Bryan Caplan  

My Advice for the Unemployed

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Babcock-Marks and Signaling... The Health Insurance Hurdle...
Non-ironically outsourced to Tyler Cowen:
Hey guys, lower your wage demands!  It's good for you!  You'll get a job and avoid the soul-sucking ravages of idleness.  It's good for the country!  It's good for Bernanke, you'll get those regional Fed presidents off his back!  Why not?  The best you can hope for is to get tricked by money illusion anyway!  Show up those elites and get to that equilibrium on your own!  Take control!
It's the same thing I'll be saying more pedantically during Weeks 3 and 4 of my labor econ class.


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COMMENTS (16 to date)
James A. Donald writes:

I am hearing a lot of anecdotes of smart, able, industrious people with long work histories and good credit ratings who have fallen straight into the underclass.

One problem with older workers may be uncertainty about health costs - it may well be that even if he is a highly productive worker who is willing to work for nothing at all, the employer may fear potentially losing a huge bundle on health care.

PeterW writes:

...Except of course for the signaling problem. The one guy who accepts lower wages is sending a signal that he can't really expect better, and due to this signal is less likely to be paid commensurately with his peers once the recovery starts.

eccdogg writes:

My wife runs the local office of a large engineering firm. They had student with a graduate degree in engineering offer to work as an intern (potentially for free) after graduation because she could not find a job.

They ultimately hired her full time. I don't think offering a low wage as an inducement signals that you are not worth much, but signals that you are someone who likes to work and stay busy.

To me the sales pitch is this. You don't want to make the investment in hiring me full time and I want full time work eventually. So I am willing to work for you in a cheap and temporary fashion so you can get a good look at me and I can gain skills. If I find a full time job I am gone but until then you get to take a look at me and get some cheap labor.

wlu2009 writes:

Unfortunately, a number of places around the country (New York in particular) are starting to crack down on the unpaid internship arguing that they violate the minimum wage unless a set of very strict conditions are met. Yet another example of how the minimum wage contributes to unemployment, even for the educated and high skilled.

Ironman writes:

Suppose you're an unemployed teen who would be really happy to land a first job paying the federal minimum wage. How might you go about lowering your wage to make yourself more attractive to potential employers? Or are you stuck in unemployment with your peers at today's 26.1% unemployment rate due to the ultimate example of Keynes' sticky wages?

Hyena writes:

Why bother with this? If you can survive on unemployment benefits, there is no excuse for either getting a job or succumbing "to the ravages of idleness".

There are libraries, there are cheap projects. Read something. Get a copy of Make. Learn to draw. Pirate some software and learn graphic design. Pick up a guitar from a pawnshop or beggar one on Craigslist. Go put your cognitive surplus to use.

If you're ramen profitable on unemployment, I see no reason to waste your life on a job. Go work on something of more value. If you can develop a skill which enriches your life, you'll probably garner more profits from the investment than you could have ever lost in missing wages.

Michael writes:

Hyena makes a great point. Why am I "wasting" my life on a job? I think I would like to join him in perfecting my guitar skills, especially since some of my work time appears to be keeping other folks in "Ramen". Does he have any suggestions as to a third party we can stick the bill to?

Lord writes:

Where is the advice to employers offer jobs, even at minimum wage. It will be good for you. You will gain customers and avoid the soul-sucking ravages of lack of demand. It's good for the country! Guess they aren't buying it either.

Ryan writes:

Not a bad idea... but I ask:

If we're all ramen profitable, then who'd make the ramen?

Douglass Holmes writes:

I agree with Hyena, in principle. However, if I had to settle for eathing Ramen, I would rather go back to work.

Hyena writes:

Ryan,

People who took their unemployed time to develop skills and moved on to things which pay better than the cap on benefits?

Evan Harper writes:

This coming from a guy with tenure.

Jacob writes:

Jumping Jehosephat, Tyler is callous... From what I hear and read, people HAVE been lowering their wage demands since the recession began, especially the highly educated. Most have not been able to find a job anyway. For every one job opening there are still about a half a dozen applicants. It's not like the unemployed enjoy feeding their kids on a $1200 a month unemployment check.

And if undergraduates are taking jobs that pay NOTHING, what are the unemployed supposed to do? PAY their employers to work? Blog like Tyler?

That was a really insensitive post.

PrometheeFeu writes:

Amusingly enough, after being unemployed for a long period of time, I finally found a job after almost doubling my wage expectation. To be fair, I did switch industry, (who would have guessed a Computer Science minor would be worth twice an Economics major) but still, I was going around for a while offering myself at x (the pay at my last job in finance) and finally got a job shortly after offering myself as 2x. Yes, N=1 is not very convincing, but I do think that signaling played a role.

matt writes:

amusingly, since I work as a contractor, this is basically how I work all of the time. I finish a job, and then look for the best rate I can find for my next one. Might be higher, might be lower, but there just needs to be one.

Rebecca Burlingame writes:

As to that ramen...I was wondering how many pounds of pecans I might need to pick this fall just to get some really tasty restaurant meals that I didn't actually have to cook myself. Good thing I like to pick pecans.

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