Via Tyler Cowen:
They are a cornerstone of Chrysler’s unlikely comeback: 900 employees turning out a Jeep Grand Cherokee sport utility vehicle every 48 seconds of the working day at an assembly plant here.
Nothing distinguishes them from other workers at the Jefferson North plant, except their paychecks. The newest workers earn about $14 an hour; longtime employees earn double that.
…the advent of a two-tier wage system in Detroit is spiking employment for one of the country’s most important manufacturing industries.
After a half-decade of too tight monetary policy, Detroit is finally managing to cut prices on its own–a positive outcome insofar as it helps reduce the 20% unemployment rate in the city of Detroit proper. It would be great if there were a much swifter and broader based mechanism (beside individual bargaining in the market for new employees) that would allow prices in Detroit to adjust relative to those elsewhere, helping prevent such prolonged episodes of unemployment, bankruptcy, and misery. If only.