Quotulatiousness

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.

June 15, 2010

QotD: Public Education

Filed under: Bureaucracy, Education, Quotations, USA — Tags: , , — Nicholas @ 12:08

As of 2006 — of course the numbers are out of date — 4,615,000 people were employed full-time by some 13,000 school districts (although if school districts used the same definition of “full-time” as the rest of us the number we’re talking about would be zero). Of these 4,615,000 there are 300,000 “clerical and secretarial staff” filling out No Child Left Behind paperwork and wondering why 64,000 “officials, administrators” aren’t doing it themselves, which they aren’t because they’re busy doing the jobs that 125,000 “principals and assistant principals” can’t because they’re supervising 383,000 “other professional staff” who are flirting with the 483,000 “teachers’ aides” who are spilling trail mix and low-fat yogurt in the teacher’s lounge making a mess for the 726,000 “service workers” to clean up, never mind that the students should be pushing the brooms and swinging the Johnny mops so at least they’d come home with a practical skill and clean the bathroom instead of sitting around comprehending 29 percent of their iPhone text messages and staying awake all night because they can only count 31 percent of sheep.

“Classroom teachers” number 2,534,000. That makes for a nationwide student/teacher ratio of 15.4:1, which compares reasonably with the 13.3:1 ratio in private schools and is an improvement over the 22.3:1 public school ratio in 1970, when kids still occasionally learned something. But the people-doing-who-knows-what/teacher ratio is getting close to 1:1.

P.J. O’Rourke, “End Them, Don’t Mend Them: It’s time to shutter America’s bloated schools”, Weekly Standard, 2010-06-21

March 17, 2010

Debunking “No Irish Need Apply”

Filed under: Britain, History, Religion, USA — Tags: , , — Nicholas @ 09:51

By way of Kathy Shaidle, a debunking of the notorious “No Irish Need Apply” era of labour:

Irish Catholics in America have a vibrant memory of humiliating job discrimination, which featured omnipresent signs proclaiming “Help Wanted — No Irish Need Apply!” No one has ever seen one of these NINA signs because they were extremely rare or nonexistent. The market for female household workers occasionally specified religion or nationality. Newspaper ads for women sometimes did include NINA, but Irish women nevertheless dominated the market for domestics because they provided a reliable supply of an essential service. Newspaper ads for men with NINA were exceedingly rare. The slogan was commonplace in upper class London by 1820; in 1862 in London there was a song, “No Irish Need Apply,” purportedly by a maid looking for work. The song reached America and was modified to depict a man recently arrived in America who sees a NINA ad and confronts and beats up the culprit. The song was an immediate hit, and is the source of the myth. Evidence from the job market shows no significant discrimination against the Irish — on the contrary, employers eagerly sought them out. Some Americans feared the Irish because of their religion, their use of violence, and their threat to democratic elections. By the Civil War these fears had subsided and there were no efforts to exclude Irish immigrants. The Irish worked in gangs in job sites they could control by force. The NINA slogan told them they had to stick together against the Protestant Enemy, in terms of jobs and politics. The NINA myth justified physical assaults, and persisted because it aided ethnic solidarity. After 1940 the solidarity faded away, yet NINA remained as a powerful memory.

March 15, 2010

PSAC president says public servants not paid as well as private sector workers

Filed under: Bureaucracy, Cancon, Government — Tags: , , — Nicholas @ 12:55

In direct opposition to common belief, John Gordon of the Public Service Alliance of Canada says that civil servants are worse-paid than private sector workers:

“Here we are again,” says John Gordon, the president of the Public Service Alliance of Canada that represents 165,000 workers.

“Every time the government gets into [trouble] they kind of ramp up the rhetoric and the Canadian public starts to believe them . . .” he said.

In general terms, he added, his members’ wages run behind those in comparable positions in the private sector.

His workers are an easy target, he said, because the government fails to explain what it means to get rid of public servants — that services provided to the public would be affected.

For example, Mr. Gordon points to the work done by federal public servants during the H1N1 crisis to get vaccines in place and deal with the pandemic.

“It’s easy to broad brush it and say they should be freezing wages, which they have already done and cutting public services, which they are already doing . . .” he said, but added that the public has to ask itself what services it would like to see gone.

You see, unlike in the bloated private sector, where jobs are for life, and pensions are awesome, civil servants are overworked and underpaid. Any hint of reducing the costs of the civil service will automatically produce the most painful cuts for the public — that’s how the game is played. Even a freeze would somehow, through the arcane alchemy of public service financing, result in cuts only in the services most visible to the public.

Update, 16 March: An interesting sidelight to this is reported in Hit and Run:

California citizens are now encountering “state and local government officials [who are] increasingly . . . blaming budget cuts and furloughs when they withhold or delay the release of information requested under the state Public Records Act.”

March 8, 2010

This sounds familiar

Filed under: Bureaucracy, Cancon, Economics, Europe, Government, Greece — Tags: , , — Nicholas @ 17:39

The other day, I wrote:

Once upon a time (and this is becoming long enough in the past to qualify as legend), government work was less well-paid than equivalent work in the private sector. The advantage of taking the lower-paid government job was job security: government workers had a “job for life” and a nice pension at the end of it. Private sector workers got more in the weekly pay, but generally had worse pensions and more uncertainty for long-term employment.

During the last generation or so, this basic trade-off has been lost. Government workers now get better paid than their private sector counterparts, still get practically guaranteed lifetime employment, and not-just-nice-but-very-nice pensions. No wonder governments have become the employer of choice.

Clearly I’m not the only one thinking this way, as Kelly McParland makes a similar pitch:

I like they way they put “bail out” in quotations, as if devoting billions of dollars to the rescue of Greece isn’t really a bail-out. Because in union-land, it isn’t. By definition, everything a unionized worker earns is deserved, because someone, somewhere agreed to pay it — especially workers employed by the government, who make up the bulk of the protesting Greeks. And since they earned it, there’s no reason they should make any sacrifices to help the country avoid economic disaster. No, that’s for little people, who don’t have government jobs.

Canada isn’t Greece, but it’s no healthier here to have a country divided into two classes. Class One: Public sector workers with safe, secure, well-paid jobs it is almost impossible for them to lose, with generous holidays, guaranteed pensions and protection against the economic cycles that prevail in the private sector. Class Two: Everyone else.

It used to be that the people in Class Two had an incentive for risking exposure to economic ups and downs. The pay was generally better, and it was possible to spend an entire career with a successful company and enjoy a pension at the end. Not any more. If events of the past few years have proved anything, it’s that no company is too big to fail, and there’s no guarantee benefits promised when you were hired are likely to be there when you leave. If the pension goes splat, like so many have, you’re on your own.

While the incentive to face the risks of the private sector have diminished, life on the government payroll has never been better. After all those nasty cutbacks imposed by Finance Minister Paul Martin, the Conservatives were elected in 2006, and have been spending wildly ever since. All the staff reductions have been reversed and the public payroll is bigger than ever. Salaries have largely caught up with private sector levels, and the pensions are just as rock solid as they’ve ever been. And you can’t be fired, short of indictment for murder.

At some point (and that point may be sooner than anyone believes), growth in civil service has to stop: there won’t be enough non-civil service jobs to pay for all the rest. Especially as government jobs become more and more attractive over their private sector counterparts. Why not take a job paying more money, with longer vacations, guaranteed pensions, and no risk of losing the job? You’d be crazy to take a job anywhere else, wouldn’t you?

March 5, 2010

Government wages and benefits outpace private sector

Filed under: Bureaucracy, Economics, Government, USA — Tags: , — Nicholas @ 12:59

Once upon a time (and this is becoming long enough in the past to qualify as legend), government work was less well-paid than equivalent work in the private sector. The advantage of taking the lower-paid government job was job security: government workers had a “job for life” and a nice pension at the end of it. Private sector workers got more in the weekly pay, but generally had worse pensions and more uncertainty for long-term employment.

During the last generation or so, this basic trade-off has been lost. Government workers now get better paid than their private sector counterparts, still get practically guaranteed lifetime employment, and not-just-nice-but-very-nice pensions. No wonder governments have become the employer of choice. Katherine Mangu-Ward has the gory details:

There are two million civilian federal workers. 1.1 million of them have direct private sector equivalents. And they are laughing their asses off at those private sector suckers, who are doing similar jobs for less pay — often a lot less.

“Accountants, nurses, chemists, surveyors, cooks, clerks and janitors are among the wide range of jobs that get paid more on average in the federal government than in the private sector,” according to a USA Today report. In jobs where there are private equivalents, the feds are earning $7,645 more on average than their private counterparts.

[. . .]

Note that the figures above are salaries and don’t include the value of benefits, which averaged $40,785 per federal employee in 2008 vs. $9,882 per private worker.

March 3, 2010

Exact terminology aids understanding

Filed under: China, Economics, Technology — Tags: , , , — Nicholas @ 08:40

Apple Computer has been accused of exploiting child labour, indirectly, in factories that make iPods and iPhones. This is a serious charge, and the moral outrage it provokes is understandable. It evokes images of Victorian factories (those “satanic mills”), with children as young as seven or eight being starved and abused in horrific conditions.

However, the term “child labour” isn’t particularly exact, as Whit points out:

What I found most interesting was the “child” part — when I was 15 I would have slugged anyone who called me a child. During the summer of my 15th year, I was working in our metal stamping plant where the highest temperature reached 103 F (40 C). I had my first factory job when I was 14 turning wheels on a lathe. My Father never read child-labor laws, and thank God for that. It was an invaluable experience that I am sad to say I won’t be able to give to my son.

I can remember in 1998 visiting a factory for a major automotive supplier in Taiwan. There were 14 year old boys working on the lines making seat belt assemblies. I asked about it and found that they were students at the local technical school. They worked half a shift on the line and spent the rest of the day in class studying engineering. Today, 12 years later, they would be around 26 with degrees in mechanical engineering and over a decade of hands-on experience. I imagine some of them are running plants in China now.

So, there are the imagined children in a Dickensian hell, and there are teenagers (“young adults” in some situations) doing co-op terms in factories. Remember that our ideas about appropriate ages to leave school and work in factories or on farms have changed dramatically over the last two generations. Our grandparents wouldn’t have batted an eye at 14-year-olds working in factories. For most of their contemporaries, the concept of “teenage years” just didn’t have any particular cultural meaning. You were a child, you went to school, then you left school and got a job.

Even 60 years ago, however, they would have objected to under-12’s working away from home (but not on the family farm . . . farming families still looked at kids as extra working hands).

I understand that Apple is worried about its image, and I acknowledge that those eleven 15 year olds may not have wanted to be there. But there is a big difference between a 15 year old farm kid fibbing about his age to get a good factory job to help support his family and using 6 year old slave labor in an illegal fireworks factory in Sichuan. It would be nice if the amazingly flexible English language had a concise way of stating the difference. I think “under-aged labor” is more reflective of the reality of the situation.

It’s also not to excuse bad employers or condone involuntary labour (permitted in some developing countries).

March 2, 2010

QotD: The true nature of school

Filed under: Bureaucracy, Education, Humour, Quotations — Tags: , , , — Nicholas @ 13:04

If you objected to high school students getting spied on in their homes by school district-issued webcams, maybe junior high students under nonstop cam surveillance on school grounds by a tubby administrator with a chinbeard (but no chin) will be the charm [. . .] I’m creeped out by the obvious glee with which Beardy McBeardsworth describes his prey at a Bronx junior high school in almost exactly the same tones you hear from Air Force flacks narrating thermal footage of hits on insurgents. But I must acknowledge that the concept of school as a place where the rights of students are severely curtailed dates back at least to my own schooling during King Philip’s War, was recently upheld by the Supreme Court in the Bong Hits 4 Jesus case, and seems to enjoy broad popular support. For the majority of Americans alive today, the function of school has always been to break you for a workplace where you will meet obstruction and indignity every day, be subject to every type of invasive surveillance, and generally, as even that greatest of working stiffs Jerry Langford put it, “have idiots plaguing your life.”

Tim Cavanaugh, “Junior High Lives of Others”, Hit and Run, 2010-03-01

February 23, 2010

Statistics can tell a lot . . . but not always truthfully

Filed under: Cancon, Economics, Europe — Tags: , , , , — Nicholas @ 12:46

Brian Lilley looks at a recent report which critiques the federal government’s claim that women earn only 84% of the wages that men earn. The report uses a different set of statistics to show that women only earn 70 cents for every dollar a man earns in Canada:

Were this true it would be a shocking and appalling state of affairs, the type of thing that government regulations must be called upon to rectify. I truly do not know anyone who would advocate that a man earn 42% more than a woman for working the same job, for the same number of hours. Of course this is not the case.

The report, dubbed a reality check by its authors, looks at the government’s claim that women earn 84 cents for every dollar a man makes and they dismiss it. Their reason for doing so? The government does not use the correct data. In the government report, the 84 cents on the dollar claim is arrived at by looking at wages on a dollar per hour basis using Statistics Canada’s July 2008 Labour Force Survey. In July of 2008 women earned an average of $19.14 per hour while men earned an average of $22.80 per hour, thus the 84 cents on the dollar figure.

In any argument over statistics, the chosen measurement is always the one that best supports your argument. This is fair play, when the statistics are comparable. It isn’t when your choice of stat measures something quite different:

The collective report by the labour and activist groups does not use dollar per hour compensation to show that women earn less than men, they use total year compensation. It is easy to understand why the group uses this formula, it will always show that women are being discriminated against while the other formula is showing improvements. A quick look at Stats Canada’s monthly Labour Force Survey shows one reason why men make more money than women; they work more hours. While this may not justify a difference in hourly wages, it would justify a difference in year end compensation. In the report cited by the government, men worked an average of 38.7 hours per week, a full five hours more than women who clocked in for 33.7 hours. For full-time workers, rather than all workers combined, there was still a difference, men working 40.7 hours per week to 38 hours for women. In reviewing several months of these reports over the past two years a consistent pattern emerges, men in full-time jobs work two to three hours more per week than women.

There may still be parts of the economy where male bosses or business owners irrationally discriminate against women (equally, there may be other forms of prejudice in play). Where laws exist to prohibit this, they should be enforced. However, trying to paint the numbers to show discrimination where it does not exist does not help anyone, and it makes it harder to achieve truly equal rights.

Update, 21 October: Ilkka at The Fourth Checkraise mentioned a related story from Finland:

Speaking of the male-female wage gap, I don’t know how I could forget the recent study by the Finnish emeritus researcher (who is thus free to speak his mind) Pauli Sumanen about this very issue. It concluded that Finnish men earn more on average (again, not the median) than Finnish women simply because they work more: if you control for actual hours worked, women get paid more than men so that a woman’s euro is not 80 cents but closer to 104. And if you look at the net salaries after the heavily progressive taxation, and include the fact that women live and receive pensions seven years longer on average (Finnish women pay 45% of total health care costs yet use 59% of health care), these numbers become vastly more dramatic for women.

February 4, 2010

Unemployment insurance systems can deter hiring

Filed under: Bureaucracy, Government, USA — Tags: , — Nicholas @ 07:31

Jay Goltz discusses how some state-level unemployment insurance systems actually deter firms from hiring new employees:

The unemployment insurance tax may be the most confusing and misunderstood tax there is. It is run by the states, and the rules can vary as much as the weather from one state to another.

Here’s how it works in Illinois. The important point for business owners to know is that when the state pays out claims to a company’s former employees, that company’s unemployment tax rate goes up. For each business, the state calculates how many dollars have been paid in compensation over the previous three years and adds on about 48 percent through various calculations. The result is that in Illinois, you end up paying for incremental compensation claims at a rate of $1.48 for every dollar that a former employee collects.

If you lay off or fire someone without “cause,” that person is eligible for unemployment compensation. “Cause” means that the employee violated a company policy, like coming in late or threatening a co-worker. “Cause” does not include doing a bad job, being very slow, or having a bad attitude.

I’d always assumed that the Canadian system (which is run by the federal government) was more generous than the various state-level systems in the US, but there appears to be more variation state-to-state so that may not be true. Certainly the Illinois system’s top payment of $531 per week is well above the Canadian EI top payment ($457 before taxes, according to the servicecanada.gc.ca website). If the Illinois amount is after tax, that’s significantly more than a Canadian claimant would get.

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