Wednesday, April 1, 2015

"Virtual co-ops" [see post below] can clear the American labor market -- and Chicago's drop-dead ghettos

Under "virtual co-ops" [see post below] the market will clear at a higher price for labor then under what I call our current "two-tier" labor market (unorganized) where labor's price is set relative to other labor instead of consumer preference (bring back the steam looms!).

Actually today's American labor market is NOT clearing because the price of labor is too low to clear: e.g., 100,000 out of (I estimate) 200,000 Chicago gang-age males are in street gangs because the minimum wage (to cite one thing) is $3.50 below LBJ's 1968 $10.75 DOUBLE THE PER CAPITA INCOME LATER!

The proportion out of the labor market may be worse. Somebody pointed me to a Forbes article stating half of Ferguson's young African-American males are missing from the census.

"While the problem of missing African American men is especially severe in Ferguson, young black men are absent from most U.S. cities. In the neighboring cities of East St. Louis, IL and St. Louis, about 38% and 24% of African American men age 25 to 34 are absent from their communities, respectively. On average, about 18 percent of young African American men are absent from large cities. (This calculation is based on the combined population of 33 cities with the largest African American populations, home to about one quarter of African Americans in the U.S.) In contrast, outside of large cities only about 4% of young black men are absent from their communities. The challenges posed by an absence of black men in Ferguson are problems faced primarily by larger cities."

Actually, there may be a ray of hope in this for the long run solution to Chicago's seemingly permanent drop-dead ghettos. Fix the American labor market as a whole and the men and women who live there may be very flexible about commuting or even emigrating to where the jobs are. Then, they can bring demand back into the neighborhood -- or send money back like foreign immigrants! Gradually, economically healthy neighborhoods can emerge.

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