Tyler Cowen coined the phrase zero marginal product workers, or ZMP, to describe the uneven impact of the 2008 financial crisis on highly-educated and less-educated workers. I think we need to consider ZMP much more broadly.
1. As I wrote at the time, the Garrett Jones worker (Jones memorably tweeted that most of us do not produce widgets but instead build organizational capital) has no measurable marginal product. You cannot compute the MRP for accountants, marketing strategists, and project managers, but corporations need them.
One of my oldest catch-phrases is “Price discrimination explains everything.” That is because most businesses have very high overhead costs relative to variable costs. This is most obviously true with Internet-based businesses. But it is also true of movie theaters (when that was a business), hospitals, air transport, and more.
2. A growing share of the work force is engaged in what we might call the ZMP sector: non-profits, government bureaucracy, health care administration, and corporate departments of political posturing–including much of HR these days.
3. The gap between the college-educated and the less-educated is arguably due to differential treatment by government programs and billionaire philanthropists. We create a well-paying job for a college-educated ZMP in the “sustainability office” of a government agency or industry trade group. Then that sustainability office destroys a less-educated worker’s high-paying job related to fossil fuels and tells the resulting ZMP to find employment installing solar panels.
We need to think about the real world of ZMP, not the imaginary world of neoclassical equilibrium.