Quotulatiousness

February 7, 2011

Licensing as a tool for restricting competition

Filed under: Bureaucracy, Economics, Government, Law — Tags: , , , — Nicholas @ 12:21

Stephanie Simon addresses the pro and con positions on licensing for various jobs:

[E]conomists — and workers shut out of fields by educational requirements or difficult exams — say licensing mostly serves as a form of protectionism, allowing veterans of the trade to box out competitors who might undercut them on price or offer new services.

“Occupations prefer to be licensed because they can restrict competition and obtain higher wages,” said Morris Kleiner, a labor professor at the University of Minnesota. “If you go to any statehouse, you’ll see a line of occupations out the door wanting to be licensed.”

[. . .]

At a time of widespread anxiety about the growth of government, the licensing push is meeting pockets of resistance, including a move by some legislators to require a more rigorous cost-benefit analysis before any new licensing laws are approved. Critics say such regulation spawns huge bureaucracies including rosters of inspectors. They also say licensing requirements — which often include pricey educations — can prohibit low-income workers from breaking in to entry-level trades.

Texas, for instance, requires hair-salon “shampoo specialists” to take 150 hours of classes, 100 of them on the “theory and practice” of shampooing, before they can sit for a licensing exam. That consists of a written test and a 45-minute demonstration of skills such as draping the client with a clean cape and evenly distributing conditioner. Glass installers, or glaziers, in Connecticut — the only state that requires such workers to be licensed — take two exams, at $52 apiece, pay $300 in initial fees and $150 annually thereafter.

California requires barbers to study full-time for nearly a year, a curriculum that costs $12,000 at Arthur Borner’s Barber College in Los Angeles. Mr. Borner says his graduates earn more than enough to recoup their tuition, though he questions the need for such a lengthy program. “Barbering is not rocket science,” he said. “I don’t think it takes 1,500 hours to learn. But that’s what the state says.”

In harder economic climates, expect to see a push towards trying to get some form of certification or licensing imposed in new fields. For example, I’ve seen several attempts to introduce mandatory certification for technical writers, usually with the intent of limiting access to the (reduced) pool of writing jobs in the field. Usually the biggest fans of certification are those who think they’re in a good position to dictate the requirements for certification (and often run courses/seminars which, I assume, would automatically appear in the final list of requirements).

January 28, 2011

QotD: If those were the “good old days” then to hell with them

Filed under: Economics, History, Politics, Quotations — Tags: , , — Nicholas @ 09:37

One of the difficulties progressives face is trying to make centralized planning sound like a good idea. Even the president, with all his rhetorical genius and majestic vagueness, can struggle with the task. So, from time to time, it’s important to mold history a bit to, you know, make a point.

Early on in his State of the Union, for instance, President Barack Obama reminisced of an age when “good jobs” meant “showing up at a nearby factory or a business downtown.” A time when you “didn’t always need a degree, and your competition was pretty much limited to your neighbors,” and, if you “worked hard, chances are you’d have a job for life, with a decent paycheck and good benefits and the occasional promotion. Maybe you’d even have the pride of seeing your kids work at the same company.”

Way to dream big! Really, was this country ever about being proud that your children ended up in the same plant you slaved in for 30 years? Even with a promise of a union pension and — if you’re lucky — an “occasional” promotion, it sounds like a soul-crushing grind you’d want your offspring to escape, tout de suite.

Luckily, in the real world, history tells of a story filled with dynamic movements of people, class climbing, churning innovation, booms and busts and widespread embrace of risk-taking.

Now, as the president explained, “painful” changes have crashed down on his revisionism and Americans have been forced to compete, find India on a map, move from town to town and study.

David Harsanyi, “Who are we in ‘Sputnik moment’?”, Denver Post, 2011-02-28

January 21, 2011

Have you ever asked yourself if you should work for free?

Filed under: Economics, Humour, Randomness — Tags: , — Nicholas @ 08:38

If so, Jessica Hische can help you figure out the appropriate response:


Click to see full image (NSFW language)

H/T to Tim Harford for the link.

December 17, 2010

Gay and lesbian couples’ income levels

Filed under: Economics, Education, Randomness, USA — Tags: , , — Nicholas @ 12:59

As this article asserts, I don’t remember where I heard the “fact” that gay couples had higher incomes than heterosexual couples, but it seemed likely to be true. Apparently not:

The myth of gay money holds that “gays” (really just gay males) are high-income or rich. Why? Mostly because they don’t have kids, especially not when two guys live together. (That would make them DINKs.)

This myth was relentlessly propagated through the 1990s and persists today. Maybe you couldn’t put your finger on where you heard it (perhaps in a newspaper article?), but the stereotype is out there. And it isn’t true.

[. . .]

Why do gay males have generally lower incomes than straight males?

  • Gay males have more education than straight males, but they do not choose male-dominated professions as often as straight males do. In fact, they choose female-dominated and/or service professions much more often. Male-dominated professions (like construction) have generally higher wages than female-dominated professions (like secretarial).
  • Gay males work fewer hours than straight males.

Why do lesbians generally have higher income than straight females? It’s almost the inverse of the gay-male trend.

  • Lesbians also have more education than straight females, but they work longer hours — because, generally speaking, they are less likely to have children to take care of at home.
  • Lesbians are overrepresented in male-dominated professions that pay better than female-dominated professions.

What about discrimination? It’s a ready excuse to explain away the “few” gays who don’t meet the stereotype of being affluent. (That’s what press coverage would tell you – that just a few of us aren’t affluent. In reality, it’s most of us.) But the statistical evidence for discrimination as a cause of lower gay incomes is weak at best, and of course falls down completely in the case of lesbians, who, most studies agree, have higher incomes than straight females. Discrimination is clearly a factor sometimes; it just isn’t a credible explanation for the whole effect, which doesn’t apply to half of the population we’re talking about.

H/T to Freakonomics blog for the link.

December 14, 2010

QotD: Buzzword Bingo, resumé edition

Filed under: Bureaucracy, Humour, Quotations — Tags: , , — Nicholas @ 12:30

Are you a motivated multitasker with extensive experience that has helped you become a results oriented team player?

Does your online resume say you have a dynamic and innovative skill set which has led to a proven track record of being entrepreneurial in a fast paced world?

Then congratulations, you’ve successfully used all 10 of the most overused buzzwords on LinkedIn in just two sentences.

[. . .]

And just so you know we tried, we did manage to get all 10 buzzwords into one single colossally cringe-worthy sentence sure to make any human resources manager’s skin crawl.

Heaven help the poor guy who has this phrase on his LinkedIn profile:

“Hi, I’m a motivated multitakser with extensive experience as an entrepreneurial and results oriented team player whose innovative and dynamic skills have helped me become adept at working in a fast paced world with a proven track record.”

Ta-da!

Matt Hartley, “The 10 most overused employment buzzwords on LinkedIn”, Financial Post, 2010-12-14

October 25, 2010

Amity Schlaes’ (condensed) The Forgotten Man

Filed under: Books, Economics, History, Politics, USA — Tags: , , , , , — Nicholas @ 13:07

An article encapsulating some of the key points of Amity Schlaes’ The Forgotten Man in PDF form:

We all know the traditional narrative of that event: The stock market crash generated an economic Katrina. One in four was unemployed in the first few years. It resulted from a combination of monetary, banking, credit, international, and consumer confidence factors. The terrible thing about it was the duration of a high level of unemployment, which averaged in the mid teens for the entire decade.

The second thing we usually learn is that the Depression was mysterious — a problem that only experts with doctorates could solve. That is why FDR’s floating advisory group — Felix Frankfurter, Frances Perkins, George Warren, Marriner Eccles and Adolf Berle, among others — was sometimes known as a Brain Trust. The mystery had something to do with a shortage of money, we are told, and in the end, only a Brain Trust’s tinkering with the money supply saved us. The corollary to this view is that the government knows more than American business does about economics.

Another common presumption is that cleaning up Wall Street and getting rid of white-collar criminals helped the nation recover. A second is that property rights may still have mattered during the 1930s, but that they mattered less than government-created jobs, shoring up home-owners, and getting the money supply right. A third is that American democracy was threatened by the rise of a potential plutocracy, and that the Wagner Act of 1935 — which lent federal support to labor unions — was thus necessary and proper. Fourth and finally, the traditional view of the 1930s is that action by the government was good, whereas inaction would have been fatal. The economic crisis mandated any kind of action, no matter how far removed it might be from sound monetary policy. Along these lines the humorist Will Rogers wrote in 1933 that if Franklin Roosevelt had “burned down the capital, we would cheer and say, ‘Well at least we got a fire started, anyhow.’”

To put this official version of the 1930s in terms of the Monopoly board: The American economy was failing because there were too many top hats lording it about on the board, trying to establish a plutocracy, and because there was no bank to hand out money. Under FDR, the federal government became the bank and pulled America back to economic health.

When you go to research the 1930s, however, you find a different story. It is of course true that the early part of the Depression — the years upon which most economists have focused — was an economic Katrina. And a number of New
Deal measures provided lasting benefits for the economy. These include the creation of the Securities and Exchange Commission, the push for free trade led by Secretary of State Cordell Hull, and the establishment of the modern mortgage format. But the remaining evidence contradicts the official narrative. Overall, it
can be said, government prevented recovery. Herbert Hoover was too active, not too passive — as the old stereotypes suggest — while Roosevelt and his New Deal policies impeded recovery as well, especially during the latter half of the decade.

H/T to Monty for the link.

October 19, 2010

The less-visible effects of workplace demographic changes

Filed under: Economics, History, USA — Tags: , , , , , , — Nicholas @ 12:12

Monty points out that we’ve passed a significant equilibrium point in employment statistics:

Women are vital to the American workforce, and have been since at least the 1940’s, but this recession may have shifted the balance of economic power decisively to women. Men have been the traditional household “breadwinners”, with the wife’s income being seen as augmenting the male’s income, but this recession has hit men disproportionately harder than women. Women are far more likely to work in industries (like services and healthcare) that are more insulated from the downturn, whereas men are far more likely to work in the hard-hit trades and manufacturing sectors. Women also have many more protections — both regulatory and social/cultural — than men do. There are many deep ramifications to this change — the impact of long-term male unemployment on the family; the loss of status, power and prestige that goes with being unemployed; the male self-image and value to society. (Studies of unemployed men during the Great Depression are not happy reading — many of the chronically unemployed males left their families rather than assume a lower status in the family, and were also far more likely to be dictatorial and violent towards their wives and children.)

Social support agencies are not well-equipped to deal with this change, and it will continue to disrupt “normal” life for years to come, unless the economy is allowed to right itself — yet another excellent reason to tell the politicians to stop meddling.

Another valuable observation from the same post:

This is a point I’ve made many times: the economic demographic most impacted by immigrant labor are teens. Low-end “starter” jobs tend to be low-skill, low-paying, part-time jobs, and adult immigrants are often favored over teens for these jobs by employers (they often have families to support, are considered more reliable, etc.). This means that the teen labor-participation percentage has fallen from 50% in 1970 to 25% today. (And even 25% is probably too high.) When faced with this lack of job opportunities, teens often opt to go back to school — but this in turn saddles them with a lot of debt for (in many cases) not much gain. For many teens, it’s simply a way of deferring adulthood, not a way to gain additional skills or knowledge. (I had my first paying job at 14; my first “real” W2 job at 16. I worked nearly full-time all the way through college, and worked full-time during the summers. I wonder how rare this is now?) Another interesting aspect to the immigrant/teen issue: the language barrier. If you’re a teen who doesn’t speak Spanish, just try and get a landscaping or construction job in the Southwest. The same goes for many fast-food crews and oil-change/tire-repair places. Still, we’re not the only ones with immigrant troubles.

Another side to the increasing longevity of western culture is the delayed start to “adult” life: now that a college diploma or university degree has about the same relevance that a high school diploma did a generation ago, young folks are entering the workforce several years later than earlier generations. This delays family formation, children, home-buying, and all the other aspects of independent-from-the-parents life.

No wonder so many of the “rules” no longer seem to apply with so many things changing.

October 14, 2010

The anomaly was the “nuclear family” era, not today

Filed under: Economics, Education, USA — Tags: , , — Nicholas @ 07:57

In so many stories about adult children moving back home after college, the default attitude seems to be that this is “not normal”. This is false: for most of human history, the default living situation has been multiple generations living in the same dwelling. The “nuclear family” era was the break with everything that had gone before. That being said, this should be no surprise:

Getting a degree used to be a stepping stone to limitless career opportunities. Now it’s more of a hiatus from living under your parents’ roof.

Stubbornly high unemployment — nearly 15% for those ages 20-24 — has made finding a job nearly impossible. And without a job, there’s nowhere for these young adults to go but back to their old bedrooms, curfews and chore charts. Meet the boomerangers.

“This recession has hit young adults particularly hard,” according to Rich Morin, senior editor at the Pew Research Center in DC.

So hard that a whopping 85% of college seniors planned to move back home with their parents after graduation last May, according to a poll by Twentysomething Inc., a marketing and research firm based in Philadelphia. That rate has steadily risen from 67% in 2006.

October 13, 2010

QotD: Economic misconceptions

Filed under: Economics, Education, Quotations, USA — Tags: , — Nicholas @ 00:04

Students typically come to an economics class with many misconceptions, not just random errors but systematic biases.

Bill Goffe recently (2009) surveyed one of his macro principles classes and found, for example, that the median student believes that 35% of workers earn the minimum wage and a substantial fraction think that a majority of workers earn the minimum wage (Actual rate in 2007: 2.3% of hourly-paid workers and a smaller share of all workers earn the minimum wage, rates are probably somewhat higher today since the min. wage has risen and wages have not).

When asked about profits as a percentage of sales the median student guessed 30% (actual rate, closer to 4%).

When asked about the inflation rate over the last year (survey was in 2009) the median student guessed 11%. Actual rate: much closer to 0%. Note, how important such misconceptions could be to policy.

When asked by how much has income per person in the United States changed since 1950 (after adjusting for inflation) the median student said an increase of 25%. Actual rate an increase of about 248%, thus the median student was off by a factor of 10.

Alex Tabarrok, “Economic Misconceptions”, Marginal Revolution, 2010-10-11

October 12, 2010

Monty on structural unemployment

Filed under: Economics, Education, Technology, USA — Tags: , , , — Nicholas @ 12:07

Monty is still too busy with real life to do a daily Financial Briefing, but he’s dropping by a few times a week with his insightful-and-acidic thoughts at Ace of Spades HQ:

Welding jobs may be plentiful, but that’s no help to you if you’re not a welder. This is called “structural unemployment”, and it has no real short-term solution. It results from a disconnect between current worker skills and employer requirements. It’s really a form of malinvestment. Students train in subjects like Postmodernist Literary Theory and The Hermeneutics of Lesbian Cinema, but the job market is asking for engineers and plumbers. Workers in fading industries won’t or can’t retrain. The last time this problem cropped up was during the 1982 recession: the old manufacturing jobs were gone, and the hundreds of thousands of Rust Belt factory workers — many now middle-aged, with high union wages and benefits packages they didn’t want to lose — either could not or would not re-train into other fields. This led to a long cycle of stagnation in which the American upper midwest remains mired to this very day. Pull quote:

Victor Calix Cruz, 51, has been job hunting for two years after being laid off from construction work in Miami. He, his wife and their two teenage children are “surviving” on his wife’s disability and his unemployment payments, he said. While he heard of openings at hotels, he hasn’t applied because the pay and benefits aren’t as good as what he had before.

I don’t imagine that your unemployment check matches what you were making before either, Chief. It’s like the old Rolling Stones song: you can’t always get what you want.

August 27, 2010

Uncertain economic conditions mean weak growth

Filed under: Economics, Government, Politics, USA — Tags: , , , , , — Nicholas @ 09:01

As I’ve argued before, the economy won’t start to really recover until the political situation stabilizes. In an article from earlier this year, Robert Higgs makes this point very well:

The explosion of the federal government’s size, scope, and power since the middle of 2008 has created enormous uncertainties in the minds of investors. New taxes and higher rates of old taxes; potentially large burdens of compliance with new energy regulations and mandatory health-care expenses; new, intrinsically arbitrary government oversight of so-called systemic risks associated with any type of business — all of these unsettling possibilities and others of substantial significance must give pause to anyone considering a long-term investment, because any one of them has the potential to turn what seems to be a profitable investment into a big loser. In short, investors now face regime uncertainty to an extent that few have experienced in this country — to find anything comparable, one must go back to the 1930s and 1940s, when the menacing clouds of the New Deal and World War II darkened the economic horizon.

Unless the government acts soon to resolve the looming uncertainties about the half-dozen greatest threats of policy harm to business, investors will remain for the most part on the sideline, protecting their wealth in cash hoards and low-risk, low-return, short-term investments and consuming wealth that might otherwise have been invested. If this situation continues for several years longer, the U.S. economy may well suffer its second “lost decade” for much the same reason that it suffered its first during the 1930s.

Unfortunately, the incentives for politicians are biased toward meddling, so don’t anticipate a slowing down of political “fixes” any time soon. If the US mid-term elections later this year return a “gridlocked” government, the economy might start to adapt to the current conditions and only then will any significant growth begin to take place. Given a relatively static political situation, businesses can at least make some plans based on their regulatory/legislative conditions as they are. Until some kind of stability is established, no businessperson in their right mind will take on major new plans: entrenching your existing business is far safer, while trying to do something radically different incurs too much risk. Risk, that is, over and above the “ordinary” risk of expansion, launching new products, or entering new markets.

August 26, 2010

The (real, true, terrifying) risks of working at home

Filed under: Humour — Tags: , , — Nicholas @ 09:35

Working from home is one of those mixed blessings, you don’t have the morning commute, you don’t have to fight for parking space or room on the bus, and there’s no dress code. You also tend to lose some of that all-important human contact with your co-workers. But I didn’t realize it could be this bad:

H/T to holykaw.alltop.com.

July 31, 2010

That 77 cents myth again

Filed under: Economics, Education, Politics — Tags: , , — Nicholas @ 11:30

Have you heard that women earn only 77 cents for each dollar earned by men? Do you believe it? I hope not, because it’s provably false:

Blau and Kahn found that 59% of the gender differential could be explained by non-discriminatory things: experience, chosen occupation, chosen industry, etc. So the “77 cents” statistic can’t be due to discrimination:

  • Estimated wage gap based on “77 cents” statistic = $0.23 per hour
  • Amount explained by nondiscriminatory factors = $0.14 per hour
  • Amount NOT explained = $0.09 per hour

According to Blau and Kahn, the most that could be attributed to discrimination is $0.09 per hour. And this assumes that their model accounts for ALL legitimate nondiscriminatory factors.

Are there legitimate nondiscriminatory factors that were omitted from their model? Probably — no model is perfect. Some people have argued that men are better negotiators than women, and because of this men tend to get higher starting salaries. Are differences in negotiating skills discriminatory? Perhaps, based on the way that we raise our daughters (that’s a sociological issue). But the employer can’t be held responsible for differences in negotiating skills, can he?

Something else to consider: overtime hours, shift premiums, etc., may cause a difference in earnings between men and women, even though their base rates of pay are the same. If a woman chooses to work fewer overtime hours than her male counterpart, resulting in lower earnings, is that discrimination?

H/T to Walter Olson for the link.

July 8, 2010

Monty sneers at your so-called “service industry” economy

Filed under: Economics, Technology — Tags: , , , , , — Nicholas @ 12:10

In today’s daily Financial Briefing, Monty takes a bit of time to pine for the good old days when a job meant lots of physical work:

I’ve always felt that the “service-based” economy idea was kind of a mirage. Yes, IT has turned into a huge industry in the United States; and yes, IT has transformed the world job market. I’m just not sure the transformation is an entirely positive one. If you’re smart and willing to sit in a cubicle all day staring at a computer screen, you can do quite well. If your skills are more mechanical or manual in nature, or you like to work outdoors or on a shop-floor . . . not so much. It’s not just a question of being smart enough or not. Are we going to say that people below some arbitrary level of IQ are not essential any more, or are not able to be productive or successful? It’s almost like a mirror-image of Harrison Bergeron. Efficiency isn’t everything, in markets or anything else. An economy must produce stuff, not just electrons in different patterns that fly back and forth. Less-bright people may have skills that the smarties lack. Many is the theoretical physicist or mathematician or computer whiz who must call a plumber when the toilet backs up.

Speaking as someone who started with a few manual labour jobs, I’m absolutely delighted that I didn’t have to stay in that segment of the economy: I was terrible at ’em. He does make a good point that no matter how digitized our economy becomes, there will always be need for people who are more skilled at moving atomic-based matter as well as those who play with electrons.

It’s not exactly news that Obama is as anti-business as they come, even for a Democrat, but it’s nice to see that more people are realizing it. It’s useful to recognize the beast that’s killing you.

This is a good overview of why Obama (or any politician, really) can’t “create jobs” by hiring in the public sector. Public-sector workers do not add to GDP; they are net consumers of GDP because their paychecks are funded ultimately through taxes and fees. (They are also overpaid by about 12% compared to the private sector, mainly because their jobs are not subject to market pressures.) Public workers are paid via transfer-payments from the private sector. Government workers of any level are overhead. They are part of the cost-center, not the profit-center. You don’t hear private sector businessmen crying, “Let’s increase our overhead by 100%, boys! It’s the only way to save the firm!” There’s a reason why they don’t say that: it’s self-evidently stupid. There is also the fact that economies do not exist to give people jobs — economies exist to mediate the flow of goods between producers and consumers. Jobs are a side-effect, not the purpose, of an economy.

Several embedded links in the original post that are worth following.

June 23, 2010

Monty’s summer job recommendations

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

Jon, my former virtual landlord, sent me a link to Monty’s “Wednesday Financial Briefing”, which includes some job advice for students:

If you’re a high-schooler looking for a summer job, your best bet looks to be sex slavery, murder-for-hire, selling your blood, or Occult Apprentice to a Master of the Dark Arts. (Teens who have already sold their souls for liquor, sex, or illegal drugs need not apply to the Dark Arts Guild. Teens will be required to promise their souls in exchange for a Guild Card.)

Monty also thinks that Barack Obama will have a noteworthy spot in the histories:

I always thought that Jimmy Carter would remain the gold standard for modern Presidential incompetence and futility. But Barack Obama, the comback kid, has already usurped Jimmah’s spot a mere two years into his term. What wonders still await us as the remainder of Bammer’s term plays out? And Bammer is a young man; he has a great shot at being the worst former President as well, a title also held by the lamentable Mr. Carter.

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