Results for “those new service sector jobs” 205 found
Wednesday assorted avian links
1. Do Trump’s speechwriters follow MRU? It seems part of Trump’s speech last night borrowed an idea/reference from our recent MRU “complacent class” video.
2. Those new puffin fan service sector jobs.
4. A new fossil shows ancient penguins were as tall as people for 30 million years.
5. Complacency and the future of work, an adaptation of part of the book. And Quartz adaptation from Complacent Class on America’s productivity slowdown. And my bit on Charlie Rose.
The political economy of inflation
That is the topic of my latest Bloomberg column, here is one bit:
Just think how the U.S. has changed. Compared to earlier decades, economic growth and wage growth have slowed, the population has aged, average job tenure is longer and Americans are much less likely to move across the country for a new job. Furthermore, more Americans have ensconced themselves service-sector jobs, where they’re sheltered by formal tenure or strong networks of allies at work. We are more set in our ways, and that means people with jobs feel more threatened by inflation.
In the rarefied world of economic theory, higher inflation would translate into higher nominal wages fairly quickly, keeping the real, inflation-adjusted wage constant. But that doesn’t happen automatically, because employers will only pay their workers more if they fear those workers will leave or rebel. With lower levels of labor-market and geographic mobility, and with more two-income families, it’s harder for many workers to threaten to quit than before.
The net result is that inflation would leave many workers with permanently lower wages, as in essence the central bank would be giving them a wage cut that their own employers probably would not have dared.
Do read the whole thing.
Are work hours allocated justly and efficiently?
That is the topic of my latest NYT column for The Upshot. Here are some excerpts:
In short, most older people already enjoy a much better deal than Keynes had predicted for the entire work force. The 1930 Keynes essay “Economic Possibilities for Our Grandchildren” didn’t even mention retirement, perhaps because he was accustomed to a world in which so many people worked until they died or were seriously disabled.
Teenagers are also ahead of Keynes’s workplace predictions. Several decades ago, about 55 percent of teenagers had jobs, but lately only about 35 percent do. In addition, service sector jobs have been replacing jobs involving manual labor. While enormous disparities exist among teenagers of different races and income groups, over all, life has gotten easier for them.
And:
If people in all of these groups are working less, then someone must be working more. The answer, overwhelmingly, is women, who have taken on an Atlaslike role in supporting American economic growth.
There are reasons to believe that at least some of the growth in female work hours has been an unfair burden. It is well known, for instance, that men do not come anywhere close to fully sharing in the household chores or child rearing when their partners are working, and that often means more stress for women. Furthermore, the best available evidence, from Betsey Stevenson and Justin Wolfers, both professors of public policy at the University of Michigan (Mr. Wolfers is also a regular contributor to this column), suggest that overall female happiness in America has been declining, while age-adjusted death rates for middle-aged white women — though not for white men — have been increasing. Those troubling trends are perhaps another sign that the distribution of stress has been uneven.
Many men are working too little, and perhaps many women too much. But why isn’t there more smoothing of leisure over time?
On the other hand, many women do receive significant recompense in leisure time eventually — once they become older. Because women on average live longer than men, they are likely to have more years in retirement. Yet it is a strange society that disproportionately bunches much work and stress for so many women in the middle of their lives, and rewards them only much later with leisure. It is a kind of feast or famine for work, leisure and earnings.
Most economic models don’t account for these patterns, and instead assume that people engage in what is called smoothing behavior, in which leisure and work is evenly distributed across the years. Yet Americans as a whole are not experiencing that kind of moderation.
That is the real labor supply puzzle, and I don’t know of any consistent model which explains that along with other basic labor supply facts.
Monday assorted links
1. Detroit renaissance fact of the day.
2. Earth fact of the day: “According to BIS total public and private debt to GDP for the world stands at 265% vs 220% at the peak of the prior credit cycle” Good thing those interest rates are low, I guess.
3. A comic on RCTs.
4. MIE: a history of farting for money. Those old service sector jobs…
5. MIE: death by chocolate.
6. Cato on Oregon. Better background than I’ve seen from any other media source.
Which social groups and classes should fear higher price inflation?
Paul Krugman considers who is helped and hurt by higher rates of price inflation, and he sees the big losers as the wealthy oligarchs (and see his column today here). In contrast, I see the big losers as those with protected service sectors jobs who do not wish to have their contracts reset. If you are a schoolteacher, a nominal wage cut is likely to mean a real wage cut because you don’t have the power to renegotiate into a deal as good as the one you started with. The declining labor mobility of the United States in general means that workers are more vulnerable to higher rates of price inflation. A guy living in Cleveland who plans on leaving for Houston is probably less worried about nominal variables, because he will be doing a new contract negotiation anyway.
We all know that inflation is extremely unpopular with voters. We also observe that inflation remains extremely unpopular in a variety of northern European economies, which typically have more egalitarian distributions of income (though not always wealth) than does the United States. In any case the top 0.1 percent in those countries has less wealth per capita than in the U.S. and, at least according to progressives, less political influence too.
Of course the ability of inflation to erode rents is one of its virtues. The super-wealthy are often earning rents, but typically those rents are structured to be relatively robust to changes in nominal variables. For instance the rent might take the form of IP rights, or resource ownership rights. Simple loans of money, as we find in traditional creditor-debtor relationships, just aren’t monopolizable enough or profitable enough to be a major source of riches for the most wealthy.
I was puzzled by this comment on Krugman’s:
But there is one small but influential group that is in fact hurt by financial repression
which is just like what Hitler did to the Jews: again, the 0.1 percent.
People that wealthy can put their money into hedge funds, private equity, private capital pools, and the like. Of course there is risk involved but they have a chance as good as anyone to earn the highest rates of return prevailing in an economy, through creative uses of equity and on top of that very good accountants and tax lawyers. The very wealthy also have the greatest ability to hedge against inflation using derivatives and commodities, if they do desire.
In other contexts, Krugman (correctly) stresses that price inflation lowers the real exchange rate of a country (and thus is not neutral, supporting the view that nominal variables really do matter). So one big group of gainers from domestic inflation are those who invest lots of money overseas, wait for some inflation, and eventually convert their foreign currency holdings back into dollars for a very high net rate of return.
Which group of people might that be? The super wealthy of course. (This internationalization of returns for the super wealthy, by the way, is one big difference between current times and the 1970s.)
I am not suggesting that the very wealthy are out there pushing for higher inflation. But they are much more protected against such inflation than Krugman’s analysis suggests, and the middle class in protected service sector jobs is more vulnerable than is usually recognized. There is a reason why 4-6% price inflation has become the new third rail of American politics.
Addendum: Here are some related comments from Brad DeLong. I understand the very wealthy as believing (rightly or wrongly) that higher rates of price inflation increase economic uncertainty without providing much in the way of benefit for the real economy. So, given that belief, why should they favor higher price inflation? Since the status quo is based on low rates of price inflation, a switch to higher inflation would in fact disrupt markets (for better or worse), which would send a kind of self-validating short-run signal, at least apparently affirming this view held by the super wealthy that inflation will increase economic uncertainty.
Is Robert Gordon underestimating the progress of automation?
In his recent NBER working paper, Robert Gordon wrote:
This lack of multitasking ability is dismissed by the robot enthusiasts – just wait, it is coming. Soon our robots will not only be able to win at Jeopardy but also will be able to check in your bags at the sky cap station at the airport, thus displacing the skycaps. But the physical tasks that humans can do are unlikely to be replaced in the next several decades by robots. Surely multiple-function robots will be developed, but it will be a long and gradual process before robots outside of the manufacturing and wholesaling sectors become a significant factor in replacing human jobs in the service or construction sectors.
So how is it with those skycaps? I queried Air Genius Gary Leff and he wrote this back to me:
There are still people picking up/loading bags onto the planes, but —
American Airlines has tested self-tagging of bags in Boston, Austin, and Orlando
http://boardingarea.com/aadvantagegeek/2012/11/14/american-airlines-orlando-mco-self-tagging-tag-bag-luggage-system-check-i/Qantas has permanent bag tags that work with RFID readers at the airport, you check in online and drop your bag at the bag drop and leave. This works for their Australian domestic flights. (I do have a “Q Bag Tag”)
http://www.qantas.com.au/travel/airlines/q-bag-tag/global/enBritish Airways is trialing an end to paper tags, they began with Microsoft employees in Seattle this past fall
http://boardingarea.com/viewfromthewing/2013/11/07/british-airways-new-electronic-baggage-tags/Brussels Airlines on intra-European flights departing Brussels
http://brusselsairlines.prezly.com/brussels-airport-and-brussels-airlines-test-automated-self-baggage-drop-off-BWI is working on their baggage systems to accommodate self-checking of bags
http://www.capitalgazette.com/news/general_assembly/bwi-moving-forward-with-new-hotel-self-bag-check-in/
And that required no more than a few minutes thought from Gary.
The Autor, Dorn, and Hanson paper on trade and technology
Several other bloggers already have covered this important paper, but there remain underexplored details. Overall the main result is that trade has had more of a negative impact on employment than we used to think. I won’t attempt a summary, but here are a few further results of note:
1. In the Providence, Rhode Island area the trade exposure to China for 2000-2007 went up by $3,490 per worker. For New Orleans the same increase was only $490 per worker.
2. Technology gains and mechanization in a region do not predict employment declines, but they do predict polarization of wage returns. (I do think that automation will create problems for labor markets, but I think that issue is more about our future. It also was true, for a while, in our more distant past, as outlined by David Ricardo.)
3. The negative employment effects of technology on manufacturing jobs peaked in the 1980s, and since have declined. The negative employment effects of technology on service sector jobs have been rising. On net the effect on employment across all sectors has stayed roughly constant over the last few decades.
4. Women and older workers are those most likely to lose their jobs because of technology.
5. The employment effects of exposure of a region to Chinese imports are significant. A good deal of this effect works through the labor force participation rate rather than through measured unemployment per se. This by the way is one indication that the labor force participation rate does contain relevant information about the health of the labor market.
6. The authors classify jobs into the categories of abstract, routine, and manual, and suggest that routine jobs are most vulnerable to automation. Maybe, but I would not take this for granted. Better software in a car can forestall mechanical problems, and thus replace the manual labor of the automobile mechanic, even if we cannot imagine how a robot could itself do the car repair work.
Will Congress exempt itself from ACA exchange provisions?
Congressional leaders in both parties are engaged in high-level, confidential talks about exempting lawmakers and Capitol Hill aides from the insurance exchanges they are mandated to join as part of President Barack Obama’s health care overhaul, sources in both parties said…
There is concern in some quarters that the provision requiring lawmakers and staffers to join the exchanges, if it isn’t revised, could lead to a “brain drain” on Capitol Hill, as several sources close to the talks put it.
The problem stems from whether members and aides set to enter the exchanges would have their health insurance premiums subsidized by their employer — in this case, the federal government. If not, aides and lawmakers in both parties fear that staffers — especially low-paid junior aides — could be hit with thousands of dollars in new health care costs, prompting them to seek jobs elsewhere. Older, more senior staffers could also retire or jump to the private sector rather than face a big financial penalty.
Plus, lawmakers — especially those with long careers in public service and smaller bank accounts — are also concerned about the hit to their own wallets.
Here is more, via these guys.
Addendum: Here is a response from Ezra Klein to the Politico story, but I don’t see that it counters the basic point, as reflected by this brouhaha, that the exchanges are not necessarily such a wonderful place to be, especially for low wage workers. Megan McArdle also comments.
Is current unemployment all about aggregate demand?
Christie Romer basically says yes, Arnold Kling dissents.
I don't expect Romer to turn a speech into an academic debate and in this sense I don't fault her. Nonetheless I did not find her account very persuasive.
I would start with the fact that output has bounced back more robustly than employment has. AD theories per se do not explain that differential. One simple possibility is that better management and better measurement have allowed us to identify (and fire) hundreds of thousands of low-wage people who just weren't producing much of value. That's a real shock, even if it does not qualify as a sectoral shift in the traditional sense.
It's also the case that the rate of new job creation has been especially low. Yet the nominal wages on those jobs-to-be are not constrained by previous contracts or agreements. Tell stories as you may, but it's hard for me to see that as exclusively an AD problem.
I wonder what is the behavioral postulate for how long all these unemployed workers are all staring jobs in the face yet persistently stubborn about their appropriate nominal wage. I'm all for behavioral economics, but I don't buy the necessary story here.
I don't want to oversell the minimum wage hike + unemployment compensation extension + means-testing hypothesis here, but surely it deserves a mention as one relevant factor. Those are real factors too.
I also see that wages, and the job market, are more flexible today than in a long time, with so much service sector employment, so much flex-time and part-time, and such a low rate of unionization. In most AD theories that implies the job market bounces back relatively quickly yet that is not what we observe.
A separate question is what Romer believes the major AD shock to have been. She clearly repudiates the Scott Sumner story that monetary policy was too tight. Is it all from the collapsed bubble in the housing market? Keep in mind those are paper values and that the real services from the country's housing stock haven't declined. Again, you can tell behavioral stories about the asymmetric perception of losses vs. future gains (for many people, buying a future home is now much cheaper, though perhaps they don't notice the positive wealth effect), but is that going to drive the whole cycle?
To be sure, AD is a major factor in this recession but it is not the entire story by any means. In major recessions usually it is AD and AS forces together.
Most of all, the Romer essay convinces me that current economic policymakers — not to mention many bloggers — should not be so certain they understand what is going on.
Addendum: I sometimes have the feeling that commentators on the left reject the "real shocks" hypothesis because they think it implies government can't do much to make things better. That doesn't follow. Most of what government does, for better or worse, is an attempt to solve a real rather than a nominal problem. It might imply "intervention is less effective" but it also (possibly) can imply "intervention is more necessary."
The benefits of outsourcing
Virginia Postrel has been blogging up a storm on outsourcing, click here for a sterling post. In addition Her latest NYT column offers an excellent historical tale of outsourcing:
In the late 1980’s, Asian manufacturers began turning out basic memory chips, undercutting American chip makers’ prices and inciting a fierce policy debate. Many industry leaders argued that the United States would lose its technological edge unless the government intervened to protect chip makers.
In a famous 1988 Harvard Business Review article, Charles Ferguson, then a postdoctoral associate at the Center for Technology Policy and Industrial Development at M.I.T., summed up the conventional wisdom: “Most experts believe that without deep changes in both industry behavior and government policy, U.S. microelectronics will be reduced to permanent, decisive inferiority within 10 years.”
He denounced the “fragmented, chronically entrepreneurial industry” of Silicon Valley, which was losing market share to government-aided Asian businesses. “Only economists moved by the invisible hand,” he wrote, “have failed to apprehend the problem.”
Those optimistic economists were right. The dire predictions were wrong. American semiconductor makers shifted to higher-value microprocessors. Computer companies bought commodity memory chips and other components, from keyboards to disk drives, abroad. Businesses and consumers enjoyed cheaper and cheaper prices.
Far from an economic disaster, the result was a productivity boom. As global manufacturing helped to reduce the price of information technology sharply, all sorts of businesses, from banks to retailers, found new, more productive ways to use the technology.
“Globalized production and international trade made I.T. hardware some 10 to 30 percent less expensive than it otherwise would have been,” Dr. Mann estimates in an institute policy brief. (Her paper, “Globalization of I.T. Services and White-Collar Jobs: The Next Wave of Productivity Growth,” can be downloaded at iie.com.)
As a result, she estimates, gross domestic product grew about 0.3 percentage point a year faster than it would have otherwise, adding up to $230 billion over the seven years from 1995 to 2002. “That’s real money,” she said in an interview.
By building the components for new integrated software systems inexpensively, offshore programmers could make information technology affordable to business sectors that haven’t yet joined the productivity boom: small and medium-size businesses, health care and construction.
I link to Doug Irwin’s excellent outsourcing piece at The Volokh Conspiracy. Daniel Drezner covers the debate in his usual quality fashion. Arnold Kling offers good comments as well. Here’s hoping that this swell of intellectual support for free trade continues. Here is a more ambivalent Glenn Reynolds.