Thursday 3 May 2012
jobs
Tax Cuts and Job Growth: They're Just Not That Into Each Other ☀
The three policy ideas I hear most often for greater job creation are cut taxes, cut regulation, and more education. While I support the latter, especially for those whose access is blocked by income constraints, none of these ideas will do much to increase the quantity of jobs.
What will? Greater consumer demand, an end to deleveraging, a growing housing market, more domestic production of the goods we consume, new innovations that generate hungry, job-creating start-ups financed by now-idle capital, clean energy investment, and if all else fails, a national program to rebuild and repair the nation’s infrastructure, from roads to schools.
Wednesday 2 May 2012
Tuesday 1 May 2012
College graduates, then, are taking it on the chin thanks to the weak economy. And research tells us that the price isn’t temporary: students who graduate into a bad economy never recover the lost ground. Instead, their earnings are depressed for life. What the young need most of all, then, is a better job market. People like Mr. Romney claim that they have the recipe for job creation: slash taxes on corporations and the rich, slash spending on public services and the poor. But we now have plenty of evidence on how these policies actually work in a depressed economy — and they clearly destroy jobs rather than create them. Paul Krugman ☀
Tuesday 13 March 2012
Tuesday 28 February 2012
College Degrees Are Valuable Even for Careers That Don’t Require Them ☀
ALMOST a century ago, the United States decided to make high school nearly universal. Around the same time, much of Europe decided that universal high school was a waste. Not everybody, European intellectuals argued, should go to high school.
It’s clear who made the right decision. The educated American masses helped create the American century, as the economists Claudia Goldin and Lawrence Katz have written. The new ranks of high school graduates made factories more efficient and new industries possible.
Today, we are having an updated version of the same debate. Television, newspapers and blogs are filled with the case against college for the masses: It saddles students with debt; it does not guarantee a good job; it isn’t necessary for many jobs. Not everybody, the skeptics say, should go to college.
The argument has the lure of counterintuition and does have grains of truth. Too many teenagers aren’t ready to do college-level work. Ultimately, though, the case against mass education is no better than it was a century ago.
The evidence is overwhelming that college is a better investment for most graduates than in the past. A new study even shows that a bachelor’s degree pays off for jobs that don’t require one: secretaries, plumbers and cashiers. And, beyond money, education seems to make people happier and healthier.
Monday 27 February 2012
Wages and the Lottery ☀
Taking this view more broadly, most jobs have some sort of lottery component in the sense that there is a benefit to staying with a firm for a long period of time that workers lose if they leave, either by their choice or their employers. In more mundane jobs, the benefit might just be a pension, job security, and perhaps above market pay for workers as they near retirement. The logic is that workers might get below market pay when they are young and energetic, but if they stay with a firm long enough the situation is reversed as they slow down and their wage rises with seniority.
This point is interesting because it implies an obvious way that firms can increase their profit, at least in the short-term: take away the lottery prize. The savings on the prize is a pure short-term gain. In the case where a firm is keeping older, less productive, workers on the payroll and paying them a premium for seniority, ending the lottery prize (i.e. firing the workers) is a pure short-term gain. (This is of course a caricature — older workers are not necessarily less productive.) In the longer term it may not be a profit maximizing strategy, since younger workers will not make a commitment to mastering firm specific skills if they do not expect to be able to stay at the firm.
An article by Larry Summers and Andre Shliefer argued that breaking commitments of this sort was at the heart of the better than normal profits that private equity companies were able to earn. They argued that by breaking implicit contracts with workers and other stakeholders, private equity companies could increase profit at least in the short-run. If their intention is to sell out their stake at a profit, then a short-run gain would suit their purposes, even if the strategy might be harmful to the company and the economy in the long-run.
Why Are Harvard Graduates in the Mailroom? ☀
But part of the American post-World War II economic miracle was that most people didn’t have to choose between a high-stakes-lottery job or a lousy dead-end one. Steelworkers, midlevel corporate executives, shopkeepers and plumbers were all able to make a decent amount from the start of their careers with steady, but never spectacular, raises throughout. These two tiers actually supported each other. Strivers were able to dream bigger because they had a solid Plan B. New York City and Los Angeles are buoyed by teachers, store owners, arts administrators and others who came to town to make it big in film or music or publishing, eventually gave up on that dream and ended up doing fine in another field.
Now, many economists fear that the comfortable Plan B jobs are disappearing. Technology and cheaper goods from overseas have replaced many of the not-especially-creative professions. A tax accountant loses clients to TurboTax; many graphic designers have been replaced by Photoshop; and the small shopkeeper by Home Depot, Walmart or Duane Reade. Though a lottery economy is valuable to various industries, the thought of an entire lottery-based economy, in which a few people win big while the rest are forced to toil in an uncertain and not terribly remunerative dead-end labor pool, is unfair and politically scary. If large numbers of people believe they have no shot at a better life in the future, they will work less hard and generate fewer new ideas and businesses. The economy, as a whole, will be poorer.
It’s not clear what today’s eager 23-year-old will do in 5 or 10 years when she decides that acting (or that accounting partnership) isn’t going to work out after all. The best advice may be to accept that economic success in America will come as much from the labor lottery as from hard work and tenacity. The Oscars make clear that there is only so much room at the top. In a lottery-based economy, you need some luck, too; now, perhaps, more than ever. People should be prepared to enter a few different lotteries, because the new Plan B is just going to be another long shot in a different field. The role model of our time should be an actress who was never nominated for an Oscar. Hedy Lamarr did well enough on the screen but, just in case, she spent her free time developing something called frequency-hopping spread-spectrum. It’s a wireless-communication technique still in use in Bluetooth and Wi-Fi. Not bad for a fallback.
Sunday 5 February 2012
Hi-Tech US Corporations Deny Skilled American Workers Jobs Through Abuse of Visa Loophole ☀
Of course, the high-tech companies are telling the White House and Congress that they can’t find US citizens for the H-1B jobs, but many critics argue that many high-tech companies hire H-1B workers without even offering the positions to Americans. On top of that, after the H-1B workers are sent back to their native nations, there are reports that they are rehired by US companies abroad to start offshore high-tech offices that move more US jobs overseas. In short, the H-1B visa could be seen as an outsourcing training program at the expense of highly skilled US professionals.
Tuesday 9 August 2011
Monday 8 August 2011
If you want to see more jobs created – change patent laws ☀
Sometimes it’s not the obvious things that create the biggest problems. In this case one of the hidden job killers in our economy today is the explosion of patent litigation.
Every technology company I have is getting hit by patent lawsuits that are the biggest bunch of bullshit ever. Every week it seems like a new one comes up. Between having to pay our lawyers a lot of money to review each, to increasing insurance rates and settlement costs because we can’t afford to pay to fight the nonsense, it’s an enormous expense. So much so that money that would have gone to new hires to improve and sell the product has to be saved to pay to deal with this bullshit.
I’m not talking about a new company that had an idea that someone beat us to. No sir. I’m talking about companies that have been doing business the same way for years that are getting hit by patent trolls . These aren’t operating companies that are trying to protect their business. These are companies that aggregate patents and raise capital for the sole purpose of suing companies and extorting money from them.
Erie struggles with unemployment rates and job loss ☀
A recent article by Evan MacDonald in the June 2011 issue of Consumer Report states that:
“In 23 of the past 24 months, lower income Americans have lost more jobs than they’ve gained. Meanwhile, more affluent Americans seem to be gaining more jobs than they’re losing.”
To hear millionaire Congressmen and TV pundits, poverty only exists in Third World countries while America is rapidly becoming one itself. In the US, poor people are euphemistically referred to as “the struggling middle class” while Third World poverty that is now enveloping Detroit and Camden threatens to consume Erie, Pennsylvania.
It is one thing to be poor, but quite another to have the deck stacked further against you by the compounding ills of poverty through legal and social structures that are, simply put, unfair.
“Equal Justice Under the Law” is inscribed above the doorway to the US Supreme Court. But when the laws are unjust, when moneyed interests shape jurisprudence and public policies and the poor are excluded and forced to bear the all the costs of a “free market”; the hope implied by that inscription rings hollow for many.
When money equals speech, and speech equals influence, and influence drives law and public policy, there is no “equal justice under the law” and there is no fairness in such an unethical system. But there is little talk of fairnness in our society today.
We hear about how government anti-poverty initiatives are “socialism”, that they were a “failure” and that giving money to the poor won’t really help those who are trapped in poverty; that the power and majesty of the “free market” under limited government is the only answer.
But the “free market” is not really free. The economic law of supply and demand does not operate in a vacuum when this “free market” is cornered and manipulated and controlled by the rich, and stacked with rules that perpetually favor those with wealth, power, and influence at the expense of those who have not.
We believe that justice is fundamental to a healthy society, but very few social predators from the hallowed halls of Wall Street went to prison as a result of the recent economic crisis caused by their economic crimes and the flamboyant escapades of corporate America’s fig-newton follies. “Personal responsibility” seems to only apply to the have-nots.
“The poor you will always have with you” — but lack of fairness and lack of social and economic justice is a choice.
Tuesday 26 July 2011
Wednesday 20 July 2011
Jobs programs and infrastructure investment can be very potent economic tools. Economists use the concept of a multiplier to estimate the effects of fiscal policy on the economy. For example, a multiplier of 1.5 means that for every dollar the government spends, GDP would increase by $1.50. The multipliers on jobs programs and infrastructure are quite high. According to Economy.com, such spending has a mulitplier of about 1.6 to 1.7—meaning that for every $1.00 spent on such programs, GDP increases about about $1.60-1.70. (Economy.com is run by Mark Zandi of Economy.com, who advised John McCain during the 2008 campaign, so these multipliers are not from some pinko source.) The multipliers on tax cuts are much much lower – under $0.40 for extending the Bush tax cuts or giving corporations tax breaks (meaning that they increase GDP by less than half what they cost). The multiplier on the payroll tax holiday is higher—around $1.20 – because the working class spends all it gets, but the upper brackets don’t. Infrastructure spending has a big kick not just because workers spend so much of what they get, it also involves buying lots of raw materials and equipment, meaning large spillover effects beyond the site of the initial spending. Doug Henwood ☀
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