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Category: labor markets

Published on Leave a comment on Supply and Demand at Foundations

This looks like a great move for the Ford Foundation:

The Ford Foundation has selected a dark-horse candidate with little experience in institutional philanthropy as its new president.

Luis A. Ubiñas, who has worked for McKinsey & Company, the consulting firm, for 18 years, will lead the organization, the nation’s second-largest foundation, with $11 billion in assets.

Mr. Ubiñas’s appointment, to be announced today, is expected to stun the nonprofit world, which has been speculating about who in the field would succeed Susan V. Berresford, Ford’s influential leader for more than a decade, when she retires in January.

Increasingly, however, high-profile nonprofit jobs are going to people who have done well in the business world or in politics, a reflection on the pressure on charities and foundations to become more accountable.

I would not discount the role of the supply side of this market--talented people like Ubiñas are likely to see his new job as very similar to his old job, and over time, they have been making themselves more available to the non-profit world.

From my vantage point, this trend will continue as current generations of students make their way through the workforce. To a greater degree than past generations, they will spend some of their time in the private sector and some of it in the public and non-profit sectors, focusing on the skills they are developing that are applicable to similar challenges in all fields.

Published on Leave a comment on Economic Challenges

The trip to Hawaii wasn't all vacation. The impetus for the trip was an invitation to make a presentation to a financial audience on "Economic Challenges: What Have We Learned? What Do We Face?" Here are the slides.

In a nutshell:

I identified three challenges to the U.S. economy that I think are fundamental: low and declining saving in all sectors of the economy, a declining labor force, and a dwindling labor income tax base. In all cases, the challenges make us less capable of absorbing additional pressures, whether unforeseen events in the near term or emerging pressures from population aging and the growth of health care costs persistently in excess of the economy's growth (and their interaction through the government's entitlement programs).

My prognosis:

Absent more prudent behavior, prices—exchange rates and interest rates—will simply change to equilibrate imbalances. The dollar has started to depreciate, but to me, the biggest mystery in the economy is how the U.S. long-term interest rate can stay so low. I cannot see it remaining that way for long, and its rise will take the stock market and (what's left of) the housing market with it. (This is a fascinating chart that didn't make it into the presentation.)

But I’ve been saying this for a while. As an economist, I’m happy to be right, but usually even happier to be wrong.

Enjoy!

Published on Leave a comment on The Economic Logic of Illegal Immigration

So goes the title of a report to the Council on Foreign Relations by UCSD Professor of Economics Gordon Hanson. From the Introduction, here's a teaser:

This analysis concludes that there is little evidence that legal immigration is economically preferable to illegal immigration. In fact, illegal immigration responds to market forces in ways that legal immigration does not. Illegal immigrants tend to arrive in larger numbers when the U.S. economy is booming (relative to Mexico and the Central American countries that are the source of most illegal immigration to the United States) and move to regions where job growth is strong. Legal immigration, in contrast, is subject to arbitrary selection criteria and bureaucratic delays, which tend to disassociate legal inflows from U.S. labor-market conditions. Over the last half-century, there appears to be little or no response of legal immigration to the U.S. unemployment rate. Two-thirds of legal permanent immigrants are admitted on the basis of having relatives in the United States. Only by chance will the skills of these individuals match those most in demand by U.S. industries. While the majority of temporary legal immigrants come to the country at the invitation of a U.S. employer, the process of obtaining a visa is often arduous and slow. Once here, temporary legal workers cannot easily move between jobs, limiting their benefit to the U.S. economy.

I'll have to add this one to the "good intentions" pile of reading.

Published on Leave a comment on Blinder on Free-ish Trade

Via Greg Mankiw, we find Alan Blinder qualifying his support for free trade. Greg seems to be taking it personally. Rather, we should just take his suggestion (my emphasis below) to its natural conclusion:

Mr. Blinder's answer is not protectionism, a word he utters with the contempt that Cold Warriors reserved for communism. Rather, Mr. Blinder still believes the principle British economist David Ricardo introduced 200 years ago: Nations prosper by focusing on things they do best -- their "comparative advantage" -- and trading with other nations with different strengths. He accepts the economic logic that U.S. trade with large low-wage countries like India and China will make all of them richer -- eventually. He acknowledges that trade can create jobs in the U.S. and bolster productivity growth.

But he says the harm done when some lose jobs and others get them will be far more painful and disruptive than trade advocates acknowledge. He wants government to do far more for displaced workers than the few months of retraining it offers today. He thinks the U.S. education system must be revamped so it prepares workers for jobs that can't easily go overseas, and is contemplating changes to the tax code that would reward companies that produce jobs that stay in the U.S.

Fantastic. We can be a nation of barbers, gardeners, and custodians, and we can enforce this nirvana by favoring it in the tax code.

Jobs have many characteristics. It is true that for the purposes of talking about jobs in trade policy, economists often collapse these characteristics into a single characteristic, the wage at a point in time. Blinder is correctly pointing out that another characteristic is the risk associated with that wage in the future. That risk could come from a number of sources, of which foreign competition is just one.

When people choose jobs, they have the freedom to trade off among the characteristics embodied in each job. Standard economic analysis would suggest that, for jobs that require the same degree of skills, those that offered more risk would also have to offer higher average wages to compensate. Starting from an equilibrium in which workers have information that is no worse than the government about the terms of this tradeoff, a policy that favored less risky wages would necessarily generate lower expected wages. What's the compelling interest by the government to justify this shift in outcomes?

I can think of two. First, one could assert that the government has better information than the public about relative risks and rewards. Second, one could assert that the social cost of risky jobs is higher than the private cost, i.e. that the government bears a fiscal cost of people being employed in jobs with higher compensation risk. I am skeptical in both cases, but I would be interested in hearing other perspectives.

Published on Leave a comment on Dick Armey on Executive Compensation

Writing in the Washington Times today, Dick Armey cautions his former colleagues against more legislation about executive compensation. Best paragraph:

There is a healthy dose of arrogance in the idea that another law could beat an entrepreneurial marketplace for determining how to evaluate compensation. Poor executive performance shows up quickly on the bottom line. Heaped on top is the misplaced notion that since Congress is engaged in politics and government all organizations should have the same objectives and structures. Governments exercise force and create rules. By contrast, firms create wealth and create the opportunity for people to exercise their freedom to choose, to contract, to buy and to sell.

Compensation of top-level executives is a matter to be resolved between the executives and the board of directors. Boards may not do a good job in some cases, but I don't see how greater government involvement will improve outcomes systematically.

Published on Leave a comment on January Employment Report

My quick read of the just released January employment report is that the main indicators were partly up and partly down. We saw some improvement in payroll jobs (+111,000) with unemployment rates holding steady around 4.6 percent and hours and average weekly earnings slightly down.

January is the month in which the BLS revises its jobs numbers to better match the sample's underlying population drawn from unemployment insurance records. The result in this case is that there were an additional 933,000 payroll jobs at the end of December 2006 than previously estimated. (See the discussion regarding "Table B" in the report.) So combined with the 111,000 net new jobs in January, I expect that most of the news coverage will focus on these "additional 1 million jobs." You are likely to hear the phrase "8.2 million new jobs since August 2003" quite a lot, based on an update to these talking points.

UPDATE: My mistake--the 7.4 million new jobs in the talking points noted above already had the adjustments had already been factored in. Very smart folks.

Published on Leave a comment on It Is a Small Pool … and It Seems To Be Shrinking All the Time

So says Jill Zimmer, mayor of a small town in Oklahoma, regarding the applicants for a job as city manager. Ralph Blumenthal writes of a coming shortage in municipal governments in yesterday's New York Times. He notes:

Fractious politics and disdain for government, the limits of small-town life and pay, and the aging of baby boomers traditionally drawn to civic careers are making the job harder to fill, even as communities increasingly turn to such professional administrators to oversee budgets, services and personnel.

The shrinking pool of recruits is a forerunner of what some experts call a broader government talent shortage to come. With the bulging postwar generation nearing its retirement years, statisticians forecast a growing gap of unfilled executive and managerial jobs.

The demographic part of this issue is what has gotten most of the attention, as shown in this graphic:


The article notes that pay has already started to go up:

Would-be city managers have no special course of study, though about 300 colleges offer master’s degrees in public administration, public management, public affairs or public policy. About 60 percent of city managers have master’s degrees, many in business administration. But while the association’s figures show a marked increase in the average salary of a city manager — to $97,075 in 2005 from $75,675 in 1999 — higher pay for school and hospital administrators lures many potential applicants away.

There's no way to avoid the laws of economics on this one--wages in the public sector are going to continue to go up, and government entities will likely get by with lower staffing ratios.

Published on Leave a comment on Monopoly and Hypocrisy

After reading this list of charges against Brian McLaughlin, a Queens assemblyman and president of the New York City Central Labor Council, I'm sure many people will be calling for his head (myself included). McLaughlin is accused of:

  • stealing $95,000 from Little League baseball teams to pay his rent.
  • creating two no-show jobs on his legislative payroll and keeping part of one salary.
  • using his subordinates as “personal servants,” to take his dog to the veterinarian, hang Christmas lights, trap rodents in his basement and clean out his barn.
  • making an aide use his E-ZPass at tollbooths to make it appear that he had returned home from Albany later than he really had, allowing him to bill for daily allowances given to legislators.
  • using more than $330,000 from his re-election campaign funds to pay for personal expenses like a rehearsal dinner for his son’s wedding, renovation of his $760,000 house in Suffolk County near Long Island Sound, payment of his country club membership fees and the purchase and installation of a plasma television for a female friend.
  • using stolen money for an $80,000 Mercedes-Benz for his wife, marina fees, school tuition for one of his children, rent payments on his Albany residence and rent payments on his Queens residence.

If true, the only mysteries are how human DNA can be so configured to permit this stupidity and why it took so long to indict him.

Doing the math, the article reports that the total theft is $2.2 million over ten years in a union comprised of a million members. So that works out to 22 cents per member per year. Checking my own response to this, I got way more angry over it than I typically do to other economic crimes, like reports of CEO malfeasance, which often have much bigger financial impacts. So why am I so angry?

The union movement is predicated on protecting the rights of the downtrodden working class. It lobbies for special concessions from the rest of society--that we confer and protect the union's monopoly rents--on behalf a select group of people. And reports of corruption like this undermine that case, as McLaughlin would tell us that they are poor enough to need special protections from the rest of us but act in such a way that he believes they are not so poor that he cannot rip them off for his own financial gain.

The combination of state-sanctioned monopoly and hypocrisy is what set me off, well beyond the size of the actual crime.

Published on Leave a comment on The Couple That Drives Together …

There's a fascinating story in today's Wall Street Journal, courtesy of Stephanie Chen, on older couples taking jobs on the road together. The crux of the matter:

Faced with a worsening shortage of long-haul truck drivers, freight carriers are turning to the RV generation, aggressively recruiting older couples like the Fords to climb behind the wheel. Schneider National Inc., the Green Bay, Wis., company that hired the Fords and put them through driving school, fishes for applicants through AARP, the advocacy group for people 50 and older, and has a Web page for "mature workers." This fall, the American Trucking Association plans a billboard and television ad blitz to lure older drivers.

"We just thought if Ma and Pa can drive the Winnebago, maybe they can drive the 18-wheeler," says Tim Lynch, a senior vice president at the trade group.

Since 2000, the number of service and truck drivers 55 or older has surged 19%, to about 616,000, according to the federal Bureau of Labor Statistics. The percentage jump is quadruple that of truck drivers overall. At Schneider, about 3,000 of the carrier's 15,000 drivers and independent contractors are older people.

The hiring binge has dramatically increased the number of husband-and-wife driving teams, and truck makers are trying to make their big rigs feel more like rolling homes away from home. Paccar Inc.'s Kenworth Truck Co. unit introduced a new model in March with leather beds and heated seats. Volvo Trucks North America, part of AB Volvo, has begun production of trucks with a full-size bed in the cab comfortable for couples.

Something for me to propose to the Voxwife, for our later years.

Published on Leave a comment on Sarah Priga on Men Not Working

The following comment was left on the original post on Men Not Working. It speaks for itself.

Sarah Priga said...

I am appalled by the lack of work ethic that is represented in this article. I am Mr. Priga’s oldest daughter and would like to say that "choosing" not to work and then glamorizing it in an article is reprehensible. His statements are untruthful – he was not left with custody of his 3 children from a divorce in 1996, and his disdain for work that was beneath him left myself, his parents (my grandparents) and my mother to care for and provide for my brother and my sister (by 1996 I was in college, living on my own AND WORKING). He did not have to quit working to care for my brother and it was not until recently that my sister (she was 22) moved back in with him because she also feels she does not “need” to work. The financial and emotional impact of growing up living with someone who does not fulfill even the most basic responsibilities is extensive and greatly impacted myself, my grandparents, my mom and the rest of the family. How can a person continually borrow money and neglect financial obligations while he waits for his “home run”. To hit a home run you have to step up to the plate. I am grateful that I had positive examples that showed me to get where you want in life and be a positive influence in society you have to work hard. I am deeply saddened to see this misreported information in a major news outlet.