For some time, the U.S. economic system has consistently been delivering the following results:

• A large segment of the population receives low wages, relatively poor benefits, and poor income stability.
• Wages for this segment of the population have been stagnant or declining over the past 25 years.
• Households in this income stratum live on annual wages in the low $20,000 range, including government supports.

Why does a modern, efficient capitalist system produce these results?

The authors of this framing piece consider the topic of increasing the quality of jobs from an economic-systems perspective by seeking answers to that question and others, such as: Why do employers offer the combination of wages, benefits, hours/income stability, and workers’ “voice” that are observed? Is it the result of optimal, cost-minimizing, efficient, competitive behavior? Does it properly reflect the full cost to society of employing these workers? Or does it represent a system that (in some respects) is distorted by externalities, or affected by an imbalance of employer/worker power?

The piece also serves as introduction to the second of three volumes that comprise the Federal Reserve System’s publication, Investing in America’s Workforce: Improving Outcomes for Workers and Employers. The book is a product of the System’s multi-year initiative aimed at reimagining workforce development efforts as investments, instead of social services.