Category: Labor Economics

Earned Income Matters More Than Equal Income

(p. A13) The concept of a universal basic income, or UBI, has become part of the moral armor of Silicon Valley moguls who want a socially conscious defense against the charge that technology is making humanity obsolete.
. . .
We need policies that encourage job creation and working, not policies that pay people not to work.
In the mid-1960s, about 5% of men aged 25 to 54 were jobless. For 40 years that share has risen, and for much of the past decade the rate has remained over 15%. Suicide, divorce and opioid abuse are all associated with nonemployment, and many facts suggest that the misery of joblessness is far worse than that of a low-paying job. According to the most recent data, only 7% of working men in households earning less than $35,000 report being dissatisfied with their lives. But that share soars to 18% among the nonemployed of all incomes. This suggests that promoting employment is more important than reducing inequality.
. . . 50 years of evidence about labor supply in the U.S. suggests that giving people money will lead them to work less.
The Negative Income Tax experiments of the 1970s–when poorer households in a number of states received direct cash payments to keep them at a minimum income–are the closest America has come to a UBI. But they did not show “minimal impact on work,” as Mr. Yang suggests. Rather, they produced a quite significant work-hours reduction of between 5% and 25%, as well as “employment rate reductions . . . from about 1 to 10 percentage points,” according to one capable study.

For the full review, see:

Edward Glaeser. “‘BOOKSHELF; ‘Give People Money’ and ‘The War on Normal People’ Review: The Cure for Poverty? A guaranteed income does nothing to address the misery of joblessness, nor the associated plagues of divorce, opioid abuse and suicide.” The Wall Street Journal (Tuesday, July 10, 2018): A13.
(Note: first two ellipses added; third ellipsis in original.)
(Note: the online version of the review has the date July 9, 2018, and has the title “BOOKSHELF; ‘Give People Money’ and ‘The War on Normal People’ Review: The Cure for Poverty? A guaranteed income does nothing to address the misery of joblessness, nor the associated plagues of divorce, opioid abuse and suicide.”)

Entrepreneur Mackay Deserved to Be Dealt Four Aces

(p. C9) One evening sometime in the 1850s, John Mackay, a prospector, was playing poker with his fellow silver miners in Virginia City, Nev. The wagering was furious, and Mackay was playing well. In one hand, he was dealt an improbable three aces. The man next to him was “betting like a cyclone,” when Mackay drew the astonishing fourth ace, whereupon he laid down his cards and walked away without picking up the pot. “Leave me out, boys,” he said. He didn’t need it. At this point in his life, he had more money than he could ever spend.
. . .
With not a cent to his name, Mackay began swinging a pick ax for subsistence wages on other peoples’ claims, eventually working his way up to mine supervisor. “Mackay tried to cast his imagination into the rock,” Mr. Crouch says, “looking for clues that would lead him to a greater understanding of what wealth lay underground.” By 1865 he had acquired enough cash to buy a stake in a promising mine called the Kentuck. At first the investment looked to be another bust, but it suddenly hit big, paying out $1.6 million of the “precious needful,” as miners called valuable ore, over the next two years.
. . .
The author saves for last an account of the delicious comeuppance Mackay delivered to the American businessman Jay Gould –“the most hated man of the age.” Gould had secured a monopoly on trans-Atlantic telegraphy. Without competition, he gouged users, prompting Mackay, a believer in private enterprise, to lay his own undersea cable, thus breaking Gould’s stranglehold and winning public admiration on both sides of the Atlantic.
Mr. Crouch clearly admires his protagonist, at times nearly to distraction. He portrays Mackay throughout this well-written and worthwhile book as a man of high principle–kind, charitable and fair, dependably doing the noble thing. Strong and silent, he is the Gary Cooper of the sagebrush set. It ever so lightly strains credulity, however, to believe that Mackay didn’t harbor a little larceny in his heart, like nearly everybody on the Comstock during the mad rush. But readers may well want to take the author’s word that a man of such humility and generosity was exactly that. Nowhere will you read John Mackay’s name among the robber barons of his era. Some men who are dealt four aces in life deserve them.

For the full review, see:
Patrick Cooke. “‘The Man Who Hit the Mother Lode.” The Wall Street Journal (Saturday, July 7, 2018): C9.
(Note: ellipsis added.)
(Note: the online version of the review has the date July 5, 2018, and has the title “‘The Bonanza King’ Review: The Man Who Hit the Mother Lode.”)

The book under review, is:
Crouch, Gregory. The Bonanza King: John Mackay and the Battle over the Greatest Riches in the American West. New York: Scribner, 2018.

“Meditation Is Demotivating”

(p. 6) . . . on the face of it, mindfulness might seem counterproductive in a workplace setting. A central technique of mindfulness meditation, after all, is to accept things as they are. Yet companies want their employees to be motivated. And the very notion of motivation — striving to obtain a more desirable future — implies some degree of discontentment with the present, which seems at odds with a psychological exercise that instills equanimity and a sense of calm.
To test this hunch, we recently conducted five studies, involving hundreds of people, to see whether there was a tension between mindfulness and motivation. As we report in a forthcoming article in the journal Organizational Behavior and Human Decision Processes, we found strong evidence that meditation is demotivating.

For the full commentary, see:
Kathleen D. Vohs and Andrew C. Hafenbrack. “GRAY MATTER; Don’t Meditate at Work.” The New York Times, SundayReview Section (Sunday, June 17, 2018): 6.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date June 14, 2018, and has the title “GRAY MATTER; Hey Boss, You Don’t Want Your Employees to Meditate.”)

The article by Hafenbrack and Vohs, mentioned above, is:
Hafenbrack, Andrew C., and Kathleen D. Vohs. “Mindfulness Meditation Impairs Task Motivation but Not Performance.” Organizational Behavior and Human Decision Processes 147 (July 2018): 1-15.

For Job Creation, Firm Youth and Fast Growth Matter More than Small Size

(p. C3) Economist David Birch of the Massachusetts Institute of Technology claimed in the late 1970s–inaccurately, as it turned out–that small businesses were the jobs engine of the economy, which allowed advocates to argue that aid to small businesses was a driver of economic growth. This narrative was reinforced by the wave of startups in the tech sector in the 1980s and 1990s. By 2000, all new businesses, no matter how technologically primitive or undercapitalized, were being called startups. A new biotech company was a startup, but so was a new three-person lawn-mowing business. Only child-labor laws prevented lemonade stands from being classified as startups, too.
A 2010 study published by the National Bureau of Economic Research showed, however, that it is the age of a firm, not its size, that matters for job creation. Just as children grow faster than adults, young firms grow faster than mature ones.
. . .
Government at every level can certainly do more to eliminate unnecessary regulations and to streamline those regulations that serve crucial public ends. But such reforms should benefit all businesses, regardless of size.
. . .
Beyond the injustice of it, small-business favoritism reverberates throughout the economy, slowing growth in two ways. First, subsidies and other size-based industrial policies slow productivity growth by enabling less efficient small firms to gain more market share than would otherwise be the case. Second, discriminatory policies provide an incentive for small firms to remain small. Why add five more workers when doing so would subject you to a host of new regulations and restrict your access to government handouts?

For the full commentary, see:
Robert D. Atkinson and Michael Lind. “Stop Propping Up Small Business.” The Wall Street Journal (Saturday, April 7, 2018): C3.
(Note: ellipses added.)
(Note: the online version of the commentary has the date April 6, 2018.)

The commentary quoted above, is based on:
Atkinson,‎ Robert D., and Michael Lind. Big Is Beautiful: Debunking the Myth of Small Business. Cambridge, MA: The MIT Press, 2018.

The published version of the 2010 National Bureau of Economic Research working paper, mentioned above, is:
Haltiwanger, John C., Ron S. Jarmin, and Javier Miranda. “Who Creates Jobs? Small Vs. Large Vs. Young.” Review of Economics and Statistics 95, no. 2 (May 2013): 347-61.

Collaborative Robots (Cobots) Fall in Price and Rise in Ease of Programming

(p. B4) Robots are moving off the assembly line.
Collaborative robots that work alongside humans–“cobots”–are getting cheaper and easier to program. That is encouraging businesses to put them to work at new tasks in bars, restaurants and clinics.
In the Netherlands, a cobot scales a 26-foot-high bar to tap bottles of homemade gin, whiskey and limoncello so that bartenders don’t need to climb ladders. In Japan, a cobot boxes takeout dumplings. In Singapore, robots give soft-tissue massages.
Cobots made up just 5% of the $14 billion industrial-robot market in 2017, according to research by Minneapolis-based venture-capital firm Loup Ventures. Loup estimates sales will jump to 27% of a $33 billion market by 2025 as demand for the robotic arms rises. About 20 manufacturers around the world have started selling such robots in the past decade.

For the full story, see:
Natasha Khan. “Robots Shift From Factories to New Jobs.” The Wall Street Journal (Monday, June 11, 2018): B4.
(Note: the online version of the story has the date June 9, 2018, and has the title “Your Next Robot Encounter: Dinner, Drinks and a Massage.”)

Splendid, Excellent, Salubrious, Salutary, Healthy, Great Jobs Numbers

(p. A16) The real question in analyzing the May jobs numbers released Friday [June 1, 2018] is whether there are enough synonyms for “good” in an online thesaurus to describe them adequately.
So, for example, “splendid” and “excellent” fit the bill. Those are the kinds of terms that are appropriate when the United States economy adds 223,000 jobs in a month, despite being nine years into an expansion, and when the unemployment rate falls to 3.8 percent, a new 18-year low.
“Salubrious,” “salutary” and “healthy” work as words to describe the 0.3 percent rise in average hourly earnings, which are up 2.7 percent over the last year — a nice improvement but also not the kind of sharp increase that might lead the Federal Reserve to rethink its cautious path of interest rate increases.
And a broader definition of unemployment, which includes people who have given up looking for a job out of frustration, fell to 7.6 percent. The jobless rate for African-Americans fell to 5.9 percent, the lowest on record, which we would count as “great.”
If anything, some of the thesaurus offerings don’t really do these numbers justice.
. . .
It isn’t perfect — wage growth remains unexceptional despite its growth spurt in May, and the ratio of prime-age adults working remains below its historical levels.
But it has been a strikingly durable and steady expansion, which is what the nation needed after the scars of the 2008 recession. And that’s just plain “good.”

For the full story, see:
Neil Irwin. “How Good? Words Fail Us.” The New York Times (Saturday, June 2, 2018: A16.
(Note: ellipsis, and bracketed date, added.)
(Note: the online version of the story has the date June 1, 2018, and has the title “We Ran Out of Words to Describe How Good the Jobs Numbers Are.” The online version says the print version appeared on May 6 on p. A17 of the New York Edition. My print version, as usual, was the National Edition.)

Those Born Poor, Benefit Less from College Degree

(p. A23) It’s a cruel irony that a college degree is worth less to people who most need a boost: those born poor. This revelation was made by the economists Tim Bartik and Brad Hershbein. Using a body of data, the Panel Study of Income Dynamics, which includes 50 years of interviews with 18,000 Americans, they were able to follow the lives of children born into poor, middle-class and wealthy families.
They found that for Americans born into middle-class families, a college degree does appear to be a wise investment. Those in this group who received one earned 162 percent more over their careers than those who didn’t.
But for those born into poverty, the results were far less impressive. College graduates born poor earned on average only slightly more than did high school graduates born middle class. And over time, even this small “degree bonus” ebbed away, at least for men: By middle age, male college graduates raised in poverty were earning less than nondegree holders born into the middle class. The scholars conclude, “Individuals from poorer backgrounds may be encountering a glass ceiling that even a bachelor’s degree does not break.”
. . .
It shouldn’t here, either: According to the Bureau of Labor Statistics, fewer than 20 percent of American jobs actually require a bachelor’s degree. By 2026, the bureau estimates that this proportion will rise, but only to 25 percent.
Why do employers demand a degree for jobs that don’t require them? Because they can.
What all this suggests is that the college-degree premium may really be a no-college-degree penalty.

For the full commentary, see:

Ellen Ruppel Shell. “College May Not Be Worth It Anymore.” The New York Times (Thursday, May 17, 2018): A23.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date May 16, 2018. The online version is substantially longer, and in some places has different wording, than the print version. Where the wording of a quoted passage differs, my quotation above follows the print version.)

The research by Tim Bartik and Brad Hershbein, mentioned above, is:
Bartik, Timothy J., and Brad J. Hershbein. “Degrees of Poverty: The Relationship between Family Income Background and the Returns to Education.” Upjohn Institute Working Paper 18-284, March 2018.

Shell’s commentary is related to her forthcoming book:
Shell, Ellen Ruppel. The Job: Work and Its Future in a Time of Radical Change. New York: Currency, 2018.

“Plumbing Industry Is Throwing the Kitchen Sink at Job Candidates”

(p. A1) FORT COLLINS, Colo.–The fast-growing business offers all the perks a pampered Silicon Valley tech worker might expect: An on-site tap flows with craft beer and the kitchen is stocked with locally roasted espresso beans. There is a putting green and a smoker for brisket lunches. Next up: a yoga studio.
Welcome to the gushing job market…for plumbers.
Colorado’s Neuworks Mechanical Inc. employs 75 plumbers but needs 15 to 20 more. To keep them happy, it offers “a lot of Zen,” says business-development manager Jackie Sindelar. That includes a sharing exercise that “brings out your raw emotions and makes you vulnerable,” she says.
Drained from a labor shortage, the plumbing industry is throwing the kitchen sink at job candidates.
Bonfe’s Plumbing, Heating & Air Service Inc. of South St. Paul, Minn., boasts an array of arcade games and a “quiet room”–a plush hangout space with insulated walls painted a calming sky blue. It has a lockable door, a comfy couch, a recliner and a sound machine that babbles with the soothing audio of ocean waves.
. . .
U.S. job openings hit a record 6.6 million in March, with the construction industry–where plumbers are heavily employed–seeing one of the largest jumps.
Building, needed repairs and retirements are fueling demand for plumbers at the same time the U.S. jobless rate in April fell below 4% for the first time since late 2000.
The annual median pay for plumbers, pipefitters and steamfitters was nearly $53,000 a year in 2017, according to federal data, but it isn’t uncommon to see jobs advertised for far higher wages, from $70,000 up to six figures.

For the full story, see:
Levitz, Jennifer. “Plumbing Firms, Drained by Labor Shortage, Tap Perks.” The Wall Street Journal (Thursday, May 24, 2018): A1 & A10.
(Note: ellipsis internal to sentence, in original; ellipsis between paragraphs, added.)
(Note: the online version of the story has the date May 23, 2018, and has the title “Perks for Plumbers: Hawaiian Vacations, Craft Beer and ‘a Lot of Zen’.” The last sentence quoted above appeared in the online, but not in the print, version of the article.)

Assigning Property Rights to Internet Data Creators

(p. C3) Congress has stepped up talk of new privacy regulations in the wake of the scandal involving Cambridge Analytica, which improperly gained access to the data of as many as 87 million Facebook users. Even Facebook chief executive Mark Zuckerberg testified that he thought new federal rules were “inevitable.” But to understand what regulation is appropriate, we need to understand the source of the problem: the absence of a real market in data, with true property rights for data creators. Once that market is in place, implementing privacy protections will be easy.
We often think of ourselves as consumers of Facebook, Google, Instagram and other internet services. In reality, we are also their suppliers–or more accurately, their workers. When we post and label photos on Facebook or Instagram, use Google maps while driving, chat in multiple languages on Skype or upload videos to YouTube, we are generating data about human behavior that the companies then feed into machine-learning programs.
These programs use our personal data to learn patterns that allow them to imitate human behavior and understanding. With that information, computers can recognize images, translate languages, help viewers choose among shows and offer the speediest route to the mall. Companies such as Facebook, Google and Microsoft (where one of us works) sell these tools to other companies. They also use our data to match advertisers with consumers.
Defenders of the current system often say that we don’t give away our personal data for free. Rather, we’re paid in the form of the services that we receive. But this exchange is bad for users, bad for society and probably not ideal even for the tech companies. In a real market, consumers would have far more power over the exchange: Here’s my data. What are you willing to pay for it?
An internet user today probably would earn only a few hundred dollars a year if companies paid for data. But that amount could grow substantially in the coming years. If the economic reach of AI systems continues to expand–into drafting legal contracts, diagnosing diseases, performing surgery, making investments, driving trucks, managing businesses–they will need vast amounts of data to function.
And if these systems displace human jobs, people will have plenty of time to supply that data. Tech executives fearful that AI will cause mass unemployment have advocated a universal basic income funded by increased taxes. But the pressure for such policies would abate if users were simply compensated for their data.

For the full commentary, see:
Eric A. Posner and E. Glen Weyl. “Want Our Personal Data? Pay for It.” The Wall Street Journal (Saturday, April 21, 2018): C3.
(Note: the online version of the commentary has the date April 20, 2018.)

The commentary quoted above, is based on:
Posner, Eric A., and E. Glen Weyl. Radical Markets: Uprooting Capitalism and Democracy for a Just Society. Princeton, NJ: Princeton University Press, 2018.

After Losing Circus Job, Clown Applies His Skills by Running for Congress as a Democrat

(p. A1) As an elephant handler for Ringling Bros. and Barnum & Bailey Circus, Lauren Ramsay used to spend her time herding four-ton pachyderms.
As an elephant handler for Ringling Bros. and Barnum & Bailey Circus, Lauren Ramsay used to spend her time herding four-ton pachyderms.
Last May, the circus closed down after 146 years traveling the country and thrilling millions with “the Greatest Show on Earth.” In the year since, the contortionists, acrobats, stilt walkers and other per-(p. A8)formers have walked a tightrope trying to adapt to more-conventional jobs, while sometimes using their circus skills. It takes some professional clowns a while to find a second act: One is now running for Congress.
Former clown Sandor Eke, of Las Vegas, Nev., wanted to put his entertaining and juggling skills to work behind a bar after 20 years with the circus. But nobody would hire him without experience. He’s now picking up random clown jobs and painting houses. “I try to have fun with it, but it’s not exactly what I wanted with life. I mean, I used to be a clown!”
In April, Mr. Eke auditioned for a mascot job with the Oakland Raiders once they move to Las Vegas for the 2020 season. He tried on the “Rushing Raider” costume, and did what he called a “crowd-pleasing routine.” He’s waiting to hear back, but remains hopeful. “I got good vibes,” he says.
. . .
Former clown Steve Lough, of Camden, S.C., who left the circus in 2004, later found employment working for McDonald’s at special events and volunteering for political campaigns.
This spring, Mr. Lough decided to run for office himself and is running in the Democratic primary for U.S. Congress in South Carolina. “I juggle at every campaign stop now,” he says.
He did a pratfall at the South Carolina Democratic Convention in April that “got a big reaction and laugh.”
. . .
. . . Mr. Lough says the crowds love his clown skills.

For the full story, see:
John Clarke. “Ex-Clown Is Hard to Hide on a Résumé.” The Wall Street Journal (Tuesday, May 22, 2018): A1 & A8.
(Note: ellipses added.)
(Note: the online version of the story has the date May 21, 2018, and has the title “What’s A Clown to Do After the Circus? One Is Running for Congress.”)