Workforce Development and the Disadvantaged: New Directions for 2009 and Beyond

Assesses the 1998 Workforce Investment Act's successes and limitations. Outlines the changes needed, such as increasing funding and consolidating programs, for a more effective public workforce training system, especially for the young and hard-to-employ

Reconnecting Young Black Men: What Policies Would Help?

The term "disconnected youth" refers to young people who have been out of school and out of work for considerable periods of time – like a year or more. They are not temporarily "idle" but are fully disconnected from the mainstream worlds of schooling and work. They may be incarcerated or on parole or probation; they might be aging out of foster care or still attached to their nuclear families. But, overwhelmingly, they come from low-income families and often grow up in poor and relatively segregated neighborhoods. Of all racial and gender groups, young black men are by far the most likely to become "disconnected" from school and work. In the year 2000 – when the labor market was very tight – over 17 percent of all young black men between the ages of 16 and 24 were disconnected, while the comparable percentages for other race/gender groups were much lower. Indeed, this figure implies that one out of every six young black men was disconnected from both school and work at that time

Wages, Employer Costs, and Employee Performance in the Firm

In this paper I use data from a survey of firms to estimate the effects of a firm's wage level on several measures of its hiring costs and the characteristics and performance of its employees. These measures include the previous experience and current tenure of its employees; subjective productivity scores for these employees; job vacancy rates; perceived ease of hiring qualified workers for the firs; and hours spent hiring and training new workers. In doing so, I distinguish the case of high wages imposed on s firm by unions from that in which the firm might be choosing its wage level in order to maximize its profits. I also provide some rough measures of the extent to which firms offset their high wage costs in each case. The results show generally positive effects of firm wages on employee experience and tenure as well as on subjective productivity scores. The firm's wages generally have negative effects on job vacancy rates and positive effects on the perceived ease of hiring qualified workers. Training time is also reduced. While the magnitude of each individual effect may not always be large or even significant, their combined effects suggest that firms offset a good deal of their higher wage costs through improved productivity and lower hiring and turnover costs among their employees.

The Determinants of Employee Productivity and Earnings: Some New Evidence

This paper uses data from a nationwide sample of firms on employee wages and characteristics to reexamine the determinants of employee productivity and earnings. The data include several measures of job experience, training, and both worker and firm characteristics as well as subjective employer productivity ratings and earnings of workers. Given observations on the same individual at different points in time, we can consider both levels and changes in earnings and productivity, with various firm- and job-specific effects eliminated from the latter. The results show that: 1) Both previous experience and tenure in the current job have significant, positive effects on wages and productivity. Previous experience effects are found primarily on levels of wages and productivity while tenure affects occur for both current levels and changes. 2) Hours of training are positively related to productivity and wage growth but generally not to levels of either. 3) Among demographic characteristics, we find productivity growth and current productivity levels to be slightly higher for females while their wages are significantly lower. Other determinants of earnings and productivity ratings (e.g., such as various types of incentive pay and the fraction unionized) are considered here as well.

On the Rationality of Black Youth Unemployment

In this paper I provide some evidence on the question of whether the behavior of unemployed young blacks, whose reservation wages are relatively high and whose jobless spells are very lengthy, reflect rational maximizing choices. To do this, I use a simple income-maximizing job search model to imply employment probabilities and various elasticities which are compared to those which are actually observed for young blacks.The results show that, for reasonable discount rates, the employment probabilities implied by income-maximization are consistent with those observed for young blacks. The elasticities of reservation wages with respect to nonwage income that are implied by income-maximizing are also consistent with those estimated econometrically for this group. This was true despite the many assumptions embodied in this model whose validity fora sample of low-income youth is highly questionable.The evidence thus suggests that young blacks are making economically rational choices by choosing high reservation wages and lengthy spells without jobs.

Search Method Use by Unemployed Youth

In this paper I investigate the use of different search methods by unemployed youth. I present a job search model which shows that search method choices should be related to their costs and expected productivities, as well as other factors such as nonwage income and wage offer distributions. I then present empirical evidence on the use of these methods and their effects on employment outcomes. These results show that the most frequently used search methods, which are friends and relatives and direct applications without referral, are also the most productive in generating job offers and acceptances. Econometric evidence then shows that the number of methods used is affected by factors which presumably reflect market opportunities as well as income sources and needs. While the use of specific search methods respond differently to these factors, they are chosen in a manner which generates positive average effects on employment outcomes for those who use them. The results are thus consistent with the search model presented here.

Immigration Policy and Less-Skilled Workers in the United States: Reflections on Future Directions for Reform

This paper reviews the evidence on the effects of less-skilled immigration to the U.S., and their implications for immigration reform. It begins with a review of the costs of less-skilled immigration, in terms of competition to native-born American workers; and the benefits of such immigration in the form of lower consumer prices, higher employer profits, and greater efficiency for the U.S. economy. Effects of different legal categories of immigrants and of immigrant integration over time are considered. The paper then reviews various reform proposals and other ideas that might raise the net benefits associated with less-skilled immigration to the U.S.immigration, employment, less-educated workers

Structural/Frictional and Demand-Deficient Unemployment in Local Labor Markets

This paper uses data on unemployment rates and job vacancy rates to measure structural/frictional and demand-deficient components of unemployment rate differences across local labor markets. Data on occupational and industrial distributions of unemployed workers and vacant jobs, as well as on local wages, recent sales growth, Unemployment Insurance, and demographics are then used to help account for these components of unemployment across local areas.

The Impact of Unions on the Labor Market for White and Minority Youth

This paper presents estimates of the effects of unions on the wages of young black and white males who are both union and nonunion workers. It also presents estimates of union effects on employment for these groups, as well as their union membership rates. While unions have a very substantial, positive effect on the wages of young union workers, particularly for young blacks, they have a negative effect on the wages of young blacks who are not unionized. The effects of unions on employment are negative for both groups and especially for blacks. As for the relative access to unionized employment, young blacks within the labor force have membership rates that are roughly comparable to those of young whites. However, rates for young blacks appear to be somewhat lower after accounting for differences in rates of labor force participation between young blacks and whites. Young blacks also continue to be under-represented in the crafts and construction industries, which are heavily unionized, while being overrepresented in the relatively nonunionized, low-wage service sector. These results suggest that increasing the access of young blacks to unionized employment would improve their positions in the labor market.