1 making labor markets work jon forman alfred p. murrah professor of law university of oklahoma...

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Making Labor Markets Work

Jon Forman

Alfred P. Murrah Professor of Law

University of Oklahoma

First Annual Colloquium on Current Scholarship in Labor & Employment Law

Milwaukee, Wisconsin

October 27, 2006

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Share of Household Income

0

10

20

30

40

50

60

Poorest 20% Middle 20% Richest 20%

perc

ent

Free market After taxes & transfers

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Average Annual Earnings of Full-time Workers, 2004

Doctors $128,689

Lawyers 105,716

Economists 71,672

Nurses 53,289

Police 50,063

Auto mechanics 38,967

Secretaries 32,349

Garbage collectors 31,284

Orderlies 20,959

Waiters and waitresses 8,789

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Distribution of Earnings, 2004

$15,600 $26,000 $36,000$50,000

$84,000

$0

$100,000

$200,000

$300,000

$400,000

0 10 20 30 40 50 60 70 80 90 100

Percentile

Ear

ning

s

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Distribution of Workers by Earnings Category, 2004

0

1

2

3

4

5

6

7

8

9

10

11

12

< 0 15 30 45 60 75 90 105 120 135 150 165 180 195 210 225 240 >250

Earnings (thousands of dollars)

Per

cent

of

wor

kers

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Wages by Percentile, 1979-2003

$0

$5

$10

$15

$20

$25

$30

$35

$40

1979 1985 1991 1997 2003

Year

Dol

lars

per

hou

r 20

03$)

95th percentile

90th percentile

80th percentile

50th percentile

20th percentile

10th percentile

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Health Coverage of the Nonelderly, 2004

Source of Coverage millions percentage

Total population 255.9 100.0

Employment-based coverage

161.2 63.2

Individually Purchased 17.0 6.6

Public 45.5 17.8

Medicare 6.2 2.5

Medicaid 34.2 13.4

Military health care 8.1 3.2

No health insurance 45.5 17.8

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Clusters without Coverage

• Employees of small businesses• Workers who lose their jobs• Workers who decline employer coverage• Low-income parents• Low-income childless adults• The near elderly• Young adults• Children• Immigrants

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Transition to Expanded Coverage

• Tax Changes: cap the exclusion for employer-provided insurance at a fixed dollar amount and gradually replace it with a tax credit

• Employer Mandate: require employers to offer a plan, and automatically enroll workers

• Individual Mandate: require workers to get coverage

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Persons in Jail and Prison 1980-2004

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

1980 1984 1988 1992 1996 2000 2004

Year

Nu

mb

er

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Rate of Return to Investment in Education as a Function of Age

0 Age

Rat

e of

re

turn

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Minimum-Wage Earnings versus Poverty Levels, 1960-2006

$0

$5,000

$10,000

$15,000

$20,000

$25,000

1960 1970 1980 1990 2000Year

Ear

ning

s

Poverty level, familyof three

Poverty level, familyof four

Annual minimumwage earnings

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$2,000 per Worker Earned Income Tax Credit, With or Without a Phase-out

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$0 $20,000 $40,000 $60,000 $80,000

Earned income

Cre

dit A

mou

nt t

$2,000 per worker credit $2,000 per worker credit with phase-out

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Making Labor Markets Work

• Make Health Care Work• Vigorously Enforce Discrimination Laws• Reduce Incarceration Levels• Make Education and Training Work• Raise the Minimum Wage• Expand the Unemployment Insurance Program• Promote Unionization• Make Full Employment a Reality• Other ideas

– Regulate executive compensation– Restrict immigration– Promote worker safety