Unions only help if the underlying economic situation is that the employer is able to charge a great deal more for the amount of product generated per worker-hour than the worker is getting — there is headroom for the worker’s wage to expand into while the manufacturer still makes a net profit. (If the manufacturer doesn’t make a net profit the business collapses and nobody gets paid.)
During the age that manufacturing nostalgisists remember nostalgically, this was true. For most of that period (roughly 1870-1970), the capital goods required to manufacture in a way price-competitive with the U.S. were so expensive that almost nobody outside the U.S. could afford them, and in the few places that could they were mainly preoccupied with supplying their domestic markets rather than the U.S. World War II prolonged this period by hammering those “few places” rather badly.
In that environment, U.S. firms could profit-take hugely, benefited by being scarce suppliers not just to the U.S. but (later on) to the whole world. And unions could pry loose enough of that margin to make manufacturing jobs comfortably middle-class.
All that ended in the early 1970s. A good marker for the change is the ability of the Japanese to make cheap cars for export and sell them for the U.S.
In the new world, the profit margins on manufactured goods narrowed dramatically. The manufacturing firms could no longer effectively ignore overseas competition in the U.S. domestic market. U.S. consumers no longer had to to pay the large price premiums required to sustain domestic manufacturing wages at pre-1970 levels, and they jumped right on that option.
In this environment, unions don’t help because they have almost no negotiating room. If they bid up workers’ wages, the jobs will evaporate or move overseas – not because corporations are being “greedy” but because they can no longer charge the prices that would allow such high wages to be sustained. Too much foreign labor and capital is ready to pounce on the first hint of price-taking.
Eric S. Raymond, “Why labor unions have lost their moxie”, Armed and Dangerous, 2014-11-29.
December 19, 2014
December 2, 2014
I realized a long time ago that a very large number of people in a modern economy are paid to do things that not only fail to add to the economic product of the country, but on the contrary reduce it, insofar as they obstruct others from producing as much as they otherwise might.
There is, as every petty official knows, a great deal of pleasure to be had from the obstruction of others, especially if they appear to be more fortunate, better placed, richer, or more intelligent than oneself. There is a pleasure in naysaying, all the greater if the naysayer is able to disguise from the victim the fact that he is not only doing his duty but gratifying himself. Indeed, there are many jobs, meaningless in themselves, in which the power to say no is the only non-monetary reward.
Theodore Dalrymple, “The Gross Domestic Pissants”, Taki’s Magazine, 2014-04-20
November 30, 2014
In Maclean’s earlier this month, Colby Cosh addressed the brief flare-up of controversy around comments by the Governor of the Bank of Canada on the topic of doing work for free:
It is inherently difficult to feel sorry for the guy whose signature is on the money. But the governor of the Bank of Canada, Stephen Poloz, has been receiving what must be an unfamiliar burst of catcalls for comments he made about underemployed youth on Nov. 3 and 4.
Canada, Poloz was explaining, is making a somewhat gimpy recovery from the financial bubble-burst of 2008-09. A lot of the lost employment has been superficially replaced, but an unusual quantity of the new work consists of part-time jobs being performed by people who would like full-time ones, and there are some 200,000 young people who are “out of work, underemployed, or trying to improve their job prospects by extending their education.
“I bet almost everyone in this room knows at least one family with adult children living in the basement,” he added. “I’m pretty sure these kids have not taken early retirement.”
The next day, at a hearing of the House of Commons finance committee, Scott Brison followed up, asking if Poloz anticipated a long-term “scarring” effect on young people whose entry into the labour market has coincided with a lingering recession. Poloz’s response has been summarized as: “Go work for free.” What he actually said was: “When I was asked yesterday, I suggested, as I have privately to young folks who ask me what they should be doing in this job environment, that people volunteer to do something which is at least somewhere related to their expertise, so that it’s clear they are gaining some learning experience during that period.”
In fewer words: yeah, go work for free. The remark led to a curious revival of this year’s earlier controversy over unpaid internships, particularly in the magazine industry. Poloz hadn’t technically said anything about unpaid internships, which are hardly the only means of amassing job experience by working for free, and in many cases probably not the best one. (If you want magazine work, don’t take an internship. Start a blog.) Nonetheless, there was a fresh round of recrimination for companies that faced legal and moral pressure months ago and stopped providing internships as a result.
One gets the sense that Poloz and his critics are talking past one another. The critics complained that not every underemployed young person has the luxury of living with his parents. But it is hard to see how that would contradict his personal advice to those who do have it. Everybody should make maximum use of their advantages in creating a career path. And a comfortable basement with no rent attached is one of the most widely available.
November 17, 2014
Ashe Schow thinks we need to get serious about addressing this issue, and here is her proposal on how to accomplish this worthy end:
For example, if men want to go into gender studies, let them — that way, they’ll make less money and it will help close the gender gap. But women need to be kept away from such majors. Colleges and universities should in fact create separate lists of majors to give to men and women. If possible, women should not be told about any course of study that will yield lower-paying career choices in the future.
Among others, social science majors feed the gender gap. When women ask about those subjects or departments, colleges should tell them they don’t exist, or that all classes are full, except maybe the ones in economics. Even better, colleges should tell women that engineering, mathematics and finance are actually social sciences. Class rosters must then be watched carefully. If a woman somehow manages to sign up for a sociology class, she should instead be given the classroom number for a course in mechanical engineering.
When women express a desire to pursue teaching or social work jobs, they should be discouraged. In fact, college counselors should be instructed to tell them there are no such jobs available, along with some sort of plausible explanation, like: “There are no teaching jobs available anymore, because Republicans cut the budget and the government is closing all of the schools. How about a nice career in accounting?”
Women who ask too many questions should be promptly steered into a nearby organic chemistry class, because no one can remain mentally alert for too long.
Feminists who might disapprove of this proposal should first ask themselves if they would be making more money had someone forced them to become an engineer rather than an activist. Would they have avoided the misfortunes and oppression they now suffer and condemn had they pursued a more useful course of studies and ended up with a higher-paying job?
November 15, 2014
So what do you do about women who freely make choices that perpetuate structural inequalities? Do you stop them from making the choices? Neither Harvard, nor Kantor, seems to have a good answer. But that is the core dilemma. Maybe women drop out because they have a deeper biological connection to their kids. Maybe they do so because they’re raised to be nurturers, or maybe because they don’t feel the same personal anguish that a man does when he gives up on the dream of a top-flight career. Maybe if men felt they had the option to stay home, more would. And maybe women find the role of breadwinner more stressful than men do — all the women I know who are the primary earners are neurotic about it in a way that the men I know don’t seem to be. I’m not talking about the fear that your partner will resent your success; these are women married to admirably feminist men. I’m just talking about a near-constant fear that you will not be able to provide, and your family will end up horribly destitute. I’m not saying that men don’t experience that worry, but they don’t seem tormented by it the way the women I talk to are.
Or maybe it’s that women just don’t want it badly enough. In my experience, one of the reasons that women drop out of finance, and 80-hour-a-week fields more generally, is that they just don’t want it as badly as the men. In their 20s, they’re happy to work those kinds of hours, even at tasks they find boring. They do well at them, too. But a lot of these jobs aren’t actually that rewarding as work: The investment banking associates I observed seemed to spend most of their time on basically clerical tasks, tabulating data and proofreading PowerPoints. And eventually most of the women seem to say “You know, I just care more about relationships than I do about success.” There are always exceptions on both sides: women who will sacrifice anything for the career they feel called to and men who would rather be home. But on average, the women I talk to just aren’t nearly as willing to sacrifice close friendships, and family relationships, for the sake of their jobs.
We can say that they shouldn’t have to, of course, but the sad fact is that there are trade-offs in this world. In your 20s you can finesse them — work super hard and also have a roaring social life — because you have boundless energy and no one depending on you. This is the age at which young women write furious articles and Facebook posts denouncing anyone who suggests that women opt-out of high pressure jobs for any reason other than the rankest sexism.
As you age, your body refuses to cooperate with your plan to work from 7 a.m. to 11 p.m. and then hang out with friends. Your parents start to need you more, if only to lift heavy things. And of course, there are kids. You start having to make direct trade-offs, and then suddenly you look up and you haven’t seen your friends for two years and your mother is complaining that you never call. This is the age at which women write furious articles defending their decision to step back from a high-pressure job and/or demanding subsidized childcare, generous paid maternity leave and “family friendly policies,” a vague term that ultimately seems to mean that people who leave at five to pick up the kids should be entitled to the same opportunities and compensation as people who stay until 9 to finish the client presentation. These pleas usually end (or begin) by pointing to the family-friendly utopia of Northern Europe, except that women in Europe do less well at moving into high-test management positions. Whatever the government says, someone who takes several years off work is in fact less valuable to their company than someone who doesn’t.
Megan McArdle, “Harvard’s Gender Bender”, Bloomberg View, 2013-09-10
November 13, 2014
After World War II, many left-wing European governments wanted to do something about unemployment. As I discuss extensively in my book, unemployment is about the worst thing that can happen to you in a modern democracy, short of death or dismemberment. So they passed laws making it very, very difficult to fire workers. In Italy, for example, a judge could reverse a layoff decision, not because you’d fired the worker unjustly, but because the judge didn’t think you needed to cut staff. Hurrah! Finally, workers were protected from the dark specter of unemployment!
Well, not quite. Workers were thrilled; employers were terrified. Now hiring a worker meant you were stuck with them unless they committed some absolutely flagrant offense — like, say, emptying the till and running out the door.
That’s a hell of a commitment to make to someone you barely know. So employers didn’t want to hire scary strangers; they wanted to hire close friends and family. Or, better yet, no one at all. Youth unemployment in many of these nations was staggering. The insiders had a great deal, but people without jobs found themselves consigned to a series of temporary, not-very-well-paid contracts. Or the dole.
The lesson is that when you make it harder to exit, you also make people reluctant to enter.
Megan McArdle, “Can Limiting Divorce Make Marriage Stronger?”, Bloomberg View, 2014-04-16
November 2, 2014
In Forbes, Tim Worstall looks at how the World Economic Forum came up with their scary conclusions that the pay gap between men and women won’t disappear until 2095:
And that’s it: no, really, that is what they’re basing, in its entirety, their estimations of the gender pay gap upon. They asked a few people whether they thought that men and women got roughly the same pay for roughly the same sort of job or not and that’s it. This isn’t cutting edge data science to put it very kindly indeed.
For when we go off and look at the messy details of the gender pay gap we find that we’ve not really got one, not in the industrialised countries. Once we correct for the obvious things like hours at work, years in the workforce, educational background and so on we find that the mythical gender pay gap (that “women earn 77 cents to every $ men do”) simply disappears. There might be a small residual, a few percent, left in there but not enough that we can really notice. And quite apart from anything else it’s actually illegal to pay men and women different amounts for doing the same job (if on the basis that the different pay is purely as a result of their being men or women that is).
So, no, we shouldn’t be taking this report or finding seriously. And there’s more than just the fact that they’re using a survey to measure that gap. For of course the printing of this report will lead to, as the other incorrect claims about the gender pay gap do, a certain circularity of reasoning.
Ask someone: “Are men and women paid equally?” And they’ll start thinking about whoever it was that said that 77 cents line, recall that last year the WEF said that gender pay inequality was very bad indeed. So, now we come to asking them the same question for the next WEF survey and their answer will be influenced by the cacophony of voices that have been telling them how bad the gender pay disparity is. Including, obviously, last year’s WEF report that said so. It’s entirely circular and self-reinforcing.
Really, we shouldn’t be taking this stuff seriously.
October 30, 2014
For the conservative, people are an asset — in the coldest economic terms, a potentially productive unit of labor. For the progressive, people are a liability — a mouth to be fed, a problem in need of a solution. Understanding that difference of perspective renders understandable the sometimes wildly different views that conservatives and progressives have about things like employment policy. For the conservative, the value of a job is what the worker produces; for the progressive, the value of a job is what the worker is paid. Politicians on both sides frequently talk about jobs as though they were economic products rather than contributors to economic output, as though they were ends rather than means. The phrase “there aren’t enough jobs” is almost completely meaningless, but it is a common refrain.
Kevin D. Williamson, “Welcome to the Paradise of the Real: How to refute progressive fantasies — or, a red-pill economics”, National Review, 2014-04-24
October 15, 2014
There’s been a lot of moaning on about inequality recently — some are even predicting it will be the big issue in next year’s Canadian federal election — but the eye-popping figures being tossed around (CEOs being paid hundreds of times the average wage) are very much a case of statistical cherry-picking:
Before retiring to their districts for the fall, the House Democratic Caucus rallied behind the CEO/Employee Pay Fairness Act, which would prevent a public company from deducting executive compensation over $1 million unless it also gives rank-and-file employees raises that keep pace with the cost of living and labor productivity.
Meanwhile, the AFL-CIO and its aligned think tanks have made hay of the huge difference between the pay of CEOs and employees. One of the most widely cited measures of the “gap” comes from the AFL-CIO’s Executive Paywatch website.
- The nation’s largest federation of unions laments that “corporate CEOs have been taking a greater share of the economic pie” while wages have stagnated for the rest of us.
- As proof, it points to a 331-to-1 gap in compensation between America’s chief executives and the pay of the average worker.
That’s a sizable number. But don’t grab the pitchforks just yet, says Mark J. Perry, economic professor at the University of Michigan-Flint and resident scholar at the American Enterprise Institute, and Michael Saltsman, research director at the Employment Policies Institute.
The AFL-CIO calculated a pay gap based on a very small sample — 350 CEOs from the S&P 500. According to the Bureau of Labor Statistics, there were 248,760 chief executives in the U.S. in 2013.
- The BLS reports that the average annual salary for these chief executives is $178,400, which we can compare to the $35,239-per-year salary the AFL-CIO uses for the average American worker.
- That shrinks the executive pay gap from 331-to-1 down to a far less newsworthy number of roughly five-to-one.
October 14, 2014
A certain amount of this rings true:
Imagine you’re a college graduate stuck in a perpetually lousy economy. That’s a problem Japanese twenty-somethings have faced for more than 20 years. Two decades of stagnation after the collapse of the 1980s real-estate and stock bubbles — combined with labor laws making it tough to fire older workers — have relegated vast numbers of Japanese young adults to low-paying, temporary contract jobs. Many find themselves living with their parents well into their twenties and beyond, unmarried and childless.
Then again, they do have plenty of time to dress up like wand-wielding sailor girls and cybernetic alchemist soldiers from the colorful world of anime cartoons and manga comics. Indeed, Japan’s Lost Decades have coincided with a major spike in “people escaping to virtual worlds of games, animation, and costume play,” Masahiro Yamada, a sociology professor at Chuo University in Tokyo, recently told the Financial Times. “Here, even the young and poor can feel as though they are a hero.”
It’s hard to blame them. After all, it’s not that these young adults in Japan are resisting becoming productive members of the economy — it’s that there just aren’t enough opportunities for them. So an increasingly large number of them spend an increasingly large amount of time living in make-believe fantasy worlds, pretending they are someone else, somewhere else. This is a very bad thing for the Japanese economy.
And guess what: America has a growing number of make-believe “cosplay” heroes, too. Many of the 130,000 people who attend the San Diego Comic Con every year invest big bucks in elaborate outfits as a way of showing off their favorite Japanese characters, as well as those from American superhero movies, comics, and “genre” televisions shows such as Game of Thrones. And this trend is growing — the crowd at Comic Con was one-third this size in 2000. In 2013, the SyFy channel even created a reality show about the trend, Heroes of Cosplay.
H/T to Ghost of a Flea for the link.
October 8, 2014
I don’t know how I missed this when it was published last week…
All right, boys and girls, it’s time to have some real talk about efficiency wages.
I know, you’re older now. You’re starting to notice things that you never noticed before. Like the differences between Costco and Wal-Mart, differences that suddenly seem so … intriguing. Exciting. You suddenly want to explore those feelings, maybe post a few GIFs to Facebook. You hear other kids talking, and suddenly you wonder about this whole new world of labor relations that you never even knew existed.
I want you to know that what you’re feeling is completely normal. Efficiency wages — that’s the scientific term, and we’re going to use scientific terms, not that dirty talk about scabs and exploiters that you hear in the locker room — are very exciting. It’s only natural that you want to explore. Now, stop tittering. I said “explore,” not “exploit.”
But you need to explore safely. You can’t just plunge straight into advocating a $15-an-hour minimum wage; you need to know all the facts so you can make sound, educated decisions about your labor-policy activism. So let’s talk about efficiency wages and how they work.
When an employer loves his workers … OK, never mind. Straight to the real talk.
As they used to say, “read the whole thing“.
September 20, 2014
It always does seem to me that I am doing more work than I should do. It is not that I object to the work, mind you; I like work: it fascinates me. I can sit and look at it for hours. I love to keep it by me: the idea of getting rid of it nearly breaks my heart.
You cannot give me too much work; to accumulate work has almost become a passion with me: my study is so full of it now, that there is hardly an inch of room for any more. I shall have to throw out a wing soon.
And I am careful of my work, too. Why, some of the work that I have by me now has been in my possession for years and years, and there isn’t a finger-mark on it. I take a great pride in my work; I take it down now and then and dust it. No man keeps his work in a better state of preservation than I do.
But, though I crave for work, I still like to be fair. I do not ask for more than my proper share.
Jerome K. Jerome, Three Men in a Boat (to say nothing of the dog), 1889.
September 17, 2014
Gregg Easterbrook on the difference between ordinary jobs and government subsidized job creation:
Elon Musk Recharges His Bank Account: Tesla’s agreement with Nevada to build a battery factory is expected to create about 6,000 jobs in exchange for $1.25 billion in tax favors. That’s about $208,000 per job. More jobs are always good. But typical Nevada residents with a median household income of $54,000 per year will be taxed to create very expensive jobs for others. Volkswagen is expanding its manufacturing in Tennessee, which is good. But the state has agreed to about $300 million in subsidies for the expansion, which will create about 2,000 jobs — that’s $150,000 per new job, much of the money coming from Tennessee residents who can only dream of autoworkers’ wages. The median household income in Tennessee is $44,140, about a third of the tax subsidies per new Volkswagen job. The Tesla handout was approved by the Democratic state legislature of Nevada; Tennessee’s Republican-controlled state government approved the Volkswagen corporate welfare deal.
At least it’s a bargain compared to federally subsidized solar jobs. A Nevada solar project — state that is home to Senate Majority Leader Harry Reid, President Barack Obama’s closest ally on Capitol Hill — cost $10.8 million in subsidies per job created. Local public interest groups noticed the extreme subsidy while the national media did not.
This cheeky website monitors giveaways state by state.
September 16, 2014
People without meaningful work and copious free time don’t write symphonies or create great works of art. They don’t live a life of the mind. They drink too much, or get in fights, or watch a lot of internet porn, or commit crimes. They don’t contribute to the economy or culture, as a rule. They just…exist. And it goes on like that, sometimes for generations.
Labor is the fate of all humankind. Always has been. We work to live. Work gives shape and meaning to our lives. It’s not just the income we derive from it; it’s the knowledge that we are able to function as adults in the wider world, and provide for ourselves and our families. It’s feeling the satisfaction of having contributed something to the maintenance of civilization, even if it means we haul trash away or keep the grass mowed. It’s all honorable work, necessary work, and not something to be ashamed of.
It’s not an outrage, it’s just the way things are. To try and embitter people about that, to make them feel that the natural order of things is unfair, is just to do an enormous amount of harm to the very people you’re claiming to want to help.
August 18, 2014
There you go … proof positive that the UK cannot possibly, under any circumstances, leave the European Union. Except for the fact that the UK would lose 3 million jobs in the year even if it stayed with the EU, because that’s how many jobs it normally loses in a year:
UK Would Not Lose 3 Million Jobs If It Left The European Union
Well, of course, the UK would lose 3 million jobs in the year it left the European Union because the UK loses 3 million jobs each and every year. Roughly 10% of all jobs are destroyed in a year and the economy, generally, tends to create 3 million jobs a year as well. But that’s not the point at contention here which is the oft repeated claim that because we left the EU then therefore the UK economy would suddenly be bereft of 3 million jobs, that 10% of the workforce. And sadly this claim is a common one and it just goes to show that there’s lies, damned lies and then there’s politics.
The way we’re supposed to understand the contention is that there’s three million who make their living making things that are then exported to our partners in the European Union. And we’re then to make the leap to the idea that if we did leave the EU then absolutely none of those jobs would exist: leaving the EU would be the same as never exporting another thing to the EU. This is of course entirely nonsense as any even random reading of our mutual histories would indicate: what became the UK has been exporting to the Continent ever since there’s actually been the technology to facilitate trade. Further too: there have been finds in shipwrecks in the Eastern Mediterranean of Cornish tin dating from 1,000 BC, so it’s not just bloodthirsty and drunken louts that we’ve been exporting all these years.