Real wages for the previously unemployed

Catherine Rampell reports:

Nearly 7 in 10 of the survey’s respondents who took jobs in new fields say they had to take a cut in pay, compared with just 45 percent of workers who successfully found work in their original field.

Of all the newly re-employed tracked by the Heldrich Center, 29 percent took a reduction in fringe benefits in their new job. Again, those switching careers had to sacrifice more: Nearly half of these workers (46 percent) suffered a benefits cut, compared with just 29 percent who stayed in the same career.

Comments

Clearly, this is persuasive evidence that there should not be tenure.

Academics should be encouraged to embrace and participate in the market. Why should value determined and locked in in period one have anything to do with value in period 2?

No price rigidity for academics either.

On the surface this seems to fit better into the recalculation narrative (to me), but here's my argument for the other side:

Picture this scenario: nominal wages have been sticky and flat in all industries but deflation in some industries has paralyzed those particular industries' hiring ability. Industries which have not experienced deflation are hiring about as often as they were a few years back because they are not forced to "overpay" for labor.

Also assume equal average pay across industries hit by deflation and those not, so it isn't say, simply a case of highly-paid Wall Street workers having to take jobs in lower paying industries. The reason the recently unemployed are more likely to take worse paying jobs is the usual reason when you change fields: you don't have the experience in that field to demand more.

Therefore, a massive switching of fields could be a result of insufficient AD combined with wage stickiness even without a general skill/demand mismatch.

Conversely, there's an argument to be made we're seeing "Hell, screw what I love, at least I'm going to get a paycheck" instead

How can this be surprising?

In your original field, you know a lot. When you switch fields, there is learning to be done.

I would hypothesize that pay increases after year 1, year 2, etc. would be higher after switching fields as you go up the learning curve -- and also because many people switch fields because there is more long-term opportunity in the new field.

It'd be nice to see some analysis of what this means to an economist. The rest of us are just guessing here. My guess is what I said above -- but I'm curious if this means anything to professionals.

Perhaps Steve Sailer can figure out how to pin this on illegal immigration. Who knows?

But why is this happening with the many tax cuts reducing the Federal tax burden by 25% from the crushing levels of 1997-2000 when incomes and benefits were rising? Why has putting more money in everyone's pocket and reducing the regulatory burden on business and Wall Street resulted in progressively lower wages and benefits over the past decade and the tax burden has been reduced?

dirk

Illegal immigrants are unskilled and decrease wages for unskilled laborers, people whose jobs require one day to one week to learn.

Legal immigrants are the ones that force you to change careers, or end them. They tend to be skilled, or to be students becoming educated/skilled, or to have relatives that can subsidise them while they are becoming skilled.

They don't compete with unskilled workers nearly as much as illegal immigrants.

It makes sense; if you're going into a brand new field, you obviously won't have experience to be able to command that higher salary. However, with the job market being what it is it may be extremely hard to find a job in your field expertise. Imho it's best out to hold out as long as humanly possible to find a job in your field and if you get to the point where you can't afford to eat and pay rent then just take whatever you can get.

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