Military Recruiting Success: What Does it Say About National Employment?

The military has enjoyed recruiting success lately, despite the rather vivid risks associated with “travel” to Afghanistan and Iraq.

I see several interpretations of this observation:

1. Private spending has fallen, and is an important determinant of total labor demand. Lots of people are looking for a public sector job, and the military is a natural public sector destination for young people.

2. The composition of private spending has changed from consumption to exports, and young people have a comparative advantage in retail activities. Thus, their effective private sector productivity has fallen (even while productivity has risen more generally), and they are shifting to the military

3. The federal minimum wage is especially binding for young people that might work in the private sector. Even if we ignore the fact that the law dictating that minimum wage does not apply to military salaries, it certainly applies only to PECUNIARY pay. For example, if an employer paid young people $20 per hour in money, but exposed them to $19 per hour in bad-working conditions (safety risk, time away from family, early morning bugle calls, etc.), the net wage of $1 per hour is perfectly consistent with the federal minimum because it applies to the $20. Thus, even if aggregate labor supply shifted in, the military would enjoy a relative employment advantage because of the composition of its compensation.

4. Some other labor market friction (search, perverse employer incentives, student loan modification with special provisions for public sector employees, etc.) does more harm to private sector employment than to military employment. Thus, as in (2) above, the military is seeing its part of the reallocation of labor from private to public sector.

Obviously, some who call themselves “Keynesian” would stop at (1), despite the lack of a coherent explanation for their spending-employment hypothesis that meets the facts about supply shifts during this recession. I tend to think it is a combination of (2) and (4), but in any case the causes of this recession may be most visible in the market for young employees.

——

Another Entry for the Employment-Reducing Policies List

The list of employment-reducing public policies grows yet again:

  • mandating the employers with large payrolls provide health insurance, but that employers with small payrolls do not,
  • means-tested mortgage modification (presenting millions of workers with implicit tax rates in excess of 100% (sic)),
  • means-tested new home buyer credit,
  • mean-tested student loan modification,
  • unemployment insurance extensions,
  • state income tax hikes,
  • IRS means-tested enforcement of prior tax debts,
About Casey B. Mulligan 76 Articles

Affiliation: University of Chicago

Casey B. Mulligan is a Professor in the Department of Economics. Mulligan first joined the University of Chicago in 1991 as a graduate student, and received his Ph.D. in Economics from the University of Chicago in 1993.

He has also served as a Visiting Professor teaching public economics at Harvard University, Clemson University, and Irving B. Harris Graduate School of Public Policy Studies at the University of Chicago.

Mulligan is author of the 1997 book Parental Priorities and Economic Inequality, which studies economic models of, and statistical evidence on, the intergenerational transmission of economic status. His recent research is concerned with capital and labor taxation, with particular emphasis on tax incidence and positive theories of public policy. His recent work includes Market Responses to the Panic of 2008 (a book-in-process with Chicago graduate student Luke Threinen) and published articles such as “Selection, Investment, and Women’s Relative Wages,” “Deadweight Costs and the Size of Government,” “Do Democracies have Different Public Policies than Nondemocracies?,” “The Extent of the Market and the Supply of Regulation,” “What do Aggregate Consumption Euler Equations Say about the Capital Income Tax Burden?,” and “Public Policies as Specification Errors.” Mulligan has reported on some of these results in the Chicago Tribune, the Chicago Sun-Times, the Wall Street Journal, and the New York Times.

He is affiliated with a number of professional organizations, including the National Bureau of Economic Research, the George J. Stigler Center for the Study of the Economy and the State, and the Population Research Center. He is also the recipient of numerous awards and fellowships, including those from the National Science Foundation, the Alfred P. Sloan Foundation, the Smith- Richardson Foundation, and the John M. Olin Foundation.

Visit: Supply and Demand (in that order)

1 Comment on Military Recruiting Success: What Does it Say About National Employment?

  1. I want to make something clear to all those that think entitlements like ui are being abused and to the ones that are still employed that think all those on it are lazy or other wise. Those benefits that are so often demonized are a necessary part of the lives of countless millions of unemployed it is easy to forget that ui keeps food on the table and a roof over there head and with the unemployment number growing by the minute those who are in that situation can’t go and find another job or means to care for themselves are entitled to more ui benefits. (He point I am trying to make clear is simple if those millions can’t feed themselves they become desperate and for those of you who can’t picture what millions of desperate and hungary people would look like turn on the discovery channel you know the one where the pride of lions is tearing apart the gazelle. In case you can’t figure it out the gazelle would be the still employed well off and those lions would be the starving masses its something you may not want to think can happen but in the end when a humans instinct takes over its kill or be killed and take my word for the millions of unemployed will not just go and starve quietly. I urge you to wake up and pull your head out of the sand and start feeling the pain of others and realize we need to work together as a nation to solve or problems.
    – hope this clears things up for you.

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