Category: Labor Economics

Illegal Immigration Hurts Low-Wage U.S. Workers

(p. C1) Research published a decade after the Mariel boatlift, as well as more recent analyses, concluded that the influx of Cuban migrants didn’t significantly raise unemployment or lower wages for Miamians. Immigration advocates said the episode showed that the U.S. labor market could quickly absorb migrants at little cost to American workers.
But Harvard University’s George Borjas, a Cuban-born specialist in immigration economics, reached very different conclusions. Looking at data for Miami after the boatlift, he concluded that the arrival of the Marielitos led to a large decline in wages for low-skilled local workers.
. . .
(p. C2) Dr. Borjas, who left Cuba in 1962, when he was 12 years old, has long challenged the idea that immigration has few downsides. One of his studies in the early 2000s analyzed decades of national data to conclude that immigrants generally do push down wages for native workers, particularly high-school dropouts.
One Sunday morning in 2015, while working on his book, Dr. Borjas recalls, he decided to revisit the Mariel boatlift. He focused on U.S.-born high-school dropouts and applied more sophisticated analytical methods than had been available to Dr. Card a quarter-century earlier.
Dr. Borjas found a steep decline in wages for low-skilled workers in Miami in the years after the boatlift–in the range of 10% to 30%. “Even the most cursory reexamination of some old data with some new ideas can reveal trends that radically change what we think we know,” he wrote in his initial September 2015 paper.
. . .
Dr. Borjas has spent decades swimming against the tide in his profession by focusing on immigration’s costs rather than its benefits. He said that he sees a parallel to the way many economists look at international trade. Long seen as a positive force for growth, trade is now drawing attention from some economists looking for its ill effects on factory towns. “I don’t know why the profession has this huge lag and this emphasis on the benefits from globalization in general without looking at the other side,” Dr. Borjas said.
. . .
Dr. Borjas’s research, including his recent work on Mariel, has found fans on the other side of the debate. When he testified at a Senate hearing in March 2016, then-Sen. Sessions welcomed his rebuttal to Dr. Card’s paper. “That study, I could never understand it because it goes against common sense of [the] free market: greater supply, lower costs,” Mr. Sessions said. “That’s just the way the world works.”
. . .
Dr. Borjas welcomes what he calls a more realistic approach to immigration under the Trump administration. “If you knew what the options are, who gets hurt and who wins by each of these options, you can make a much more intelligent decision rather than relying on wishful thinking,” he said. “Which is what a lot of immigration, trade debates tend to be about–that somehow this will all work out, and everybody will be happy.”

For the full commentary, see:
Ben Leubsdorf. “The Immigration Experiment.” The Wall Street Journal (Sat., June 17, 2017): C1-C2.
(Note: ellipses added.)
(Note: the online version of the commentary has the date June 16, 2017, and has the title “The Great Mariel Boatlift Debate: Does Immigration Lower Wages?”)

The book by Borjas, mentioned in the passage quoted above, is:
Borjas, George J. We Wanted Workers: Unraveling the Immigration Narrative. New York: W. W. Norton & Company, 2016.

U.S. Has 250,000 Less Jobs Due to Obamacare

(p. A15) Democrats loudly complain that people will lose health insurance if the Affordable Care Act is repealed. They never mention those who lose jobs because the ACA remains.
The ACA includes a penalty on employers that fail to provide “adequate” insurance for full-time workers. Thanks to the ACA, hiring the 50th full-time employee effectively costs another $70,000 a year on top of the normal salary and benefits.
. . .
In partnership with the Mercatus Center at George Mason University, in March 2017 I was able to commission Hanover Research to survey small businesses nationwide regarding their hiring and compensation practices. The result was a sample of 745 small businesses, representing every major industry and together employing almost 50,000 people.
. . .
Many businesses, when they do not offer coverage, keep their payrolls just below 50 full-time employees and thereby narrowly escape the ACA’s penalty. This pattern is not visible among businesses that offer coverage.
When we followed up, the businesses employing just fewer than 50 often said the ACA caused them to hire less and cut hours below the full-time threshold. The penalty caused payrolls to shrink or prevented them from growing.
Nationwide, we estimate the ACA-inspired practice of keeping payrolls below 50 has cost roughly 250,000 jobs. This does not count jobs lost when businesses close (we didn’t survey closed businesses) or shrink because of other ACA incentives.

For the full commentary, see:

Casey B. Mulligan. “How Many Jobs Does ObamaCare Kill? We surveyed managers at small businesses and put the count at 250,000.” The Wall Street Journal (Thurs., July 6, 2017): A15.
(Note: ellipses added.)
(Note: the online version of the commentary has the date July 5, 2017.)

“90 Is the New 65”

(p. A15) In this era full of baby boomers caring for frail parents, we’ve seen plenty of documentaries, plays and memoirs about dementia, infirmity, loss. But in the HBO documentary “If You’re Not in the Obit, Eat Breakfast,” Carl Reiner and friends take up another side of the phenomenon of longer life spans: the many people in their later years who are still sharp and vigorous and engaged.
The film, . . . , doesn’t pussyfoot around when setting its bar; no “life after 65” theme here. Mr. Reiner is interested in people 90 and above.
. . .
There is chagrin on occasion; no one likes the condescension that is often showered on people of this age.
“I think the culture stereotypes everything,” Norman Lear says. “Because I’m 93 I’m supposed to behave a certain way. The fact that I can touch my toes shouldn’t be so amazing to people.” (Mr. Lear is now 94.)
. . .
. . . there is plenty of life yet in the population born before the Great Depression. Now the broader culture needs to consider how to change its preconceptions if 90 is the new 65.

For the full review, see:
NEIL GENZLINGER. “Life Goes On (The 90-and-Up Crowd.” The New York Times (Fri., JUNE 5, 2017): C7.
(Note: ellipses added.)
(Note: the online version of the review has the date JUNE 4, 2017, and has the title “Review: ‘If You’re Not in the Obit, Eat Breakfast’ Finds Vigor After 90.”)

Workers Are Empowered, Not Threatened, by Robots

(p. A15) Most computer scientists agree that predictions about robots stealing jobs are greatly exaggerated. Rather than worrying about an impending Singularity, consider instead what we might call Multiplicity: diverse groups of people and machines working together to solve problems.
Multiplicity is not science fiction. A combination of machine learning, the wisdom of crowds, and cloud computing already underlies tasks Americans perform every day: searching for documents, filtering spam emails, translating between languages, finding news and movies, navigating maps, and organizing photos and videos.
Consider Google’s search engine. It runs on a set of algorithms with input from a large number of human users who share valuable feedback every time they click on or skip over a link. The same is true for spam filters. Every time someone marks an email as spam or overrides a filter, it helps fine-tune the system for determining what is relevant.
. . .
Multiplicity is collaborative instead of combative. Rather than discourage the human workers of the world, this new frontier has the potential to empower them.

For the full commentary, see:
Ken Goldberg. “The Robot-Human Alliance; Call it Multiplicity: diverse groups of people and machines working together.” The Wall Street Journal (Mon., June 12, 2017): A15.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date June 11, 2017.)

Silicon Valley “Oligarchs” Block Upward Mobility of Masses

Bill Gates, Jaron Lanier, Tim Berners-Lee, and others have suggested that a fairer system of information technology property rights would enable micropayments for intellectual content posted to blogs and Facebook. This also would allow upward mobility. The value of the intellectual contributions is currently being unfairly appropriated by mega-server companies such as Google and Facebook.

A different kind of socialism

The oligarchs of the Bay Area have a problem: They must square their progressive worldview with their enormous wealth. They certainly are not socialists in the traditional sense. They see their riches not as a result of class advantages, but rather as reflective of their meritocratic superiority. As former TechCrunch reporter Gregory Ferenstein has observed, they embrace massive inequality as both a given and a logical outcome of the new economy.

The nerd estate is definitely not stupid, and like rulers everywhere, they worry about a revolt of the masses, and even the unionization of their companies. Their gambit is to expand the welfare state to keep the hoi polloi in line. Many, including Mark Zuckerberg, now favor an income stipend that could prevent mass homelessness and malnutrition.

How socialism morphs into feudalism

Unlike its failed predecessor, this new, greener socialism seeks not to weaken, but rather to preserve, the emerging class structure. Brown and his acolytes have slowed upward mobility by environment restrictions that have cramped home production of all kinds, particularly the building of moderate-cost single-family homes on the periphery. All of this, at a time when millennials nationwide, contrary to the assertion of Brown’s “smart growth” allies, are beginning to buy cars, homes and move to the suburbs.

For the full commentary, see:

KOTKIN, Joel. “California’s Descent to Socialism.” Orange County Register, Posted: June 11, 2017. URL: http://www.ocregister.com/2017/06/11/californias-descent-to-socialism/
(Note: bold headings in original.)

Deregulation Can Stimulate Dynamism and Economic Growth

(p. A15) Various estimates suggest that had U.S. productivity growth not slowed, GDP would be about $3 trillion higher than it is today.
. . .
Many economists contend that properly counting free digital services from companies like Google and Facebook would substantially boost productivity and GDP growth. One of the highest estimates, calculated by economists Austan Goolsbee and Peter Klenow, stands at $800 billion. That’s a big number, but not big enough to fill a $3 trillion hole.
. . .
In his 2016 book, “The Rise and Fall of American Growth,” Northwestern University economist Robert Gordon contends that the current economy fails to measure up to the great inventions of the past, and that innovation today is more incremental than transformative. He has argued vigorously that the transformative effects of technologies like electric lighting, indoor plumbing, elevators, autos, air travel and television are unlikely to be repeated. Technological innovation, he argues, will not be sufficiently robust to counter the headwinds of slowing population growth, rising inequality and exploding sovereign debt.
Former Treasury Secretary Larry Summers has resurrected Alvin Hansen’s 1938 theory of secular stagnation. Morgan Stanley economist Ruchir Sharma has argued that a 2% economy is the new normal. Former Fed Chairman Alan Greenspan has repeatedly said that the growing share of social benefits and entitlements in GDP crowds out national savings and reduces investments required to boost productivity growth.
The growth dividends from disruptive technology often require time before they are widely diffused and used. To Mr. Gordon’s point, economic historians respond that the Industrial Revolution did not improve British living standards for almost a century. Likewise the productivity boost spurred by the transformative innovations of the early 20th century took decades to kick in.
In the short term, as companies try to develop online capabilities while maintaining a physical presence, some costs are duplicated.
. . .
It’s possible that economic dynamism and entrepreneurship are no longer driving the U.S. economy. Startups are being created at a slower pace. From 1996 to 2007 the ratio of new firms to the total number of firms oscillated between 9.6 and 11.2. Today it has dropped to 7.8. Existing firms do innovate and contribute to improved productivity, but the declining share of young firms suggests a less dynamic economy.
Concurrently, the most recent numbers from the Bureau of Labor Statistics confirm that churn in the U.S. labor market remains weak across industries, regions and age groups. People are simply not moving or changing jobs for better alternatives.
. . .
The real debate is about policies that favor productivity and GDP growth. Predicting future innovation is hazardous, but deregulation and streamlined licensing requirements will facilitate job mobility. Tax reform that encourages and rewards investment should stimulate capital investment.
. . .
These necessary policy changes provide options for improving productivity and GDP growth. Waiting for the data debate to resolve itself gets us nowhere.

For the full commentary, see:
Brian Switek. “The Great Productivity Slowdown; It began long before the financial crisis, and it has worsened markedly in the past six years.” The Wall Street Journal (Fri., May 5, 2017): A15.
(Note: ellipses added.)
(Note: the online version of the commentary has the date May 4, 2017.)

The Goolsbee and Klenow article mentioned above, is:
Goolsbee, Austan, and Peter J. Klenow. “Valuing Consumer Products by the Time Spent Using Them: An Application to the Internet.” American Economic Review 96, no. 2 (May 2006): 108-13.

Artificial Intelligence (A.I.) Cannot Automate All Legal Tasks

(p. B1) “There is this popular view that if you can automate one piece of the work, the rest of the job is toast,” said Frank Levy, a labor economist at the Massachusetts Institute of Technology. “That’s just not true, or only rarely the case.”
An artificial intelligence technique called natural language processing has proved useful in scanning and predicting what documents will be relevant to a case, for example. Yet other lawyers’ tasks, like advising clients, writing legal briefs, negotiating and appearing in court, seem beyond the reach of computerization, for a while.
. . .
(p. B3) Dana Remus, a professor at the University of North Carolina School of Law, and Mr. Levy studied the automation threat to the work of lawyers at large law firms. Their paper concluded that putting all new legal technology in place immediately would result in an estimated 13 percent decline in lawyers’ hours.
A more realistic adoption rate would cut hours worked by lawyers by 2.5 percent annually over five years, the paper said. The research also suggests that basic document review has already been outsourced or automated at large law firms, with only 4 percent of lawyers’ time now spent on that task.
Their gradualist conclusion is echoed in broader research on jobs and technology. In January, the McKinsey Global Institute found that while nearly half of all tasks could be automated with current technology, only 5 percent of jobs could be entirely automated. Applying its definition of current technology — widely available or at least being tested in a lab — McKinsey estimates that 23 percent of a lawyer’s job can be automated.

For the full story, see:
STEVE LOHR. “A.I. Is Doing Legal Work. But It Won’t Replace Lawyers, Yet..” The New York Times (Mon., MARCH 20, 2017): B1 & B3.
(Note: ellipsis added.)
(Note: the online version of the story has the date MARCH 19, 2017, and has the title “A.I. Is Doing Legal Work. But It Won’t Replace Lawyers, Yet.”)

The Remus and Levy article, mentioned above, is:
Remus, Dana, and Frank S. Levy. “Can Robots Be Lawyers? Computers, Lawyers, and the Practice of Law.” Georgetown Journal of Legal Ethics (forthcoming).

Amazon Increases Rewards to Live-Video-Content-Creators

(p. B4) Amazon.com Inc.’s Twitch is allowing more broadcasters to make money on its platform, a move that could help the live-streaming business seize on challenges facing bigger rivals YouTube and Facebook Inc.
On Friday, Twitch said it will open up its revenue-sharing program next week for more broadcasters to get paid whenever they receive “bits”–custom, animated emoticons that act as an online currency for viewers to tip them. Twitch says bits are a way for those in the broadcasters’ channels to cheer them on.
Twitch will add more money-making opportunities to its new “affiliate program” in the future, the company said. Currently, only the top 1% of the 2.2 million people who stream on Twitch at least once a month–members of its so-called “partner program”–can generate revenue on the platform.
. . .
Twitch said its top earners in the partner program, who are its most popular broadcasters, make more than $100,000 a year. Under the new affiliate program, creators with fewer fans must meet certain criteria to demonstrate their commitment to streaming, such as a minimum number of hours spent on the air, to earn revenue. The amount of money the platform shares with its broadcasters varies depending on how it is earned.
Twitch sells bits to viewers in bundles ranging from $1.40 for 100 to $308 for 25,000. Broadcasters then earn one cent every time a viewer uses one.

For the full story, see:
Sarah E. Needleman. “Twitch Entices Video Creators With More Revenue Sharing.” The Wall Street Journal (Sat., April 22, 2017): B4.
(Note: ellipsis added.)
(Note: the online version of the story has the date April 21, 2017, and has the title “Twitch Entices Video Creators With More Revenue Sharing.”)

Retiring Later Improves Health in Old Age

(p. 3) Despite what may seem like obvious benefits, scholars can’t make definitive statements about the health effects of working longer. The research is inherently difficult: Just as retirement can influence health, so can health influence retirement.
“I would say, in my experience, the research is mixed,” said Dr. Maestas of Harvard Medical School. “The studies I have seen tend to show that there are health benefits to working longer.”
As the economists Axel Börsch-Supan and Morten Schuth of the Munich Center for the Economics of Aging of the Max Planck Institute for Social Law and Social Policy put it in an article for the National Bureau of Economic Research, “Even disliked colleagues and a bad boss, we argue, are better than social isolation because they provide cognitive challenges that keep the mind active and healthy.”
Other studies have examined the impact of work and employment on the richness of social networks and social connectedness. The economists Eleonora Patacchini of Cornell University and Gary Engelhardt of Syracuse University tapped into a database of some 1,300 people from ages 57 to 85 that asked about their social networks in 2005 and 2010. After controlling for marital status, age, health and income, they concluded that people who continued to work enjoyed an increase in the size of their networks of family and friends of 25 percent. The social networks of retired people, on the other hand, shrank during the five-year period. In the study, the gains were found to be largely limited to women and older people with postsecondary education.

For the full commentary, see:
CHRISTOPHER FARRELL. “Retiring; Their Jobs Keep Them Healthy.” The New York Times, SundayBusiness Section (Sun., MARCH 5, 2017): 3.
(Note: the online version of the commentary has the date MARCH 3, 2017, and has the title “Retiring; Working Longer May Benefit Your Health.”)

The article by Börsch-Supan and Schuth, is:
Börsch-Supan, Axel, and Morten Schuth. “Early Retirement, Mental Health, and Social Networks.” In Discoveries in the Economics of Aging, edited by David A. Wise. Chicago: University of Chicago Press, 2014, pp. 225-50.

On-Site Work “Is a Remnant of the Industrial Era”

(p. B5) Studies show that when employees have the choice to work remotely, “business is a whole lot better” for “people, the planet and profit,” said Kate Lister, president of Global Workplace Analytics, a consulting firm that focuses on emerging workplace trends.
Gallup’s State of the American Workplace report, released in February [2017], showed that more American employees were working remotely and for longer periods. The “sweet spot” was employees who spend three to four days a week off site; they reported feeling most engaged at work.
Mohammed Chahdi, global human resources services director for Dell, said a large percentage of its 140,000 employees already worked remotely and the goal was to have 50 percent do so by 2020. The strategy has helped the company “grow smart,” he said, by reducing its real estate and environmental footprints and retaining talented employees.
“We have data that show employees are more engaged when they enjoy flexibility,” said Mr. Chahdi, who works remotely from Toronto. “Why insist that they be in an office when it simply doesn’t matter?”
A new study, Future Workforce, released in February [2017] by Upwork, a marketplace for online work, surveyed more than 1,000 hiring managers in the United States. It found that only one in 10 believed location was important to a new hire’s success; nearly two-thirds said they had at least some workers who did a significant portion of their work from a remote location, and about half agreed that they had trouble finding the talent they needed locally.
“Remote work has gone mainstream,” said Stephane Kasriel, Upwork’s chief executive. On-site work between the hours of 9 and 5 “is a remnant of the industrial era.”

For the full story, see:
TANYA MOHN. “ITINERARIES; Digital Nomads Wander World Without Missing a Paycheck.” The New York Times (Tues., APRIL 4, 2017): B5.
(Note: bracketed years added.)
(Note: the online version of the story has the date APRIL 3, 2017, and has the title “ITINERARIES; The Digital Nomad Life: Combining Work and Travel.”)

Oregon Gadfly Fined for Practicing Engineering Without a License

(p. B2) Mats Jarlstrom acknowledges that he is unusually passionate about traffic signals — and that his zeal is not particularly appreciated by Oregon officials.
His crusade to make traffic lights remain yellow longer — which began after his wife received a red-light camera ticket — has drawn some interest among transportation specialists and the media. But among the power brokers in his hometown, Beaverton, it has elicited ridicule and exasperation.
“They literally laughed at me at City Hall,” Mr. Jarlstrom recalled of a visit there in 2013, when he tried to share his ideas with city counselors and the police chief.
Worse still was getting hit recently with a $500 fine for engaging in the “practice of engineering” without a license while pressing his cause. So last week, Mr. Jarlstrom filed a civil rights lawsuit in federal court against the Oregon State Board of Examiners for Engineering and Land Surveying, charging the state’s licensing panel with violating his First Amendment rights.
“I was working with simple mathematics and applying it to the motion of a vehicle and explaining my research,” said Mr. Jarlstrom, 56. “By doing so, they declared I was illegal.”
The lawsuit is the latest and perhaps most novel shot in the continuing campaign against the proliferation of state licensing laws that can require costly training and fees before people can work. Mr. Jarlstrom is being represented by the Institute for Justice, a libertarian organization partly funded by the billionaire brothers and activists Charles G. and David H. Koch.

For the full story, see:
PATRICIA COHEN. “Crusader Fined for Doing Math Without License.” The New York Times (Mon., May 1, 2017): B2.
(Note: the online version of the story has the date APRIL 30, 2017, and has the title “Yellow-Light Crusader Fined for Doing Math Without a License.”)