Are unpredictable schedules harming U.S. workers’ health?

A retail employee wheels out a rack of girls’ clothing in Phoenix.

Working too few hours to make ends meet. Scrambling to arrange childcare around a schedule that is constantly shifting. Commuting to work only to be sent home without pay. These are some of the big hurdles confronting millions of workers in the U.S. retail and service sectors as they seek to build stable livelihoods. Increasingly, more and more employers are using scheduling systems that match the number of workers on the job with predicted consumer demand, which often wreak havoc on workers who have little control over a schedule that changes at a moment’s notice.

The consequences of unpredictable schedules have been well-documented by the media and researchers alike, and many accounts have suggested that these kind of worker schedules may have consequences for health as well. Now, a new working paper from Equitable Growth by sociologists Daniel Schneider of the University of California-Berkeley and Kristen Harknett at the University of Pennsylvania looks specifically at the health and well-being of workers who work unpredictable and variable hours. The results are overwhelmingly negative, with the variability of work hours being strongly associated with a host of physical and mental health issues as well as financial instability.

The researchers use data collected from a national sample of hourly retail workers at eight brick-and-morter companies, all of which are among the largest 15 retail employers in the United States. The two sociologists zero in on the correlation between the health and well-being of workers and three scheduling practices that many of these workers experience— volatility in work hours from week to week, variation in the times of workers’ shifts, and little advance notice for upcoming work schedules.

Somewhat unsurprisingly, the authors find that those workers with greater variation in their weekly work hours were significantly more likely to prefer more work hours compared to those who had set shifts. Schneider and Harknett also find that unstable and unpredictable work schedules are negatively associated with household financial insecurity, even when controlling for hourly wage and overall household income. That’s because workers’ pay fluctuates from week to week depending on how many hours they are given, which affects everything from the ability to put food on the table to engaging in any long-term financial planning.

The stress of these schedules takes a toll. Schneider and Harknett found that those who work a variable schedule are much less likely to have good quality sleep and are more likely to report “serious psychological distress.” Those with volatile schedules also spend less time with their children and are more stressed out. If sustained, research shows that parental stress can harm kids’ mental and physical health, which has lasting effects into adulthood.

The authors point out that, importantly, it is the variability of hours rather than nonstandard timing of work that has the most significant association with harmful outcomes (excluding those who work a regular night shift). But they do find that having at least two-weeks notice of their next work schedules makes a significant difference in terms of a workers’ well-being. As the authors say, this advance notice seems likely “to improve workers’ ability to plan their child care, to combine work with schooling or a second job, and in turn may reduce stress and improve mental health.”

Many state and local governments (including Washington, D.C. and Seattle) are currently debating legislation that would require two-weeks advance notice of schedules and access to more work hours. This research adds to the growing body of work documenting the harm these scheduling practices inflict onto workers.

Must-Read: Pseudoerasmus: Ideology & Human Development

Must-Read: The mysterious Pseudoerasmus says–I believe correctly–that Cuba’s very real accomplishments in raising human development index values since 1959 are not nearly enough to offset the other major manifest flaws of the Castro brothers’ regime in the scales of history.

I would add that had Cuba been a normal North Atlantic country since 1957, then starting from where it was then–as not a poor but a middle-income country–and following the standard North Atlantic historical trajectory would have delivered equivalent improvements in human development index, plus lots more in the way f material plenty, plus a free press, plus real elections, plus a whole host of other bourgeois virtues and comforts:

Pseudoerasmus: Ideology & Human Development:

My overall point can be summarised thus….

It’s not technically difficult or financially onerous to substantially improve life expectancy and infant mortality even for a poor country. What usually gets in the way is a combination of politics, institutional capacity, and cultural predispositions. Cuba’s accomplishments in human development are real, but not nearly as impressive as boosters claim.

  • First, Cuba’s social indicators were already advanced in 1960 compared with its natural peers.
  • Second, Castro’s regime was massively subsidised by the Soviets in overcoming the fixed costs associated with improving human development to near-developed country levels.
  • Third, Cuba’s HD outcomes were facilitated by an authoritarian central planning regime with few political and social constraints faced by most human societies, which treated prestige health and educational metrics like Gosplan production targets to be met at all cost.

Must-Read: Paul Romer: The Trouble with Macroeconomics

Must-Read: Paul Romer observes–I believe indisputably–that the now 40-year tool-building exercise creating Dynamic Stochastic General Equilibrium models based on representative agents and rational expectations has produced neither estimates nor insights. He further ventures the guess–which I believe is correct–that it never will.

As Paul Krugman observes, the fact that he was one of the last students to learn macroeconomics under the old Keynesian regime of Jim Tobin and then escaped the gravitational attraction of DSGE and RBC entirely by wandering off into international trade meant that, when the —- started to hit the fan internationally in the later 1990s and did hit the fan for real in 2008, he was vastly better prepared to understand the world than virtually any of his colleagues who had felt, to any degree, the gravitational attraction of DSGE and RBC:

Paul Romer: The Trouble with Macroeconomics:

In the last three decades, the methods and conclusions of macroeconomics have deteriorated…

…to the point that much of the work in this area no longer qualifies as scientific research. The treatment of identification in macroeconomic models is no more credible than in the first generation large Keynesian models, and is worse because it is far more opaque. On simple questions of fact, such as whether the Fed can influence the real fed funds rate, the answers verge on the absurd. The evolution of macroeconomics mirrors developments in string theory from physics, which suggests that they are examples of a general failure mode of for fields of science that rely on mathematical theory in which facts can end up being subordinated to the theoretical preferences of revered leaders. The larger concern is that macroeconomic pseudoscience is undermining the norms of science throughout economics. If so, all of the policy domains that economics touches could lose the accumulation of useful knowledge that characteristic of true science, the greatest human invention….

[…]

As Canova and Sala (2009) signal with the title of a recent paper, we are now “Back to Square One.” Macro models now use incredible assumptions to reach absurd conclusions. To appreciate how far backwards our conclusions have gone, consider this observation, from a paper published in 2010, by a leading macroeconomist:

…although in the interest of disclosure, I must admit that I am myself less than totally convinced of the importance of money outside the case of large inflations.

If you want a clean test of the claim that monetary policy does not matter, the Volcker deflation is the episode to consider…. If the Fed can cause a 500 basis point change in interest rates, it is truly absurd to wonder if monetary policy is important. Faced with the data… the only way to remain faithful to dogma that it is not important is to argue that despite what people at the Fed thought, it was actually an imaginary shock that increased real fed funds rate….

The real business cycle model explains recessions as exogenous decreases in phlogiston. Given output Y , the only effect of a change in the monetary monetary aggregate M is a proportional change in the price level P. In this model, the effects of monetary policy are so insignificant that, as Prescott taught graduate students at the University of Minnesota “postal economics is more central to understanding the economy than monetary economics” (Chong, La Porta, Lopez-de-Silanes, Shliefer, 2014).

Proponents of the RBC model cite as one of its main advantages its microeconomic foundation. This posed a problem because there is no microeconomic evidence for the negative phlogiston shocks that the model invokes nor any sensible theoretical interpretation of what a negative phlogiston shock would mean.
In private correspondence, someone who overlapped with Prescott at the University of Minnesota sent me an account that reminded me of what it was like to encounter “negative technology shocks” before we became numb to them:

I was invited by Ed Prescott to serve as a second examiner at one of his student’s preliminary oral…. I had not seen or suspected the existence of anything like the sort of calibration exercise the student was working on. There were lots of reasons I thought it didn’t have much, if any, scientific value, but as the presentation went on I made some effort to sort them out, and when it came time for me to ask a question, I said (not even imagining that the concept wasn’t specific to this particular piece of thesis research) “What are these technology shocks?”

Ed tensed up physically like he had just taken a bullet. After a very awkward four or five seconds he growled “They’re that traffic out there.” (We were in a room with a view of some afternoon congestion on a bridge that collapsed a couple decades later.) Obviously, if he had what he sincerely thought was a valid justification of the concept, I would have been listening to it…

In response to the observation that the shocks are imaginary, a standard defense invokes Milton Friedman’s (1953) methodological assertion from unnamed authority that “the more significant the theory, the more unrealistic the assumptions.” More recently, “all models are false” seems to have become the universal hand-wave for dismissing any fact that does not conform to a favorite model. The noncommittal relationship with the truth revealed by these methodological evasions and the “less than totally convinced …” dismissal of fact goes so far beyond post-modern irony that it deserves its own label. I suggest “post-real”…

Must-Reads: September 14, 2016


Should Reads:

Must-Read: Nick Bunker: How Intensely are U.S. Employers Looking for Workers?

Must-Read: Nick Bunker: How Intensely are U.S. Employers Looking for Workers?:

How intensely are U S employers looking for workers Equitable Growth

Recruitment intensity might have something to do with the overall health of the labor market….

Intensity drops during recessions and starts to move upward as the economy heals…. Think of it this way: If there are a lot more unemployed workers per job than companies are trying to fill then firms don’t have to work that hard to find good talent. But as the labor market improves, employers have to work harder to fill positions. This increasing desire to recruit workers amid improving economic conditions also leads to companies poaching workers from other firms. Hiring workers from other firms is how the job ladder works…. It’s another way to think about how a tight labor market and why periods of full employment can boost wage growth for workers. Making employers put a little bit more effort into finding workers might not be a bad thing.

Must-Read: JEC: Houdini’s Straightjacket

Must-Read: JEC: Houdini’s Straightjacket:

Escape artistry… probably wouldn’t be anyone’s first choice as a model for the conduct of social science.  Yet, bizarrely, it has become the prevailing paradigm in macroeconomics….

How so? Consider the macroeconomist.  She constructs a rigorously micro-founded model, grounded purely in representative agents solving intertemporal dynamic optimization problems in a context of strict rational expectations.  Then, in a dazzling display of mathematical sophistication, theoretical acuity, and showmanship (some things never change), she derives results and policy implications that are exactly what the IS-LM model has been telling us all along. Crowd–such as it is–goes wild. And let’s be clear:  not even the most enthusiastic players of the macroeconomics game imagine that representative agents or rational expectations are, in any sense, empirical realities. They are conventions, “rules of the game”…. arbitrary difficulties we impose on ourselves in order to demonstrate our superior cleverness in being able to escape them. They are, in a word, Houdini’s straightjacket….

[This] modelling approach made arriving at sound policy recommendations unnecessarily difficult. For example, George Evans at the University of Oregon writes:

[T]he profession as a whole seemed to many of us slow to appreciate the implications of the NK model for policy during and following the financial crisis… because many macro economists using NK models in 2007-8 did not fully appreciate the Keynesian mechanisms present in the model.

Now, if after thirty years of study economists failed to “fully appreciate the Keynesian mechanisms present in the model,” one might wonder exactly what such models have to recommend themselves. What is the advantage of an intellectually demanding and mathematically complex modelling approach that makes it harder to actually get the job done? The answer, I suspect, is that “intellectually demanding and mathematically complex” has become an end in itself…. Which is fine as long as the goal is entertainment…

Who pays U.S. taxes on inheritances?

This photo shows the Internal Revenue Service headquarters building in Washington.

Greg Mankiw, a Harvard University economist and Chairman of the Council of Economic Advisers for President George W. Bush, argues in a piece for The Upshot of the New York Times that the U.S. estate tax is a suboptimal way to tax wealth. Mankiw’s concern is that the tax violates “horizontal equity” by placing a similar tax burden on people who behave in very different ways. He presents an example of two couples, both of whom sell a family business for the same amount, but one couple spends all their proceeds and the other saves most of it to give to their children. Under the current federal tax system, both couples would end up paying the same amount of taxes, according to Mankiw, even though they ended up doing wildly different things with the money.

This example, however, assumes that the frugal couple who bequest their savings to their children end up paying the estate tax. If that were true, then the estate tax should be a larger part of a more effective tax system as the behavior impact of taxation on dead people is likely to be very small. But as Matt Levine at Bloomberg View points out, “We could fund the government with a lovely, efficient, non-distortionary system of taxing only the dead, except—and this is another key point—the dead don’t have any money.” The tax ends up getting paid by the heirs of the estate. Of course, the estate tax will influence how a person sets up their estate before they die, but the incidence of the tax will fall on those who end up receiving it.

This is why it might make sense to change the focus of taxes on inheritance from the estate to the heirs. Right now, an estate is taxed based the amount of money in the estate, regardless of how many heirs there are to the trust. But there are proposals to change the taxes on pass-down wealth so that the tax becomes an inheritance tax. In other words, the tax would be on the size of the wealth transfer a person receives and the tax rate would be decided by the person’s income bracket. Such a proposal comes from Lily Batchelder, of the New York University School of Law. This change would make clear who is really being taxed, shifting the burden onto high-income households that are inheriting large amounts. And, because it considers the economic status of the individual (or individuals) inheriting the estate, it also means that it could end up reducing the tax burden for lower-income households with larger inheritances (though this may not be a large group).

Mankiw’s example also assumes that the assets that lead to the wealth being passed along will be sold and taxed before death. But that’s often not the case, which leads to a good amount of inherited wealth not being taxed. Assume (as Mankiw does) that two couples who run small businesses are about to retire and sell their companies. The first couple, the Smiths, sell the company, pay the taxes on the gains from the increased value of the company, and pass along the proceeds to their heirs.

The second couple, the Jones, tragically die before they can sell the company and ownership passes to their heirs. Their heirs eventually sell the company, but the taxes they pay are only on the gains from when they get the company—not from when their parents founded the firm. The income created from the appreciation of the company before it gets passed on never gets taxed. This “stepped up basis” (in tax parlance) seems like a reform that could be made to the estate tax as well.

The current system for taxing capital in the United States could use quite a bit of changes, but the idea that inheritances shouldn’t be taxed due to concerns about horizontal equity seems strange. A concern for equity might suggest that policymakers change the form of certain wealth taxes, but not their wholesale elimination.

Must-Read: Larry Summers: Building the Case for Greater Infrastructure Investment

Must-Read: Note that the case for greater infrastructure investment is close to orthogonal to the case for bigger government deficits ending in a larger target national debt, and that both are together each close to orthogonal to the case for larger swings in the government’s fiscal balance–bigger surpluses in times of boom to create the fiscal space so that you can run bigger and more stimulative deficits in times of recession. Larry is here making a case that I believe is intellectually irresistible for the first only. But the cases for the second and third are, I believe, intellectually irresistible as well:

Larry Summers: Building the Case for Greater Infrastructure Investment:

The issue now is not whether the US should invest more but what the policy framework should be

There is a consensus that the US should substantially raise its level of infrastructure investment… [to] can create quality jobs… provide economic stimulus without posing the risks of easy-money policies… expand the economy’s capacity… and mitigate the huge maintenance burden we would otherwise pass on to the next generation. The case for infrastructure investment has been strong for a long time, but it gets stronger with each passing year, as government borrowing costs decline and ongoing neglect raises the return on incremental spending…. Just as the infrastructure failure at Chernobyl was a sign of malaise in the Soviet Union’s last years, profound questions about America’s future are raised by collapsing bridges, children losing IQ points because of lead in water and an air traffic control system that does not use GPS technology. The issue now is… what the policy framework should be. There are five key questions:

[1] How much more do we need to invest?… [2] What is the highest priority?… [3] How should investment be financed?… [4] What about the private sector?… [5] How can we be sure investment is carried out efficiently?… Every year that we allow our infrastructure to decay raises the burden that our generation places on the next. We will not always be able to borrow for the long term at a near zero interest rate. However the election turns out, a major infrastructure investment programme should be adopted by the president and Congress in the spring of 2017.

Thus (3) really does not belong on this list–it is a separate question. But (1), (2), (4), (5)–how much? what? how to harness private-sector initiative? and how to maintain efficiency?–are things that even moderate quality political reporters should be asking and reasking candidates for president and for other offices–federal, state, and local–this fall.

I’m not holding my breath. Our country’s political reporters are, by and large, uninterested in public policy and unconcerned with informing voters–who are interested in public policies and their effects. And they aren’t even very guide at covering the election-as-contest: as if they were horse-race reporters who knew nothing about the key fundamentals of bloodlines, jockeys, and tracks.

Must-Read: Lael Brainard: The “New Normal” and What It Means for Monetary Policy

Must-Read: Now can somebody please tell me why this is a minority and not the consensus view of the FOMC?:

Lael Brainard: The “New Normal” and What It Means for Monetary Policy:

Several features of the “new normal”… appear particularly noteworthy for our policy deliberations:

(1) Inflation Has Been Undershooting, and the Phillips Curve Has Flattened…. (2) Labor Market Slack Has Been Greater than Anticipated…. (3) Foreign Markets Matter, Especially because Financial Transmission is Strong…. (4) The Neutral Rate Is Likely to Remain Very Low for Some Time…. (5) Policy Options Are Asymmetric…. From a risk-management perspective, therefore, the asymmetry in the conventional policy toolkit would lead me to expect policy to be tilted somewhat in favor of guarding against downside risks relative to preemptively raising rates to guard against upside risks…. It will be important to assess whether our current policy tools are adequate to respond to negative shocks and, if not, what adjustments would be most appropriate…. For the time being, the most effective way to address these concerns is to ensure that our policy actions align with our commitment to achieving the existing inflation target, which the Committee has recently clarified is symmetric around 2 percent–and not a ceiling–along with maximum employment…

Must-Read: Victor Gay, Daniel Hicks and Estefania Santacreu-Vasut: Languages and Gender Norms

Must-Read: Victor Gay, Daniel Hicks and Estefania Santacreu-Vasut: [Languages and Gender Norms[]:

Forms of gender inequality are higher in countries where the language distinguishes gender…

…But these patterns could arise spuriously, as languages and other cultural institutions have co-evolved…. An epidemiological approach to isolate language from other cultural forces… provide[s] direct evidence on whether language matters… how gender roles have been shaped, how they are perpetuated, and, ultimately, how they can be changed.