(Roughly) Daily

Posts Tagged ‘wages

“A fair day’s-wage for a fair day’s work: it is as just a demand as governed men ever made of governing.”*…

As low-wage employers struggle to find workers, it seems as that labor– which has been left behind over the last several decades, as the economic benefits of growth have flowed to executives and owners– may be about to have its day. But will it? And what might that mean?

In her first statement as Treasury Secretary, Janet Yellen said that the United States faced “an economic crisis that has been building for fifty years.” The formulation is intriguing but enigmatic. The last half century is piled so high with economic wreckage that it is not obvious how to name the long crisis, much less how to pull the fragments together into a narrative. One place to start is with the distribution of national income between labor and capital (or, looked at another way, between the wage share and the profit share of national income). About fifty years ago, the share of income going to labor began to decline, forming a statistical record of the epochal collapse of working class power. Episodes of high employment in the 1990s and the late 2010s did not reverse the long-term pattern. Even today, with a combination of easy money and fiscal stimulus unprecedented since World War II, it is unclear what it would take to reverse the trend in distribution.

Few would seriously dispute that hawkish Federal Reserve policies have played a direct role in the decline of the labor share since the 1970s. This is the starting point for thinking about monetary policy and the income distribution, but many questions remain. Today’s expansionary program extends beyond monetary policy to include fiscal stimulus and even industrial policy, but the first sign of an elite rethinking was the Fed’s dovish turn around 2016. (The Fed chair then was Yellen, whose current tenure as Treasury Secretary has been marked by close coordination with her successor, Jerome Powell.) In a fundamental sense, the entire Biden program hangs on the Fed: low interest rates made possible a reevaluation of the cost of massive government debt, which has in turn opened new horizons for a would-be activist government. 

If the age of inequality was the product of a hawkish Fed, could a dovish central bank reverse the damage? Today, there is more reason to speak of a “pro-labor turn” than perhaps at any time over the last half century. But history is not so easily reversed. The new policy regime is not a simple course correction to decades of misguided neoliberalism. There is evidence that the current experiment was made possible by a recognition that workers had suffered a secular defeat—specifically, that they had lost the ability to increase or even defend their share of the national income. What would happen if labor became stronger?…

Tim Barker (@_TimBarker) explores: “Preferred Shares,” in Phenomenal World (@WorldPhenomenal).

On a related note: “The economics of dollar stores.”

[Image above: source]

* Thomas Carlyle

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As we re-slice the pie, we might send acquisitive birthday greetings to Claude-Frédéric Bastiat; he was born on this date in 1801 (though some sources give tomorrow as his birthday). An economist and writer, he was a prominent member of the French Liberal School. As an advocate of classical economics and the views of Adam Smith, his advocacy for free markets influenced the Austrian School; indeed, Joseph Schumpeter called him “the most brilliant economic journalist who ever lived”… which is to say that Bastiat was a father of the neo-liberal economic movement that’s been central to creating the situation we’re in.

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“A man is worked upon by what he works on”*…

 

Jobs

 

Further to last week’s “The most perfect political community is one in which the middle class is in control, and outnumbers both of the other classes”*

The numbers tell one story. Unemployment in the US is the lowest it’s been in 50 years. More Americans have jobs than ever before. Wage growth keeps climbing.

People tell a different story. Long job hunts. Trouble finding work with decent pay. A lack of predictable hours.

These accounts are hard to square with the record-long economic expansion and robust labor market described in headline statistics. Put another way, when you compare the lived reality with the data and it’s clear something big is getting lost in translation. But a team of researchers thinks they may have uncovered the Rosetta Stone of the US labor market.

They recently unveiled the US Private Sector Job Quality Index (or JQI for short), a new monthly indicator that aims to track the quality of jobs instead of just the quantity. The JQI measures the ratio of what the researchers call “high-quality” versus “low-quality” jobs, based on whether the work offer more or less than the average income.

A reading of 100 means that there are equal numbers of the two groups, while anything less implies relatively lower-quality jobs. Here’s what it looks like:

Job Quality

So, what is this newfangled thing telling us? Right now the JQI is just shy of 81, which implies that there are 81 high-quality jobs for every 100 low-quality ones. While that’s a slight improvement from early 2012—the JQI’s 30-year nadir—it’s still way down from 2006, the eve of the housing market crash, when the economy regularly supported about 90 good jobs per 100 lousy ones.

Or, in plainer English, the US labor market is nowhere near fully recovered from the Great Recession. In fact, the long-term trend in the balance of jobs paints a more ominous picture…

Quality vs. quantity: more at “The great American labor paradox: Plentiful jobs, most of them bad.”

Resonantly, see also: “Job loss predictions over rising minimum wages haven’t come true.”  The higher minimum wages in question are still below the average that separates high- and low-quality jobs; but they are a step in the direction of narrowing the gap.

* “A man is worked upon by what he works on. He may carve out his circumstances, but his circumstances will carve him out as well.”  – Frederick Douglass

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As we “Get a Job,” we might recall that it was on this date in 1956 that serendipity yielded one of the coolest collectibles ever: rockabilly legend Carl “Blue Suede Shoes” Perkins was recording at Sam Phillips’ Sun Records in Memphis; Perkin’s buddy Johnny Cash, a Sun artist and a country star by virtue of his recent hits “I Walk The Line” and “Folsom Prison Blues,” was hanging out in the booth; and soon-to-be-famous Jerry Lee Lewis was playing piano (for a $15 dollar session fee– “Whole Lotta Shakin’ Goin’ On” was set for release a few weeks later).

A couple of years earlier, Phillips had launched Elvis Presley with “It’s Alright Mama”; but in 1955, as Elvis’ career exploded, Phillips had sold his contract to RCA, and Elvis moved on.  But The King was back in Memphis that fateful day; he stopped by Sun to say hello… and an impromptu jam ensued.  Phillips had the presence of mind to order his engineer, Jack Clement, to roll tape– a tape that was promptly shelved, forgotten, and unheard for 20 years.  The recordings of what was arguably the first “supergroup” were found in 1976 and finally released in 1981… since when, they’ve been treasured by fans– a new crop of which has emerged with the success of the Broadway musical Million Dollar Quartet.

https://i2.wp.com/farm9.staticflickr.com/8200/8239430651_733906291d_o.jpg?resize=400%2C298 source

 

 

Written by (Roughly) Daily

December 4, 2019 at 1:01 am

“A government that robs Peter to pay Paul can always count on the support of Paul”*…

 

Since 1979, inflation-adjusted hourly pay is up just 3.41 percent for the middle 20 percent of Americans while labor’s overall share of national income has declined sharply since the early 2000s. There are lots of possible explanations for why this is, from long-term factors like the rise of automation and decline of organized labor, to short-term ones, such as the lingering weakness in the job market left over from the great recession. But a recent study by a group of labor economists introduces an interesting theory into the mix: Workers’ pay may be lagging because the U.S. is suffering from a shortage of employers… its authors argue that the labor market may be plagued by what economists call a monopsony problem, where a lack of competition among employers gives businesses outsize power over workers, including the ability to tamp down on pay. If the researchers are right, it could have important implications for how we think about antitrust, unions, and the minimum wage…

… not to mention anti-trust laws.  The full story at: “Why Is It So Hard for Americans to Get a Decent Raise?

* George Bernard Shaw

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As we concentrate on concentration, we might spare a thought for Charles Erskine Scott (C. E. S.) Wood; he died on this date in 1944.  An author, civil liberties advocate, artist, soldier, attorney, and Georgist, he is best known as the author of the 1927 satirical bestseller, Heavenly Discourse.

Wood settled in Oregon, where he defended Native American causes, represented dissidents such as Emma Goldman and wrote articles for radical journals such as LibertyThe Masses, and Mother Earth.  His friends included Chief Joseph, Emma Goldman, Eugene Debs, Ansel Adams, Robinson Jeffers, Clarence Darrow, Childe Hassam, Margaret Sanger and John Steinbeck.  His daughter, Nan Wood Honeyman, was Oregon’s first U. S. congresswoman.

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Written by (Roughly) Daily

January 22, 2018 at 1:01 am

Leaning In?…

Barbie, who celebrated her 54th birthday last month, has had more than 130 careers.  Some, of course, command higher wages than others. But what is perhaps surprising is that the price of a doll varies by profession.  Most in the “Barbie I can be…” collection cost $13.99; but some, like “computer engineer” or “snowboarder” can cost two or three times more.  It can’t be the (cheap) accessories that come with each— why should a miniature plastic laptop be valued so much more highly than a chef’s tiny cupcakes?

The Economist‘s “Graphic Detail” explains…

Matthew Notowidigdo, an economist at the University of Chicago, calls it the “Barbie Paradox,” an idea popularised by his colleague Emily Oster in an article last year in Slate. They conclude that price discrimination is probably at work: sellers exploit parental hopes that a girl playing palaeontologist may grow up to be the real thing, so charge more. And the white-collar professions certainly assuage criticisms from the early 1990s when Mattel released talking Barbies that groused “Math class is tough” (which inspired The Economist to publish an in-depth analysis of the pint-sized princess in 2002). Interestingly, there is only a modest correlation between Barbie’s occupations and real-world salaries. Inexpensive pilot dolls are paid quite a lot in life, and despite babysitter Barbie’s moderately high price, she would take home a pittance as a childcare worker.

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As we put away our childish things, we might send darkly humorous birthday greetings to Samuel Barclay Beckett; he was born on this date in 1906.  A novelist, poet, and theatrical director, Beckett is best remembered as the playwright who created (with Eugéne Ionesco) what Martin Esslin dubbed “The Theater of the Absurd.”  His Modernist masterpieces– Krapp’s Last Tape and Waiting for Godot, for instance had a profound influence on writers like Václav Havel, John Banville, Tom Stoppard, and Harold Pinter.  Beckett was awarded the Nobel Prize for Literature in 1969.

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Written by (Roughly) Daily

April 13, 2013 at 1:01 am

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