Blame low IQs for unemployment and low wages

Saw this article going viral Why Do We Pay So Many People So Little Money?

The authors of the report, Martha Ross and Nicole Bateman, both of the Brookings Metropolitan Policy Program, calculated that “more than 53 million people — 44 percent of all workers aged 18-64 — are low-wage workers by our criteria. They earn median hourly wages of $10.22 and median annual earnings of $17,950.”

Ross and Bateman determined that, nationally, low wage workers are 52.4 percent white, 14.8 percent black and 24.9 percent Hispanic, compared with a middle and high wage work force that is 70.6 percent white, 9.9 percent black and 11.4 percent Hispanic.

In regard to the racial composition low-income workers, these percentages are roughly isomorphic to the general population, suggesting that there is no ‘white privilege’ in so far as low wages are concerned.

The color of poverty in America is white, by pure statistical certainty. Blacks are still only 13% of the US population–a figure that has remained remarkably constant for many decades–so most poor people are going to be white, but so will most rich people, mentally ill people, drug-addicted people, or any group.

But Ross and Bateman show that blacks are under-represented in middle and upper-income work. The left attributes this to racism. Of course, no mention of IQ anywhere. The preponderance of data shows that blacks score around 1 standard deviation lower than whites on IQ tests, even on sub-tests that have no obvious cultural/language component, such as matrix reasoning, block assembly, information processing, or digit span. But the correlations between job performance and educational attainment and IQ are high. If IQ tests were somehow unduly biased against blacks, then we would expect blacks (or anyone who scores low on an IQ test) to perform way better than their low scores suggest, but this is often not the case. Dr. Jordan Person has called the science of IQ ‘dismal’ because not only is a sizable portion (roughly 10-15%) of the US population permanently or borderline unemployable because of low IQ, but also because there is nothing that can be done about it: IQ cannot be raised.

I disagree that the decline of unions are to blame. Although union jobs pay more, it comes at the cost of increasing automation and reducing supply of labor, so more people are possibly made worse-off even if wages increase. I think it really just boils down to supply and demand. The supply of labor, particularly for low and average-IQ jobs, vastly exceeds demand, and such supply is not reflected by the low unemployment rate. One would assume that with 4% unemployment (pre-Covid) that anyone regardless of skill who wants a job would be able to get one, but that is not true. Job seekers lacking in skills and or credentials have few options, so jobs that require neither of those tend to get a lot of applicants even if the unemployment rate is low.

A Google search reveals huge demand for Amazon warehouse jobs despite the insistence by the liberal media about how bad such jobs are. Uber and other gig jobs are also seeing strong demand in spite of low pay. An AI researcher who specializes in computer vision can commend a very high salary, as there are probably only a handful of individuals who possess such skills, which are highly sought by major tech companies such as Facebook and Google for applications such as self-driving cars or image recognition. But low-skilled work, by definition, can be done by almost anyone, so employers can set their wages low knowing that will always be someone who will bite.

The unemployment rate tells an incomplete story and does not take into account individuals who have dropped out of the labor force but may still want to work. In theory, you can have 0% unemployment and at the same time have five people be employed and millions who have dropped out and are not counted. The labor force participation rate has been in decline for decades, suggesting there are a lot of people who want to work but are not counted as unemployed, even in the U6 stats (which is way more comprehensive than the U3).

A low unemployment rate does not imply that companies are less choosy when it comes to hiring. Some cite the proliferation of “we’re hiring” signs as evidence of a labor shortage, but this is misleading. When companies put up “we’re hiring” signs, it does not actually mean that are looking for immediate work or have an acute labor shortage, but rather it is like an audition process in which dozens or more people apply for only a handful low or medium-skilled jobs. Putting up the sign is cheaper than paying for a Craigslist, newspaper, or LinkedIn ad. Even when unemployment got to 4% in early 2020, plenty of low-skilled people who wanted to work were unable to, due to not being qualified and or too many job seekers relative to demand. A google search reveals tons of stories of people looking for low-skilled work, even when unemployment was at 4-5%. It’e not like jobs magically appear when unemployment falls below a certain threshold.

Making matters worse, in regard to IQ again, even for low-skilled jobs, less intelligent job seekers are at a markedly great disadvantage compared to smarter applicants. Pre-employment screening tests such as the Wonderlic, which is highly correlated with IQ despite not being an actual IQ test, are used extensively (such tests are legal in spite of Duke vs. Griggs) by employers to filter candidates by IQ (as mentioned above, IQ is highly correlated with job performance) even for low-skilled jobs.

A more informative statistic would be the hiring rate, broken down by job type/skill, geography, age, etc. What this means is, out of X number of people who apply for a certain type of job (based on skill , occupation, location, etc.), how many are actually hired. A 4% unemployment rate doesn’t do much good if only one out of every 100 qualified people who apply for an opening is hired. Such data is hard to come by, as companies with either an abnormally high or low hiring rate are not exactly going to be inclined to make such information public because it would either discourage people from applying or result in too many applications, and is not accounted for by the Bureau of Labor Statistics. Although major tech companies such as Google and Microsoft are famous for having very low hiring rates, even low-skilled work can have a low hiring rate.