Labor Economics – Page 69 – artdiamondblog.com

American Poor Are Richer Now than in the Past

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

(p. A1) WASHINGTON — Is a family with a car in the driveway, a flat-screen television and a computer with an Internet connection poor?

Americans — even many of the poorest — enjoy a level of material abundance unthinkable just a generation or two ago.
. . .
(p. B2) Two broad trends account for much of the change in poor families’ consumption over the past generation: federal programs and falling prices.
Since the 1960s, both Republican and Democratic administrations have expanded programs like food stamps and the earned-income tax credit. In 1967, government programs reduced one major poverty rate by about 1 percentage point. In 2012, they reduced the rate by nearly 13 percentage points.
As a result, the differences in what poor and middle-class families consume on a day-to-day basis are much smaller than the differences in what they earn.
“There’s just a whole lot more assistance per low-income person than there ever has been,” said Robert Rector, a senior research fellow at the conservative Heritage Foundation. “That is propping up the living standards to a considerable degree,” he said, citing a number of statistics on housing, nutrition and other categories.
. . .
. . . another form of progress has led to what some economists call the “Walmart effect”: falling prices for a huge array of manufactured goods.
Since the 1980s, for instance, the real price of a midrange color television has plummeted about tenfold, and televisions today are crisper, bigger, lighter and often Internet-connected. Similarly, the effective price of clothing, bicycles, small appliances, processed foods — virtually anything produced in a factory — has followed a downward trajectory. The result is that Americans can buy much more stuff at bargain prices.

For the full story, see:
ANNIE LOWREY. “Changed Life of the Poor: Better Off, but Far Behind.” The New York Times (Mon., May 1, 2014): A1 & B2 (sic).
(Note: ellipses added.)
(Note: the online version of the story has the date APRIL 30, 2014, and has the title “Changed Life of the Poor: Better Off, but Far Behind.”)

Apprenticeships as an Alternative to Education Credentials

(p. R3) College degrees and internships don’t produce the same quality of worker as intensive, on-the-job apprenticeships, says Brad Neese, director of Apprenticeship Carolina, a program of the South Carolina Technical College System. Employers are seeing “a real lack of applicability in terms of skill level” from college graduates, Mr. Neese says. “Interns do grunt work, generally.” In contrast, he says, “an apprenticeship is a real job.”
. . .
“The apprenticeship model helps us show people there’s a career path within this company,” says Robby Hill, owner of HillSouth, a Florence, S.C., technology consulting firm taking advantage of South Carolina’s on-the-job training program. New employees see the opportunities ahead, along with a clearly delineated ladder of skill acquisition and salary increases, says Mr. Hill, whose 22-person firm offers apprenticeships for IT and administrative-support employees. The company also asks employees to sign noncompete agreements as they get accredited for new skills.

For the full story, see:
LAUREN WEBER. “JOURNAL REPORTS: LEADERSHIP IN HR; Here’s One Way to Solve the Skills Gap. Apprenticeships Can Help Give Companies the Employees They Need. So Why Aren’t There More of Them.” The Wall Street Journal (Mon., April 28, 2014): R3.
(Note: ellipsis added.)
(Note: the online version of the story has the date April 27, 2014, and has the title “JOURNAL REPORTS: LEADERSHIP; Apprenticeships Help Close the Skills Gap. So Why Are They in Decline? Some States Try Extending the Practice to More Professions.”)

French Socialist Wants to Encourage Entrepreneurs by Reducing Regulations

“Emmanuel Macron, France’s new economy minister, has been a major force behind a recent shift by President François Hollande toward a more centrist economic policy.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B3) . . . , what is important, Mr. Macron said, as a late train from the nearby Gare de Lyon rumbled beneath his window, is that France continue to streamline and modernize the welfare state.

“For me being a Socialist today is about defending the unemployed, but also defending businessmen who want to create a company, and those who need jobs,” he said. “We have to shift the social model from a lot of formal protections toward loosening bottlenecks in the economy.”

For the full story, see:
LIZ ALDERMAN. “France’s 36-Year-Old Economy minister Is Face of the New Socialism.” The New York Times (Tues., OCT. 7, 2014): B3.
(Note: ellipsis added.)
(Note: the online version of the story has the date OCT. 6, 2014, and has the title “Emmanuel Macron, Face of France’s New Socialism.”)

Boring Jobs Cause Stress and Lower Productivity

(p. B4) A study published this year in the journal Experimental Brain Research found that measurements of people’s heart rates, hormonal levels and other factors while watching a boring movie — men hanging laundry — showed greater signs of stress than those watching a sad movie.
“We tend to think of boredom as someone lazy, as a couch potato,” said James Danckert, a professor of neuroscience at the University of Waterloo in Ontario, Canada, and a co-author of the paper. “It’s actually when someone is motivated to engage with their environment and all attempts to do so fail. It’s aggressively dissatisfying.”
It’s not just the amount of work, Professor Spector said, also but the type. . . .
“You can be very busy and a have a lot to do and still be bored,” he said. The job — whether a white-collar managerial position or blue-collar assembly line role — also needs to be stimulating.
. . .
In a 2011 paper based on the doctoral dissertation of his student Kari Bruursema, Professor Spector and his co-authors found that the stress of boredom can lead to counterproductive work behavior, like calling in sick, taking long breaks, spending time on the Internet for nonwork-related reasons, gossiping about colleagues, playing practical jokes or even stealing. While most workers engage in some of these activities at times, the bored employee does it far more frequently, he said.

For the full story, see:
ALINA TUGEND. “Shortcuts; The Contrarians on Stress: It Can Be Good for You.” The New York Times (Sat., OCT. 4, 2014): B4.
(Note: ellipsis added.)
(Note: the online version of the story has the date OCT. 3, 2014.)

The Experimental Brain Research study mentioned above, is:
Merrifield, Colleen, and James Danckert. “Characterizing the Psychophysiological Signature of Boredom.” Experimental Brain Research 232, no. 2 (Feb. 2014): 481-91.

The article mentioned above, that is co-authored by Spector, is:
Bruursema, Kari, Stacey R. Kessler, and Paul E. Spector. “Bored Employees Misbehaving: The Relationship between Boredom and Counterproductive Work Behaviour.” Work & Stress 25, no. 2 (April 2011): 93-107.

Mexicans Abandon Government Subsidized Housing Developments

(p. A5) ZUMPANGO, Mexico — In an enormous housing development on the edge of this scrappy commuter town, Lorena Serrano’s 11-foot-wide shoe box of a home is flanked by abandoned houses. The neighborhood has two schools, a few bodegas and a small community center that offers zumba classes.
There is very little else.
“There are no jobs, no cinema, no cantina,” said Ms. Serrano of the 8,000-home development, called La Trinidad. Her husband’s commute to the capital, Mexico City, about 35 miles south, takes two hours each way by bus and consumes a quarter of his salary, she said. “We’re in the middle of nowhere.”
Ms. Serrano, 39, is among more than five million Mexicans who, over the past decade, bought houses through a government program that made mortgages available to low-income buyers.
The program, initially hailed by some experts as the answer to Mexico’s chronic housing deficit, fueled a frenzy of construction and helped inspire similar efforts in Latin America and beyond, including Brazil’s “My House, My Life,” which aims to build at least 3 million homes by this year.
But the concrete sprawl around Mexico City and other big towns grew faster than demand. Commutes proved unbearable, and residents abandoned their homes.

For the full story, see:
VICTORIA BURNETT. “ZUMPANGO JOURNAL; They Built It. People Came. Now They Go.” The New York Times (Tues., SEPT. 9, 2014): A5.
(Note: the online version of the story has the date SEPT. 8, 2014.)

Labor Process Innovations Increased Productivity

(p. 6) . . . , Greg Clark, a professor of economics at the University of California, Davis, has gone so far as to argue that the Industrial Revolution was in part a self-control revolution. Many economists, beginning with Adam Smith, have argued that factories — an important innovation of the Industrial Revolution — blossomed because they allowed workers to specialize and be more productive.
Professor Clark argues that work rules truly differentiated the factory. People working at home could start and finish when they wanted, a very appealing sort of flexibility, but it had a major drawback, he said. People ended up doing less work that way.
Factories imposed discipline. They enforced strict work hours. There were rules for when you could go home and for when you had to show up at the beginning of your shift. If you arrived late you could be locked out for the day. For workers being paid piece rates, this certainly got them up and at work on time. You can even see something similar with the assembly line. Those operations dictate a certain pace of work. Like a running partner, an assembly line enforces a certain speed.
As Professor Clark provocatively puts it: “Workers effectively hired capitalists to make them work harder. They lacked the self-control to achieve higher earnings on their own.”
The data entry workers in our study, centuries later, might have agreed with that statement. In fact, 73 percent of them did agree to this statement: “It would be good if there were rules against being absent because it would help me come to work more often.”
Of course with newer forms of technology, showing up for work on time need not mean being physically at a given workplace. A study by the economists Nicholas Bloom, John Roberts and Zhichun Ying of Stanford and James Liang of Peking University looked at call center workers in China. In their experiment, some workers were randomly assigned to work at home, others worked in group call centers. The work habits of both groups were carefully monitored electronically, and the workers knew it. The researchers found that those working at home were 13 percent more productive than those in call centers. With modern technology, we now have so many ways to quantify, track and motivate productivity. We do not need to lock factory doors or even have a factory. Yet we have not yet begun to scratch the surface of motivating production in this way.

For the full commentary, see:
SENDHIL MULLAINATHAN. “Economic View; Looking at Productivity as a State of Mind.” The New York Times, SundayBusiness Section (Sun., SEPT. 28, 2014): 6.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date SEPT. 27, 2014.)

The article mentioned above by Clark is:
Clark, Gregory. “Factory Discipline.” Journal of Economic History 54, no. 1 (March 1994): 128-63.

The article mentioned above by Bloom, Liang, Roberts and Ying is:
Bloom, Nicholas, James Liang, John Roberts, and Zhichun Jenny Ying. “Does Working from Home Work? Evidence from a Chinese Experiment.” August 18, 2014.

Less Time in Office Leaves Workers Happier, Less Stressed and Equally Productive

(p. 4) A recent study, published in The American Sociological Review, aimed to see whether the stress of work-life conflicts could be eased if employees had more control over their schedules, including being able to work from home. . . .
The study, financed by the National Institutes of Health and the Centers for Disease Control and Prevention, involved the information technology department of a large corporation. . . .
As part of the research, department managers received training to encourage them to show support for employees’ family and personal lives, said Erin Kelly, a sociology professor at the University of Minnesota and one of the lead authors of the study. Then employees were given much more control over their schedules than before. They “were free to work where and when they preferred, as long as the work got done,” she said.
The results: The employees almost doubled the amount of time they worked at home, to an average of 19.6 hours from 10.2 hours. Total work hours remained roughly the same. Focusing on results rather than time spent at the office, and cutting down on “low value” meetings and other tasks, helped employees achieve more flexibility, Professor Kelly said.
Compared with another group that did not have the same flexibility, employees interviewed by the researchers said they felt happier and less stressed, had more energy and were using their time more effectively, Professor Kelly said. There was no sign that the quality of the work improved or declined with the changed schedules, she added.

For the full story, see:
PHYLLIS KORKKI. “Yes, Flexible Hours Ease Stress. But Is Everyone on Board?.” The New York Times, SundayBusiness Section (Sun., AUG. 24, 2014): C4.
(Note: the online version of the story has the date AUG. 23, 2014.)

The study mentioned above is:
Kelly, Erin L., Phyllis Moen, and Eric Tranby. “Changing Workplaces to Reduce Work-Family Conflict: Schedule Control in a White-Collar Organization.” American Sociological Review 76, no. 2 (April 2011): 265-90.

Predictors of Technological Doom Have “All Been Wrong”

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

(p. 4) JUST over 50 years ago, the cover of Life magazine breathlessly declared the “point of no return for everybody.” Above that stark warning, a smaller headline proclaimed, “Automation’s really here; jobs go scarce.”
As events unfolded, it was Life that was nearing the point of no return — the magazine suspended weekly publication in 1972. For the rest of America, jobs boomed; in the following decade, 21 million Americans were added to the employment rolls.
Throughout history, aspiring Cassandras have regularly proclaimed that new waves of technological innovation would render huge numbers of workers idle, leading to all manner of economic, social and political disruption.
As early as 1589, Queen Elizabeth I refused a patent on a knitting machine for fear it would put “my poor subjects” out of work.
In the 1930s, the great John Maynard Keynes predicted widespread job losses “due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour.”
So far, of course, they’ve all been wrong. But that has not prevented a cascade of shrill new proclamations that — notwithstanding centuries of history — “this time is different”: . . .

For the full commentary, see:
Steven Rattner. “Fear Not the Coming of the Robots.” The New York Times, SundayReview Section (Sun., JUNE 22, 2014): 4.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date June 21, 2014.)

Flexibility of System of Industrial Relations Makes German Economy Strong

(p. 183) We have argued that the remarkable transformation of the German economy from the “sick man of Europe” to a lean and highly competitive economy within little more than a decade is rooted in the inherent flexibility of the German system of industrial relations. This system allowed German industry to react appropriately and flexibly over time to the demands of German unification, and the global challenges of a new world economy.

Source:
Dustmann, Christian, Bernd Fitzenberger, Uta Schoenberg, and Alexandra Spitz-Oener. “From Sick Man of Europe to Economic Superstar: Germany’s Resurgent Economy.” Journal of Economic Perspectives 28, no. 1 (Winter 2014): 167-88.

Nobel-Prize-Winner Views Success as Rigged (Except for Nobel Prizes)

(p. 245) . . . , Solow interprets the evidence on intergenerational mobility as showing that the economy is not very meritocratic. (Oddly, he exempts the economics profession. He seems to believe that lack of success is often the result of bad luck or a rigged system, unless you are an economist, in which case it’s your own fault.) Although I noted in my article that those born into extreme poverty face particularly difficult obstacles, I view the rest of the economy as more meritocratic than Solow does. In addition to the Kaplan and Rauh study, I recommend a popular book called The Millionaire Next Door (Stanley and Danko 1996). Written by two marketing professors who extensively surveyed high net worth individuals, the book reports that the typical millionaire is not someone who was born into wealth but rather is someone who has worked hard and lived frugally.

Source:
Mankiw, N. Gregory. “Correspondence: Response from N. Gregory Mankiw.” Journal of Economic Perspectives 28, no. 1 (Winter 2014): 244-45.
(Note: ellipsis added; italics in original.)

The Stanley and Danko book that Mankiw praises (and I use in my Economics of Entrepreneurship seminar) is:
Stanley, Thomas J., and William D. Danko. The Millionaire Next Door: The Surprising Secrets of America’s Wealthy. First ed. Atlanta: Longstreet Press, 1996.

HR Regulations and Fear of Lawsuits Keep Managers from Firing Workers Who Do Not Work

(p. 1B) The biggest problem in your workplace has a name. His name is Jeff. . . .
Jeff sits two cubicles down from us, or three, or four. His real name may be John, Juan or Joan. He gets to the widget factory late, he leaves early and always mucks up his part of any group project. He complains, loudly, about the smallest things, and when you bring doughnuts for your birthday he probably takes three and then talks with his mouth full, too.
. . .
(p. 2B) . . . , morale suffers greatly when most of a company’s employees perceive that their supervisor is failing to deal with their low-performing co-worker, month after month, year after year.
For this, Hoogeveen blames a corporate culture that is so concerned about HR regulations, and the often-imagined threat of litigation, that bosses often fail to take into account how the trouble employee affects the larger climate.
. . .
. . . if Jeff doesn’t improve, he needs to be fired. This is perhaps the worst part of a boss’s job, Hoogeveen thinks. His eyes mist as he recalls firing an employee whom he liked, but who was simply a bad fit at QLI.
It’s human nature to avoid this conflict, to maintain the status quo and let Jeff be, he says. That’s what can and does happen at most Omaha companies.
But it’s bad for the employees, and it’s bad for business.
“A lot of this stuff is incredibly easy to understand,” says Omaha’s workplace mechanic [Kim Hoogeveen]. “It’s incredibly difficult to live.”

For the full story, see:
Hansen, Matthew. “Workplace Guru: Don’t Let Problem Worker Slide.” Omaha World-Herald (Mon., July 21, 2014): 1B-2B.
(Note: ellipses, and bracketed name, added.)
(Note: the online version of the article had the title “Hansen: Don’t let Jeff — the problem worker — slide, workplace guru says.”)