Tag: Labor Market

Must-Read: Adam Posen: Some Big Changes in Macroeconomic Thinking from Lawrence Summers

Posted on by Brad DeLong

Must-Read: Adam Posen: Some Big Changes in Macroeconomic Thinking from Lawrence Summers: “In the United States, since 1965, there has been a tripling of the non-employment rate…

…for men… 24 and 54… similar trends… elsewhere…. It is a real puzzle to observe simultaneously multi-year trends of rising non-employment of low-skilled workers and declining measured productivity growth. Either we need a new understanding, or one of these observed patterns is ill-founded or misleading…. Unless we can somehow transform that sustained lower demand for workers into the widespread leisure of the sort imagined by Keynes and some science fiction writers, with the income redistribution to support it, I would think this is very bad news for social stability and technological progress….

Unmeasured quality improvement… [the] fraction of the economy… [susceptible] has been rising, so the amount of mismeasurement (and therefore productivity understatement) would be rising…. [Thus] inflation is lower than even its currently low level–and that has the consequence that real interest rates are higher, so monetary policy at present is tighter… [and] farther away from its mandated inflation target…

Recessions in the OECD… in most cases the level of GDP is lower five to ten years afterward than any prerecession forecast or trend…. “The classic model of cyclical fluctuations… around the given trend is not the right model…. The preoccupation of macroeconomics should be on lower frequency fluctuations that have consequences over long periods of time….

Discussing… Abenomics’ results… I asked whether a message we should take from the Japanese experience is to avoid bad states of the economy at almost any cost…. [And] the very language we use to speak of business cycles, of trend growth rates, of recoveries of to those perhaps non-stationary trends, and so on–which reflects the underlying mental framework of most macroeconomists–would have to be rethought.

Must-Read: Isabel Sawhill: Where Have All the Workers Gone?

Posted on by Brad DeLong

Must-Read: Isabel Sawhill: Where Have All the Workers Gone?: “Real wages have fallen by 28 percent for high-school educated men since 1980…

…making work much less attractive, but also signaling that employers are looking for a higher level of skill…. Disability rolls have been growing (primarily because of musculoskeletal and mental health issues)… [which] create[s] a disincentive to re-enter…. Now that women are almost half the labor force, the pressure for men to work has lessened. In the shorter run, it’s hard to tell how much of the recent sharp drop in employment is related to weak demand and how much to these longer-term factors…. A rather large group may simply be unemployable at an attractive wage and may have figured out how to get by without working very much….

Must-Read: Mark Thoma: An Essential Part of Job Creation Policy Is Missing

Posted on by Brad DeLong

Must-Read: Mark Thoma: An Essential Part of Job Creation Policy Is Missing: “Candidates have focused on how to create jobs that pay a decent wage…

…But there is an important facet of job creation that is being left out… the opportunity for advancement. People are taught that if they play by the rules, do well in school, go to college, find a job, and then show up every day and work hard, they will be rewarded. Over time they will move up the job ladder, their income will rise, and a time will come when life won’t be such a struggle. That won’t happen to everyone, of course, but workers need to be able to see a path to a better life. But the dream has faded….

As the opportunities to move up the job and income ladder have diminished over time, workers become discouraged, disenfranchised, and look for someone to blame. It’s immigrants, unfair opportunities granted to others through affirmative action, globalization that allows labor to be exploited in other countries at a cost to U.S. jobs – the list goes on and on. In many, if not most cases, the blame is misplaced, but the underlying anger with a system that broke its promise about “playing by the rules” is more than understandable. My goal is not to suggest some magical solution that will fix this problem quickly. It’s a difficult problem that will take time and concerted effort on a variety of fronts…M

Must-Read: Belle Sawhill: Where Have All the Workers Gone?

Posted on by Brad DeLong

Must-Read: I really want to see what happens to these numbers in a high-pressure low-slack economy…

Isabel Sawhill: Where Have All the Workers Gone?: “Among male heads of household between the ages of 25-54…

…[not at work,] 27 percent say it is because they are ill or disabled…. [But] we excluded from the sample anyone on disability…. Another 22 percent said they couldn’t find work–not too surprising in a year when the unemployment rate was still over 7 percent. The remaining half… going to school, taking care of home or family… retired (despite being under 55), or… some other reason for why they weren’t working…. These are all men in their prime working years and that their lack of work leaves them and anyone else in their household at or near the poverty line…. Women heading households are somewhat similar… with far fewer reporting that they are ill or disabled and more of them reporting that they are taking care of home or family…

Must-Read: Rich Yeselson: The Decline of Labor; The Increase in Inequality

Posted on by Brad DeLong

Must-Read: The question I always find myself going back and forward on is this: Do strong unions primarily reflect or primarily cause a high labor share of income? And I find my views on this question both disturbingly ungrounded in evidence and disturbingly volatile…

Rich Yeselson: The Decline of Labor; The Increase in Inequality: “Between the end of the Second World War and the early 1970s, the American labor movement was one of the reliable signposts…

…that defined the parameters of American life. But if history has taught us anything, it’s that the signposts of our culture, economics, and politics are continually evolving, even as we believe they will be perennially rooted…. No less a figure than Dwight Eisenhower assumed an America that would always have strong unions…. Timothy Noah, relying on the work of economists Claudia Goldin and Robert Margo, describes this period in his book about American inequality, The Great Divergence (2012), as one in which “incomes became more equal and stayed that way.” Union density peaked at about 1/3rd of the non-farm workforce in the decade following the second world war…. States like Alabama and Tennessee had “low” union density rates in the high teens that were equal to the “high” density rates of “union states” like Michigan today….

During the 1972 election, Meany’s AFL-CIO, enraged by George McGovern’s opposition to the Vietnam War and the influence of the New Left and the counter-culture that permeated his campaign, remained neutral rather than endorse the Democratic candidate. Organized labor was so important to the Democrats that the wily Republican president, Richard Nixon, had courted Meany over several rounds of golf and sought to identify the administration with what Nixon and his top aides took to be the cultural symbols of blue collar, white manhood. The Federation’s neutrality was his reward…. By the middle of the 1980s, history had fooled the present again: the “secure place” of American labor which Ike had spoken of so confidently in 1952, turned out to be, in fact, evanescent. By 1991, union density had declined to just 16%. (It is now about 11%.)… In 1978, despite the most massive lobbying drive in union history, Carter placidly watched a modest labor reform bill be filibustered to death by Republicans and Southern Democrats in an overwhelmingly Democratic Congress….

Why did this happen?… For some of the same structural, macro-economic reasons it has declined in almost every advanced country… but… also occurred for reasons intrinsic to the American political economy…. Just as labor and the economic base of much of its membership lost altitude, unions faced the egalitarian necessity to modernize themselves. This was not without complications. Title VII of the1964 the Civil Rights Act accelerated a much longer struggle by black workers to have full and equal representation within unions. Arguments against racial (and gender) discrimination, especially in building trades and manufacturing unions, that had mostly been ignored by the NLRB, gained salience before the new Equal Employment Opportunity Commission (EEOC)….

Labor… today… remains the most effective institutional bulwark against income inequality. Within its blue state zones of urban power, labor has, effectively, fought inequality via the “fight for 15” led by the still formidable SEIU, and promoted the passage of minimum wage laws in states and cities around the country. Unions, despite their inability to win legislation of direct benefit to themselves, still lead efforts to augment social insurance and regulate companies and banks…. Advancing beyond their previous racism and sexism, unions are, in significant ways, better advocates for such concern today than they were when George Meany was refusing to endorse the March on Washington and, then during the McGovern campaign, railing about the Democratic party being seized by “people named Jack who look like Jill and smell like johns.”…

The numbers of union members and the dollars in the stagnant paychecks of millions of American workers tell an unhappily congruent story. If, in subsequent years, union membership numbers don’t increase dramatically, workers’ paychecks aren’t likely to increase very much either.

Must-Watch: Ron Lee et al.: Do Millennials Stand a Chance? Giving the Next Generation a Fair Shot at a Prosperous Future

Posted on by Brad DeLong

Must-Watch: Ron Lee, Hilary Hoynes, Henry Brady, Alex Gelber, Jesse Rothstein (November 18, 2015): Do Millennials Stand a Chance? Giving the Next Generation a Fair Shot at a Prosperous Future:

Wednesday, November 18, 2015 from 8:00 AM to 11:00 AM (PST) :: California Memorial Stadium :: 210 Stadium Rim Way

Question: What Are Our Biggest Economic Problems Right Now?

Posted on by Brad DeLong

I have been someone who takes the long-run secular decline in prime-age male employment as a canary in the coal mine: it has seemed to me via sign that information technology which greatly reduces valuable employment of human brains as cybernetic control elements for machines poses us with significant problems that are not necessarily economic but rather in the sociology of social roles. When Case and Deaton on the decline in life expectancy among the white and middle-aged crossed my desk earlier this week, I thought that case was reinforced.

But now I find myself updating and looking at this graph:

Graph Employment Rate Aged 25 54 Females for the United States© FRED St Louis Fed

It now looks quite different from how it looked a couple of years ago.

I had, a couple of years ago, taken the gender gap in trends here as an indication that those trained not to focus on social intelligence were having increasing difficulties finding valued social roles, and thus as a sign that information technology sociological apocalypse was drawing near. But now… relative to 2000, it is much easier to tell a slack-labor-demand-is-most-of-it story.

Thus I am now swinging toward thinking that if we could only focus on expansionary fiscal policy to restore the high-pressure full-employment economy of the Clinton years that we would find our longer-run structural problems solving themselves, or at any rate becoming smaller and moving further away into the distance. And I am now swinging toward understanding Case and Deaton as more evidence on the extremely high sociological costs of a low-pressure economy.

Minimum wage workers and the collapse of the job ladder

Posted on by Casey Schoeneberger

FiveThirtyEight’s Ben Casselman recently explained that it’s becoming harder and harder for U.S. minimum-wage workers to move up the wage ladder. According to his analysis, during the mid-1990s, only one in five minimum-wage workers was still earning their state’s minimum wage a year later. But in 2014, the most recent year for which data are available, that number jumped up to one in three. Casselman also finds an increase in the proportion of workers who stay in minimum-wage jobs for three years.

Casselman’s results seem to indicate that raising the minimum wage might not be susceptible to some of the criticisms that opponents throw its way. Minimum-wage workers, for example, are often characterized as teenagers who will soon jump to higher-paying jobs. Casselman finds, however, that minimum wage workers are increasingly older—almost a quarter of U.S. minimum-wage workers in 2014 were 40 or older. Minimum-wage workers are also often mischaracterized as less-educated immigrants, although Casselman finds that minimum-wage workers today are more educated than in previous decades.

The facts about minimum-wage workers are important for thinking about the merits of increasing the federal minimum wage, but they are also emblematic of broader trends in the U.S. labor market. As Casselman points out, the job ladder—or the ability of workers at low-paying jobs to move up to higher-paying jobs—continues to collapse, the evidence stretching back to well before the Great Recession. Economists John Haltiwanger of the University of Maryland and Henry R. Hyatt and Erika McEntarfer of the U.S. Census Bureau show that the flows between jobs are still below their levels from the year 2000. Casselman’s data shows that movement away from minimum-wage jobs peaked in 1998, about the same time.

Equitable Growth’s Marshall Steinbaum and Austin Clemens recently showed other ways that the job ladder has failed during the 21st century. Young workers, for example, are increasingly working in low-paying industries. The percentage of workers between the ages of 19 and 34 hired into low-paying industries has been on the increase while the share of these workers hired into high-paying industries has declined.

An earlier analysis by Steinbaum and Clemens showed that this trend was particularly pronounced for new college-educated workers. This “cruel game of musical chairs” means that more-educated workers are increasingly taking jobs that would have gone to workers with a high school education. This cascade down the job ladder means that workers who before would have had, to borrow an example from Casselman, factory line jobs instead take minimum-wage jobs. And the workers who would have previously had those minimum-wage jobs are then pushed out of the labor force altogether.

It’s also worth noting that the share of prime-age workers (ages 25 to 54) that have a job is well below its level during the 1990s. That’s another sign of employment being constrained by the number of jobs, which breaks the job ladder.

So while Casselman’s interesting new analysis might be interpreted as a story just about the minimum wage, it’s really a piece about larger, structural changes in the labor market. These larger changes may indicate that an increase in the minimum wage will help these workers, but policymakers need to think also about the larger problems in the labor market that have led to a job ladder with too many broken rungs.

“Your Mom Isn’t Here” Jobs…

Posted on by Brad DeLong

Live from (Outside of) New York ComicCon: We Have (Close to the Equivalent of) Replicators: So Why Do We (Still) Have Non Personal-Service Jobs?

We grow things–but fewer and fewer of us do. We make things–but fewer and fewer of us do. We provide personal services–non-information and information. What else do we do?

It strikes me that a huge proportion of jobs these days are really “your mom isn’t here!” jobs.

What proportion of jobs wouldn’t it be necessary if people would only behave–if people would reliably and properly drop the money they owe into the jar, would clean up if they spilled something, leave the place in the clean state it was when they arrived, would not break machines by trying to operate them when they do not understand them, and so on?

Must-Read: Ben Casselman: It’s Getting Harder To Move Beyond a Minimum-Wage Job

Posted on by Brad DeLong

Must-Read: Ben Casselman: It’s Getting Harder To Move Beyond a Minimum-Wage Job: “Minimum-wage jobs are meant to be the first rung on a career ladder…

…But a growing number of Americans are getting stuck…. Anthony Kemp is one of them. In 2006, he took a job as a cook at a Kentucky Fried Chicken in Oak Park, Illinois. The job paid the state minimum wage, $6.50 an hour at the time, but Kemp figured he could work his way up. ‘Normally, a good cook would make $14, $15, $17 an hour,’ Kemp said. ‘I thought that of course I’d make a better wage.’ He never did; nine years later, the only raises Kemp, 44, has seen have been the ones required by state law. He earns $8.25, the state’s current minimum wage…