Category: Labor Economics

Ed Telling’s Nimble, Intuitive Labor Decisions at Sears

(p. 49) Telling rarely gave a direct order, so the Searsmen near him knew they had to listen hard and learn to read his arcane signals. You had to understand his gnomic comments and apparent throwaway lines, for you would only hear what Telling thought about something twice. The requirement made people scared, because the third time he spoke you were gone. “No need to beat a horse if he’s not able to pull,” he’d say. “Let’s get another horse.”
He had a habit he said he couldn’t do anything about of judging the utility and character of a man the first time he looked into his eyes. Quick-draw decisions like this were a part of the general managerial ethos at Sears. The practice might have descended from the store master’s knack for spotting at fifteen paces a shopper in the mood to spend freely.

Source:
Katz, Donald R. The Big Store: Inside the Crisis and Revolution at Sears. New York: Viking Adult, 1987.

Skill Differences Cause Four Times as Much Inequality as Is Caused by Wealth Concentration

(p. A25) “What I find destructive,” says David Autor of the Massachusetts Institute of Technology, “is the message that if you don’t get into the top 1 percent then you’re out of the game. That’s deeply, deeply incorrect.”

Autor’s own research shows that skills differences are four times more important than concentration of wealth in driving inequality. If we could magically confiscate and redistribute the above-average income gains that have gone to the top 1 percent since 1979, that would produce $7,000 more per household per year for the bottom 99 percent. But if we could close the gap so that high-school-educated people had the skills of college-educated people, that would increase household income by $28,000 per year.

For the full commentary, see:

David Brooks. “The Temptation of Hillary.” The New York Times (Fri., MARCH 6, 2015): A25.

Sears CEO Ed Telling Opposed the “Sloppiness” of Across-the-Board Layoffs

(p. 46) It was never that layoffs were anathema to Telling as such; he just resented the sloppiness of a 10-percent across-the-board layoff when some areas of the company should have been cut by 40 percent and some built up by half.

Source:
Katz, Donald R. The Big Store: Inside the Crisis and Revolution at Sears. New York: Viking Adult, 1987.

Longevity and Frugality Allow More Happiness Through New “Second Act” Jobs

(p. B7) Research suggests that happiness over the course of our lives is U-shaped, with our satisfaction deteriorating through our 20s and 30s, hitting bottom in our 40s and then bouncing back from there.
What causes the decline in our happiness during our early adult years? We don’t know for sure. It might be the stress of juggling work and home life, or it could be the gradual realization that we won’t fulfill all of our youthful ambitions.
But for some, midlife dissatisfaction may reflect growing disenchantment with their chosen career. The good news: Today, thanks to our longer life expectancy, we have time for a second act.
In fact, that second act may be necessary if we are laid off. Our new career could prove more fulfilling, but it might come with a smaller paycheck.
This is a reason to start saving as soon as we enter the workforce. If we do that, we likely will have the financial flexibility to swap into a less lucrative job. What if we haven’t been good savers? We may be stuck in a job we have come to hate.

For the full commentary, see:
JONATHAN CLEMENTS. “Can You Afford a Long Life?” The Wall Street Journal (Sat., APRIL 25, 2015): B7.
(Note: the online version of the commentary has the date APRIL 23, 2015, and has the title “What Long Life Spans Mean for Your Money and Career.”)

Automation Anxieties Unjustified

(p. 5B) In 1964, technology anxieties caused President Lyndon Johnson to create a national commission on automation. When it reported in 1966, the unemployment rate had dropped to 3.8 percent.
“Technological shocks have been happening for decades, and … the U.S. economy has been adapting to them,” writes economist Timothy Taylor (whose website recounts the 1960s episode).
. . .
Human contact is wanted or needed in places where it seems obsolete. Logically, ATMs should have decimated bank tellers. In reality, the number of tellers (about 600,000) is slightly above its 1990 level, notes Taylor, citing a study by James Bessen of Boston University law school.

For the full commentary, see:
ROBERT J. SAMUELSON. “Must we fear robots in workplace?” Omaha World-Herald (Mon., March 23, 2015): 5B.
(Note: ellipsis internal to quote, in original; ellipsis between paragraphs, added.)

The article by Bessen mentioned above, is:
Bessen, James. “Toil and Technology.” Finance and Development 94, no. 1 (March 2015): 16-19.

Social Security “Produces Inequality Systematically”

(p. B5) Mr. Kotlikoff, 64, did not set out to become Dr. Social Security. Two decades ago, he and a colleague were studying the adequacy of life insurance. To do so, you need to know something about Social Security. Soon, Mr. Kotlikoff was developing a computer model for various payouts from the government program and realized that consumers might actually pay to use it.
From that instinct, a service called Maximize My Social Security was born, though it wasn’t easy to do and get it right. “We had to develop very detailed code, and the whole Social Security rule book is written in geek,” he said. “It’s impossible to understand.”
Because of that, most people filing for benefits have to get lucky enough to encounter a true expert in their social circle, at a Social Security office or on its hotline. They are rare, and this information dissymmetry offends Mr. Kotlikoff. “We have a system that produces inequality systematically,” he said. It’s not because of what the beneficiaries earned, either; it’s simply based on their (perhaps random) access to those who have a deep understanding of the rules.
. . .
“Get What’s Yours” is a useful book. Indeed, we all need better instruction guides for the many parts of our financial lives that only grow more complex over time.

For the full commentary, see:
RON LIEBER. “YOUR MONEY; The Social Security Maze and Other U.S. Mysteries.” The New York Times (Sat., MARCH 14, 2015): B1 & B5.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date MARCH 13, 2015.)

The book under discussion is:
Kotlikoff, Laurence J., Philip Moeller, and Paul Solman. Get What’s Yours: The Secrets to Maxing out Your Social Security. New York: Simon & Schuster, 2015.

International Evidence that Young Firms Create Most Jobs

(p. 252) Chiara Criscuolo, Peter N. Gal, and Carlo Menon compile empirical evidence concerning “The Dynamics of Employment Growth: New Evidence from 18 Countries.” “[N]ot all small businesses are net job creators, showing that only young businesses–predominantly small–create a disproportionate number of jobs, confirming recent evidence for the United States. When disentangling the role of entry from the role of expansion of incumbent young firms, the data clearly shows that entry explains most of the contribution to job creation, followed by startups (i.e., firms that are less than three year old). While this remains true even during the recent great recession, the data shows a sharp decline in the contribution of entry and young firms to aggregate employment growth during the recession. More generally, the findings point to a decline in start-up rates over the past decade across all countries considered, which gives cause for concern, given their strong contribution to job creation.” OECD Science, Technology and Industry Policy Papers No. 14, May 21, 2014. http://www.oecd-ilibrary.org/science-and-technology/the-dynamics-of-employment-growth_5jz417hj6hg6-en.

Source:
Taylor, Timothy. “Recommendations for Further Reading.” Journal of Economic Perspectives 28, no. 3 (Summer 2014): 249-56.
(Note: bracketed letter in original.)

Successful Billionaire Mathematician Would Have Lost Math Contests, But Was Good at Slow Pondering

(p. D1) James H. Simons likes to play against type. He is a billionaire star of mathematics and private investment who often wins praise for his financial gifts to scientific research and programs to get children hooked on math.
But in his Manhattan office, high atop a Fifth Avenue building in the Flatiron district, he’s quick to tell of his career failings.
He was forgetful. He was demoted. He found out the hard way that he was terrible at programming computers. “I’d keep forgetting the notation,” Dr. Simons said. “I couldn’t write programs to save my life.”
After that, he was fired.
His message is clearly aimed at young people: If I can do it, so can you.
. . .
(p. D2) “I wasn’t the fastest guy in the world,” Dr. Simons said of his youthful math enthusiasms. “I wouldn’t have done well in an Olympiad or a math contest. But I like to ponder. And pondering things, just sort of thinking about it and thinking about it, turns out to be a pretty good approach.”

For the full story, see:
WILLIAM J. BROAD. “Seeker, Doer, Giver, Ponderer; A Billionaire Mathematician’s Life of Ferocious Curiosity.” The New York Times (Tues., JULY 8, 2014): D3.
(Note: ellipsis added.)
(Note: the online version of the story has the date JULY 7, 2014.)

Occupational Licensing Creates Cartels

(p. 251) Aaron Edlin and Rebecca Haw discuss “Cartels by Another Name: Should Licensed Occupations Face Antitrust Scrutiny?” “Once limited to a few learned professions, licensing is now required for over 800 occupations. And once limited to minimum educational requirements and entry exams, licensing board restrictions are now a vast, complex web of anticompetitive rules and regulations. . . . State-level occupational licensing is on the rise. In fact, it has eclipsed unionization as the dominant organizing force of the U.S. labor market. While unions once claimed 30% of the country’s working population, that figure has since shrunk to below 15%. Over the same period of time, the number of workers subject to state-level licensing requirements has doubled; today, 29% of the U.S. workforce is licensed and 6% is certified by the government. The trend has important ramifications. Conservative estimates suggest that licensing raises consumer prices by 15%. There is also evidence that professional licensing increases the wealth gap; it tends to raise the wages of those already in high-income occupations while harming low-income consumers who cannot afford the inflated prices.” “We contend that the state action doctrine should not prevent antitrust suits against state licensing boards that are comprised of private competitors deputized to regulate and to outright exclude their own competition, often with the threat of criminal sanction.” University of Pennsylvania Law Review, April 2014, pp. 1093-1164. http://www.pennlawreview.com/print/162-U-Pa-L-Rev-1093.pdf.

Source:
Taylor, Timothy. “Recommendations for Further Reading.” Journal of Economic Perspectives 28, no. 3 (Summer 2014): 249-56.
(Note: ellipsis in original.)

Italian Traditional Family Stunts Individual Enterprise

(p. 15) Hooper’s book, both sweeping in scope and generous with detail, makes persuasive arguments for how geography, history and tradition have shaped Italy and its citizens, for better and sometimes for worse. Roman Catholicism, for example, has indelibly conditioned Italian society, even as the Vatican’s restrictions are widely ignored. Catholicism’s great allowance for human frailty has translated into a great propensity for forgiveness, as evinced in the Italian justice system, but also resistance to the notion of accountability. It’s a word, Hooper adds, that has no counterpart in the Italian language.
. . .
There’s . . . mammismo, the propensity of young Italians to remain too closely tied to the maternal apron strings. But while “the traditional family has been at the root of much of what Italy has achieved,” Hooper writes, dependence on the family can infantilize, and lack of individual enterprise has held the country back. Indeed, various sections of Hooper’s book return to Italy’s economic decline and its underlying causes.
He notes that the paperwork and formalities of Italy’s cumbersome bureaucracy rob the average Italian of 20 days a year. And he wonders what other country could ever have had a Minister for Simplification to deal with its plethora of often conflicting laws and regulations.
Circumventing some of that bureaucracy partly answers another common question: Why is Italy so prone to corruption? After all, Italians are masters at sidestepping regulations, or, as the saying goes, “Fatta la legge, trovato l’inganno” (“Make the law, then find a way around it”). It’s no wonder foreign investment in Italy is so low.

For the full review, see:
LISABETTA POVOLEDO. “Under the Italian Sun.” The New York Times Book Review (Sun., March 1, 2015): 15.
(Note: ellipses added; italics in original.)
(Note: the online version of the review has the date FEB. 27, 2015, and has the title “‘The Italians,’ by John Hooper.”)

The book under review is:
Hooper, John. The Italians. New York: Viking, 2015.

For Some, Apprenticeships Could Be Less Expensive Path to Good Jobs

(p. 250) Melissa S. Kearney and Benjamin H. Harris have edited an e-book, Policies to Address Poverty in America, with 14 short essays on specific policies. As one example, Robert I. Lerman advocates “Expanding Apprenticeship Opportunities in the United States.” “Today apprentices make up only 0.2 percent of the U.S. labor force, far less than in Canada (2.2 percent), Britain (2.7 percent), and Australia and Germany
(3.7 percent). . . . While total annual government funding for apprenticeship in the United States is only about $100 to $400 per apprentice, federal, state, and local annual government spending per participant for two-year public colleges is approximately $11,400. Not only are government outlays sharply higher, but the cost differentials are even greater after accounting for the higher earnings (and associated taxes) of apprentices compared to college students.” “Stimulating a sufficient increase in apprenticeship slots is the most important challenge. Although it is easy to cite examples of employer reluctance to train, the evidence from South Carolina and Britain suggests that a sustained, business-oriented marketing effort can persuade a large number of employers to participate in apprenticeship training. Both programs (p. 251) were able to more than quadruple apprenticeship offers over about five to six years.” Hamilton Project, Brookings Institution. 2014, http://www.brookings.edu/~/media/research/files/papers/2014/06/19_hamilton_policies_addressing_poverty/policies_address_poverty_in_america_full_book.

Source:
Taylor, Timothy. “Recommendations for Further Reading.” Journal of Economic Perspectives 28, no. 3 (Summer 2014): 249-56.
(Note: ellipsis in original.)