Certainly, a number of smart people have connected this lame economic recovery to income inequality. But why? Paul Beaudry and David Green continue their work on the changing U.S. labor market, noting in a paper that since 2000, demand for high-skilled workers has actually declined. That seems counter-intuitive, since it seems to matter more than ever that workers obtain the right skills. True, but having the right skills has become a necessary, but not a sufficient condition to employment commensurate with skill training. What Beaudry, Green and Sand document is a pushing-down of the labor market: with some high-skilled workers settling for lower-skilled jobs, lower-skilled workers are getting pushed down even further, and often into unemployment. That might help explain why this economic recovery still seems so unsatisfying.
Why did the labor market change in 2000? Beaudry, Green and Sand argue that the information technology revolution and the accompanying organizational changes first built up a huge stock of skilled labor to service that revolution, and then, once that market reached maturity — when a lot of "organizational capital" had been built up that ultimately replaces skilled labor — those markets wound up with a surplus of that skilled labor. BGS call this an “over-shooting property.” Doesn’t that sound like a lot of boom and bust cycles? Fishermen and oil and pipeline workers come immediately to mind.
What are the legal implications? Well, why do we have to put up with boom and bust cycles? Are there no legal interventions worth considering?