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A striking characteristic of the labour market

A major characteristic of the behavior of both the employed and the unemployed is a claim for equal or similar treatment
by the employer and, in particular, a claim for equal or similar pay. This claim makes the structure of wages differ from the structure of the “value added” by employees, and it thereby makes employees unequally profitable.
At least from the employer’s point of view, the lower the employee’s identifiable productivity, the less the employee is contributing to the company’s profitability. The least productive part of the labor force is less than profitable. Employers, therefore, try to restrict employment to the more productive – and therefore profitable – part of the labor force, to the exclusion of those that are not directly contributing to the bottom line.
A striking political implication of this behavior is that, at lest in the long run, an increase in employment has very little effect on the level of output. This in turn means that that reducing unemployment, while it is a serious moral challenge, would yield far less in economic rewards.

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