Four measures of labor market losses in the pandemic

Below is a graph of 4 ways of measuring the downturn in the labor market due to the pandemic:

1. Payrolls (blue) – this is the headline jobs number from the establishment survey
2. Civilian employment (green) – this is the equivalent number from the household survey.
3. Aggregate hours worked (red) – tracks hours rather than jobs.
4. Aggregate payrolls (gold) – tracks total payrolls rather than jobs.


First of all, note that the two jobs measures from the two component surveys track similarly. They are currently down -5.7% and -6.5% respectively from their February peaks.

The Guardian newspaper has a story about wages in England:

A shortage of factory workers is starting to push up pay rates but wage rises in the services sector remain rooted at around 2%, according to the latest feedback from the Bank of England’s regional agents.

The central bank said its agents, which are based in offices across the country, found that shortages this month across the manufacturing sector were leading to a “slight increase in pay growth” that would take average rate of pay rises up by half a percent, from 2-3% this year to 2.5%-3.5% in 2018.

The report appeared to justify Threadneedle Street’s move last week to increase interest rates, which officials at the bank said was needed to dampen the inflationary effects of wage rises.

A survey of employers in October by the Recruitment and Employment Confederation chimed with the BoE report after it found firms were having to raise their pay offers to hire new staff.

The REC said the increase, the second quickest rise in wages since November 2015, followed a fall in unemployment to the lowest level in 40 years that had restricted the number of workers available to take up new positions. It warned that higher pay offers were also needed to counter a growing shortage of EU workers ahead of Brexit.

“We already know that EU workers are leaving because of the uncertainties they are facing right now,” said Kevin Green, REC’s chief executive. “We therefore need clarity around what future immigration systems will look like. Otherwise, the situation will get worse and employers will face even more staff shortages.”

Official data shows that in August net migration fell to its lowest level in three years, with more than half the drop caused by EU citizens leaving and fewer arriving since the Brexit vote.

I find it truly shocking that employment and wages are determined by the market forces, or that the supply of labor is affected by whether foreigners can freely enter and exit a market. Who could have imagined such absurd chains of events? Fortunately, we can rest assured that this is an aberration and can’t possibly apply in the US.

A presidential candidate like Donald Trump should not be viable. Candidates he supports should not be viable. The existence of Donald Trump should be a boon for the Democrats. And, in fact, it has been.

But it hasn’t been enough. Perhaps four (or eight?) years worth of results will tip the balance for Democrats, but it is reasonable to ask: why have Democrats been coming up short against Trump, both in the Presidential election and in special elections since?

The reason is that the Democrats have abandoned their traditional base (i.e., the working class). So why the change?

I would suggest it is because the middle class intelligentsia from which most leaders and volunteers of the Party spring is increasingly reliant on people who have believe in nonsense.

Consider a paper entitled Evolution is Not Relevant to Sex Differences in Humans Because I Want it That Way! Evidence for the Politicization of Human Evolutionary Psychology published in EvoS Journal: The Journal of the Evolutionary Studies Consortium.

Here’s is the article’s abstract:

This research explored political motivations underlying resistance to evolutionary psychology. Data were collected from 268 adults who varied in terms of academic employment and parental status. Dependent variables represented whether participants believed that several attributes are primarily the result of biological evolution versus socialization. Variables addressed attitudes about: (a) sex differences in adults, (b) sex differences in children, (c) sex differences in chickens, (d) human universals, and (e) differences between dogs and cats. Using a Likert-scale, participants were asked to rate the degree to which they believed items were due to “nature” versus “nurture.” For instance, one of the items from the cat/dog subscale was “Dogs are more pack-oriented than cats.” Independent variables included political orientation, parental status, and academic employment status. Political liberalism corresponded to endorsing “nurture” as influential – but primarily for the two human sex-difference variables. Academic employment status was independently predictive of the belief that sex differences are the result of “nurture.” This effect was exacerbated for academics who came from sociology or women’s studies backgrounds. The effect of academic employment status also corresponded to seeing behavioral differences between roosters and hens as caused by “nurture.” Further, parents were more likely than non-parents to endorse “nature” for the sex-difference variables. Beliefs about differences between cats and dogs and beliefs about causes of human universals (that are not tied to sex differences) were not related to these independent variables, suggesting that the political resistance to evolutionary psychology is specifically targeted at work on sex differences.

While the paper deserves its own post, for our purposes, a quick summary is this: a person’s tendency to attribute differences between the behavior of roosters and hens to nurture rather than biology increases if the person is either an academic or not a parent. The paper also notes that this effect seems especially pronounced among Gender Studies scholars. The sample size is a bit small, but meshes with what can be observed on the evening news or twitter.

Conservatives have more children than liberals, and academics tend to lean left, so the particular brand of crazy discussed in the paper above is a Democrat rather than a Republican phenomenon. More than that – the childless and academics have the time to set the agenda for causes and organizations in which they get involved.

The adoption of the an anti-Biology stance (and yes, the Republicans have their own, different and long-standing anti-Biology stance… and it has them cost them) comes at the same time as the Democrats have been jettisoning Labor as their cause. This is not a coincidence. The historical image of Labor is of men trudging off to work every day at the crack of dawn to support their nuclear family. In today’s lexicon, those are oppressors who maintain the toxic male patriarchy.

Once you identify the problem, the solution is easy: toss those fat cats who lord their privilege with sweat stained undershirts and grime under their finger nails under the bus. And don’ t stop there. Oppose their elitist attitude by finding common cause with other ideas that are anathema to them. Labor worries about unrestricted unskilled immigration, fearing it will lower wages, cost jobs, and making the country less safe? The obvious solution is to bring in Sayfullo Saipov and pretty much anyone for whom Saipov cares to vouch. The US taxpayer will be happy to spring for the bill.

And after all of this, the misogynist racist pigs prove their perfidy by refusing to give their votes to the Democrats who despise them and want them dead. They begin voting Republican. Sure, Republican economic policies not only don’t work, the benefits they do manage to generate don’t trickle down to the working class. But at least Republicans aren’t purposely screwing them over, and the Republican Party is willing to give them some hope along with the bad economic policy. Hope is free, after all.

The good news is that insanity isn’t completely entrenched in the Democratic Party. It hasn’t had control long – less than a decade, in fact. It can be reversed. I’m just afraid that it isn’t going to happen.

Back in 1934, the Bureau of Labor Statistics produced a fascinating and very readable book entitled History of Wages in the United States From Colonial Times to 1928 : Bulletin of the United States Bureau of Labor Statistics, No. 604. There’s lots of cool stuff there, but it quickly becomes apparent that Colonial America was a whole other country than today’s America.

I want to quote extensively from the beginning of the book. (Note – I’m not going to copy footnotes.) It begins with a chapter entitled “Early Working Conditions and Wage Legislation.” The chapter begins with this:

“ High American wages” date from the beginning of the country, to judge from evidence contained in the earliest colonial records in which reference to wages is found. Letters and reports from agents of the British companies engaged in colonial settlement and from the early colonial governors, express consternation amounting to distress over the “ exhorbitant demands” of craftsmen and laborers. A colonial treasurer of the Virginia Colony declared, about 1625, that the wages paid there were “ intolerable” and “ much in excess of the sum paid to the same class of persons in England.” In 1633 Governor Winthrop, of the Massachusetts Bay Colony, noted that the “ excessive rates ” charged by workmen “ grew to a general complaint ” which called for legislative action, and a colonial governor in North Carolina complained that “ the Price of Labour is very high.”

From the workman’s side of the story comes similar testimony treated from a different viewpoint. Gabriel Thomas, who wrote a history of “ the Province and Countrey of Pensilvania” in 1698 for the purpose of inducing the poverty-stricken workers of England to emigrate, asserts that “ the encouragements are very greate and inviting, for Poor People (both Men and Women) of all kinds can here get three times the wages for their Labour they can in England or Wales;” and William Penn says in a letter that “ all provisions are reasonable but Labour dear, which makes it a good Poor Man’s country.” Another promoter, with a zeal suggestive of present-day publicity methods, wrote glowingly of the “ happy circumstances” in which laborers in New Jersey were placed in 1641.

Moving on:

Governor Winthrop, of the Massachusetts Bay Colony, declared in 1630 that the “ scarcity of workers caused them to raise their wages to an excessive rate;” a century and a quarter later Governor Dobbs, of North Carolina, reported that “ artificers and labourers being scarce in comparison to the number of Planters, when they are employed they won’t work half, scarce a third part of work in a Day of what they do in Europe, and their wages are from two shillings to 3, 4, and 5 shillings per Diem this currency.”

Today’s Planters, er, farmers sympathize.  Of course, today’s outrage is that workers get paid more in the US than in Mexico.

A bit later, still in chapter 1, we get a section entitled “Control of Workers”:

Both of these conditions, the scarcity of labor and the resulting high wages, were met differently by the northern and the southern colonies… The New England colonies undertook to meet them by regulation and legislation. If local laws limiting property holding and citizenship to “ freemen” and “ commoners” operated to exclude needed tradesmen from a town, the laws were either suspended in given cases or the town found some way to get around them in order to secure the desired services. Both Boston and Charlestown in 1640 waived certain of the citizenship requirements to obtain carpenters. As early as 1635 Lynn voted to admit a landless blacksmith, and later granted him 20 acres of land, thus keeping both the blacksmith and the letter of the law requiring that residents be landholders.

These concessions as a rule had strings to them. When 20 citizens of Haverhill, Mass., raised a subscription among themselves to purchase a house and land in order that a blacksmith could come into the settlement, they required that the smith agree to remain for seven years, and did not permit him to work for any person other than the 20 subscribers. The town of Windsor, Conn., presented a currier with a house and land and “ something for a shop,” but it was to belong to him and his heirs only on condition that “ he lives and dies with us and affords us the use of his trade.” Otherwise the property was to revert to the town. In 1656 William How was granted “ twelve acres of meadow land and twelve acres of upland ” in what afterwards became the great textile center of Lowell, Mass., “ provided he set up his trade of weaving and perform the town’s work.”

Once established in the colony, workmen were under the rigid regulation and control of a governmental system which, to quote Weeden, believed that it “ could legislate prosperity and well-being for everyone, rich or poor.” Impressment of labor was one tenet of that system, and “ either the public need or the demands of private business could enforce it.” As a rule it was only in harvest time that craftsmen were impressed into private service, but carpenters were sometimes drafted to build houses for individuals. Work on the public roads one day in the month was required of every workman in Salem, and he was subject to a fine of 3 shillings if he did not comply. When the selectmen of Dedham, Mass., decided to build a meeting house, the committee in charge was authorized to “ order men to worke upon the same.”

The next section of Chapter 1 deals with “Wage Legislation”

It was in legislation dealing with wages, however, that the authorities in the New England colonies made their most persistent efforts to control workers. Plymouth Colony and Massachusetts Bay Colony passed similar laws in 1630 fixing a maximum rate of pay. In Massachusetts Bay Colony:

It was ordered that Carpenters, Joyners, Brickelayers, Sawers and Thatchers shal not take above 2s. [48.6 cents] a day, and 16d. [32 cents] a day if they have meate and drinke, nor any man shall give more, under paine of 10s. [$2.43] to taker and giver; and that sawers shal not take above 4s. 6d. [$1.00] ye hundred for boards, att six score to the hundred, if they have their wood felled and squared for them, and not above 5s. 6d. [$1.33] if they fell and square their wood themselves. It was ordered that labourers shal not take above 12d. [24.3 cents] a day for their worke, and not above 6d. [12 cents] and meat and drink, under paine of 10s. [$2.43].

Although this law was not successful and operated less than six months, the court tried again in 1633, with lower rates and evidently greater determination, to dictate wages. The second ruling kept the same rate of 2s. a day for “ master” workmen—building tradesmen, mowers, and wheelwrights— but the rate with “ dyett” became 14d. (28 cents) a day instead of 16d. “ Master taylors” were allowed 12d. (24.3 cents) and “ inferior taylors” 8d. (16 cents) per day “ with dyett.” Instead of fixing the rate for laborers, or “ inferior” workmen, as did the 1630 act, that of 1633 left its determination to the town constable and “ two indifferent freemen,” probably for each and every given case.

Of course, it helps if the workers know their place.  The powers that be knew how to keep workers from developing fancy tastes that might lead them to get uppity, though truth to tell, a bit more than that might be happening in the quote below:

A few years later the court, “ aware that the board at public houses, if extravagant, not only required a corresponding price from the traveller, but also put him in the hazard of contracting a taste for similar fare at his own house, and thus promoted a costly mode of living, ever unfavorable to the pecuniary concerns of a community,” tried another way of helping the consumer. It declared that:

Whereas complaint hath bene also made that diverse pore people, who would willingly content themselves with meane dyet are forced to take such dyet as is tendered them at 12d. [24.3 cents] the meale or more; it is now ordered that every keeper of such Inn or comon vicualling house shall sell and allow unto every of their guests such victuals as they shall call for, and not force them to take more or other than they desire, bee it never so meane and small in quantity, and shall affoard the same and all other dyet at reasonable prizes upon paine of such fine as the Court shall inflict according to the measure and quantity of the offence.

This law was enacted in 1637.

Anyway, the book is chock full of good stuff. I might quote some more in later posts.

by run 75441

“The Treadmill and the Poor Law are in full vigour, then?” A Christmas Carol, Charles Dickens

“That’s Baloney” stated Rep. Micky Hammon, R-Decatur, Alabama; the immigration bill cosponsor, told the Huntsville Times.

“It’s clear the study over estimates the negative and under estimates the positive to skew the result toward an agenda,” Hammon said. “If 40,000 illegal workers leave the state, they free up jobs that homegrown Alabamians are happy to have.”
 The Cost of Alabama Immigration Law (H.B. 56) Disputed.

“Alabama has the lowest unemployment rate among seven southeastern states,” the spokeswoman for Governor Robert Bentley said.

I recently completed a quip to Senator Levin of Michigan who was commenting on the fall of the unemployment rate in Michigan and his plan to jump on the deficit reduction bandwagon at the same time. I thought by now most states and the relative “pols” would know a drop in U3 state wide or nationally does not necessarily mean an increase in employment. If the Civilian Labor Force drops in numbers because people give up looking for work, than it is possible for U3 to decrease. This is precisely what has happened in Alabama.

“People are dropping off unemployment rolls because they’ve become discouraged by not being able to find a job and have stopped looking, according to an analysis by Arise Citizens’ Policy Project. Alabama’s labor force shrank by more than 6,000 workers in October, and the labor force has been shrinking since June. Economists say a shrinking labor force makes it easier for a state to post an unemployment rate decline, even if job growth is small.” …“Analysis shows a steep drop in the state’s unemployment rate isn’t because of Alabama’s overreaching immigration law”
Birmingham News

It appears kicking the illegal immigrants out of Alabama doesn’t do much for getting people back to work. Maybe those UAW jobs which did not require more than a high school education and a good work ethic were not as bad as some Senators made them out to be?

“Are there no prisons? Are there no workhouses?” A Christmas Carol, Charles Dickens

It appears those students who went to Law School, shelled out $100,000 or more to get the exclusive Juris Doctorate, and as a result expected to make the big bucks. They were sadly disappointed when they could not find a job even with the best of credentials. So what does a newly minted attorney to do? Of course, sue the School of Law which they attended for false advertising.

“Adam Bevelacqua graduated from Brooklyn Law School last year with $100,000 in debt but high hopes for his future. He passed the bar on his first try in New York and had internships to highlight on his resume. And, according to his research, the school’s job placement rate for new graduates was between 90 to 95 percent. But Bevelacqua, 29, is no longer as optimistic.

“I’ve been looking for work ever since,” Bevelacqua told msnbc.com. “The jobs aren’t really there.”
On Wednesday, Bevelacqua joined 50 other law school graduates from across the country who sued their alma maters, alleging they were misled about job prospects and burdened with huge amounts of student debt.”
MSNCB News Law schools face lawsuits over job-placement claims

The state of Alabama and Jefferson County are in need of good and cheap attorneys to defend the H.B. 56 law and to process Jefferson County’s bankruptcy. The going rate right now is $1 million per month or enough to fund a few attorneys. Maybe the law labour has to relocate and go to where the demand is? Any takers???

“Please Sir, I want some more.” Oliver,” Charles Dickens

The Center for Progressive Studies Looks at  “Immigrants and the Child Tax Credit”
In order to fund the Payroll Tax Credit and instead of whacking the 1% of the taxpayers making > $500,000 annually; Congress has decided to whack the children of immigrants. Parents claiming a tax credit using the ITIN must now provide a Social Security number. Most likely, they do not have a legitimate SS number. Isn’t this like the feudal wars? Knights on horseback slaughtering the serfs and the peasants (Bruce?).

Benefits of the Child Tax Credit

2.3 million: The number of people, including 1.3 million children, who were kept out of poverty by the child tax credit in 2009.

$1,800: The average amount claimed in child tax credits by ITIN filers in 2010.

3: The number of months for which a family of four with two children could put food on the table using the average child tax credit refund under the Department of Agriculture’s “Thrifty Food Plan.”

$1.38: The amount of economic growth that results from every $1 spent on child tax credits. Not all tax cuts are created equal, though. The payroll tax holiday results in $1.25 of economic growth for every $1 spent, while making the Bush tax cuts permanent would result in $0.35 per dollar.

4 million: The number of U.S.-born children whose families would be affected by the proposed offset.

20 percent: The amount of the payroll tax holiday extension that would be offset by raising taxes on lower-income immigrant parents of American children. The payroll tax holiday extension is worth $120 billion. The proposed legislation to offset the tax cut, however, will, by conservatives’ own calculations, save a total of only $24 billion over 10 years.

About $100 billion: The amount of payroll taxes that will be contributed by ITIN filers over the next 10 years. These taxes contribute to the trust funds for Medicare and Social Security—programs from which immigrants will never recoup benefits because of their status.

$21,240: The average household income for ITIN filers claiming additional child tax credit refunds in 2010. This is less than half of the 2010 median household income in the United States of $49,445, and would mean that a family of four with two children was living below the poverty line. Latino children are more likely to be living in poverty than any other racial or ethnic group in the United States.

“But injustice breeds injustice; the fighting with shadows and being defeated by them necessitates the setting up of substances to combat.” Bleak House, Charles Dickens; February 7th . . . belated Happy Birthday!

(cross-posted from Skippy)

by Mike Kimel

Can someone explain to me why people volunteer at for-profit hospitals? I can understand volunteering at a not-for-profit hospital, but how is volunteering at a for-profit hospital different from, say, volunteering at Exxon-Mobil or Wal-Mart?

The standard model of Economic Development is Romer’s (1989, JPE 1990) adaptation* of Solow’s (1956, 1957) Model.  Basically,

became

Y = AK^α(HL)^(1-α)

where the H stands for “human capital,” which multiplies the ability of labor. (Think high-skills labor—construction work, plumbing, teaching—where the worker continually “learns by doing” [op cit., Arrow, 1962]. The additional “human capital” multiples the effect of the labor.

One central question is how much of α is attributable to capital and how much is attributable to labor.  Standard Macroeconomics and Economic Development courses teach varying values for α, ranging from around 25% to about 1/3 (33.3%): that is, the mixture is between 3 and 4 parts of Labor to every one part of Capital.

How does the compensation go?  Well, not quite that way:

The banded area is the estimate of actual allocations of capital and labor. The bars show the compensation to labor (and, therefore, the area above that to 100% are the portion of GDP that is being allocated to capital).

Economic theory tells us that if something is receiving excessive rents—as capital is clearly doing in the United States—there is suboptimal growth occurring across the economy. The standard method of adjusting for that is to reduce the excessive rents through either the introduction of competition (preferred if possible) or through taxation and redistribution.  Following are the tax rates on Capital v. Labor:

Note also that labor is not necessarily allowed to exclude its “depreciation” above the value of the “standard deduction” ($8,500 for an individual, $11,600 for a married couple). This is clearly a skewed incentive, with preferable tax treatment given to the overvalued resource (capital) at the expense of the undervalued one (labor).

Happy Labor Day!

*NBER subscribers can access paper w3173.  Others can just type “Human Capital and Growth: Theory and Evidence” and probably find an ungated copy somewhere.  The uncurious are referred to Wikipedia.

by Mike Kimel

Most economists believe that unemployment benefits increase the unemployment rate. The idea is that even having a relatively small income coming in (from unemployment) can encourage people to stay jobless just a little while longer. And no doubt there are people who play the unemployment compensation game fairly well.

Now, consider severance packages. These days they aren’t uncommon. There are differences in how different states treat severance packages, but as I understand it, in general, if a jobless worker received a severance package equivalent to X weeks of pay in lump sum form, that makes the worker ineligible to receive unemployment benefits for what would otherwise be the first X weeks worth of claims. Which, would imply that for an unemployed worker, there is zero incentive to be jobless during the first X weeks of unemployment, but a jump in the incentive to be jobless beginning in week X + 1. One presumes, therefore, a greater probability of people turning down proffered job offers in weeks X-1 or X (when unemployment benefits are imminent) than in week 1 or 2 (when there is a much longer wait to get unemployment benefits).

If this solves the problem of anyone looking for a thesis topic at a Freshwater school, your thanks are all the payment I need but I do appreciate cookies.

By Daniel Becker

The political deadlock in Baghdad, which has prevented the formation of an Iraqi government more than six months after the parliamentary elections in March, has not prevented the administration of Nuri Kamal al-Maliki from opening the southern oilfields to the world’s giant corporations. Nor has it stopped the US Embassy and Commerce Department from reinvigorating the Bush-era program of selling the country’s public assets to corporate buyers. And because Iraqi unions have organized opposition to privatization since the start of the occupation, the Maliki administration is enforcing with a vengeance Saddam Hussein’s prohibition of public sector unions.

The United States may have withdrawn its combat brigades, but it is not leaving Iraq. And while Washington may have scaled back its dreams of nation-building, it has not given up on a key aspect of the economic agenda behind that project: encouraging corporate investment by sacrificing the rights of Iraqi workers.

June demonstrations over blackouts, supported by the union — the first national union led by a woman, Hashmeya Muhsin — were put down by police, who killed one protester and injured several others

Also in June, longshoremen protesting the prohibition of unions in ports south of Basra were surrounded by troops, and the union’s leaders were transferred hundreds of miles from their homes.

In January the government threw the president of Basra’s Iraqi Teachers Union in jail. According to Nasser al-Hussain, an executive board member, the government seeks to establish control over an organization it views as far too independent.

After the 2003 invasion, occupation czar Paul Bremer decided to keep on the books Saddam’s Law 150, which bans public sector unions. Each succeeding Iraqi administration continued the prohibition.

At the end of World War I, Iraqi workers wasted no time in forming oil, railway and dockworker unions in the fragmented country that Churchill had carved out of the desert, connecting the oil fields of three Ottoman provinces–Mosul, Baghdad, and Basra. Their hold on the terrain already tenuous, the British occupiers responded with force. Repeated strikes were quashed, often violently.

Under Qasim’s watch, unions along with civic groups swelled in rank and number. By 1959, 250,000 workers had joined unions in Iraq; peasants had formed 3,000 village associations for 200,000 peasants; the Iraqi Women’s League boasted 20,000 members and the Democratic Youth Federation 84,000 youngsters.

Qasim’s “progressive” autocracy was fleeting, however, and in February of 1963, the Baath party, in alliance with a sect of the nationalist armed forces, and with the help of the CIA, overthrew Qasim.

When Saddam Hussein seized control in 1979, he built upon the Baathist tradition of usurping the unions as an instrument of state power. As part of his brutal purge of all leaders and activists refusing to pledge total allegiance to the Baath party, he eradicated all non-Baathist unions. In 1987, the Baathist unions fully backed Saddam’s Orwellian decree: “From now on, the title ‘worker’ is abolished and all workers shall become official employees by the State…As everybody is now a government employee, there is no more need for trade unions.” Interestingly, Saddam did tolerate private sector unions, albeit with certain laws circumscribing their powers. The exception appears irrelevant, because, since the 1970’s through the fall of Saddam, no strikes are known to have occurred in Iraq, according to Political Risk Services, a well-respected corporate consultancy firm.

When questioned by reporters about the union bans, an official at the US Embassy, the world’s largest, said mildly, “We’re looking into it. We hope that everybody resolves their differences in an amicable way.” The Obama White House has not spoken out, and the latest State Department report on human rights plays down the oppression of Iraqi unionists, calling their situation a “limited exercise of labour rights.”