Harvard is actually Vaulting Workers Into the Middle Class With High Pay. Can Anyone Else Follow Its Lead?
The university doesn’t calculate how much the item might save if the parity policy were not in place. although the committee appointed to study the issue in 2001 came up that has a rough estimate of $2.4 million to $3.7 million a year. in which is actually pocket change for an institution like Harvard, whose operating expenses last year approached $5 billion.
although as Mr. Summers pointed out, across the economy, better jobs may mean fewer jobs. If, say, Massachusetts were to introduce a similar policy for public services, the item might need to find the money. Taxpayers could provide the item — or the state could scale back services as well as cut jobs. as well as employers forced to pay more may attract better-trained workers, displacing less-educated ones.
There is actually a substantial body of research suggesting in which modest increases to the minimum wage will have only a tiny effect on employment. although there is actually almost no research on what might happen if a cook’s wage were set at $24, about twice the market rate. Most economists might probably agree in which the number of cooks might fall.
Research by David Neumark, a labor economist at the University of California, Irvine, points out in which inside parts of the economy most susceptible to automation, imposing a “living wage” might just accelerate the pace at which robots take over everybody’s job.
Still, various other economists suggest, Harvard’s innovation deserves a shot. As the noted labor economist Richard Freeman argued inside opinion pages of The brand-new York Times after the Discharge of the Katz Committee’s report in 2001, “Failure to spread prosperity widely has been the major failure in America’s economic success.”
Over the last 40 years, the earnings of workers inside middle of the distribution — half earn more, half less — have increased by an average of 0.16 percent per year, after inflation. in which is actually very close to nothing. Workers without a college degree make about $20 less a week, in today’s money, than they did at the millennium. that has a labor movement dwindling into insignificance — only 6.5 percent of private-sector workers are unionized — economists like Mr. Weil as well as Mr. Katz suggest in which brand-new institutions are needed to hold up the bottom half.
Alan B. Krueger, a labor economist at Princeton who headed the Council of Economic Advisers under Mr. Obama, argues in which the costs of introducing a parity policy like Harvard’s in various other workplaces might be “probably second order” — too smaller to matter. Higher pay, he noted, brings about efficiency gains: Workers who are paid well are more loyal. They will exert more effort for the company. the item’s worth the item even if they are more expensive.
Indeed, Mr. Krueger argues, “in which kind of policy is actually pushing firms to a better equilibrium.” via the standpoint of Massachusetts, he adds, think of all the brand-new tax revenue in which higher wages might bring about. By in which reasoning, considering the consequences of low wages across society — poverty as well as its contingent ills, family instability, addiction — policies to set a floor on the cost of labor could well justify their cost.