Charles Murray on the role of economic forces

by on March 10, 2012 at 12:20 pm in Books, Economics, Education | Permalink

This has been debated by Brooks, Krugman, and around the blogosphere, so let us hear from the man himself:

“OK, let’s try this,” he said. “If you get a rising economy, for example, if Barack Obama could say we are going to bring on seven years of incredibly low unemployment, then he would argue that this would do a lot of good to the working class, wouldn’t he?” I agree. “But we already had that in the 1990s, and yet the dropout from the labour force continued to go up, people on social disability went up. Divorce went up. We have no evidence that a robust economy has much to do with these problems at all.”

I point out that many employers complain of a shortage of skills – a large chunk of America’s workforce is not as well equipped as it used to be relative to the rest of the world. If you don’t have the skills to make a living, how can you feel pride in your situation? “Well, that’s a different problem,” says Murray, looking suddenly uninterested. “If you are arguing that 22-year-old men are saying to their girlfriends, ‘I just need a job and then I’ll behave responsibly …’ Well, that’s just bullshit. If you ask women in working class communities, they will say, ‘Why should I marry these losers? It’s like taking another child into the household.’ ”

That is from his FT interview, I am not sure if it is gated for you.  The closing paragraph is this:

I feel mildly guilty at having spoiled Murray’s jovial mood but he quickly bounces back. The bill arrives. I disguise my shock at its size. As we get up to leave, Murray says: “Here is an interesting commentary: I was willing to talk to the Financial Times under the influence of alcohol but I’m not willing to play poker under the influence. What does that say?” Don’t worry, I reply, you won’t lose your shirt. Murray laughs. As we are shaking hands, he adds, “I really enjoyed that. We must do it again some time.” Then he strides off in what looks to me like a straight line.

1 TA March 10, 2012 at 12:41 pm

Not gated.

2 gwern March 10, 2012 at 1:01 pm

Not gated for me either.

3 Dredd March 10, 2012 at 12:42 pm

Economic forces are the strongest forces in some nations of current civilization, especially the U.S.A. The government, according to NY Times, Hardball, and Morning Joe, allowed Saudi Arabia to kill 3,000 Americans because the Saudi’s have so much oil.

That is strong economic force wouldn’t you say?

4 asdf March 10, 2012 at 12:48 pm

“If you are arguing that 22-year-old men are saying to their girlfriends, ‘I just need a job and then I’ll behave responsibly…”

There are a lot of men this is probably true for. Men know, instinctively, that unless they make more money then their spouse the relationships can never be serious or a family formed. So if they consider their chances of getting a good job slim they will likely not try to do the other things necessary to become a family man.

5 Max Tower March 10, 2012 at 3:39 pm

What incentive does a man have to become a family man these days?

6 JonF311 March 10, 2012 at 4:25 pm

Same as ever though it is true that most people (not just men) do not want large families the way they used to.

7 Tom March 14, 2012 at 11:26 am

@Max Tower
>What incentive does a man have to become a family man these days?

Not as many as the serious disincentives, I would suppose.

There’s an elephant lurking in the room of American society & life: Divorce

Family courts and assymetric, even punitive treatment of men. It’s impolite, possibly career limiting, to talk about it in academia. The mainstream media can’t publish it, except in the form of little human-interest snippets; never presenting the bigger picture. But at the grass roots, the word gets traded around.

Almost every guy knows someone whose life has been destroyed by a divorce court: guys making 6-figre salaries living in poverty, Kafkaesque situations like guys being thrown in jail after losing their job, because they didn’t make their court-ordered support payments, but then they get out and can’t get a job because they’ve been in jail.

You hear it in casual locker room banter: This is an actual quote from a fairly ordinary guy “Marry a girl, lose half your assets when she gets tired of you, then you get to pay for her to sleep with another guy in your house: I don’t think so”

The “lose half your money” thing is a shibboleth, a cultural byword among guys nowadays. As is the perception that you can be jailed, often on tactical abuse charges, find yourself working long hours to live in grinding poverty, and be cut off from ever seeing your kids.

There’s a Great Divide, in that the prevailing counter-perception among women is that you take a risk of ending up in grinding poverty with the responsibility for children who aren’t being visited or nurtured by their father. There are probably very few women, or men, who haven’t encountered a woman in that situation. Both happen, probably far less than supposed by the average Joe or Jane. But perception is what’s behind action, or inaction, in the case of men & women deciding not to marry.

Guys & dolls still harbor romantic views of having a soulmate for life, a regular sex companion, and happy kids bouncing around, but they can’t ignore the horrors they’ve seen occurring around them. And there’s a polite nose-holding, an unwillingness to talk about it, in public discourse.

8 derek March 10, 2012 at 3:43 pm

I’d back up a bit and say that if men can get sex without taking responsibility, many won’t. At one time a man could not become a family man unless he had shown some stability and ability to be employed and care for a family. I would suggest that the desire for sex has been one of the primary socializing influences on men for centuries.

If a woman is having sex with a man, then demands he smartens up and gets serious about a job, I think she has it backwards.

9 JonF311 March 10, 2012 at 4:25 pm

Men could alays get sex without responsibility. See: prostitution.

10 Harold Lloyd March 10, 2012 at 5:39 pm

But now they can get sex without status drawbacks, indeed the more sex one gets the better it seems

11 JonF311 March 10, 2012 at 9:53 pm

Maybe. But this is true for all men, rich, poor, middle class. It begs the question of why family formation fails in some demographics and not in others. And since that failure correlates very strongly with income, why not posit an economic cause for it? Surely Occam’s Razor suggests as much?

12 celestus March 10, 2012 at 6:01 pm

That would be pretty tough for unemployed/underemployed men to do on a regular basis.

13 derek March 10, 2012 at 8:06 pm

Sure. You need money for that as well.

14 JonF311 March 10, 2012 at 9:56 pm

You need some money to get a date with a woman too. It’s not like women are standing around just free for the taking. Maybe there are a lot more “loose” women than there used to be, but they are not “free” women. Overall I would suggest that it still costs more to establish a new sexual relationship than to just pay for the ladies of the evening.

15 derek March 10, 2012 at 11:30 pm

I think you are not recognizing the change that the sexual revolution produced. The ease with which a young man can have sex with no strings attached is remarkable compared to previous generations. I’m not describing some imaginary utopia either. The costs were real for women, pregnancy meant dependence on a breadwinner.

The town I live in was a very prosperous centre for mining in the area at the turn of the last century. Small town, has always been around 10k, but it had 5 whore houses, all the Canadian banks had very fancy branches. The miners would show up with their money and spend it on partying and women. There was money available, and the services were provided in return. You didn’t see the same density of those types of services beside the grain elevators in the prairie provinces for the simple reason that the money wasn’t available.

There were always times and places that were exceptional, but generally the expectations and behaviours were that women would have sex with someone who could look after the resulting children. Oddly enough those expectations ended up imposing the discipline that resulted in prosperity.

16 asdf March 11, 2012 at 4:52 am

If your a good looking man, its practically free.

If your a bad looking man the asking price on regular sex starts somewhere around middle class, though you really need to be upper middle class before a decent wife and a low chance of divorce are reasonable.

17 asdf March 11, 2012 at 4:56 am

It’s not as good, it doesn’t provide children, its dangerous, and its more expensive per bang (depending).

18 JonF311 March 11, 2012 at 4:46 pm

To the extent there are men who only want sex, not wives or kids, prostitutes are better than some random pick-up: the latter may well end up with them in child support peonage, the former not.
Of course Murray fudges his numbers by looking only at official marriage rates and ignoring common law marriages, which have become very common. Just because a woman with children is not married does not mean that she is a single mother. In a great many cases the father of her children is living with her and them and they simply dispense with a slip of paper from the county clerk and some clergyman’s blessing. The economic benefits of marriage exist mainly for the upper income strata; in fact lower income people are frequently better off financially not marrying and just living together. If you factor in these common law arrangements the picture is no where near so grim and dysfunctional as Murray is fretting about.

19 The Original D March 11, 2012 at 8:10 pm

True, but you get what you pay for, and to pay anything at all you will need an income.

20 teh_boy March 12, 2012 at 2:52 pm

The hypothetical male that we are talking about here is so heteronormative it hurts. Regardless, you are missing what has changed in this situation. Far, far fewer women need a man – especially a man who is a bit of a loser outside the bedroom – to provide for her. So not it isn’t ‘smarten up and get a job,’ but ‘you don’t have to go home, but you can’t stay here.

21 Seth March 11, 2012 at 11:50 am

I think he’s saying that the job is the effect of behaving responsibly, not the cause. The cause of behaving irresponsibly is not having to because the state provides positive feedback to support this behavior that offsets the negative feedback provided by society.

22 Rahul March 10, 2012 at 1:21 pm

Ed Luce has a great style; loved his writing more than what Murray really had to say (Do Brit’s make more enjoyable interviewers than Americans? ).

As an aside, Luce’s book “In Spite of the Gods” is one of the best books on modern India.

23 Hoover March 10, 2012 at 1:41 pm

“the loss of the tocquevillian virtues of industriousness, marriage, honesty and religiosity on which he says the republic was built”

I’m reminded of Ferdinand Mount’s book called Mind the Gap. It describes “a thriving culture of schools, Sunday schools, reading rooms, Nonconformist religion, collective insurance and trade unions. ‘It is not too much to say that the lower classes in Britain between 1800 and 1940 had created a remarkable civilisation of their own which it is hard to parallel in human history: narrow-minded perhaps, prudish certainly, occasionally pharisaical, but steadfast, industrious, honourable, idealistic, peaceable and purposeful.’

And then this civilisation was dismantled.”

His solution: “‘Only a wholehearted, even reckless opening up of genuine, substantial power to the bottom classes is likely to improve either their self-esteem or the view which the managing classes take of them – which is what makes the managing classes so reluctant to effect any such transfer.’”

24 NAME REDACTED March 11, 2012 at 4:42 am


25 Unsympathetic March 11, 2012 at 2:30 pm

Bullpucky. Quit idealizing past civilizations that never existed except in the fantasy corners of your mind.

Those “past civilizations” had a lifespan under half of today, labor abuse was considered appropriate, women and non-whites had no vote, regulations on finance did not exist and therefore banks busted all the time, a white woman had on average 5.5 births before the age of 40 in the US, one out of every 5 children died during childbirth, and most importantly nobody had any fckng money except the top 1%.

Charles Murray is nothing but an apologist for the super-rich. “Values” today are far, far improved when compared to “values” of the past.

26 MZT March 13, 2012 at 2:12 am

“women and non-whites had no vote”…and neither did the lower class average men being discussed here…a key point for feminists to remember is that women and the vast majority of men got the vote at approximately the same time…that is the time period around the end of WW I, and therefore women were not democratically disadvantaged in comparison to the average man in 19th or early 20th century society.

27 Norman Pfyster March 11, 2012 at 7:48 pm

I’m assuming this model British lower class excludes the drinking class?

28 Willitts March 10, 2012 at 2:11 pm

If a drunk person perceives a drunk person walking in a straight line, is that a random walk?

29 Another Rahul March 10, 2012 at 2:23 pm

Was Luce’s treatment of Murray in the article a bit mean spirited? He made him out to be a big drinker and a sponger. Never mind a gambler as well. Not the genteel image of a social scientist.

30 dearieme March 10, 2012 at 8:44 pm

“Not the genteel image of a social scientist.” By God, things must have changed since my day.

31 Jason March 10, 2012 at 2:23 pm

As an aside, I think this statement by the interviewer (and then the discussion at the link) miss the point:

“I point out that many employers complain of a shortage of skills – a large chunk of America’s workforce is not as well equipped as it used to be relative to the rest of the world.”

Shortages = price too low. Just like parking in the US and bread in ye olde Soviet Union.

32 Matt Waters March 10, 2012 at 4:16 pm

In defense of those employers, there are many issues at work here. They could certainly raise salaries and/or have more investment in training, but those actions would also require an increase in price to keep the same profit margins. You would think that if they really had a glut of demand, they would increase prices until demand met supply. Managers still have a lot of fear though after the huge downturn in demand in 2008 and, even if increasing prices would maximize their profits, they may be very reluctant to do so.

But I agree in general, any employer arguing that there isn’t enough applicants smacks me of either blatant entitlement to cheaper-than-market workers, economic ignorance or both. In the end, the less entitled managers who earn money by managing better instead of trying to somehow trap workers to lower-than-market wages will win out.

33 Daniel Dostal March 10, 2012 at 5:18 pm

None of what you said has explanatory power. Why are the prices too low? Especially when supply vs demand suggests the prices and supply should be increased?

34 Rahul March 10, 2012 at 9:39 pm

What if labor finds your price too low yet machines are willing to work at that price-point?

35 Matt Waters March 10, 2012 at 10:10 pm

Then machines would fill the gap in demand until there is not glut of demand.

Let’s put this another way. Let’s say tomorrow, Obama says no gallon of gas could be sold for over two dollars. A huge shortage and glut of demand would happen overnight.

The business owners in the article say that, if they could just hire more people at the same price, then they would see more revenue. What they’re really saying is that their business is in a situation like two dollar gas above. The difference is that there is no price cap and they could rise prices until there is no demand glut/supply shortage.

They may be right that there is a demand glut, or they may just be posturing or ill-informed. If there is a demand glut, then prices and wages aren’t rising to meet demand due to some sort of economic friction, irrational fears of raising prices or leaving for another job, or some other real-world market imperfection.

36 Seth March 11, 2012 at 11:37 am

I’ve been hearing employers complain about this for 4 decades.

37 John Bullock March 10, 2012 at 2:27 pm

seven years of incredibly low unemployment […] we already had that in the 1990s, and yet […] Divorce went up. We have no evidence that a robust economy has much to do with these problems at all.”

Where is Murray getting this? According to the US Statistical Abstract, divorce declined during the 1990s. See (And on the calculation of divorce rates.)

38 NAME REDACTED March 11, 2012 at 4:43 am

He discussed this in other books. The welfare state creates a lot of these problems.

39 Unsympathetic March 11, 2012 at 2:32 pm

Nice strawman you’ve got there. It’d be a shame if anything should happen to it.

40 Unsympathetic March 11, 2012 at 2:31 pm

He’s lying and hoping you don’t fact-check him. Just like everyone on Faux News.

41 Unsympathetic March 11, 2012 at 2:38 pm

You’re just another typical fascist Republican.

Your position is objectively wrong, and you can’t defend yourself without threats of violence when challenged.

42 The Original D March 11, 2012 at 8:14 pm

Now now, children, remember that a good vs. evil frame automatically lowers your IQ by 10 points.

43 jfeit March 10, 2012 at 2:43 pm

@Jason: Is it your contention that the return to human capital is too low? I’d agree that skilled wages are too low, especially for ‘low-level’ skilled work. Many of the ‘good jobs’ whose losses we bemoan were once union jobs. While unions can clearly introduce inefficiencies into the labor market, many would argue that those inefficiencies are simply the societal cost of the existence of a middle class. Anyway, Jason, just wanted to make sure I properly understood your point.

44 Foobarista March 10, 2012 at 3:00 pm

One of the ironies of desegregation in the 60’s and 70’s was it allowed skilled and capable Blacks to leave their original communities, leaving many not-so-skilled behind. This is obviously a generally good thing, and it was hugely unfair that generations of such people weren’t allowed to leave. But it left their old communities with a lack of role models and people who could be the core of a working local society – nowadays, such people will go to university and get good jobs “outside” instead of being “stuck” in the community.

Extend this to women and get rid of numerous other impediments that hindered everyone, including poor whites and immigrants. Now, you have a functioning meritocracy, and all that’s left in the poor neighborhoods are people who don’t have whatever it takes to function well generally: they often make bad decisions as kids (our education and credential-heavy world is extremely unforgiving to such), and they don’t have a lot of role models in their families with the collapse of marriage (which, among other things, effectively kills the extended family, so you don’t even have that uncle who’s a successful contractor that you could go work with to get into construction). Add to that associative mating (so very few accomplished men marry working-class women, so they aren’t visible role-models), and you have a really sticky situation.

45 Amy March 10, 2012 at 3:09 pm


“In the 1960s, America’s wealthy brought Buicks rather than Cadillacs, which were then the flashiest cars on the market. They may have been rich but their tastes were still middle-class.”

combined with:

“Our black truffle has arrived. Murray’s martini glass is empty. The waiter pours him a taster from the bottle of Gavi di Gavi, an Italian white wine. ‘Mmmm, it’s like a good Montrachet,’ Murray says.”

46 Frank Broder March 10, 2012 at 3:40 pm


“the Republican party, to which Murray is something of a patron saint”

Edward Luce, former Larry Summers speech writer, seems both clueless and an asshat.

What is it about these so snide Europeans. Is snark and attitudes suppose to be some sort of close substitute for being interesting or having talent?

We’ve gone from Hunter Thompson & Tom Wolfe to this?

47 Hoover March 10, 2012 at 4:39 pm

“What is it about these so snide Europeans?”

We’re snide and European.

48 Mercer March 10, 2012 at 4:04 pm

I find it hard to reconcile someone who believes that:

” elites in America have become so tolerant – afflicted with such “ecumenical niceness”, as Murray calls it – that they cannot bring themselves to “preach what they practise”.

Also likes to:

“plays poker at a casino in Charles Town, West Virginia, and that he will, in fact, head over there after our lunch has finished. “The ways in which it reinvigorates your confidence in America”

Gambling boosts his confidence in America? Is this how Victorian values worked? Did he preach about the virtues of thrift and hard work to the lower classes in the WV casino?

49 Greg Ransom March 10, 2012 at 10:06 pm

Truman & Nixon were big poker players .. you know what lazy spendthrifts those guys were.

Stupidity doesn’t constitute an argument against Murray.

50 Chuck Rudd March 11, 2012 at 4:58 am


I think you miss a different point though. Murray’s bag has always been that the cognitively deficient are unable to handle their vices as the cognitive elite (or cognitively sufficient). A guy like Murray will never go broke playing poker but a lotto winner who was previously poor is apt to squander most of his wealth. One major shortcoming of Murray’s argument – given that he is a libertarian – is that unconstrained freedom harms the lower classes and cognitively deficient. Economic freedom, which Murray supports, is more debilitating to those groups than to people in the higher classes and with higher IQ. So how does a libertarian square that circle?

51 Unsympathetic March 11, 2012 at 2:36 pm

Murray’s a mendacious liar. He actually believes that the super-elite are better people, and no rules actually apply to them. Therefore he’s not best viewed as a libertarian, but rather just another oligarch.
Morality/”values” are for the hoi polloi, not for the super-rich – because the super-rich have already won the game and aren’t bound by those silly rules.

52 The Original D March 11, 2012 at 8:18 pm

If the rules don’t apply to the super rich, why then does he advocate that they “preach what they practice?” His argument is that even though they are wealthy, they nonetheless place constraints on themselves because restraining your animal spirits are important for creating wealth in the first place.

53 JonF311 March 10, 2012 at 4:23 pm

Re: But we already had that in the 1990s, and yet the dropout from the labour force continued to go up

Is this from some alternate reality? Labor force participation peaked in the late 90s then fell with the crash recesson, so yes, that era’s rising economic tide really did lift all boats.

54 Ranjit Suresh March 10, 2012 at 4:47 pm

Murray is referring to the decades-long decline in the male labor force participation rate.

The percentage of adult men under retirement age working has been in secular decline since the 1950’s.

55 JonF311 March 10, 2012 at 9:59 pm

In other words it’s been in decline since before the sexual revolution, before second wave feminism, before outsourcing, globalism and automation, before inequality exploded, before just about every possible explanation Left or Right could offer.

56 JonF311 March 11, 2012 at 4:51 pm

OK, so we increased the side of the labor pool and more people dropped out of it. I don’t think we need to posit anything specific about the sexes here. After all the labor pool size is increasing due to immigration as well.

57 dearieme March 10, 2012 at 4:24 pm

A man who is sound on Gavi should not lightly be dismissed.

58 Five Daarstens March 10, 2012 at 5:14 pm

In the IT field, companies want you to have a slew of the latest and greatest skills, but the worker has to somehow acquire them on his own time and money.

59 Dan Hanson March 10, 2012 at 5:30 pm

Something which is not at all hard to do. Professionals are expected to stay current with their industry.

The current, most in-demand programming languages right now are C#, HTML5, Java, Javascript, and the various open libraries and frameworks for building web pages.

Access to all of this stuff is completely free. You can go to Microsoft today and download visual studio express and start coding. You can code HTML in notepad and try it out in your browser. The internet is just filled with free training. There is absolutely no excuse for not keeping up to speed with the changes in your field. Yes, you have to do it on your own time. That’s always been true in engineering – it’s one of the reasons professionals get paid larger salaries – they’re expected to keep up with current practices in the field, and to do it on their own time.

If you want to write for Apple products, so long as you have a mac you can get all the developer tools for free. The same is true for Android and Windows Phone 7. If you want to do database programming, MySQL is a fully-capable database, and it’s completely free. It has never been easier for someone to get themselves set up with excellent tools for little to no money.

I began professional software engineering over 20 years ago. Not a single language or technology that I use today existed then. All of it had to be learned, and most of that learning tool place on weekends and evenings while I worked on other things in my day job. I have no sympathy for someone who interviews for a job that pays $60,000-$100,000 per year, but who isn’t familiar with the basic current practices in her or her chosen field.

60 NAME REDACTED March 11, 2012 at 4:48 am

“C#, HTML5, Java, Javascript”

yes he’s in management.

61 asdf March 11, 2012 at 4:53 am

IT workers making $60-100k are either entry level or bad at their jobs.

62 Engineer March 11, 2012 at 5:58 am

Companies aren’t interested in knowhow that you acquired on your own time.

It’s one thing if you made a major contribution to an open-source project, but if your day job was coding in c++ you are not going to get a mysql job just because you learned it in the evenings.

And everyone who I know works hard, has a long commute, and spends their sparetime with their families.

63 The Original D March 11, 2012 at 8:22 pm

Not where I live (Boulder, CO). Google has been expanding like crazy here, and part of the reason is they can promise a great quality of life.

64 The Original D March 11, 2012 at 8:20 pm

For IT workers, now is the best time in history to self-educate, and it’s practically free.

In my experience the best IT workers are the ones who so love IT that they have a burning desire to acquire those skills on their own.

65 Charlie March 10, 2012 at 5:30 pm

Murray sounds awesome. I would love to have have drunken dialectics with him. I’m sure we’d find a lot to disagree about, but I think I’d really enjoy it.

66 Rahul March 10, 2012 at 9:33 pm

….especially if you got someone to comp the wine and truffles.

67 Claudia March 10, 2012 at 8:56 pm

Again this interview gives me little hope in viable solutions. Murray’s book makes a compelling case about the long trends of class division (even if he’s not enthusiastic about delving into the economics). One part of the book that struck me is when he glorified how everyone used to think of themselves as middle class. That fantasy is over now … the lower class can’t get the factory jobs and the upper class like Murray eat up their expensive pasta gleefully. The reinstituion of a Victorian-like era seems completely unfathomable. Maybe the upper class (with some exceptions) don’t tell other people what values they should have because it’s none of their business? In any case, I’d be shocked if lower classes listened to a lecture on values from Murray or his elite contemporaries…money talks more loudly. Still I think these discussions of a hollowing out of the middle in the US are important.

68 Rahul March 10, 2012 at 9:32 pm

Isn’t Murray’s paternalistic prescription that the elite “preach” to the underclass at odds with his libertarian ideology?

69 Bob March 10, 2012 at 10:07 pm


70 NAME REDACTED March 11, 2012 at 4:50 am

Why can’t the left tell the difference between evangelism and force? Libertarians are all for preaching, and evangelism, just not for using force.

71 Matt March 10, 2012 at 10:47 pm

So Murray writes “…If you ask women in working class communities, they will say, ‘Why should I marry these losers? It’s like taking another child into the household.’ ”

I wonder how much time Murray has spent around women in working class communities observing their habits, attitudes, physical appearance, etc.. I’m sure there are many men in working class communities asking themselves the same question about the women.

72 maguro March 10, 2012 at 11:16 pm

In fairness, it’s not easy to find a good Montrachet at Wal-Mart.

73 NAME REDACTED March 11, 2012 at 4:52 am

He’s spot on. Most women I have talked to seem to compare their husbands to children, and see men as just another child they have to take care of. This is also true for the upper classes, but the difference is upper class men also give the women status by virtue of the marriage lower class men don’t give their women more status in marriage.

74 JonF311 March 11, 2012 at 4:54 pm

Haven’t the sexes always kvetched a good deal about each other? “Why can’t a woman be more like a man”? “Gonna wash that man right out of my hair”. And per Kaherine Hepburn, “Men and women ought live next door to each and just visit”.
Sounds like we are taking something universal in human life and pronouncing it evidence of pathology.

75 Murray, no relation March 11, 2012 at 12:39 pm

Murray is wrong. The labor participation rate went UP

76 Murray, no relation March 11, 2012 at 12:40 pm

Murray is wrong. The labor participation rate went UP during the 90’s, when wages were increasing. It went down during the 00’s, after the brief recession, and after tax cuts, btw.

77 Tim March 12, 2012 at 2:28 pm

Not among men – male labor force participation has been monotonically dropping since the early 60s.

78 Eric March 12, 2012 at 12:13 am

In regards to the discussion over employers not being able to find qualified workers because they simply weren’t paying enough, here is why that is generally wrong. First, most businesses live in a competitive environment where they are limited in their ability to pass cost increases on to their customers. For it to be worthwhile for a business to hire an employee, the marginal value that the employee creates must exceed his/her marginal cost. A person may not be willing to work for the price that the employer is able to offer based on competitive constraints. Perhaps he feels better off on unemployment or social assistance than if he took the job at market wages. Of course, this is not good for society as there is a limit to how many can be supported in this way. On the other hand, the path to higher wages lies in creating more value for the employer so that they will pay more to retain such an employee. In today’s globalized world, government coercion to force companies to pay higher wages is counter productive. The only sustainable way to raise wages is through employees that recognize that what they contribute to a company’s profitability eventually determines their compensation and job security and through companies that recognize and reward these employees properly.

79 anonymous March 12, 2012 at 1:40 pm

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