Institutional Failure and the American Worker, The Collapse of Low-Skill Wages

David Howell ()

Economics Public Policy Brief Archive from Levy Economics Institute

Abstract: Howell argues that the collapse of low-skill wages in the United States cannot be explained by a skill mismatch resulting from a technology-driven decline in the for low-skill labor. He presents evidence refuting the prevailing belief that a substantial shift in demand away from low-skill work characterized the 1980s. He asserts that a more compelling explanation for the growing wage gap can be found in fundamental changes in the institutions, practices, and norms that determine labor market outcomes--a return to a confrontational attitude toward labor by management, a shift to a laissez-faire approach to regulatory and redistributive functions by government, and management's adoption of low-road strategies to cut labor costs in response to competitive pressures.

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