Quotulatiousness

January 28, 2015

Employment skills at the very basic level

Filed under: Business, Economics, Government, USA — Tags: , , — Nicholas @ 04:00

Warren Meyer says what the US needs to do is to make changes to the structure of the working world to allow companies to profitably hire low-skilled workers:

A lot of head scratching goes on as to why, when the income premium is so high for gaining skills, there are not more people seeking to gain them. School systems are often blamed, which is fair in part (if I were to be given a second magic wand to wave, it would be to break up the senescent government school monopoly with some kind of school choice system). But a large portion of the population apparently does not take advantage of the educational opportunities that do exist. Why is that?

When one says “job skills,” people often think of things like programming machine tools or writing Java code. But for new or unskilled workers — the very workers we worry are trapped in poverty in our cities — even basic things we take for granted like showing up on-time reliably and working as a team with others represent skills that have to be learned. Amazon.com CEO Jeff Bezos, despite his Princeton education, still learned many of his first real-world job skills working at McDonald’s. In fact, back in the 1970’s, a survey found that 10% of Fortune 500 CEO’s had their first work experience at McDonald’s.

Part of what we call “the cycle of poverty” is due not just to a lack of skills, but to a lack of understanding of or appreciation for such skills that can cross generations. Children of parents with few skills or little education can go on to achieve great things — that is the American dream after all. But in most of these cases, kids who are successful have parents who were, if not educated, at least knowledgeable about the importance of education, reliability, and teamwork — understanding they often gained via what we call unskilled work. The experience gained from unskilled work is a bridge to future success, both in this generation and the next.

But this road to success breaks down without that initial unskilled job. Without a first, relatively simple job it is almost impossible to gain more sophisticated and lucrative work. And kids with parents who have little or no experience working are more likely to inherit their parent’s cynicism about the lack of opportunity than they are to get any push to do well in school, to work hard, or to learn to cooperate with others.

Unfortunately, there seem to be fewer and fewer opportunities for unskilled workers to find a job. As I mentioned earlier, economists scratch their heads and wonder why there are not more skilled workers despite high rewards for gaining such skills. I am not an economist, I am a business school grad. We don’t worry about explaining structural imbalances so much as look for the profitable opportunities they might present. So a question we business folks might ask instead is: If there are so many under-employed unskilled workers rattling around in the economy, why aren’t entrepreneurs crafting business models to exploit this fact?

Spending more money on education won’t guarantee better outcomes for students

Filed under: Economics, Government, USA — Tags: , , — Nicholas @ 02:00

Not having gone to university myself, I can’t speak from direct personal experience, but my strong sense is that the university degree today fulfils almost exactly the role for job-seekers that a high school diploma did about a generation ago. Most of the “entry level” jobs that actually offer some sort of career progression require no more skill or preparation now than they did 25 or 30 years ago … but the combination of lowered standards in secondary school and the vast expansion of post-secondary education have encouraged employers to filter job applicants for such openings by education first. As a direct result, parents have been pushing their children toward university as the only way to ensure those kids have a fighting chance to get into jobs that might, eventually, lead somewhere both interesting and remunerative.

But with more demand for places at university, the government is under pressure to provide funding — both to the universities to create more spaces, and to the students themselves to allow them to pay their tuition and other costs. Megan McArdle worries that pouring more money into the system isn’t the right answer:

The other day, I argued that maybe we should rethink our current policy of endlessly dumping more money into college education. It’s completely true that there is a big wage premium for having a college degree — but it does not therefore follow that we will make everyone better off by trying to shove every American through post-secondary (aka tertiary) education. We may simply be setting up college as a substitute for a high school diploma: a signal to employers that you can read and write, and are able to turn in scheduled assignments within a reasonable time frame. And in the process, excluding people who aren’t college-educated from access to decent jobs.

Predictably, this was not met with shouts of joy and universal admiration in all quarters. I was accused of just wanting to stick it to President Barack Obama, and also of wishing to deny the dream of college education that should be the birthright of every single American. I was also accused of being unfamiliar with the known fact that America woefully underinvests in education compared to other advanced nations.

It is true that I am unfamiliar with America’s woeful underinvestment in education, in the same way that I am unfamiliar with the tooth fairy, because both are legends with no basis in fact. American spending on education is in line with that of our peers in the developed world — a little higher than some, a little lower than others, but not really remarkable either way:

School expenditure per student

[…]

You can argue that there’s an inequality problem in our schools. In fact, I think there is obviously an inequality problem in our schools, but that the big problem is not at the college level, but rather in the primary and secondary schools that are overwhelmingly government-funded. And those disparities are also not primarily about the dollar amounts going into schools — Detroit spends well above the U.S. average per pupil, and yet one study found that half the population of the city was “functionally illiterate.”

Should we fix the issues with those schools? Absolutely — and doing so might mean spending more money. But that doesn’t mean that we need to increase the overall level of educational funding. It means that we need to identify ways to improve those underperforming schools, then find out how much more it would cost to implement those programs. It is just as likely that improvements will come from changing methods and reallocating resources as that they will require us to pour more money into failing institutions.

January 11, 2015

Is more immigration the answer? It depends on how you frame the question

Filed under: Business, Cancon, Politics, Technology — Tags: , , , , — Nicholas @ 04:00

Jay Currie looks at one of the traditional way of looking at the benefits of immigration — as providing society with workers who will “do the jobs Canadians/Americans won’t do” and wonders if that’s actually true in today’s increasingly technological world:

The elite refrain seems to be that if we want to maintain our welfare system, pensions, healthcare and the like we have simply no choice but to import drafts of tax serfs to make up our declining numbers. Is that true?

Here are a few ideas to extend the independence of the Boomers and reduce the need for immigrants at any cost.

  • Postpone retirement to 70 or even 75: the boomers parents are extending life expectancy rapidly. 90 is the new 70. Greater activity, a keener sense of healthy life style choices and, as Doug Coupland put it, “Vitamin D and baby aspirin and (mum’s) going to live forever.” Boomers are nuts to be thinking of retirement at 60 unless they really are too sick to work. So don’t. Pushing back the retirement and pension ages saves a lot of pension money and reduces the need to bring in more people.
  • Have more children. Not something the boomers can do but our kids can and should. But to do this we need a lot of very family friendly policy. Income splitting is a cute idea but hardly a huge incentive to family formation. Big tax deductions for kids number three, four and five could help a bit. But those are governmental changes.
  • […]

  • Where possible transfer wealth early. There are a lot of older boomers whose parents have died and left good big whacks of dough. And those same boomers are coming to the end of their mortgages. Here is a hint: offer your kids some money. And not, ideally, as a loan. An outright gift is more useful. Don’t tie it to real estate either. There is going to be a massive correction in Canadian real estate but even if there wasn’t tying a gift to what is usually a debt and endless expense is a poor idea.
  • […]

  • Build houses and condos which can adapt to the changing needs and means of families. Everything from in-law suites to legally easy house splitting needs to be done to drive down the price of housing in Canada. Yes there is a correction coming but that does not change the fact there are many cities where housing is unaffordable. Build rental housing for families. Build up market rental housing. Encourage density. Make it possible to rent with a 1/5 of your average income rather than 1/2.

  • Use technology in place of people. A lot of the jobs “Canadians just will not do” should not be done at all by anyone. From self cleaning toilets – already done in Japan – to robotic floor cleaners and fast food “servers” there are lots of jobs which can and will be done by robots. Pushing that sort of technology will reduce the need for more immigrants.
  • […]

If you actually look at those numbers seriously and, instead of 10% use 5%, you’ll see that 900,000 low skill jobs are going to get eaten by robots and IT over the next decade. 90,000 a year. Now, look at the naturalized Canadian number for 2014 again 260,000. If half our new citizens are entering the labour force that is 130,000 new workers per year in an economy which will be shedding 90,000 jobs per year. Does that make any sense at all?

January 4, 2015

When companies bought into the open plan workspace model

Filed under: Business — Tags: , , , — Nicholas @ 02:00

In the Washington Post, Lindsey Kaufman recounts her experience when her workplace changed to the “open-office model”:

A year ago, my boss announced that our large New York ad agency would be moving to an open office. After nine years as a senior writer, I was forced to trade in my private office for a seat at a long, shared table. It felt like my boss had ripped off my clothes and left me standing in my skivvies.

Our new, modern Tribeca office was beautifully airy, and yet remarkably oppressive. Nothing was private. On the first day, I took my seat at the table assigned to our creative department, next to a nice woman who I suspect was an air horn in a former life. All day, there was constant shuffling, yelling, and laughing, along with loud music piped through a PA system. As an excessive water drinker, I feared my co-workers were tallying my frequent bathroom trips. At day’s end, I bid adieu to the 12 pairs of eyes I felt judging my 5:04 p.m. departure time. I beelined to the Beats store to purchase their best noise-cancelling headphones in an unmistakably visible neon blue.

Despite its obvious problems, the open-office model has continued to encroach on workers across the country. Now, about 70 percent of U.S. offices have no or low partitions, according to the International Facility Management Association. Silicon Valley has been the leader in bringing down the dividers. Google, Yahoo, eBay, Goldman Sachs and American Express are all adherents. Facebook CEO Mark Zuckerberg enlisted famed architect Frank Gehry to design the largest open floor plan in the world, housing nearly 3,000 engineers. And as a businessman, Michael Bloomberg was an early adopter of the open-space trend, saying it promoted transparency and fairness. He famously carried the model into city hall when he became mayor of New York, making “the Bullpen” a symbol of open communication and accessibility to the city’s chief.

These new floor plans are ideal for maximizing a company’s space while minimizing costs. Bosses love the ability to keep a closer eye on their employees, ensuring clandestine porn-watching, constant social media-browsing and unlimited personal cellphone use isn’t occupying billing hours. But employers are getting a false sense of improved productivity. A 2013 study found that many workers in open offices are frustrated by distractions that lead to poorer work performance. Nearly half of the surveyed workers in open offices said the lack of sound privacy was a significant problem for them and more than 30 percent complained about the lack of visual privacy. Meanwhile, “ease of interaction” with colleagues — the problem that open offices profess to fix — was cited as a problem by fewer than 10 percent of workers in any type of office setting. In fact, those with private offices were least likely to identify their ability to communicate with colleagues as an issue. In a previous study, researchers concluded that “the loss of productivity due to noise distraction … was doubled in open-plan offices compared to private offices.”

I work in the software industry and it’s been nearly 20 years since I last had a private office. Every company I’ve worked for since then has either consciously been moving in the open office direction, or unwilling to spend money to partition open space in whatever office space they had. Sometimes, I even get nostalgic for cube farms…

January 3, 2015

Urban Canada – where China’s one-child policy has been religiously observed

Filed under: Cancon, Humour, Politics — Tags: , , , , — Nicholas @ 03:00

I can’t imagine what has gotten into David Warren to distract him from posts on the inner spirituality of the Catholic Church to suddenly turn to a bit of Canadian Ethnography:

… in a DINK household (“double income, no kids”) the rules subtly change, or rather change overtly, and no need remains for any sort of manliness. Indeed, should the woman make a substantial income, perhaps the man should consider living off her. She can claim him for a little break on her taxes, after all. Consider: housework, without kids, is a snip. And when his “partner” gets home, physically and emotionally exhausted from work, burning with the little humiliations she has suffered out there in the “real world,” and seriously hungry into the bargain — he can remind her that they are a “modern” couple. Tasks such as cooking should be shared equally.

This is old hat, of course. For the most part it also applies where the Red Chinese “one child policy” is obeyed, as across most of urban Canada.

I became exceptionally aware of the new arrangements in a visionary experience, twenty years ago. It consisted of attending a “bake sale” for the public school in which my sons were enrolled (temporarily, I assure you). I got to meet the whole “sorority” in my new liberal neighbourhood. (Kingston, Ontario: never go there.) This was mostly an “audio” vision, I should explain, though it had a video component. I’d never seen nor heard before so many whole-earth, left-wing, squeaky-voiced “house husbands,” all in one place. The immediate revelation was that spiritual emasculation actually changes a man’s voice in the same way physical emasculation does.

Among other discoveries was that the men had done most of the baking — which was good, for men often make better bakers. And we turn to the castrati to hit the highest notes.

The women, on the other hand, I could hear roar. The tone in which they addressed their squeakers was beyond instructive. I reflected that if a man spoke to his wife like that, in public, he’d be courting arrest. The feminists had now got exactly what they wanted.

There was more. The “gender” stereotypes had reversed at every other level. These women were now the sexual aggressors. I recall one in particular — an executive in a local “arts” operation — who had previously called me “fascist” as well as “sexist” in reference to something I had written in a newspaper. That she hated me still, I could take for granted. But right in front of her lamentable house-husband she was, unbelievably, “flirting” (although the term seemed over-refined). The wee fellow looked harmlessly outraged. He made sounds such as I imagine a gerbil makes when his mate shoves him aside. On his fidelity, I’m sure she could rely, for no other woman could want him. But she was trawling for something more masculine, herself.

Feminism alone could account for the collapse of the birth rate (which does, incidentally, have economic repercussions); for it operates at so many levels, from the neutering of males, to making females so extremely unattractive. But it cannot account for the rise of feminism. On that, I’m with Marx: it has a chiefly economic causation.

January 1, 2015

QotD: Henry Ford and the doubled wages – the real story

Filed under: Business, History, Quotations, USA — Tags: , , , , , — Nicholas @ 00:01

In 1913, turnover reached an unbelievable 370 percent, and Ford hired more than 50,000 people to maintain an average labor force of about 13,600. When profits swelled, he paid well for labor, creating an uproar when he doubled the basic wage to $5.00 a day, which triggered a virtual stampede of job seekers. Paying higher wages for labor was not altruistic in Ford’s eyes. Moreover, it wasn’t simply that Ford was trying to pay his workers “enough to buy back the product,” although he did preach a high-wage doctrine after the stock market crash in 1929. Rather, paying relatively high wages was, for Ford, a matter of smart business. He regarded well-paid skilled workers as important as high-grade material. By paying workers well, he effectively lowered his costs because higher wages reduced turnover and the need for constant training of new hires. (At the time, the newspapers saw Ford’s wage increase as an extraordinary gesture of goodwill.)

Mark Spitznagel, The Dao of Capital: Austrian Investing in a Distorted World, 2013.

December 19, 2014

QotD: The twin rise and fall of unions and manufacturing

Filed under: Business, Economics, History, Quotations, USA — Tags: , , — Nicholas @ 00:01

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 2, 2014

QotD: Bureaucratic job satisfaction

Filed under: Bureaucracy, Quotations — Tags: , — Nicholas @ 00:01

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

Working for free

Filed under: Cancon, Economics — Tags: , — Nicholas @ 11:12

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

A proposal to permanently fix the gender wage gap

Filed under: Humour, Politics, USA — Tags: , , , , , — Nicholas @ 00:03

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

QotD: Women, careers, and equality

Filed under: Business, Economics, Quotations — Tags: , , , — Nicholas @ 00:01

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

QotD: Unintended consequences

Filed under: Business, Economics, Europe, Government, Quotations — Tags: , , — Nicholas @ 00:01

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

It’s safe to just ignore the World Economic Forum’s report on pay gaps

Filed under: Economics, Media — Tags: , , , , — Nicholas @ 08:37

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

QotD: Conservative versus Liberal views on jobs

Filed under: Economics, Media, Quotations, USA — Tags: , — Nicholas @ 00:01

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

The pay gap issue, again

Filed under: Business, Economics — Tags: , , , — Nicholas @ 09:28

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.
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