Who's Not Working and Why: Employment, Cognitive Skills, Wages, and the Changing U.S. Labor Market by Frederic L. Pryor; David L. Schaffer

presents important results from new data on job applicants and employer hires that suggest considerable discrimination against blacks by small businesses and suburban employers. The sins of the book are of omission. At least four topics deserve more exploration. First, the book does not explicitly present a unified view of the low-wage labor market. Such a view is implicit. The chapters imply a low-wage labor market with a significant but modest elasticity of labor demand. The effective labor supply curve for low-wage labor is flat, either because labor supply responds to wages or because there is involuntary unemployment that can be reduced. As a result, policies that increase demand for low-wage labor can considerably increase employment. Policies such as wage subsidies have modest positive effects on employment, while mandates that increase employers' labor costs have modest negative effects. Second, the bookwould have benefitted from more discussion of how training programs and other labor market intermediaries can reduce stigma problems and other information problems that impede the employment of disadvantaged workers. Such intermediaries are "demand-side" programs in that they affect employers' hiring decisions by becoming a trusted part of their recruiting networks. Useful discussion of how programs can affect employers' hiring procedures is provided in Edwin Melendez and Bennett Harrison's "Matching the Disadvantaged tojob Opportunities: Structural Explanations for the Past Successes of the Center for Employment Training" (Economic Development Quarterly, Vol. 12, No. 1 [1998], pp. 3-11) and Brenda A. Lautsch and Paul Osterman's "Changing the Constraints: A Successful Employment and Training Strategy" (in Robert P. Giloth, ed., Jobs and Economic Development: Strategies and Practice [Thousand Oaks, Calif.: Sage, 1998]). Third, the book's discussion of economic development programs is limited because it focuses on enterprise zones, which help the poor by locating jobs in particular neighborhoods. As Gramlich and Heflin point out, such efforts are expensive, and manyjobs may not go to neighborhood residents. There are more effective ways to use economic development to increase labor demand for the poor. For example, some cities have required employers receiving economic development subsidies to consider workers referred by work force development programs. (See, for example, Joseph Stillman, Making the Connection: Economic Development, Workforce D velopment, and Urban Poverty [New York: Conservation Company, 1994].) Finally, given the potential importance of publicjobs programs, readers of the book might be interested in more exploration of how to enhance the effectiveness of such programs. David T. Ellwood and Elisabeth D. Welty examine that subject in their 1999 discussion entitled "Public Service Employment and Mandatory Work: A Policy Whose Time Has Come and Gone and Come Again? " (available at the web site of the Joint Center for Poverty Research, wwwjcpr.org). This more recent paper also discusses publicjobs programs that have evolved in response to welfare reform. Other information on recent public jobs initiatives is provided in papers by Cliff Johnson at the Center for Budget and Policy Priorities (www.cbpp.org). This book is an important contribution to the research literature on anti-poverty policy that should be read by anyone interested in that subject. A fuller view of demand-side policies can be obtained by supplementing the book with the readings mentioned above.