobs, but frees up the people who used to do those jobs to do something else. Automation only necessarily creates unemployment when the people who lose their jobs as a result of automation aren't able to do any work doing anything else that has economic value.

3.  While workers do have specific skill sets that aren't inherently hierarchical, for the most part, there is a hierarchy of workers such that workers able to do more skilled, higher level jobs are also able to do less skilled lower level jobs, while the reverse is not true. Collectively, managers can mostly do what the employees they supervise do, while supervised employees are usually not able to do what their managers do.

4.  Lots of educational requirements for employment (and a fair number of other requirements for experience and particular skills and experiences) are simply indirect tests of IQ, work ethic, social skills, and social class that are used to weed out applicants. Outside the STEM fields and academia, most jobs do not require the knowledge acquired in the course of getting that education to be performed well. Conversely, some of the specific skills that are critical to doing a job are often not taught in the formal educational program whose completion is required to be hired for a job.

5.  Employment discrimination laws had a powerful effect, but this effect was not largely due to fear of enforcement. Instead, the effect arose mostly because it changed institutional culture and because many firms obey the law as a matter of uniform policy without regard to the consequences for not doing so.

6.  A majority of people in the society are not in the paid workforce. They may be in school, they may be preschool children, they may be homemakers, they may be retired or disabled. The economy needs to have people who have the responsibility and the means to provide for everyone who is not in the paid workforce for society to work well.

7.  Automation is a two way street. On one hand, it makes workers more productive, making it possible to pay them more. On the other, the incentive to automate is highest when the cost of labor is high and employers need to automate to make their businesses profitable.