A little while ago I wrote about sticky wages and how employers might be responsible for it. I concluded:
My personal experience doesn’t really bear out the notion that it’s on the employer’s side. I got my first 9-5 job essentially by offering to work for substantially less than the job advertised for. The interview was not going well and it was a sort of hail mary. But it worked. And a number of jobs I have gotten since I have been overqualified for. Which is not exactly the same thing, but you’re confronting the same obstacle: I am worth x, but am asking for less than x. Only once have I been turned down for a job that I was overqualified for, as near as I can recall. It’s a little different, though, when you’re taking industry wages for a lesser job. There’s always the dangle of advancement. Getting raises for doing the same job seems to almost never happen anymore. Even before the recession.
According to a new paper, it may actually be the unemployeds’ decision:
[T]oday’s job seekers seem more picky. According to an analysis of surveys of 6,000 job seekers, the minimum wages that the unemployed are willing to accept are very close to their previous salary and drop little over time, says Mr. Mueller. That could help explain in part why they have so much trouble finding work, he says.
Of course, part of the issue is that people are overleveraged and household incomes don’t allow for a whole lot of flexibility. One of the problems with home ownership is that it fixes your housing costs at a particular rate. And if you’ve been living close to the edge, taking a pay-cut can hurt pretty deeply. The same applies to people who take 5-year car payment obligations. My inlaws paid cash for the houses that they bought. With housing costs being what they are, though, that’s a pretty difficult thing to do. But our tax laws reward home ownership, our regulatory laws may be making buying a house and renting it out less desirable, and so if you want to live somewhere larger than an apartment, it can be quite hard to get what you want without buying.
Of course, these things would be less of an issue if people were to live more within their means. You could afford to take the financial hit on the mortgage by cutting back elsewhere. That’s easier to do in some parts of the country than others, naturally. But even among those with comparatively low fixed expenses (no children, for example, and no mortgage), the degree to which a lot of my peers live on the edge doesn’t cease to surprise me.