Full Employment and "Good Jobs"

A blog about business and economics.
Sept. 21 2012 12:36 PM

Full Employment and "Good Jobs"

There's a lot that I often find frustrating about the conversation around "good jobs" so I was really glad to see Neil Irwin's piece about what we can learn about the economy from Darden Restaurants (Capital Grille, Olive Garden, Red Lobster) park this in the right place:

This isn’t to blame Darden; any employer pays only the wages it has to pay to get capable workers. It is instead an indictment of the U.S. economy as a whole. If the unemployment rate were 5 percent instead of 8.1 percent, it would surely be harder for Darden to find qualified chefs and waiters, and it would have to pay more. In fact, you would expect an industry that is growing as a share of the economy to see higher wage gains than shrinking industries, as workers’ training lags changes in the economy.
High unemployment means that workers at Darden don’t have the negotiating leverage to demand big raises; there is always another jobless worker around to take their job.
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Food service jobs are often considered "bad jobs" and they are in fact often bad. But this isn't a mystical property of restaurants. It would be profitable for Darden to give its workers' raises rather than close down restaurants if the workers started quitting in droves. But they're not, because the economy on the whole is weak. And there's just no substitute for full employment. Workers' skill levels will still put some kind of ceiling on their earnings power no matter what the state of the economy, but it's persistent mass unemployment rather than anything in particular about specific workplaces that drives wages into the floor.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.