Labor Economics – Page 58 – artdiamondblog.com

Best Entrepreneurs, and Managers, Help Workers Lead Meaningful Lives

(p. C6) In “Payoff,” Dan Ariely makes the strong case that the best way to motivate people, including ourselves, is not through persuasive tactics, however subtle, but by providing the groundwork for meaning in people’s lives.

For Altucher’s full book recommendations, see:
James Altucher. “12 Months of Reading.” The Wall Street Journal (Sat., December 10, 2016): C6.
(Note: the online version of the review has the date Dec. 7, 2016, and has the title “James Altucher on con artists.”)

The book recommended, is:
Ariely, Dan. Payoff: The Hidden Logic That Shapes Our Motivations, Ted Books. New York: Simon & Schuster, Inc., 2016.

Micro-Entrepreneur Worked Hard, Saved, and Has No Regrets

(p. 1) PORT HEDLAND, Australia — A lanky, dark-haired surfer, Lee Meadowcroft modeled on the runways of London, Milan and Singapore, then followed his dream of going home to Australia to sell herbal medicines. His store failed — he had chosen the wrong street, he says — and he lost almost all his savings. By then, the fashion world had found fresher faces.

So like tens of thousands of other Australians, Mr. Meadowcroft went to the mines.

It was late 2004. He plowed his last $4,000 into a two-week course on how to operate a crane. He found companies so desperate for workers that they would send chauffeured cars to pick up prospective welders, electricians and crane operators and deliver them to the nearest airport for their flights to mining country, here on Australia’s remote northwestern coast.

China back then was growing at a breathtaking pace and needed all the Australian rocks it could get. Mine workers like Mr. Meadowcroft kept a punishing schedule: 13 consecutive days of 12-hour shifts, a day off, then another 13 consecutive days of 12-hour (p. 4) shifts. Mining fueled Australia’s surging exports to China, which at their peak reached nearly $100 billion a year — a figure representing $4,300 for every man, woman and child in the country.

Resource-rich places around the world prospered thanks to China, and Mr. Meadowcroft and his fellow Port Hedland equipment jockeys were no exception. By 2011 he was earning $250,000 a year.

. . .

The bust came just as hard and just as fast. China’s economic slowdown left too many mines to feed too many dormant Chinese steel mills. Construction of new mines stopped. Port Hedland’s economy slumped. Mr. Meadowcroft lost his job, then lost a second job. Like thousands of others, he went back home.

Mr. Meadowcroft’s tale could serve as yet another boom-and-bust cautionary tale of the limits of China’s rise. From Russia to Brazil, and Nigeria to Venezuela, resource-rich countries that boomed during China’s surge found their economies shaken when Chinese demand slowed.

Except something unexpected has happened to Australia: It has withstood the global rout. Most mines — lower-cost compared with mines elsewhere — have stayed open. But Australia has also kept thriving, against all expectations, with a different kind of money flowing in from China.

Attracted by clean air, a strong education system and worries about China’s future, more Chinese are spending their money in Australia. Thousands of Chinese families have sent their children to study at costly Australian universities, and Australian food exports to China have boomed. Chinese investment in Australian real estate has increased at least tenfold since 2010; Chinese investors have purchased up to half the new apartments in downtown Melbourne and Sydney.

. . .

. . . for people like Mr. Meadowcroft and others in Western Australia who were cut loose by the mining slump, Chinese money is a blessing. He now lives in the Western Australia capital city of Perth and works as an apprentice plumber in new housing developments aimed at Chinese buyers. He earns just $21,000 a year, but that could double or triple when he finishes his apprenticeship.

. . .

(p. 5) . . . for now, Chinese money is still flowing. Many miners who squandered their earnings during the iron ore boom are now trying to catch up in construction jobs. But many others socked away their money from the boom and have used those savings to buy homes or start small businesses.

“They were micro-entrepreneurs,” said Tom Barratt, a University of Western Australia doctoral student who is doing his thesis on labor markets in the Pilbara hills.

Mr. Meadowcroft is among those savers. He bought a house and soon paid off most of the mortgage. He also married his longtime girlfriend after years of commuting to far-flung mines and ports, and is now raising two children as he learns to be a plumber.

Although his savings account is much smaller now, he has no regrets about the boom years. “That was 12 years of really hard work,” he said, “to achieve what a lot of people don’t achieve in their whole lives.”

For the full story, see:

KEITH BRADSHER. “Money From the Dust.” The New York Times, SundayBusiness Section (Sun., SEPT. 25, 2016): 1 & 4-5.

(Note: ellipses added.)

(Note: the online version of the story has the date SEPT. 24, 2016, and has the title “In Australia, China’s Appetite Shifts From Rocks to Real Estate.”)

Middle Class Income Increased 5.2 Percent in 2015

(p. B1) Working families finally got a raise.
Early on Tuesday, the Census Bureau provided some long-awaited good news for the beleaguered working class: The income of the typical American household perched on the middle rung of the income ladder increased a hearty 5.2 percent in 2015, the first real increase since 2007, the year before the economy sank into recession.
Households all the way down the income scale made more money last year. The average incomes of the poorest fifth of the population increased 6.6 percent after three consecutive years of decline. And the official poverty rate declined to 13.5 percent from 14.8 percent in 2014, the sharpest decline since the late 1960s.
The numbers are heartening, confirming that the sluggish yet consistent recovery of the American economy has finally begun to lift all boats.

For the full commentary, see:
Porter, Eduardo. “ECONOMIC SCENE; The Bad News Is the Good News Could Be Better.” The New York Times (Mon., SEPT. 14, 2016): B1 & B5.
(Note: the online version of the commentary has the date SEPT. 13, 2016, and has the title “ECONOMIC SCENE; America’s Inequality Problem: Real Income Gains Are Brief and Hard to Find.”)

Udacity Entrepreneur Counters Creeping Credentialism

(p. B2) Udacity, an online learning start-up founded by a pioneer of self-driving cars, is finally taking the wraps off a job trial program it has worked on for the last year with 80 small companies.
The program, called Blitz, provides what is essentially a brief contract assignment, much like an internship. Employers tell Udacity the skills they need, and Udacity suggests a single candidate or a few. For the contract assignment, which usually lasts about three months, Udacity takes a fee worth 10 to 20 percent of the worker’s salary. If the person is then hired, Udacity does not collect any other fees, such as a finder’s fee.
For small start-ups, a hiring decision that goes bad can be a time-consuming, costly distraction. “This lets companies ease their way into hiring without the hurdle of making a commitment upfront,” said Sebastian Thrun, co-founder and chairman of Udacity.
. . .
Mr. Thrun, a former Stanford professor and Google engineer who led the company’s effort in self-driving cars, said he was also trying to nudge the tech industry’s hiring beyond its elite-college bias.
“For every Stanford graduate, there are hundreds of people without that kind of pedigree who can do just as well,” he said.

For the full story, see:
STEVE LOHR. “Udacity, an Education Start-Up, Offers Tech Job Tryouts.” The New York Times (Fri., NOV. 18, 2016): B2.
(Note: ellipsis added.)
(Note: the online version of the story has the date NOV. 17, 2016, and has the title “Udacity, an Online Learning Start-Up, Offers Tech Job Trials.”)

Dignity and Equality Before the Law Unleashes Creativity in the Poor

(p. A23) We can improve the conditions of the working class. Raising low productivity by enabling human creativity is what has mainly worked. By contrast, taking from the rich and giving to the poor helps only a little — and anyway expropriation is a one-time trick.
. . .
Look at the astonishing improvements in China since 1978 and in India since 1991. Between them, the countries are home to about four out of every 10 humans. Even in the United States, real wages have continued to grow — if slowly — in recent decades, contrary to what you might have heard. Donald Boudreaux, an economist at George Mason University, and others who have looked beyond the superficial have shown that real wages are continuing to rise, thanks largely to major improvements in the quality of goods and services, and to nonwage benefits. Real purchasing power is double what it was in the fondly remembered 1950s — when many American children went to bed hungry.
What, then, caused this Great Enrichment?
Not exploitation of the poor, not investment, not existing institutions, but a mere idea, which the philosopher and economist Adam Smith called “the liberal plan of equality, liberty and justice.” In a word, it was liberalism, in the free-market European sense. Give masses of ordinary people equality before the law and equality of social dignity, and leave them alone, and it turns out that they become extraordinarily creative and energetic.

For the full commentary, see:
DEIRDRE N. McCLOSKEY. “Economic View; Equality, Liberty, Justice and Wealth.” The New York Times, SundayBusiness Section (Sun., SEPT. 4, 2016): 6.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date SEPT. 2, 2016, and has the title “Economic View; The Formula for a Richer World? Equality, Liberty, Justice.”)

McCloskey’s commentary, quoted above, is related to her book:
McCloskey, Deirdre N. Bourgeois Equality: How Ideas, Not Capital, Transformed the World. Chicago: University of Chicago Press, 2016.

Poor Are Exiting High-Housing-Cost Cities

Source of graph: online version of the WSJ article quoted and cited below.

(p. A3) Americans are leaving the costliest metro areas for more affordable parts of the country at a faster rate than they are being replaced, according to an analysis of census data, reflecting the impact of housing costs on domestic migration patterns.

Those mostly likely to move from expensive to inexpensive metro areas were at the lower end of the income scale, under the age of 40 and without a bachelor’s degree, the analysis by home-tracker Trulia found.
. . .
Another study this year from California policy group Next 10 and Beacon Economics found that New York state and California had the largest net losses of domestic migrants between 2007 and 2014, and that lower- and middle-income people were more likely to leave.

For the full story, see:
CHRIS KIRKHAM. “Costly Cities See Exodus.” The Wall Street Journal (Thurs., Nov. 3, 2016): A3.
(Note: ellipsis added.)
(Note: the online version of the story has the date Nov. 1, 2016, and has the title “More Americans Leave Expensive Metro Areas for Affordable Ones.”)

About 90% of Current Jobs Include Tasks that Are Hard to Automate

(p. B1) They replaced horses, didn’t they? That’s how the late, great economist Wassily Leontief responded 35 years ago to those who argued technology would never really replace people’s work.
. . .
(p. B6) A research paper published last month by the Organization for Economic Cooperation and Development argued that even the occupations most at risk of being replaced by machines contained lots of tasks that were hard to automate, like face-to-face interaction with customers.
It concluded that only 9 percent of American workers faced a high risk of being replaced by an automaton. Austrians, Germans and Spaniards were the most vulnerable, but only 12 percent of them risked losing their jobs to information technology.

For the full commentary, see:
Porter, Eduardo. “ECONOMIC SCENE; Contemplating the End of Human Workhorse.” The New York Times (Weds., JUNE 8, 2016): B1 & B6.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date JUNE 7, 2016, and has the title “ECONOMIC SCENE; Jobs Threatened by Machines: A Once ‘Stupid’ Concern Gains Respect.”)

The Organization for Economic Cooperation and Development paper mentioned above, is:
Arntz, Melanie, Terry Gregory, and Ulrich Zierahn. “The Risk of Automation for Jobs in OECD Countries: A Comparative Analysis.” OECD Social, Employment and Migration Working Papers, No. 189. Paris: OECD Publishing, 2016.

Immigration Depresses Wages of Low-Wage Americans

(p. A11) Mr. Borjas is himself an immigrant, having at age 12 fled from Cuba to Miami with his widowed mother in 1962, just before the Cuban Missile Crisis shut down legal exits. As a labor economist, he has spent much of his academic career studying the effects of immigration on the American jobs market, often arguing that immigration depresses wages, or job opportunities, at the lower end of the scale. Here he notes that, on balance, the added production supplied by immigrants makes a modest contribution to U.S. economic growth. He generously provides readers with arguments on all sides, including Milton Friedman’s wry observation that illegal immigrants are of more net benefit to the American economy than legals because they make less use of welfare-state services.
. . .
After totting up the pluses and minuses, Mr. Borjas concludes that immigration has very little effect on the lives of most Americans. He does worry, however, that some future wave might bring along with it the “institutional, cultural and political baggage that may have hampered development in the poor countries” from which immigrants often come, and he sees a need for reforms.

For the full review, see:

GEORGE MELLOAN. “BOOKSHELF; The Immigration Debate We Need.” The Wall Street Journal (Weds., Oct. 19, 2016): A11.
(Note: ellipsis added.)

The book under review, is:
Borjas, George J. We Wanted Workers: Unraveling the Immigration Narrative. New York: W. W. Norton & Company, 2016.

Regulations Cause Sluggish Economy by Slowing Startup Creation

Source of graph: online version of the WSJ article quoted and cited below.

(p. A2) The U.S. economy is inching along, productivity is flagging and millions of Americans appear locked out of the labor market.
One key factor intertwined with this loss of dynamism: The U.S. is creating startup businesses at historically low rates.
. . .
The share of private firms less than a year old has dropped from more than 12% during much of the 1980s to only about 8% since 2010. In 2014, the most recent year of data, the startup rate was the second-lowest on record, after 2010, according to Census Bureau figures released last month, so there’s little sign of a postrecession rebound.
. . .
Rules and regulations also could be at play. Goldman Sachs economists in part blame the cumulative effect of regulations enacted since the Great Recession for reducing the availability of credit and raising the cost of doing business for small firms, making them less competitive.
. . .
There is some disagreement on whether tech firms have fallen into the same doldrums as other startups like mom-and-pop shops. Mr. Haltiwanger and colleagues at the Federal Reserve and Census Bureau find evidence they have, with significant detriment to the economy.
“It may be that we are designing things here in the U.S. as rapidly as ever,” Mr. Haltiwanger said. “We’re just not producing here. That’s not good news for U.S. productivity.”
Researchers at the Massachusetts Institute of Technology delved into state business licensing information and found somewhat different but also discouraging results. That is, tech entrepreneurs are generating good ideas and founding companies at a healthy pace, but those ventures aren’t breaking out into successful big companies.
“The system for translating good, high-quality foundings into a growth firm, that system seems to have broken,” said Scott Stern, an MIT professor and co-author of the study on startups.

For the full commentary, see:
Sparshott, Jeffrey. “THE OUTLOOK; Sputtering Startups Weigh Down Growth.” The Wall Street Journal (Mon., Oct. 24, 2016): A2.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Oct. 23, 2016 title “THE OUTLOOK; Sputtering Startups Weigh on U.S. Economic Growth.” The passages quoted above include a couple of sentences that appeared in the online, but not the print, version of the article.)

Land Use Regulations Increase Income Inequality

Source of graph: online version of the WSJ article quoted and cited below.

(p. A3) In this year’s election, candidates have focused blame for rising income inequality on broad economic forces, from globalization to the decline of the American manufacturing base. But a growing body of research suggests a more ordinary factor: the price of the average single-family home for sale, from Fairfield, Conn., to Portland, Ore.

According to research by Daniel Shoag, an associate professor of public policy at Harvard University, and Peter Ganong, a postdoctoral fellow at the National Bureau of Economic Research, a decadeslong trend in which the income gap between the poorest and richest states steadily closed has been upended by growth in land-use regulations.
Moving to a wealthier area in search of job opportunities has historically been a way to promote economic equality, allowing workers to pursue higher-paying jobs elsewhere. But those wage gains lose their appeal if they are eaten up by higher housing costs. The result: More people stay put and lose out on potential higher incomes.
. . .
Messrs. Shoag and Ganong looked at mentions of “land-use” in appeals-court cases and found the number of references began rising sharply around 1970, with some states seeing a much larger increase than others. For example, the share of cases mentioning land use for New York rose 265% between 1950 and 2010 and 644% in California during the same period. By contrast, it increased by only 80% in Alabama.

For the full story, see:
LAURA KUSISTO. “Land Use Rules Under Fire.” The Wall Street Journal (Weds., Oct. 19, 2016): A3.
(Note: ellipsis added.)
(Note: the online version of the story has the date Oct. 18, 2016, and has the title “As Land-Use Rules Rise, Economic Mobility Slows, Research Says.” A few extra words appear in the online version quoted above, that were left out of the print version.)

The research by Ganong and Shoag, mentioned above, is:

Ganong, Peter, and Daniel Shoag. “Why Has Regional Income Convergence in the U.S. Declined?” Harvard University, John F. Kennedy School of Government, Working Paper Series, Jan. 2015.

Many Can Have Good Jobs, and Good Lives, Without College

Source of graph: online version of the WSJ article quoted and cited below.

(p. B1) American employers struggling to find enough qualified industrial workers are turning to Germany for a solution to plug the U.S. skills gap: vocational training.

Two million U.S. manufacturing jobs will remain vacant over the next decade due to a shortage of trained workers, according to an analysis by the Manufacturing Institute, a nonprofit advocacy group affiliated with the National Association of Manufacturers, and professional-services firm Deloitte LLP.
While the Obama administration has invested millions of dollars to promote skills-based training, it remains a tough sell in a country where four-year university degrees are seen as the more viable path to good-paying jobs. The Bureau of Labor Statistics said two-thirds of high school graduates who enrolled in college in 2015 opted for four-year degrees.
. . .
In Germany, roughly half of high-school graduates opt for (p. B2) high-octane apprenticeships rather than college degrees. One draw: almost certain employment.
German apprentices spend between three and four days a week training at a company and between one and two days at a public vocational school. The company pays wages and tuition. After three years, apprentices take exams to receive nationally recognized certificates in their occupation. Many continue working full time at the company.
The Labor Department said 87% of apprentices in the U.S. are employed after completing their training programs. Workers who complete apprenticeships earn $50,000 annually on average, or higher than the median U.S. annual wage of $44,720,

For the full story, see:
ELIZABETH SCHULZE. “U.S. Turns to Germany to Fill Jobs.” The Wall Street Journal (Tues., Sept. 27, 2016): B1-B2.
(Note: ellipsis added.)
(Note: the online version of the story has the date Sept. 26, 2016, and has the title “U.S. Companies Turn to German Training Model to Fill Jobs Gap.”)