Labor Economics – Page 46 – artdiamondblog.com

Blacks Hurt by Increase in Irrelevant Degree Requirements for Jobs

(p. A15) Some 61% of employers have rejected applicants with the requisite skills and experience simply because they didn’t have a college degree, according to a 2017 Harvard Business School study. If current trends continue, the authors found, “as many as 6.2 million workers could be affected by degree inflation–meaning their lack of a bachelor’s degree could preclude them from qualifying for the same job with another employer.”
The pernicious effects of degree inflation are obvious, as tuition and student debt rise and qualified workers arbitrarily lose employment opportunities. But the practice also flouts federal law.
Title VII of the Civil Rights Act of 1964 prohibits employers from discriminating on the basis of race, color, religion, sex or national origin. In Griggs v. Duke Power (1971) the Supreme Court unanimously interpreted this to mean that when minority groups are disproportionately affected–or suffer a “disparate impact”–from the selection process, employers must show that any requirements are directly job-related and an accurate predictor of job performance.
. . .
. . . degree inflation has obvious disparate-impact implications. The Harvard report found that groups with college graduation rates below the national average are disproportionately harmed by the practice.
. . .
Employers also fail the Griggs test by demanding college degrees without evidence they are necessary for the job. In a 2014 survey, Burning Glass Technologies found that employers are increasingly requiring bachelor’s degrees for positions whose current workers do not have one. For example, 65% of job postings for executive assistant and secretary positions call for a degree even though only 19% of people currently employed in such roles hold a degree.

For the full commentary, see:
Frederick M. Hess and Grant Addison. “Degree Inflation and Discrimination; Could civil-rights laws and ‘disparate impact’ protect job applicants who haven’t finished college?” The Wall Street Journal (Tuesday, April 3, 2018): A15.
(Note: ellipses added.)
(Note: the online version of the commentary has the date April 2, 2018.)

The Harvard Business School study mentioned above, is:
Fuller, Joseph B., and Manjari Raman. “Dismissed by Degrees: How Degree Inflation Is Undermining U.S. Competitiveness and Hurting America’s Middle Class.” Accenture, Grads of Life, and Harvard Business School, Oct. 2017.

“Overblown” Worries that A.I. Will Make Humans Obsolete

(p. B3) SAN FRANCISCO — Apple has hired Google’s chief of search and artificial intelligence, John Giannandrea, a major coup in its bid to catch up to the artificial intelligence technology of its rivals.
. . .
Mr. Giannandrea, a 53-year-old native of Scotland known to colleagues as J.G., helped lead the push to integrate A.I. throughout Google’s products, including internet search, Gmail and its own digital assistant, Google Assistant.
He joined Google in 2010 when it purchased Metaweb, a start-up where he served as chief technology officer. Metaweb was building what it described as a “database of the world’s knowledge,” which Google eventually rolled into its search engine to deliver direct answers to users’ queries. (Try googling “How old is Steph Curry?”) During Mr. Giannandrea’s tenure, A.I. research became increasingly important inside Google, with its primary A.I. lab, Google Brain, moving into a space beside the chief executive, Sundar Pichai.
. . .
On the debate over whether humanity should be worried about the rapidly accelerating improvements in A.I., Mr. Giannandrea told MIT Technology Review in an interview last year that the concerns were overblown.
“What I object to is this assumption that we will leap to some kind of superintelligent system that will then make humans obsolete,” he said. “I understand why people are concerned about it but I think it’s gotten way too much airtime. I just see no technological basis as to why this is imminent at all.”

For the full story, see:
JACK NICAS and CADE METZ. “Lagging Rivals in A.I., Apple Adds A Top Google Executive to Its Team.” The New York Times (Wednesday, April 4, 2018): B3.
(Note: ellipses added.)
(Note: the online version of the story has the date APRIL 3, 2018, and has the title “Apple Hires Google’s A.I. Chief.”)

Early Industrial Workers’ Living Standards Improved Over Their Lifetimes

(p. C6) Historians have long debated whether the Industrial Revolution was a net benefit to those who labored in the mills. The first generation of workers generally enjoyed higher wages and liberation from the confines of rural life. Yes, there was child labor, but one girl who entered a New England mill at age 11 recalled: “It was paradise here because you got your money, and you did whatever you wanted to with it.” In her book “Liberty’s Dawn” (2013), Emma Griffin studied those early industrial workers longitudinally and found that their living standards improved markedly over a lifetime.
. . .
William Blake’s “dark Satanic Mills” are now brightly lit in China, but are they still infernal? Today, Mr. Freeman reports, Foxconn offers “a library, bookstores, a variety of cafeterias and restaurants, supermarkets, . . . swimming pools, basketball courts, soccer fields, and a stadium, a movie theater, electronic game rooms, cybercafés, a wedding-dress shop, banks, ATMs, two hospitals, a fire station, a post office, and huge LED screens that show announcements and cartoons.” But Chinese worker dormitories impose a positively Victorian regime of moral supervision: no drinking, gambling or visiting the opposite sex. Work rules are draconian. And surveillance cameras are everywhere (though, come to think of it, we have plenty of those in the West).
Ultimately, Mr. Freeman can’t decide whether industrialism represents progress or dystopia, and that ambivalence reflects his clear eyes and fair-mindedness. He often lets workers speak for themselves, and they don’t always agree. Xu Lizhi, one of those Foxconn employees who killed himself, was also a poet: “They’ve trained me to become docile / Don’t know how to shout or rebel / How to complain or denounce / Only how to silently suffer exhaustion.” But another worker from a small Hunan village was amazed by his company dormitory: “I had never lived in a multi-story building, so it felt exciting to climb stairs and be upstairs.” Mr. Freeman reminds us that, benevolent or tyrannical, the factory was an exponential leap in the human experience.

For the full review, see:
Rose, Jonathan. “The Very Symbol of Modern Times; Workers’ paradise or soul-deadening dystopia? Why society remains of two minds about the factory.” The Wall Street Journal (Saturday, Feb. 24, 2018): C6.
(Note: ellipsis between paragraphs, added; ellipsis within paragraph, in original.)
(Note: the online version of the review has the date Feb. 23, 2018, and has the title “Review: The Very Symbol of Modern Times; Workers’ paradise or soul-deadening dystopia? Why society remains of two minds about the factory.”)

The book under review, is:
Freeman, Joshua B. Behemoth: A History of the Factory and the Making of the Modern World. New York: W. W. Norton & Company, 2018.

The book by Emma Griffin, mentioned above, is:
Griffin, Emma. Liberty’s Dawn: A People’s History of the Industrial Revolution. New Haven, CT: Yale University Press, 2013.

Upward Mobility from Moving to the Robust Redundant Labor Markets of Open Boomtowns

(p. B3) Chicago in 1850 was a muddy frontier town of barely 30,000 people. Within two decades, it was 10 times that size. Within another two decades, that number had tripled. By 1910, Chicago — hog butcher for the world, headquarters of Montgomery Ward, the nerve center of the nation’s rail network — had more than two million residents.
“You see these numbers, and they just look fake,” said David Schleicher, a law professor at Yale who writes on urban development and land use. Chicago heading into the 20th century was the fastest-growing city America has ever seen. It was a classic metropolitan magnet, attracting anyone in need of a job or a raise.
But while other cities have played this role through history — enabling people who were geographically mobile to become economically mobile, too — migration patterns like the one that fed Chicago have broken down in today’s America. Interstate mobility nationwide has slowed over the last 30 years. But, more specifically and of greater concern, migration has stalled in the very places with the most opportunity.
As Mr. Schleicher puts it, local economic booms no longer create boomtowns in America.
. . .
Some people aren’t moving into wealthy regions because they’re stuck in struggling ones. They have houses they can’t sell or government benefits they don’t want to lose. But the larger problem is that they’re blocked from moving to prosperous places by the shortage and cost of housing there. And that’s a deliberate decision these wealthy regions have made in opposing more housing construction, a prerequisite to make room for more people.
Compare that with most of American history. The country’s economic growth has long “gone hand in hand with enormous reallocation of population,” write the economists Kyle Herkenhoff, Lee Ohanian and Edward Prescott in a recent study of what’s hobbling similar population flows now.
. . .
Were it not for all the restrictions on housing in the most productive places — if workers were able to more freely migrate to them — Mr. Herkenhoff and his co-authors and the economists Enrico Moretti and Chang-Tai Hsieh have estimated that the nation’s G.D.P. would be substantially higher. By their calculations, there are millions of workers missing from the Bay Area and metropolitan New York today.
The population growth that is occurring in these metro areas is fueled almost entirely by immigration, as Ryan Avent points out in “The Gated City,” where he makes a similar argument to Mr. Schleicher. If we consider only domestic moves, about 900,000 more people have moved away from New York than to it since 2010. On net, about 47,000 have left both San Jose and Washington, D.C., while Boston has lost a net 36,000.

For the full commentary, see:
Emily Badger. “Why New York and the Bay Area Are Missing Millions of Workers.” The New York Times (Friday, Dec. 8, 2017): B3.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Dec. 6, 2017, and has the title “What Happened to the American Boomtown?”)

The Herkenhoff et al. paper mentioned above, is:
Herkenhoff, Kyle F., Lee E. Ohanian, and Edward C. Prescott. “Tarnishing the Golden and Empire States: Land-Use Restrictions and the U.S. Economic Slowdown.” Journal of Monetary Economics 93 (Jan. 2018): 89-109.

The Moretti and Hsieh paper mentioned above, is:
Hsieh, Chang-Tai, and Enrico Moretti. “Housing Constraints and Spatial Misallocation.” Working paper, May 18, 2017.

The book by Ryan Avent, mentioned above, is:
Avent, Ryan. The Gated City. Amazon Digital Services LLC, 2011.

Millions of Dollars and 30 Years Later, A.I. Still Has Lacks Crucial Common Sense

(p. B6) SAN FRANCISCO — Microsoft’s co-founder Paul Allen said Wednesday [February 28, 2018] that he was pumping an additional $125 million into his nonprofit computer research lab for an ambitious new effort to teach machines “common sense.”
. . .
“To make real progress in A.I., we have to overcome the big challenges in the area of common sense,” said Mr. Allen, who founded the software giant Microsoft in the 1970s with Bill Gates.
. . .
In the mid-1980s, Doug Lenat, a former Stanford University professor, with backing from the government and several of the country’s largest tech companies, started a project called Cyc. He and his team of researchers worked to codify all the simple truths that we learn as children, from “you can’t be in two places at the same time” to “when drinking from a cup, hold the open end up.”
Thirty years later, Mr. Lenat and his team are still at work on this “common sense engine” — with no end in sight.
Mr. Allen helped fund Cyc, and he believes it is time to take a fresh approach, he said, because modern technologies make it easier to build this kind of system.
Mr. Lenat welcomed the new project. But he also warned of challenges: Cyc has burned through hundreds of millions of dollars in funding, running into countless problems that were not evident when the project began. He called them “buzz saws.”

For the full story, see:
CADE METZ, “A.I.’s Greatest Challenge: Digitizing Common Sense.” The New York Times (Thursday, March 1, 2018): B6.
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the article has the date Feb. 28, 2018, and has the title “Paul Allen Wants to Teach Machines Common Sense.”)

The More Governments Tax, the Less Workers Work

(p. A17) European countries trail the U.S. in working hard and controlling taxes, and their economies have lagged in comparison. France has a tax-to-GDP ratio of about 44%, and in Italy it’s 43%. The French and Italians work almost 30% fewer hours per person than Americans. Notably, the French economy has flatlined since 2010 while Italy’s has contracted.
These patterns are not a coincidence: High taxes discourage work and capital formation. Data from the Organization for Economic Cooperation and Development suggests that a 1% increase in a nation’s tax rate is associated with a 1.4% decrease in hours worked per person in the working-age population. U.S. data dating to the 1970s also shows that higher taxes cause workers to limit their hours, reducing economic output.

For the full commentary, see:
Winkler, Rolfe and Justin Lahart. “Government Spending Discourages Work; The French and Italians pay higher taxes and put in 30% fewer hours per person than Americans.” The Wall Street Journal (Tuesday, Feb. 27, 2018): A17.
(Note: the online version of the commentary has the date Feb. 26, 2018.)

High Energy Costs Killed 15,000 of the Poor in Britain in Winter of 2014-2015

(p. A15) Higher costs from policies like stringent emissions caps and onerous renewable-energy targets make it even harder for the poorest citizens to afford gas and electricity.
. . .
In the U.K., the cost of electricity has increased by 36% in real terms since 2006, while the average income has risen only 4%. Environmentalists point out that energy usage has fallen as a result. But they ignore the fact that the poorest households cut back their consumption much more than average, while the richest have not reduced electricity consumption at all. Meanwhile, the share of income the bottom tenth of Britons spend on energy has increased rapidly, to almost 10%, while the share of income spent by the top tenth is still under 3%.
One 2014 poll shows that one-third of British elderly people leave at least part of their homes cold, and two-thirds wear extra layers of clothing, because of high energy costs. According to a report in the Independent, 15,000 people in the U.K. died in the winter of 2014-15 because they couldn’t afford to heat their homes properly.
Climate change is a real challenge for every country, but we need to maintain some perspective. The United Nations’ climate-change panel estimates that global warming could cause damage amounting to 2% of global gross domestic product toward the end of the century. That makes it a problem, but not the Armageddon produced by some feverish imaginations.

For the full commentary, see:
Bjorn Lomborg. “Climate-Change Policies Can Be Punishing for the Poor; America should learn from Europe’s failure to protect the needy while reducing carbon emissions.” The Wall Street Journal (Saturday, Jan. 5, 2018): A15.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date Jan. 4, 2018.)

Decline in Startups Reduces Labor Market Dynamism

Source of graphs: online version of the NYT commentary quoted and cited below.

(p. B1) . . . a broad sweep of statistics reveals a peculiar weariness spreading through the economy. Belying breathless headlines about the fabulous opportunities that technology is about to bestow on society, it suggests that many rich market democracies have lost much of their dynamism. Their companies are getting old, and their labor markets are getting stuck. Productivity growth has slumped. And many workers in their prime are peeling off from the labor force.
. . .
(p. B4) . . . , the economy’s ability to generate and support new businesses — agents of creative destruction that bring new products and methods into the marketplace — appears to be faltering across the world. In the United States, the rate of company formation is half what it was four decades ago. And it is slowing in many industrialized countries.
. . .
In a study published on Tuesday [February 6, 2018] by the Hamilton Project at the Brookings Institution, Jay Shambaugh, Ryan Nunn and Patrick Liu explore what economists have figured out about the American economy’s inertia and the fallout for wages and living standards.
The evidence paints a distinct picture of decline: Fewer start-ups mean fewer new ideas and fewer young, productive businesses to replace older, less productive ones. Researchers have found that the decline in companies entering the market since 1980 has trimmed productivity growth by about 3.1 percent.
The dearth of new businesses is also cutting off one of the main paths to workers’ advancement: the outside job offer. Changing jobs allows workers to shift to positions in which they are more productive, and better paid. But labor market fluidity — job switching, creation and destruction — has been declining since the 1980s.
Clear though the pattern may be, the researchers acknowledge that we haven’t yet figured out what is holding the economy’s dynamism back. “This is one of those big, economywide trends,” Mr. Shambaugh told me. “There is room for a lot of stories.”

For the full commentary, see:
Porter, Eduardo. “ECONOMIC SCENE; What to Worry About: Decrease in Start-Ups Is a Sign of Stagnation.” The New York Times (Wednesday, February 7, 2018): B1 & B4.
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the commentary has the date FEB. 6, 2018, and has the title “ECONOMIC SCENE; Where Are the Start-Ups? Loss of Dynamism Is Impeding Growth.”)

The paper by Shambaugh, Nunn, and Liu, that is mentioned above, is:
Shambaugh, Jay, Ryan Nunn, and Patrick Liu. “How Declining Dynamism Affects Wages.” In Revitalizing Wage Growth Policies to Get American Workers a Raise, edited by Jay Shambaugh and Ryan Nunn, Washington, D.C.: Brookings, 2018, pp. 11-23.

Blockchain May Bring Property Rights to the Poor

(p. A15) The great economic divide in the world today is between the 2.5 billion people who can register property rights and the five billion who are impoverished, in part because they can’t. Consider what happens without a formal system of property rights: Values are reduced for privately owned assets; wages are devalued for workers using these assets; owners are denied the ability to use their assets as collateral to obtain credit or as a credential to claim public services; and society loses the benefits that accrue when assets are employed for their highest and best purpose.
. . .
Fortunately there is a new technology that could make a global property-rights registration system feasible. Patrick Byrne, an e-commerce pioneer and the CEO of Overstock.com, has committed a professional staff and significant resources to modernizing the collection and maintenance of property-rights records on a global scale. Blockchain is an especially promising technology because of its record-keeping capacity, its ability to provide access to millions of users, and the fact that it can be constantly updated as property ownership changes hands.
If Blockchain technology can empower public and private efforts to register property rights on a single computer platform, we can share the blessings of private-property registration with the whole world. Instead of destroying private property to promote a Marxist equality in poverty, perhaps we can bring property rights to all mankind. Where property rights are ensured, so are the prosperity, freedom and ownership of wealth that brings real stability and peace.

For the full commentary, see:
Phil Gramm and Hernando de Soto. “How Blockchain Can End Poverty; Two-thirds of the world’s population lacks access to a formal system of property rights.” The Wall Street Journal (Friday, Jan. 26, 2018): A15.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date Jan. 25, 2018.)

Reporters Celebrate Union Before Losing Jobs

(p. A23) A week ago, reporters and editors in the combined newsroom of DNAinfo and Gothamist, two of New York City’s leading digital purveyors of local news, celebrated victory in their vote to join a union.
On Thursday [November 2, 2018], they lost their jobs, as Joe Ricketts, the billionaire founder of TD Ameritrade who owned the sites, shut them down.

For the full story, see:
ANDY NEWMAN and JOHN LELAND. “DNAinfo and Gothamist Shut Down After Workers Join a Union.” The New York Times (Tuesday, November 3, 2017): A23.
(Note: bracketed date added.)
(Note: the online version of the story has the date NOV. 2, 2017, and has the title “DNAinfo and Gothamist Are Shut Down After Vote to Unionize.” The online version says that the page number of the New York edition was A21. The page number of my edition, probably midwest, was A23.)

Technology Increases Time at Home, Reducing Energy Use

(p. A15) A new study in the journal Joule suggests that the spread of technologies enabling Americans to spend more time working remotely, shopping online — and, yes, watching Netflix and chilling — has a side benefit of reducing energy use, and, by extension, greenhouse gas emissions.
. . .
Researchers found that, on average, Americans spent 7.8 more days at home in 2012, compared to 2003. They calculated that this reduced national energy demand by 1,700 trillion BTUs in 2012, or 1.8 percent of the nation’s total energy use.
. . .
“Energy intensity when you’re traveling is actually 20 times per minute than when spent at home,” said Ashok Sekar, a postdoctoral fellow at the University of Texas at Austin and lead author on the story.
One of his co-authors, Eric Williams, an associate professor of sustainability at the Rochester Institute of Technology, made the point a different way. “This is a little tongue in cheek, but you know in ‘The Matrix’ everyone lives in those little pods? For energy, that’s great,” he said, because living in little pods would be pretty efficient. “In the Jetsons, where everyone is running around in their jet cars, that’s terrible for energy.”
. . .
. . . , the study suggests that workers are spending less time at work because faster and better online services make it easier for us to work from home. As a result, we’re spending less time in office buildings, which use more energy than our homes, and employers are consolidating office space.

For the full story, see:
Kendra Pierre-Louis. “Tech Creates Homebodies, And Energy Use Declines.” The New York Times (Tuesday, January 30, 2018): A15.
(Note: ellipses added.)
(Note: the online version of the story has the date January 29, 2018, and has the title “Americans Are Staying Home More. That’s Saving Energy.”)

The “in press” version of the article mentioned above, is:
Sekar, Ashok, Eric Williams, and Roger Chen. “Changes in Time Use and Their Effect on Energy Consumption in the United States.” Joule (2018).