Category: Labor Economics

Government Wastes Millions on Corrupt Nanotech Boondoggle

(p. A19) In Utica, a former industrial hub in upstate New York where the near collapse of manufacturing has made for a scarcity of jobs and a rarity of good news, the announcement in August 2015 that an Austrian chip maker had decided to put down roots in a fabrication plant built by the state was cause for jubilation.
Gov. Andrew M. Cuomo celebrated with an appearance in Utica, promising $585 million in state funds to cement the public-private partnership, which was to create 1,000 jobs. Some in the crowd wept with emotion.
But last week, after months of delays and mismanagement that culminated in September with federal prosecutors revealing a far-reaching bribery and bid-rigging scheme, state and local officials said that the Austrian chip maker, AMS, had abandoned the project.
The Utica project was merely one chunk of the multibillion-dollar investment with which the Cuomo administration has pledged to seed nanotechnology and high-tech industries in upstate cities starved for economic growth.
. . .
For the state, it seems, the strategy developed by Mr. Kaloyeros and trumpeted by Mr. Cuomo — to lavish hundreds of millions of dollars in state subsidies on corporate partners to create high-tech jobs — is unblemished. Yet the model has come in for repeated criticism from government watchdogs, who say an economic policy that tries to create risky new industries virtually from scratch, and that spends millions in taxpayer dollars to create every new job, is folly.
“We’re incredibly skeptical of the economic logic behind these projects because they’re too expensive,” said John Kaehny, the executive director of Reinvent Albany, a good-government group. “There is no economic logic to (p. A21) this, really. But there’s a huge political logic to it. The governor desperately needs for this to be a success for his political legacy in New York.”

For the full story, see:
VIVIAN YEE. “How Missteps Doomed Plan for Growth, Foiling Cuomo.” The New York Times (Weds., DEC. 28, 2016): A19.
(Note: ellipsis added.)
(Note: the online version of the story has the date DEC. 27, 2016, and has the title “How Cuomo’s Signature Economic Growth Project Fell Apart in Utica.”)

Where Fidelistas Miss Mr. Hershey’s Company Town

(p. A9) This small town on Cuba’s northern coast is steeped in memory and wistfulness, a kind of living monument to the intertwined histories of the United States and Cuba and to the successes and failures of Fidel Castro’s social revolution.
The town dates to 1916, when Milton S. Hershey, the American chocolate baron, visited Cuba for the first time and decided to buy sugar plantations and mills on the island to supply his growing chocolate empire in Pennsylvania. On land east of Havana, he built a large sugar refinery and an adjoining village — a model town like his creation in Hershey, Pa. — to house his workers and their families.
He named the place Hershey.
The village would come to include about 160 homes — the most elegant made of stone, the more modest of wooden planks — built along a grid of streets and each with tidy yards and front porches in the style common in the growing suburbs of the United States. It also had a public school, a medical clinic, shops, a movie theater, a golf course, social clubs and a baseball stadium where a Hershey-sponsored team played its home games, residents said.
The factory became one of the most productive sugar refineries in the country, if not in all of Latin America, and the village was the envy of surrounding towns, which lacked the standard of living that Mr. Hershey bestowed on his namesake settlement.
. . .
“I’m a Fidelista, entirely in favor of the revolution,” declared Meraldo Nojas Sutil, 78, who moved to Hershey when he was 11 and worked in the plant during the 1960s and ’70s. “But slowly the town is deteriorating.”
Many residents do not hesitate to draw a contrast between the current state of the town and the way that it looked when “Mr. Hershey,” as he is invariably called here, was the boss.
Residents seem amused by, if not proud of, the ties to the United States.
Most still use the village’s original name, pronounced locally as “AIR-see.” And Hershey signs still hang at the town’s train station, a romantic nod to a bygone era, though perhaps also a symbol of hope that the past — at least, certain aspects of it — will again become the present.

For the full story, see:
KIRK SEMPLE. “CAMILO CIENFUEGOS JOURNAL; Past Is Bittersweet in Cuban Town That Hershey Built.” The New York Times (Thurs., DEC. 7, 2016): A9.
(Note: ellipsis added.)
(Note: the online version of the article has the date DEC. 7, 2016, and has the title “CAMILO CIENFUEGOS JOURNAL; In Cuban Town That Hershey Built, Memories Both Bitter and Sweet.”)

“Worrying About Overpopulation on Mars”

(p. B4) Reflecting on my own brief experience as an invertebrate neuroscientist, I’d say that today’s AI is at the jellyfish stage in the evolution of biological intelligence. Real brains–and genuine intelligence–are so far in the future as to be beyond any reasonable horizon of prediction.
Or, as chief scientist and AI guru Andrew Ng of Chinese search giant Baidu Inc. once put it, worrying about takeover by some kind of intelligent, autonomous, evil AI is about as rational as worrying about overpopulation on Mars.

For the full commentary, see:
CHRISTOPHER MIMS. “KEYWORDS; Artificial Intelligence Has a Way to Go.” The Wall Street Journal (Mon., Dec. 5, 2016): B1 & B4.
(Note: the online version of the commentary has the date Dec. 4, 2016, and has the title “KEYWORDS; Artificial Intelligence Makes Strides, but Has a Long Way to Go.”)

The Case Against “Mindful Dishwashing”

(p. 9) I’m making a failed attempt at “mindful dishwashing,” the subject of a how-to article an acquaintance recently shared on Facebook. According to the practice’s thought leaders, in order to maximize our happiness, we should refuse to succumb to domestic autopilot and instead be fully “in” the present moment, engaging completely with every clump of oatmeal and decomposing particle of scrambled egg. Mindfulness is supposed to be a defense against the pressures of modern life, but it’s starting to feel suspiciously like it’s actually adding to them. It’s a special circle of self-improvement hell, striving not just for a Pinterest-worthy home, but a Pinterest-worthy mind.
Perhaps the single philosophical consensus of our time is that the key to contentment lies in living fully mentally in the present. The idea that we should be constantly policing our thoughts away from the past, the future, the imagination or the abstract and back to whatever is happening right now has gained traction with spiritual leaders and investment bankers, armchair philosophers and government bureaucrats and human resources departments.
. . .
So does the moment really deserve its many accolades? It is a philosophy likely to be more rewarding for those whose lives contain more privileged moments than grinding, humiliating or exhausting ones. Those for whom a given moment is more likely to be “sun-dappled yoga pose” than “hour 11 manning the deep-fat fryer.”
On the face of it, our lives are often much more fulfilling lived outside the present than in it.
. . .
Surely one of the most magnificent feats of the human brain is its ability to hold past, present, future and their imagined alternatives in constant parallel, . . .
. . .
What differentiates humans from animals is exactly this ability to step mentally outside of whatever is happening to us right now, and to assign it context and significance. Our happiness does not come so much from our experiences themselves, but from the stories we tell ourselves that make them matter.
. . .
So perhaps, rather than expending our energy struggling to stay in the Moment, we should simply be grateful that our brains allow us to be elsewhere.

For the full commentary, see:
RUTH WHIPPMAN. “Actually, Let’s Not Be in the Moment.” The New York Times, SundayReview Section (Sun., NOV. 27, 2016): 9.
(Note: ellipses added.)
(Note: the online version of the commentary has the date NOV. 26, 2016.)

Rigid Labor Regulations Hurt Labor in India

(p. A9) . . . rigid and complex regulations have discouraged investment in labor-intensive industries in India, . . . .
Many economists say India’s labor laws have encouraged enterprises to stay small, rely on informal labor or substitute capital for workers. A report by the Paris-based Organization for Economic Cooperation and Development said for India to return to a high-growth trajectory, it must “reduce barriers to formal employment by introducing a simpler and more flexible labor law which doesn’t discriminate by size of enterprise.”

For the full story, see:
NIHARIKA MANDHANA. “India State Tests Labor-Law Overhaul.” The Wall Street Journal (Sat., Dec. 6, 2014): A9.
(Note: ellipses added.)
(Note: the online version of the article has the date Dec. 7 [sic], 2014, and has the title “Modi’s BJP-Controlled States Become Labs for Contentious Reform.”)

Innovation Brought Rise of Middle Class and Decline of Aristocracy

(p. C7) Mr. Evans claims that “master narratives” have fallen into disrepute, and he does not aspire to provide one. But he returns repeatedly to such themes as the growth of “public space” as Europe urbanized and communications improved. He likewise describes the “shifting contours of inequality” as the middle classes burgeoned and benefited from the hastening pace of scientific innovation while the aristocracy slowly declined in status (albeit not in creature comforts).
Similarly, Mr. Evans offers an interesting discussion of how various forms of serfdom disappeared, even as the essence of rural immiseration generally did not. He conveys the degradation of existence for the emergent working class of the cities with controlled pathos yet without acknowledging the improvements in living standards that took place in advanced countries during the last decades of the century. He adduces evidence to show that the benefits of improved sanitation and hygiene, health and nutrition, consumer products and home conveniences, as well as longer life expectancy, went at first disproportionately to the urban middle and professional classes, strata that tripled as a fraction of the population in leading countries. Thus even in comparatively prosperous England, well-off adolescents at midcentury stood almost 9 inches taller than their proletarian contemporaries and by 1900 enjoyed a life expectancy 14 years longer.

For the full review, see:
STEPHEN A. SCHUKER. “The European Century.” The Wall Street Journal (Sat., December 3, 2016): C7.
(Note: the online version of the review has the date Dec. 2, 2016, and has the title “A Long Century of Peace.”)

The book under review, is:
Evans, Richard J. The Pursuit of Power: Europe 1815-1914. New York: Viking, 2016.

Increasing Minimum Wage Hurts Low Productivity Workers

(p. B1) CHICAGO — A growing number of economists have found that many cities and states have considerable room to raise the minimum wage before employers meaningfully cut back on hiring.
But that conclusion may gloss over some significant responses to minimum-wage increases by individual employers, according to two new studies. And those reactions may, in turn, raise questions about the effectiveness of the minimum wage in helping certain workers.
The findings, presented over the weekend at the annual meeting of the American Economic Association, the nation’s premier gathering of academic economists, come as many cities and states are raising their minimum wages. California and New York last year approved gradual increases to $15 per hour. Proponents argue that raising the minimum is one of the most practical ways of improving living standards for the working poor and reducing inequality.
To test that proposition, John Horton of New York University conducted an experiment on an online platform where employers post discrete jobs — including customer service support, data entry, and graphic design — and workers submit a proposed hourly wage for completing them.
Mr. Horton, working with the platform, was able to impose a minimum wage at random on one-quarter of about 160,000 jobs posted over roughly a (p. B4) month and a half in 2013. If a worker proposed an hourly wage that was below the minimum, the platform’s software asked him or her to raise the bid until it cleared the threshold. In some cases the minimum wage was $2 per hour, in some cases $3, and in some cases $4.
At first glance, the findings were consistent with the growing body of work on the minimum wage: While the workers saw their wages rise, there was little decline in hiring. But other results suggested that the minimum wage was having large effects. Most important, the hours a given worker spent on a given job fell substantially for jobs that typically pay a low wage — say, answering customer emails.
Mr. Horton concluded that when forced to pay more in wages, many employers were hiring more productive workers, so that the overall amount they spent on each job changed far less than the minimum-wage increase would have suggested. The more productive workers appeared to finish similar work more quickly.

For the full story, see:
NOAM SCHEIBER. “Studies Find Higher Minimum Wage May Have Losers.” The New York Times (Weds., JAN. 11, 2017): B1 & B4.
(Note: the online version of the article has the date JAN. 10, 2017, and has the title “Higher Minimum Wage May Have Losers.”)

The paper that Horton presented at the 2017 AEA meetings in Chicago, is:
Horton, John J. “Evidence from a Minimum Wage Experiment.” Working Paper, Leonard N. Stern School of Business. New York University, Jan. 10, 2017.

Entrepreneur Hires for Perseverance

Max Levchin, who is quoted below, is an entrepreneur who played an important role in the early days of PayPal.

(p. 2) How do you think your parents and grandparents influenced your leadership style today?

My grandmother was exceptionally formative. She basically was willpower personified. If she wanted something to happen, it would happen. She had this walk-through-walls style where you did not ask for permission or forgiveness; you just did what you needed to get it done. I still judge some of my decisions based on: What would Grandma decide? Was I sufficiently tenacious or not enough?
And one thing I have found over the years is that in hiring, the dominant characteristic I select for is this sense of perseverance in really tough situations. It’s like the difference between endurance athletes and sprinters. I think it is a really good predictor for how people behave under severe stress.
Working in a start-up means there is a baseline of stress with occasional spikes. There are people who are really good at handling spikes. In fact, most people are really good at handling spikes. But normal isn’t normal. There is constant stress. And so I look for endurance athletes, in the business sense.

For the full interview, see:
ADAM BRYANT. “Corner Office; Looking for Signs of Endurance.” The New York Times, SundayBusiness Section (Sun., December 11, 2016): 2.
(Note: bold in original.)
(Note: the online version of the interview has the date DEC. 9, 2016, and has the title “Corner Office; Max Levchin of Affirm: Seeking the Endurance Athletes of Business.” The bold words are Adam Bryant’s question; the non-bold words are Max Levchin’s answer.)

Everybody Is Seeking “a Life that Provides Them with Dignity”

(p. A11) I want to end this dramatic year writing of a man whose great and constructive work I discovered in 2016. He is the photojournalist Chris Arnade.
. . .
In his work you see an America that is battered but standing, a society that is atomized–there are lonely people in his pictures–but holding on.
. . .
Mr. Arnade didn’t intend to discover virtue in a mighty corporation, but McDonald’s “has great value to community.” He sees an ethos of patience and respect. “McDonald’s is nonjudgmental.” If you have nowhere to go all day they’ll let you stay, nurse your coffee, read your paper. “The bulk of the franchises leave people alone. There’s a friendship that develops between the people who work there and the people who go.” “In Natchitoches, La., there’s a twice-weekly Bible study group,” that meets at McDonald’s. “They also have bingo games.” There’s the Old Man table, or the Romeo Club, for Retired Old Men Eating Out.
I’ve written of the great divide in America as between the protected and the unprotected–those who more or less govern versus the governed, the facts of whose lives the protected are almost wholly unaware. Mr. Arnade sees the divide as between the front-row kids at school waving their hands to be called on, and the back-row kids, quiet and less advantaged. The front row, he says, needs to learn two things. “One is how much the rest of the country is hurting. It’s not just economic pain, it’s a deep feeling of meaninglessness, of humiliation, of not being wanted.” Their fears and anxieties are justified. “They have been excluded from participating in the great wealth of this country economically, socially and culturally.” Second, “The front-row kids need humility. They need to look in the mirror, ‘We messed this up, we’ve been in charge 30 years and haven’t delivered much.’ ” “They need to take stock of what has happened.”
Of those falling behind: “They’re not lazy and weak, they’re dealing with bad stuff. Both conservative and progressive intellectuals say Trump voters are racist, dumb. When a conservative looks at a minority community and says, ‘They’re lazy,’ the left answers, ‘Wait a minute, let’s look at the larger context, the availability of jobs, structural injustice.’ But the left looks at white working-class poverty and feels free to judge and dismiss.”
. . .
I asked how he describes his work. I see it as an effort to help America better understand itself. He said he was trying to show that “Everybody is kind of working in the same direction, trying to get by, get a life that provides them with dignity.” In this, he suggests, we are more united than we know.

For the full commentary, see:
PEGGY NOONAN. “Shining a Light on ‘Back Row’ America; Chris Arnade’s photos reveal an America that is battered but standing, atomized but holding on.” The Wall Street Journal (Sat., Dec. 31, 2016): A11.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Dec. 29, 2016.)

Complex Labor Rules Reduce Work Choices for Older Workers

(p. B4) CALL them boomerang retirees: people who exit gracefully after their career at a company, then return shortly afterward to work there part time.
More and more companies are establishing formal programs to facilitate this, for reasons that benefit both the employer and the retiree. Leaving a satisfying job cold-turkey for a life of leisure can be an abrupt jolt to people accustomed to feeling purposeful, earning money and enjoying their colleagues. From the corporate perspective, it is useful to have experienced hands who can train younger people, pass along institutional wisdom and work with fewer strings attached.
“People in the U.S. define themselves by their work, and they like their co-workers,” said Roselyn Feinsod, senior partner in the retirement practice at the human resources firm Aon Hewitt, the human resources consultancy. Thus, unlike many retirees from past generations, people from both the blue-collar and white-collar sectors are more eager to retain ties to the familiar working world that they enjoyed (and sometimes loathed).
. . .
. . . , Atlantic Health Systems of Morristown, N.J., is among the growing ranks of employers that sponsor a formal program to invite retirees back into the work force, for no more than 1,000 hours a year. The company’s Alumni Club — formerly known as the 1,000 Hour Club — was established in 2006, and about 300 Atlantic Health retirees are currently on the company’s payroll in various capacities. “They’re engaged employees; they’re productive,” said Lesley Meyer, Atlantic Systems’ manager of corporate human resources. “They’re a stable talent pool.”
. . .
Most boomerang retirees return to work after an informal negotiation with a former boss. Programs like the one at Atlantic Systems are still relatively rare — for instance, about 8 percent of the 463 companies surveyed by the Society for Human Resource Management in 2015 had one — but they are on the rise.
They are also tricky to run: Establishing a boomerang retiree program involves a substantial commitment of resources, including systems for navigating complex labor market rules and pension law. Most returning retirees must wait several months before they can come back, and are often limited to that 1,000 hours a year. Companies are increasingly turning to outside staffing firms to manage the nuts and bolts.
. . .
It was a phone call from her former manager that lured Pat Waller, who spent 39 years as an intensive care nurse for Atlantic Health before retiring in 2005 at age 66, back to the work force part time. She joined the Alumni Club in 2007 after the hospital where she had worked, Morristown Medical Center in Morristown, N.J., applied to qualify as a federal center of excellence in knee and hip surgery; her former boss wondered if she would help gather data. Absolutely, she answered.
Since then, Ms. Waller has worked on several projects for Atlantic Health, gigs that easily give her the time to travel with her husband and see her six grandchildren.
Now that she is 77, Ms. Waller works mostly from home, sometimes three to four days a week and other times one to two, depending on the project, “I always said when I was at work I learned something every day,” she said. “Since I’ve come back, I feel the same way.”

For the full story, see:
CHRISTOPHER FARRELL. “Boomerang Boom: Firms Tapping Skills of the Recently Retired.” The New York Times (Sat., December 17, 2016): B4.
(Note: ellipses added.)
(Note: the online version of the story has the date DEC. 16, 2016, and has the title “Retiring; Boomerang Boom: More Firms Tapping the Skills of the Recently Retired.”)

Better Policies Can Turn Stagnation into Growth

(p. A19) . . . , now ought to be the time that policy makers in Washington come together to tackle America’s greatest economic problem: sclerotic growth. The recession ended more than seven years ago. Unemployment has returned to normal levels. Yet gross domestic product is rising at half its postwar average rate. Achieving better growth is possible, but it will require deep structural reforms.
The policy worthies have said for eight years: stimulus today, structural reform tomorrow. Now it’s tomorrow, but novel excuses for stimulus keep coming. “Secular stagnation” or “hysteresis” account for slow growth. Prosperity demands more borrowing and spending–even on bridges to nowhere–or deliberate inflation or negative interest rates. Others advocate surrender. More growth is impossible. Accept and manage mediocrity.
But for those willing to recognize the simple lessons of history, slow growth is not hard to diagnose or to cure. The U.S. economy suffers from complex, arbitrary and politicized regulation. The ridiculous tax system and badly structured social programs discourage work and investment. Even internet giants are now running to Washington for regulatory favors.
. . .
So why is there so little talk of serious growth-oriented policy? Regulated and protected industries and unions, and the politicians who extract support from them in return for favors, will lose enormously. The global policy elite, steeped in Keynesian demand management for the economy as a whole, and microregulation of individual businesses, are intellectually unprepared for the hard project of “structural reform”–fixing the entire economy by cleaning up the thousands of little messes. Even economists fight to protect outdated skills.

For the full commentary, see:
JOHN H. COCHRANE. “Don’t Believe the Economic Pessimists; Memo to Clinton and Trump: The U.S. economy can and will grow faster with the right policies.” The Wall Street Journal (Mon., Nov. 7, 2016): A19.
(Note: ellipses added.)