Archive for the ‘Economics’ Category

what’s the story behind declining male employment?

Sunday, July 8th, 2012

in which I test whether anyone is still getting notified when I update this blog….

Matt Yglesias has a graph up showing the trends in the employment-population ratio for men and women over the past 50 years.   He observes “One striking thing that pops out is that the labor market for men never recovers from recessions. Each trough is followed by a new peak, but the new peak is lower than the previous peak.”  (By contrast, there’s an overall trend up for women.)

There’s at least two ways of thinking about this phenomenon.  One is that this graph shows the intersection of a two unrelated factors — cyclical variation in employment driven by the economy, and a secular decline in employment driven by something else (some combination of increases in education, lower retirement ages, the growth of incarceration, and other factors).  But what Yglesias seems to be implying is that the recessions are in fact part of the cause of the decline in labor force participation.  This is a possibility — we know that the longer that people are out of work, the lower the likelihood that they’ll ever get back to work — but then you’d have to make a case for why it would affect men differently than women.  (Or you could argue that recessions have depressed women’s labor force participation — but that the other factors promoting it have had even more of an impact that it would appear on face value.)

I just finished Charles Murray’s Coming Apart (I didn’t want to give him my money, so I had to wait to get the top of the list at the library).  This decline in male employment is one of his main indicators for the decline of American civilization.  He notes that it’s true even if you just look at white prime-age men, for whom incarceration, retirement and education are not a significant part of the story.  He attributes the decrease primarily to moral factors — the decline in “industriousness”  and the decline in marriage — rather than primarily economics, although at times he suggests that the government safety net, particularly disability benefits, is part of the story.

I do think there’s a real phenomenon going on in this prolonged recession, where older less-educated workers with health limitations, who could have kept their old jobs in a normal economy, but were laid off for economic reasons, are then finding it particularly hard to find new jobs.  And a lot of them are either taking early social security (if they’re old enough to qualify) or applying for disability benefits (which they may or may not get).  And that probably does reduce their likelihood of working in the future, even if the economy picks up.  But I think this is peculiar to this particular moment, and not enough to explain a 50 year trend.

What’s your explanation?

 

 

What does society look like in 2030?

Tuesday, January 18th, 2011

I’ve just been reading a paper that sketches out four possible scenarios for “vulnerability” in 2030. It was written by something called the Institute for Alternative Futures for the Robert Wood Johnson Foundation, and lays out a most likely scenario, a gloom and doom option, and two possible brighter futures (one of which we get to by having a catastrophe that allows for non-incremental improvements).

I’m somewhat chagrined that I think their baseline scenario is overly optimistic, especially with regard to education.  The gloom and doom scenario requires everything to go wrong — a double-dip recession, peak oil,  global climate disruption.  I think the odds of all of these happening in the next 20 years is very low — but it seems quite possible that one — or something not even on our list — could happen.

If you have the time to take a look at the report, I’d love some other reactions.  (There’s also a formal way to comment to the folks who wrote it.)

Basic economic security?

Thursday, October 14th, 2010

This week, Wider Opportunities for Women issued their “Basic Economic Security Tables” for the Washington DC region.   Not unpredictably, the Washington Post coverage led with the finding that a family of four needs $108,000 to be “economically secure” in Fairfax county.  I sometimes work with folks from WOW, and I generally think they do good work, but I have to admit that I winced reading this — I worry that it feeds into the world view where people who earn  six digits feel entitled to whine about how they can’t make ends meet.

And, I make less than $108,000 a year, and I don’t feel like we’re “just getting by.”   So, I thought I’d take a look at their budget for a family of four: two workers, one preschooler, one school-age child, which is the one that is closest to our family type.

  • Housing — $1546.  This is based on HUD’s fair market rent and seems reasonable to me.  I can’t think of where in Fairfax you could rent a three bedroom apartment or house for much less than $1500,.
  • Utilities — $188.  Sure.  We pay a bit more, especially in the winter, but a smaller house would be cheaper.
  • Food — $868.  They get this from the USDA low-cost food plan, which is one step up from the thrifty food plan.   I think we spend somewhat less than this on food, but as I’ve discussed before, we eat less meat and less prepared foods than the budget assumes.  The thrifty food plan definitely means you need to pay attention to what you’re buying — if economic security means being able to buy ice cream and meat without worrying about the cost, the low-cost plan seems reasonable.
  • Transportation — $652.  They assume two cars, and a lot of this cost is depreciation.  I think you could probably get away for less, if you bought used cars and kept them until they fell apart.  It certainly feels like we spend a lot less on transportation, but because we don’t have car payments, but pay insurance 2x a year and repairs at irregular intervals, I may be undercounting the real cost of car ownership.
  • Child care — $2,210.  With two school age kids, I took this out of the budget.  With no other changes, it brings the annual total bill down to$81,540.
  • Personal and Household Items — $702.   This is based on a statistical report that says that renters on average (nationally) spend 27% of a family’s housing, utility and food expenses in these categories.  I think it’s too high — this is a very high cost of housing area, but I don’t think that should drive up personal and household costs correspondingly.   Even with cable and netflix and occasionally eating out or going to the movies, we spend way less than this.
  • Health care — $508 (assuming employer provided health insurance).  This is based on an average of plans in the area — you can definitely spend less if you’re willing to go with a HMO like Kaiser.  (I have Kaiser, and my premium is fully employer paid, so I spend less than $1000 a year on all health care, including glasses, etc.)
  • Emergency savings — $345 and retirement savings — $320.   I’m willing to buy that to be “secure” you should be saving this much.
  • Taxes — $2007, and credits of $334.  I’m sure WOW did the math correctly for their hypothetical family.

So, what do you think?  Do WOW’s numbers seem reasonable to you?  Is my reaction just a version of the recurrent survey finding that the overwhelming majority of Americans think they’re “middle class?”

The Housing Bubble (All Your Worth Revisited)

Wednesday, October 13th, 2010

I was looking for an old link on the site, and I ran across my book review of Elizabeth Warren (yes, that Elizabeth Warren) and Amelia Tyagi’s personal finance book, All Your Worth.  We had a really heated discussion here, with several readers arguing that it just wasn’t possible to follow her guidelines for housing spending and live anywhere acceptable in big cities.  It’s kind of strange reading this again from other side of the housing bubble.

At the time, I wrote “The problem — at least in this area — is that in those 3 years, the same house will go up to $400,000 and you still won’t have your 20% downpayment. Warren and Tyagi’s answer is to say that you shouldn’t be chasing markets like this.”

With hindsight, yes.  clearly, yes.

I’m not sure if any of the folks who commented at the time other than Dave S are still reading here.  If so, I’d love to hear your reactions with the benefit of hindsight.  TCAndreaMoxie?  New voices are also welcome…

the email I just sent to Gerry Connolly

Thursday, September 23rd, 2010

Dear Rep Connolly

I am writing to express my deep concern about news reports that suggest that you are considering supporting extensions of the Bush tax cuts for the richest 1 percent of Americans.

In the long term, we can not continue to run large budget deficits.  Therefore, a vote to extend these tax cuts is a vote to cut spending on education, on roads, on health care, on job training.  It is a vote to take away money from child care and from senior centers.  It is a vote to accept the increasing inequality of opportunity in our society and to surrender the hope that government can make things better.

I know, some of your constituents are fortunate to make more than $250,000 a year.  But they benefit from a healthy society, and can afford to contribute.  Our economy grew very well during the 1990s when tax rates were at the levels that they would return to.

Please give me a reason to vote for you next month.

******************************

I sent the same letter (w/o the last sentence) to Warner and Webb.

****************************

I am really f-ing depressed tonight.   And I don’t see it getting better soon.

Update:  I meant to link to this  Center for American Progress report on what a budget balanced through spending cuts alone would look like.

What nepotism buys

Monday, July 26th, 2010

In today’s NY Times, there were a bunch of letters in response to a story from last week about how many interns at City Hall have connections to the rich and powerful.   I’m not shocked or even particularly surprised by the article.   New York is a city where people use their pull to get kids into preschool, after all, and once upon a time my mom was able to use her mid-level city job to get my brother a summer job with the Buildings Department.   But I was bemused by the letter from the former high school teacher of some of the young adults in the article, who defends the practice by noting what “excellent, hard-working and conscientious students” the kids were.

I don’t have any data on this (not sure how you’d go about trying to find it), but my sense is that it’s less and less common for nepotism to be a matter of getting stupid and lazy people into jobs. There are exceptions, of course, but I think business is really more competitive these days, such that it’s harder to hide your dumb nephew for very long.  Nepotism is what lets one excellent, hard-working and conscientious student get ahead of all the excellent, hard-working and conscientious students who don’t have someone opening doors for them.  (Or, as another letter-writer notes, can’t afford to take an unpaid internship.)

The other thing that’s changed, I think, is that it’s harder for blue collar workers and lower level managers to use nepotism.  Kids used to be able to count on following their fathers into factory jobs, and that’s pretty much unheard of now.  Earlier this month, the Times ran a long profile of a young man, a recent college graduate, who was looking for work, but had turned down one job because it wasn’t at the level he was hoping for.  One of the points Uchitelle makes is that his father and grandfather both got their starts through connections:

They said it was connections more than perseverance that got them started — the father in 1976 when a friend who had just opened a factory hired him, and the grandfather in 1946 through an Army buddy whose father-in-law owned a brokerage firm in nearby Worcester and needed another stock broker.

What do you think?  Am I being naive in thinking that there are fewer total incompetents getting jobs because of nepotism now?  And is it any less pernicious if it’s used to decide between two competent people rather than to promote incompetence?

mental accounting

Monday, June 21st, 2010

I finally had a chance to listen to the Planet Money podcast from last month about payday loans.  Overall, it mostly covered familiar territory, but I was intrigued by the research suggesting that rate ceilings tend to act as “anchors” for interest rates, and wind up as floors.

I was also struck by one element of the story of the man who kept on coming back to take out high-interest loan after high-interest loan, in order to support his gambling habit.  In passing, they noted that he owned his house free and clear.  I think the implication was that he was making a mistake taking out payday loans, when he could have taken out a much cheaper mortgage.  Alternatively, I could tell a story that he had figured out a mental accounting scheme that let him keep gambling relatively small amounts, without risking losing his house.  The payday loans may not have been as irrational a choice as all that.

In perhaps related news, Jim McDermott and Barney Frank have introduced bills that would legalize — and tax — internet gambling.   In general, I’m vaguely supportive, mostly because I think it’s pretty much impossible to stop people from gambling on the internet anyway.  I like some of the causes that the money is supposed to support — although I’m also very aware that in most of the states where lottery sales are supposed to support education, they just supplant money the state would have spent from general revenues otherwise, with no net increase in spending.

is unemployment insurance the new welfare?

Wednesday, June 16th, 2010

If you listen to the US Congress, unemployment insurance is becoming the new welfare.

Orrin Hatch today dropped an amendment that would require states to test applicants for cash assistance (TANF) and unemployment insurance for illegal drugs before they could be approved for benefits.  We’re used to dealing with this sort of stupidity in the TANF program, but I have to admit that I was surprised to see this applied to unemployment insurance as well.  At least Hatch is honest enough to admit that testing all these people would cost far more than the value of any benefits it might save — when this comes up at the state level, legislators are constantly surprised to learn that it doesn’t save money.

This proposal isn’t likely to go anywhere, but meanwhile the Senate is dropping the COBRA subsidy for health insurance for the unemployed as well as the $25 a week additional federal benefits from the UI extension bill.  And almost no one is talking about continuing benefits for the “99-ers” those who have exhausted 99 weeks of unemployment insurance.

My theory is that people are terrified by the notion that you could do nothing wrong, be  a good worker, lose your job, search hard for another one, and still be unemployed after two years.  They don’t want to believe that they live in a country where it could happen, and they don’t want to believe that it could happen to them, or to their friends or family.  And we’ve got this really weird dynamic of unemployment right now, where unemployment is really high but no longer climbing,  nearly half of the unemployed have been out of work  for more than 27 weeks, but at this point if you’ve got a job, your odds of being laid off are pretty low.

So people are  convincing themselves that the long-term unemployed  must have done something wrong.    They must not really be looking, or they’re too picky, or they’re not willing to move to where the jobs are, or something.  And so it’s ok to cut them off, because they deserve it.

Update: Nancy Folbre just said almost the exact same thing in the New York Times today, except she’s an economist, so she used bigger words.

Action alert

Thursday, February 25th, 2010

The single most frightening statistic out of this recession is this one:  41 percent of unemployed workers have been out of work for 27 weeks or more. This is vastly higher than in previous recessions.

26 weeks is the maximum length of time that workers can receive regular unemployment insurance, but as often happens during a recession, there has been a series of extensions, paid for at the federal level.  These run out on Sunday.   If nothing happens, 1.2 million workers will lose their benefits starting next week.  Even if there’s a one or two day gap, it will cost state agencies a ton of money to reprogram their systems, and cause delays in workers getting their benefits.  Extending them should be as closer to a no-brainer as exists in politics, but it is proving surprisingly hard.  So, I’m begging everyone I know, call your Senator, and tell them:

1) Pass the short-term extension immediately so benefits don’t run out.  It is unacceptable to hold 1.2 million workers hostage so that a few dead millionaires can pay less taxes.

2)  Extend benefits until the end of the year.  Congress has too much else to get done this year to keep passing short-term extensions and then having to take it up again. And workers need to know that they’re not about to be cut off.

3)  Not everyone qualifies for unemployment insurance, and some people just want a job.  The TANF Emergency Fund, created under the Recovery Act, gives states money for subsidized jobs for low-income parents, and also helps pay for rising cash assistance caseloads.  It doesn’t expire until September, but states are doing their budgets now, and they’ll start shutting down their programs if they don’t know that the money will be available next year.  Plus, because it’s part of TANF — aka “welfare” — it has almost no chance of passing on it’s own.  So please tell your Senators to ask that it be extended along with UI.

Thanks.

deficits

Tuesday, January 26th, 2010

Last week I read about deficit spending from a variety of perspectives, ranging from the Pew-Peterson Commission on Budget Reform to the Center on Budget and Policy Priorities to  the Economic Policy Institute.  These are groups that are usually depicted in the media as being on opposite sides of the budget debate, so I was pretty surprised at how many points of consensus there were:

  • The US government’s long-term budget trajectory leads to unsustainable levels of debt.  These are bad both because government borrowing will crowd out private investment, and because the interest payments will consume an unacceptable share of the federal budget.
  • Pew-Peterson call for a goal of the debt stabilizing at no more than 60 percent of GDP.  (I gather the National Academy of Sciences has issued a report with the same goal.)  CBPP notes that there’s no evidence for supporting that particular target, and argues that a goal of 70 percent of GDP is more achievable, and doesn’t require such painful cuts that everyone just says it’s impossible and gives up.  EPI doesn’t set a specific target.
  • However, it does not make sense to try to balance the budget in the next year or so, while we’re still recovering from the recession.  Cutting spending sharply now would put us back into a recession.  Even Pew-Peterson says that policy changes shouldn’t be implemented until 2012.
  • The major drivers of the long-term problem are 1) the growing costs of Medicare, Medicaid (especially the portion of Medicaid that pays for nursing homes), and to a lesser degree Social Security and 2) the large 2001 and 2003 tax cuts.  (EPI and CBPP note that Medicare and Medicaid are actually growing slightly slower than overall health care costs, and argue that the solution has to include overall control of health care costs.)
  • The hole is too big to fill either by just cutting spending, or by just raising taxes, but will require a combination of the two.

That said, why the heck is Obama calling for a three-year freeze in domestic discretionary spending? Everyone agrees that domestic discretionary spending isn’t the problem — and if you cut it in half, we’d still run long-term budget deficits — and cause a great deal of harm in the process.  Paul Krugman is scathing — and accurately so.  It’s bad economics, distracts from the real challenges, and feeds into the Republican message machine.  I truly don’t get it.  Poking around the web, it sounds like the kindest thing that anyone is saying is that it’s just posturing and won’t really result in horrible cuts, but I’m not sure that’s any better.

More good reading:  How to Spot a Deficit Peacock, from the Center for American Progress.


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