Entries Tagged as 'employment'

The Texas Non-Miracle

David Frum September 22nd, 2011 at 11:34 am 38 Comments

About all those new jobs created under Gov. Rick Perry…

The Center for Immigration Studies reports some facts that should sprinkle a little cold water on over-heated claims for the low-wage/high-immigration Texas economic model.

Of jobs created in Texas since 2007, 81 percent were taken by newly arrived immigrant workers (legal and illegal).

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Res Judicata: Americans Will Do the Jobs

August 8th, 2011 at 1:26 am 43 Comments

“On lesser days, doctor unmentionable objects block the huge grates in the sewer channels. The workers descend knee deep into the muck and scrape at the dripping clogs. The gunk drips to their shoulders and splashes on their faces, check working its way into pores and psyches.”  This is how the New York Times described the work of sewage treatment workers in a story last year about their fight for higher pay.

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My Life at the Bottom of the Food Chain

August 6th, 2011 at 12:00 am 128 Comments

I have a friend who has recently graduated from the University of Toronto with a B.A. in History. I’ve been living with him this past summer, and he has been unemployed for most of it. About a month ago, he came home happy. He had found a job at an upscale restaurant in the city.

After a bit of prodding, he finally admitted to what it was. After years of education, thousands of dollars spent on tuition, countless readings and promises for a bright future, my friend was now a busboy.

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The Jobs Report is Awful, but a Default is Worse

July 8th, 2011 at 10:19 am 19 Comments

The latest jobs report is truly dismal in that it shows a slight gain in jobs. However, it isn’t the “death blow” or sure sign of a double-dip recession that might send President Obama packing even against a very weak Republican candidate. While two straight months of bad jobs reports creates a real opening for the GOP the problem is that with few exceptions neither the Republicans in Congress or the campaign trail have any novel medicine for what ails the nation or any plans to create jobs. (Some commercials coming out of Mitt Romeny’s campaign at least acknowledge the unemployment problem.)

In fact, a growing faction (and I count a few people I consider friends as members of it) somehow seems to think that a default on the debt would get the nation’s house into order on the basis that it would cut spending. It would cut spending, and cause a worldwide depression at the same time. Republicans need to do a lot more to convince voters that they can govern and a legitimate jobs plan would be a very good start.

Pawlenty’s Blue-Collar Blues

David Frum June 8th, 2011 at 7:48 am 51 Comments

Tim Pawlenty supporters cite their man’s blue-collar origins as reason to hope that he can reach voters unreachable by say Mitt Romney or Jon Huntsman.

On the evidence of Pawlenty’s big economic speech at the University of Chicago, those hopes are unlikely to be realized.

The problem is not merely the Pawlenty economic plan itself, although it does not help.

The deeper problem is the fundamental view of the economy – of human society really – revealed by this answer to a Chicago student’s question, as recorded by FF‘s Noah Kristula-Green:

There’s about 5% of this country who are our entrepreneurial class … if that 5% becomes 6%, 7%, 8% or 9% then we have a bright future, and if that 5% becomes 4% 3% or 1%, we’re in deep doo doo, we’re in deep crap.

If you imagine that entrepreneurs form a small elite “class” – and that 95% or thereabouts of the human species merely ride along on the wealth created by others – well you may get an “A” in your seminar at the Objectivist Institute. On the other hand, you also probably disqualify yourself from winning much respect or affection (or even much of a hearing) from the voters you dismiss as unthinking order-takers.

Such a view puts the proponent on the wrong side of Adam Smith: “The propensity to truck, barter and exchange one thing for another is common to all men ….”

But maybe more relevantly and urgently, Tim Pawlenty has aligned himself on the wrong side of the first and greatest of Republicans, Abraham Lincoln, who in his 1859 address to the Wisconsin State Agricultural Society delivered a withering retort to those who advance the kind of argument that Tim Pawlenty yesterday advanced:

By some it is assumed that labor is available only in connection with capital – that nobody labors, unless somebody else owning capital, somehow, by the use of it, induces him to do it…. Having proceeded so far, they naturally conclude that all laborers are naturally either hired laborers or slaves. They further assume that whoever is once a hired laborer, is fatally fixed in that condition for life; and thence again, that his condition is as bad as, or worse than, that of a slave. This is the “mud-sill” theory. But another class of reasoners hold the opinion that there is no such relation between capital and labor as assumed; that there is no such thing as a free man being fatally fixed for life in the condition of a hired laborer; that both these assumptions are false, and all inferences from them groundless.

No Evidence of Double Dip Recession With New Job Numbers

April 1st, 2011 at 10:37 am 104 Comments

Although the just-announced drop to 8.8 percent unemployment hardly reflects a thriving economy, it does seem to show that the economic recovery has at least some legs. It’s unlikely the economy will be anywhere near full employment when President Obama comes up for reelection next year but there’s little to indicate a chance of a significant “double dip” recession. Three quick thoughts:

First, the evidence of recovery is actually pretty strong. Only two sectors, information services and construction, saw employment declines and the construction employment declines is within the survey’s margin of error. The workforce participation rate, which had been slipping, also remained stable.

Second, whatever their consequences—and a lot of them will be negative—there’s also little evidence that the massive financial reform and health care laws are causing short-term problems for the industries they impact. Financial services employment, which had been falling (and is a bit difficult to measure in any economy because of a quirk in the way real estate agents report employment status) actually trended upward. Health care, which added employees even in at the depths of the 2008 recession, showed another quarter of strong employment gains.

Third, Republicans will fail both in Congress and in the 2012 elections if they don’t change their style. An angry, pessimistic reading of the country’s future simply doesn’t jibe with the reality of a moderately strong recovery. It will make Republicans look bad and cost them at the polls.

Are American Workers in a Great Stagnation?

March 29th, 2011 at 2:56 pm 14 Comments

Economist Tyler Cowen, of whom I’m generally a big fan, has summarized an interesting post by Michael Mandel suggesting that recent claims of productivity growth have been illusory.  Cowen ends by trumpeting Hamilton Project analyses claiming to show that men’s earnings declined by 28 percent between 1969 and 2009.  This claim, like the Mandel analyses, reinforces Cowen’s argument that we are in a Great Stagnation, but it’s not true!  Stop this meme!

I’ve not had much time to blog recently, so I submitted a brief critique in the comments to the David Leonhardt blogpost that introduced the world to this unfortunate study (co-authored, unfortunately, by a fellow classmate of mine from Harvard’s inequality program) and in the comments to the Hamilton Project post.

Here’s the basic problem: the analyses assign all nonworking men annual earnings of $0, and since labor force participation among men has declined, the result is a big drop in median earnings over time.  But a lot of that decline in labor force participation is attributable to earlier retirement (they include men as old as 64), later and longer school enrollment (they include men as young as 25), rising “disability” rates (which do not correspond in any obvious way with changes in health or job demands but which do correspond with increasing generosity in disability benefits), and other factors having nothing to do with the strength of labor markets.

I re-crunched the numbers as follows.  I included all men age 20 to 59 except for those who said they worked only part of the year or not at all because they were retired, going to school, in the Armed Forces, sick or disabled, or taking care of home and family.  Using the inflation adjustment that the Hamilton guys likely used, I find a decline in median earnings of 9 percent, not 28.

Note, however, that comparing 1969 and 2009 holds up a likely peak year (when the business cycle was at a high) to a trough year (when it was at a low).  Comparing 1969 to 2007 is apples-to-apples, and when I did that, the median was exactly the same in both years (to the dollar, which is a pretty crazy coincidence).  Finally, if I use the Bureau of Economic Analysis “personal consumption expenditures” deflator, which I think overstates inflation somewhat less than other commonly-used deflators, median earnings among men rose 7 percent from 1969 to 2007.

Seven percent is no great shakes, but this figure is also too small for assessing how men’s economic fortunes have changed over time.  None of these analyses account for the fact that as a group, husbands reduced their hours over time in response to rising work and wages among wives.  Nor do they account for the rising share of non-wage benefits in total compensation (health and retirement benefits have eaten into wages, presumably following the preferences of the median worker).  Nor do they include the impact of taxes (which have declined) and tax credits (which have increased).  In addition, even my figures may overstate inflation, thereby understating the earnings increase over time–inflation measurement is much more tricky when choices within categories of goods and services and retail outlets explodes. Finally, the analyses do not account for changes in the composition of the population.  For instance, the fact that more men today are nonwhite and foreign-born pushes the 2009 median down, but it is likely that the typical white, nonwhite, native-born, and foreign-born men are all doing better than the trend in the overall median implies.  Someday I’ll get to a full analysis.

Subject for discussion (and a future post): how are we as a nation supposed to clearly understand the state of the economy and our living standards when even moderate think tanks and researchers are so eager to hype negativity?  As I’ve said before, policymakers aren’t the only people who–individually or collectively–can talk down the economy.

Fighting the Deficit with Tax Reform

February 28th, 2011 at 12:36 pm 12 Comments

Congress is once again considering revamping the tax code, starting with corporate taxes.  It may be heresy to say, but there was never a worse time to be considering corporate tax reform. Ditto for individual tax reform. With annual deficits, national debt, state debt, employment and the entire array of ‘entitlements’ all pointed in the wrong direction, addressing real tax reform without a reasonable federal and state business plan borders on silliness.

Add to the overall picture that the President is making tax proposals regarding the oil industry which would drive the price of oil up and enacting drilling restrictions which could only drive the availability of American petroleum resources down.

In this arena, trying to achieve real tax reform is far from priority number one, two or frankly, fourteen.

As with all things, if one does not know where they are going, any road will get them there. If the Congress and the President need a national financial crisis that will make the mortgage crisis look like a game for the “B” team, the game currently being played will get them there, sooner rather than later. Everyone who wants to know accepts that the current federal and state borrowing game will end with the inability to borrow or with federal and state governmental entities finally taking action on entitlements, reducing spending and enacting government pension reform. It is not all that complicated.

If we must first act through the Internal Revenue Code, the easiest place to start is with the individual income tax. There are a few easy, yet politically painful first steps that could be taken.

a) Step one is an income tax hike with entitlement reform built into a few changes to the taxation of Social Security. Changes to the taxation of Social Security payments have been made before and would not be a unique change to the system.

Unlike other pension plans, the investment return on the amounts invested (Social Security taxes paid by the employee) in Social Security are not taxed. The investment return on all other pension plans is taxed. The investment return on Social Security payments should be taxed to level the playing field with all other pension payments. The taxation methodology could be achieved in a manner identical to the taxation of other life annuities.

For tax preparation purposes, the taxable amount of Social Security payments could be determined by the Social Security Administration and withholdings could be made from the monthly payments to insure ultimate payment. Of course, the adoption of such a plan could be phased in and as a side benefit, the mind boggling calculations of partial taxation of Social Security included in the Internal Revenue Code could be eliminated from the law.

This idea would be politically very painful, but with graduated tax rates, the wealthy would bare a higher tax rate on their Social Security receipts and this should ease some of that political pain.

b) Step two is the elimination of the state tax deduction, the lowering of the overall Federal individual tax rate and the accompanying reduction of the number of alternative minimum taxpayers to virtually none. This is one of the great no-brainers available in individual tax reform.  This would reduce the brain damage of planning and calculating the alternative minimum tax and eliminate the indirect subsidy that low income tax states pay high income tax states through the deduction of state taxes.

c) Step three is withholding on taxpayers with student loans. This will create increased revenues to the federal government without increasing anyone’s taxes. It would merely create an organized and effective way to collect student loans which were made in good faith and should be repaid in good faith.

Will any of these reforms make a material impact on the deficit? Actually, they probably would make a good first dent. The change to Social Security taxation would produce serious money and the repayment of student loans certainly should produce billions over the next decade. The elimination of the alternative minimum tax for ninety percent of the current payers should produce a significant number of smiles and such a move in the interest of intelligent taxation alone is worth the effort.

As to the initial question: a few solid policies moving the deficit and total debt in the right direction would bring our country a great deal closer to a return to prosperity than rearranging the deckchairs of corporate taxation.

And no matter what happens on the revenue side, governmental spending and involvement in our lives needs to be dramatically reduced.