Welcome back to The Workweek, the Indeed Hiring Lab’s round-up of the latest research, news, and perspectives that made us think deeply or differently about the labor market this week. It’s your guide to the most important new insights about work.
These are our picks for this week:
A Young Small Business May Be the Next Rung on Your Job Ladder
Despite a tightening labor market, the overall performance of US wages has been lackluster. For workers, taking a job with a new employer may be a way to climb the job ladder and get that raise, especially during periods of economic expansion. But what kinds of business offer the best earnings prospects? According to a recent NBER paper, it’s probably not large established corporations, but rather small, young companies that are able to hire more workers by poaching than they lose. (WSJ)
Do Market-Dominating Companies Earn Unproductive Profits?
But if startups are often the engine that spurs wage gains through a process of “creative destruction,” why has the US been creating fewer businesses in recent years? This may reflect an incentive structure that promotes “unproductive” entrepreneurial activity—the kind that takes place when businesses exploit special relationships and market-dominating positions as incumbents, Robert E. Litan and Ian Hathaway argue. To support their hypothesis, the authors point to rising profits and expanded regulation favoring incumbent companies in the US. (HBR)
Jobs Quality and Quantity Can Go Hand in Hand
As the share of people at work in advanced countries finally returns to pre-crisis levels, for many workers the labor market does not look as healthy as the number of jobs created suggests. What about the quality of the jobs that have been added? In its latest Employment Outlook, the OECD finds that countries with more people at work tend to have—not surprisingly—lower levels of relative poverty. But generally these countries also have higher quality jobs, though a number of countries are exceptions, most notably the US, the UK and Japan. The OECD’s evidence suggests that the tradeoff between the quantity and quality of jobs is not inevitable. (FT)
Increasingly, Immigrants are Better Educated than People Born in the US
Increasingly, immigrants coming to the US have had more schooling than natives. Almost half of all immigrants arriving in the US today are college-educated, up from 27% between 1986 and 1990. Immigrants were better educated than natives in 26 states, Migration Policy Institute data show, and the trend is accelerating. Most states gained immigrants with a college degree between 2010 and 2015. However, employers do not always readily recognize foreign degrees because of differences in education systems. That forces some immigrants to take jobs for which they are significantly overqualified. (The Economist)
Americans are Getting Paid More than Their Paychecks Tell Us
Most Americans have not seen their wages rise much in recent years, but that’s not the whole story. Benefits have been increasing at a much faster clip. Specifically, paid leave, Social Security, Medicare and health insurance have grown faster than wages for most of the past decade. Overall, benefits have grown 12.4% since 2006 while wages have risen just 4%, once inflation is accounted for. Thus, a smaller share of what the workers collect winds up in their paychecks. (WSJ)