Category: Labor Economics

Lockdowns in China Move Atlas to Shrug

(p. A1) By the usual measures, Loretta Liu had it made. She graduated in 2018 from one of China’s top universities, rented an apartment in the glamorous city of Shenzhen, and had been hired as a visual designer at a series of high-flying companies, even as youth unemployment in China was reaching record highs.

Then, last year, she quit. She now works as a groomer at a chain pet store, for one-fifth of her previous salary. She spends hours on her feet, wearing a uniform in place of her once carefully selected outfits.

And she is delighted.

“I was tired of living like that. I didn’t feel like I was getting anything from the work,” Ms. Liu said of her previous job, where she said she had little creative freedom, often worked overtime, and felt her mental and physical health deteriorating. “So I thought, there’s no need anymore.”

Ms. Liu is part of a phenomenon attracting growing attention in China: young people trading high-pressure, prestigious white-collar jobs for manual labor. The scale of the trend is hard to measure, but widely shared social media posts have documented a tech worker becoming a grocery store cashier; an accountant peddling street sausages; a content manager delivering takeout. On Xiaohongshu, an Instagram-like app, the hashtag “My first experience with physical labor” has more than 28 million views.

. . .

Around the world, the coronavirus pandemic spurred people to reassess the value of their work — see the “Great Resignation” in the United States. But in China, the forces fueling the disillusionment of young people are particularly intense. Long working hours and domineering managers are common. The economy is slowing, dimming the prospect of upward mobility for a generation that has known only explosive growth.

And then there were China’s three years of “zero Covid” restrictions, which forced many to endure prolonged lockdowns, layoffs and the realization of how little control their hard work gave them over their futures.

“Emotionally, everyone probably can’t bear it anymore, because during the pandemic we saw many unfair and strange things, like being locked up,” Ms. Liu said.

. . .

When Yolanda Jiang, 24, resigned last summer from her architectural design job in Shenzhen, after being asked to work 30 days straight, she hoped to find another office job. It was only after three months of unsuccessful searching, her savings dwindling, that she took a job as a security guard in a university residential complex.

At first, she was embarrassed to tell her family or friends, but she grew to appreciate the role. Her 12-hour shifts, though long, were leisurely. She got off work on time. The job came with free dormitory housing. Her salary of about $870 a month was even about 20 percent higher than her take-home pay before — a symptom of how the glut of college graduates has started to flatten wages for that group.

But Ms. Jiang said her ultimate goal is still to return to an office, where she hoped to find more intellectual challenges. She had been taking advantage of the slow pace at her security job to study English, which she hoped would help her land her next role, perhaps at a foreign trade company.

“I’m not actually lying flat,” Ms. Jiang said. “I’m treating this as a time to rest, transition, learn, charge my batteries and think about the direction of my life.”

For the full story, see:

Vivian Wang and Zixu Wang. “In China, Young Workers Ditch Prestige Jobs for Manual Gigs.” The New York Times (Tuesday, April 11, 2023): A1 & A11.

(Note: bracketed year added.]

(Note: the online version of the story has the same date as the print version, and has the title “In China, Young People Ditch Prestige Jobs for Manual Labor.”)

The title of this blog entry alludes to Ayn Rand’s novel:

Rand, Ayn. Atlas Shrugged. New York: Random House, 1957.

Local Chinese Governments Fund Bullet Trains and Green Spaces When People Want Higher Wages and Basic Bus Service

(p. B4) China is full of wasteful infrastructure that the government likes to brag about but that doesn’t serve the most urgent needs of the public.

The Chinese government likes to say the country has the longest and fastest high-speed railways in the world. But except for a couple of lines that connect the megacities of Beijing, Shanghai, Guangzhou and Shenzhen, most lines operate below capacity and at a great loss. About 80 percent of China’s high-speed railways constructed in the past decade were built in distant and poor regions, China State Railway Group said last year.

Zhao Jian, a professor at Beijing Jiaotong University, warned in an article that high-speed railways could become the “gray rhino” that crushed the Chinese economy because many local governments had taken on a lot of debt to build them. But most of those railways move people, not freight. So they would make sense only in densely populated areas where people were willing to pay more for speed.

Local leaders are interested in infrastructure projects because their economic payoff, while minimal, is immediate — people get construction jobs, and companies get building contracts. Such a short-term approach dominates in China’s political system, in which cadres are deployed to run toward the goal set by their leader regardless of the financial or human cost.

The Shangqiu government brags that there is about 150 square feet of green space for each of the 2.3 million residents in the city’s central municipal area. One of Shangqiu’s biggest infrastructure projects this year is a wetlands park. After building many roads to nowhere, local governments have been spending big on urban beautification projects in recent years.

It’s nice to have green space for everyone. But like most inland Chinese cities, Shangqiu isn’t wealthy. Its college graduates are complaining on social media that it’s difficult to find a job that pays more than $300 a month. Its basic pension provides its seniors with $17.80 a month, after a $1.50 raise this year.

Many Chinese people who are at least 60 years old live on pensions like this. According to official data, in 2021, $54 billion in basic pensions was distributed to more than 162 million people, or about $28 a person each month on average. The residents would probably prefer that the government spent on unemployment protection, bus service and welfare instead of high-speed railways and green space.

Shangqiu is far from an exception.

A resident in Pucheng, in the northwestern province of Shaanxi, complained on the local government’s online messaging board in February [2023] that there was no bus service between downtown and the railway station.

“This is the most basic public service,” the resident, who signed with the name Li Hongbo, wrote. “I felt that people’s livelihood has deteriorated. I hope the leaders can pay some attention to it.”

For the full commentary, see:

Li Yuan. “THE NEW NEW WORLD; China’s Cities Splurge and Debt Piles Up.” The New York Times (Wednesday, March 29, 2023): B1 & B4.

(Note: bracketed year added.)

(Note: the online version of the commentary has the date March 28, 2023, and has the title “THE NEW NEW WORLD; China’s Cities Are Buried in Debt, but They Keep Shoveling It On.”)

The Growing Pain of the Working-Class

Many of the working poor are indeed suffering. The solution is mainly to reduce government regulations, to allow a robustly redundant labor market and more opportunities for free-agent entrepreneurship. (See Openness to Creative Destruction.)

(p. 6) Ever since Bobbie Wert was 8 years old, her stomach has ached. “My tummy hurts,” was her refrain as a girl, and the discomfort was accompanied by vomiting and diarrhea that kept her out of school — sometimes for half the days in the school year.

Doctors poked and scanned but couldn’t figure out anything wrong. Over the years, they cut her open and removed bits and pieces yet couldn’t drive away the pain. So doctors prescribed opioids in increasing doses — even fentanyl patches — that left her addicted. At age 43, she now is off opioids but still suffers every single day, enduring chronic pain like an estimated 50 million other Americans.

Wert is part of a vast and mysterious panorama of pain that is increasing, sometimes with no obvious physical cause. And while chronic pain is a global problem, it is particularly puzzling in America. In other wealthy countries, it’s the elderly who report the most chronic pain, which makes some sense. But in the United States it’s the middle-aged — especially the jobless and people like Wert, who did not graduate from high school — who suffer the most. It is a plague on the less educated.

All this raises the question: Is this physical suffering a canary in the coal mine warning us of larger dysfunction in our society?

Here’s what we do know: Tens of millions of Americans are suffering pain. But chronic pain is not just a result of car accidents and workplace injuries but is also linked to troubled childhoods, loneliness, job insecurity and a hundred other pressures on working families.

. . .

“People’s lives are coming apart, and this leads to huge increases in physical pain,” said Angus Deaton, a Nobel Prize winner in economics who with Anne Case popularized the term “deaths of despair.” He, Case and Arthur Stone warn in a recent article that “the mystery of American pain reveals a warning for the future.”

Americans die from deaths of despair — drugs, alcohol and suicide — at a rate of more than a quarter-million a year, and the number of walking wounded is far greater.

For the full commentary, see:

Nicholas Kristof. “Why So Many Americans Are Feeling More Pain.” The New York Times, SundayOpinion Section (Sunday, May 7, 2023): 6-7.

(Note: ellipsis added. In the original last paragraph, the words “want” and “all” are in italics.)

(Note: the online version of the commentary has the date May 3, 2023, and has the title “Why Americans Feel More Pain.”)

The book by Deaton and Case alluded to above is:

Case, Anne, and Angus Deaton. Deaths of Despair and the Future of Capitalism. Princeton, N.J.: Princeton University Press, 2013.

Firing an Actor “Early Could Be a Motivator for the Remaining Cast”

The ability to fire at will gives the entrepreneur (and the movie director) the ability to put together the right team for a project. Keeping those employed who are not doing their jobs, can be demoralizing for those who are doing their jobs.

(p. C1) When the writer and director Mike Nichols was young, he had an allergic reaction to a whooping cough vaccine. The result was a complete and lifelong inability to grow hair. One way to read Mark Harris’s crisp new biography, “Mike Nichols: A Life,” is as a tender comedy about a man and his wigs.

. . .

(p. C5) Harris is the author of two previous books, “Pictures at a Revolution: Five Movies and the Birth of the New Hollywood” and “Five Came Back: A Story of Hollywood and the Second World War.” He’s also a longtime entertainment reporter with a gift for scene-setting.

He’s at his best in “Mike Nichols: A Life” when he takes you inside a production. His chapters on the making of three films in particular — “The Graduate,” “Silkwood” and “Angels in America” — are miraculous: shrewd, tight, intimate and funny. You sense he could turn each one into a book.

Nichols was an actor’s director. &nbsp. . .  But he had a steely side.

He fired Gene Hackman during week one on “The Graduate.” Hackman was playing Mr. Robinson and it wasn’t working, in part because, at 37, he looked too young for the role.

Sacrificing someone early could be a motivator for the remaining cast, he learned. He fired Mandy Patinkin early in the filming of “Heartburn,” and brought in Jack Nicholson to play Meryl Streep’s faithless husband.

For the full review, see:

Dwight Garner. “BOOKS OF THE TIMES; The Wit and Wigs Of a Star-Studded Life.” The New York Times (Tuesday, January 26, 2021): C1 & C5.

(Note: ellipses added.)

(Note: the online version of the review was updated Jan. 29, 2021, and has the title ‘BOOKS OF THE TIMES; ‘Mike Nichols’ Captures a Star-Studded Life That Shuttled Between Broadway and Hollywood.”)

The book under review:

Harris, Mark. Mike Nichols: A Life. New York: Penguin Press, 2021.

Towns Flourish When Entrepreneurs Want to Live in Them

(p. B1) SIDNEY, Neb. — The forest green roof and pair of bronze stags frozen in combat are impossible to miss as you drive down Interstate 80.

. . .

For 54 years, Cabela’s made its home here, a juggernaut that kept the town humming. But in 2017, the sporting goods store sold for $5 billion to Bass Pro Shops — a takeover that eventually made 2,000 jobs vanish in a town of roughly 6,600 residents.

. . .

But Sidney’s staying power still surprises experts, who say it’s driven by two factors.

One: Former Cabela’s employees opening their small businesses, diversifying the economy in a formerly one-company town.

Two: A recent influx of new (p. B3) residents, both retirees and remote workers.

. . .

Each spring, high schoolers from Nebraska and neighboring states flock to Sidney searching for the perfect prom dress. Their destination: Charlotte & Emerson, a downtown boutique — and one example of Sidney’s rebirth from the ashes of Cabela’s.

Co-owner Sarah Kaiser and husband Kurt Kaiser both worked at Cabela’s. When the company was swallowed by Missouri-based Bass Pro, the family relocated there as Sarah Kaiser ran the combined company’s human resources.

But in 2020, they decided to return to Sidney, her hometown. Sarah Kaiser opened Charlotte & Emerson with her sister. Her husband launched an online fitness store, Frost Giant Fitness. They’re two of many Sidney-based companies run by ex-Cabela’s employees who decided to stick around and start something new.

“The corporate experience of these young folks really was key to this particular recovery,” said David Iaquinta, a Nebraska Wesleyan University sociology professor who has researched Sidney’s economic development. “. . . they combined that talent with a strong desire for the lifestyle that they had. They said, ‘We’re here. We’re rooted here.’”

Budding companies are being boosted by E3, a Nebraska Community Foundation program meant to aid entrepreneurship in rural Nebraska.

Already, new businesses have remodeled once-dilapidated buildings, said Sarah Sinnett, the program’s community lead.

. . .

Economic development in Nebraska “used to be about cheap land, cheap labor and cheap incentives” to nab big companies, Stinnett said.

Now: “If you want small towns to start thriving … really it needs to be focused on entrepreneurship,” she said.

For the full story, see:

Natalia Alamdari, Flatwater Free Press. “Sydney Shows Staying Power.” Omaha World-Herald (Sunday, April 23, 2023): B1 & B3.

(Note: ellipses between paragraphs, and bracketed date, added; ellipsis internal to paragraph, in original.)

(Note: the online version of the story was updated April 28, 2023, and has the title “Six years after ‘Cabela’s debacle,’ Sidney’s lights are still on.”)

Majority Doubt College Degree Is Good Investment

(p. A3) A majority of Americans don’t think a college degree is worth the cost, according to a new Wall Street Journal-NORC poll, a new low in confidence in what has long been a hallmark of the American dream.

The survey, conducted with NORC at the University of Chicago, a nonpartisan research organization, found that 56% of Americans think earning a four-year degree is a bad bet compared with 42% who retain faith in the credential.

Skepticism is strongest among people ages 18-34, and people with college degrees are among those whose opinions have soured the most, portending a profound shift for higher education in the years ahead.

For the full story, see:

Douglas Belkin. “More Say Colleges Aren’t Worth the Cost.” The Wall Street Journal (Saturday, April 1, 2023): A3.

(Note: the online version of the story has the date March 31, 2023, and has the title “Americans Are Losing Faith in College Education, WSJ-NORC Poll Finds.”)

“Race-Conscious Affirmative Action” Creates “Racial ‌Animosity”

(p. A1) Since picking up a memoir of Robert F. Kennedy at a garage sale his senior year of high school, Mr. Kahlenberg, 59, has cast himself as a liberal champion of the working class. ‌ For three decades, his work, largely at a progressive think tank, has used empirical research and historical narrative to argue that the working class has been left behind.

That same research led him to a conclusion that has proved highly (p. A17) unpopular within his political circle: that affirmative action is best framed not as a race issue, but as a class issue.

In books, ‌articles and academic papers, Mr. Kahlenberg has spent decades‌ ‌arguing for a different vision of diversity, one based in his 1960s idealism. He believes that had they lived, Kennedy and the Rev. Dr. Martin Luther King Jr. would have pursued a multiracial coalition of poor and working class people, a Poor People’s ‌Campaign that worked together toward the same goal of economic advancement in education, employment and housing. ‌ ‌

Race-conscious affirmative action, while it may be well intentioned,‌ ‌does just the opposite, he says — aligning with the interests of wealthy students‌ and creating racial ‌animosity.

With class-conscious affirmative action, “Will there be people in Scarsdale who are annoyed that working-class people are getting a break? Probably,” he said in an interview. “But the vast majority of Americans support the idea, and you see it across the political spectrum.”

His advocacy has brought him to an uncomfortable place. The Supreme Court is widely expected to strike down race-conscious affirmative action this year in cases against Harvard and the University of North Carolina. He has joined forces with the plaintiff, Students for Fair Admissions, run by a conservative activist; the group has paid him as an expert witness and relied on his research to support the idea that there is a constitutional “race-neutral alternative” to the status quo.

That alliance has cost him his position as a senior fellow at the Century Foundation, the liberal-leaning think tank where he had found a home for 24 years, according to friends and colleagues.

. . .

Mr. Kahlenberg studied government and went on to Harvard Law School, where he wrote a paper about class-based affirmative action, advised by Alan Dershowitz, his professor, known for defending unpopular causes and clients.

The paper inspired him to write his influential 1996 book, “The Remedy,” which developed his theory that affirmative action had set back race relations by becoming a source of racial antagonism.

“If you want working-class white people to vote their race, there’s probably no better way to do it than to give explicitly racial preferences in deciding who gets ahead in life,” he said. “If you want working-class whites to vote their class, you would try to remind them that they have a lot in common with working-class Black and Hispanic people.”

For the full story, see:

Anemona Hartocollis. “Acolyte of the Left Aims to Kill Race-Based College Admission.” The New York Times (Thursday, April 6, 2023): A1 & A17.

(Note: ellipsis added.)

(Note: the online version of the story was updated April 3, 2023, and has the title “The Liberal Maverick Fighting Race-Based Affirmative Action.”)

Kahlenberg’s “influential” book mentioned above is:

Kahlenberg, Richard D. The Remedy: Class, Race, and Affirmative Action. New York: Basic Books, 1997.

For Musk, Buying Twitter “Needed to Be Done”

(p. A8) LONDON — Billionaire Elon Musk told the BBC that running Twitter has been “quite painful” but claimed the social media company is now roughly breaking even after he acquired it late last year.

In an interview also streamed live late Tuesday [April 11, 2023] on Twitter Spaces, Musk discussed his ownership of the online platform, including layoffs, misinformation and his work style.

. . .

After acquiring the platform, Musk carried out mass layoffs as part of cost-cutting efforts. He said Twitter’s workforce was slashed to about 1,500 employees from about 8,000 previously.

“It’s not fun at all,” Musk said. “The company’s going to go bankrupt if we don’t cut costs immediately. This is not a caring-uncaring situation. It’s like if the whole ship sinks, then nobody’s got a job.”

Asked if he regretted buying the company, he said it was something that “needed to be done.”

For the full story, see:

Associated Press. “Musk says owning Twitter ‘painful’ but needed to be done.” Omaha World-Herald (Tuesday, April 13, 2023): A8.

(Note: ellipsis, and bracketed date, added)

(Note: the online version of the story has the date April 12, 2023, and has the same title as the print version.)

Recent Degrowth Policies Will “Reduce Medicare and Social Security Tax Revenue by at Least $400 Billion”

(p. A13) President Biden released his 2024 budget request Thursday while continuing to accuse Republicans of scheming to cut benefits for seniors. But he’s got it backward. By advancing policies that hinder the economic growth that drives prosperity, Mr. Biden and his Democratic colleagues are the ones depriving Social Security and Medicare of the hundreds of billions of dollars those programs need to remain solvent.

. . .

My own research on the Biden agenda’s effect on Social Security and Medicare makes clear that low economic growth translates into smaller benefits for seniors. These programs give the elderly a share of the earnings of the nation’s current workers. The more people who work, and the more each worker earns, the more payroll tax revenue is available to fund Social Security and Medicare. I estimate that degrowth policies since 2020 will cumulatively reduce Medicare and Social Security tax revenue by at least $400 billion—and perhaps as much as $900 billion. The tax base will shrink even more if Mr. Biden succeeds in levying higher wealth and business taxes.

For the full commentary, see:

Casey B. Mulligan. “Biden’s Assault on Social Security.” The Wall Street Journal (Monday, March 10, 2023): A13.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date March 9, 2023, and has the title “Biden’s Budget Is an Assault on Social Security.”)

A somewhat more detailed version of Mulligan’s argument can be found in:

Mulligan, Casey B. “Payroll Tax Revenues Down $400 to $900 Billion Due to Lower Wages and Less Growth.” Washington, D.C.: Committee to Unleash Prosperity, March 2023.

Poor People Benefit More From “Entrepreneurial Capitalism” Than From Philanthropy

(p. A15) Paul David Hewson said it best during a 2012 speech at Georgetown University. Wait, who? “Aid is just a stopgap,” said Mr. Hewson, whose stage name is Bono. “Commerce [and] entrepreneurial capitalism take more people out of poverty than aid. We need Africa to become an economic powerhouse.” We still haven’t found what he’s looking for. An economic powerhouse would be able to afford mosquito nets and malaria drugs without handouts. That should be the endgame.

. . .

At its best, lots of philanthropy is very useful, but may not be sustainable over time—a sugar high that rarely enables that “teach a man how to fish” thing. Effective altruism may be an oxymoron. And it’s hard to miss that much of philanthropy is to fix government failures in education, welfare or medicine. I think that was Bono’s point.

But at its shadiest, philanthropy drives the misallocation of capital, overvaluing professors, the U.N. and climate poets and undervaluing those who can productively increase societal wealth to fund solutions to the future’s harder problems.

If only there were a way to use capital to provide opportunity, train workers, pay middle-class wages, help people build wealth . . . wait, it just came to me. How about starting new companies and investing in entrepreneurs and world-changing technology?

For the full commentary, see:

Andy Kessler. “INSIDE VIEW; A Wrench Thrown Into Capitalism.” The Wall Street Journal (Monday, April 17, 2023): A15.

(Note: ellipsis between paragraphs, added; ellipsis internal to last quoted paragraph, in original; bracketed word in original.)

(Note: the online version of the commentary has the date April 16, 2023, and has the same title as the print version.)

Public Unions Are “Designed for Inefficiency”

(p. A13) Mr. [Philip] Howard, a lawyer and writer, first noticed how unions stymie governance during his public service in New York as a member of a neighborhood zoning board and chairman of the Municipal Art Society. “I kept wondering why my friends who had responsible jobs in government couldn’t do what they thought was right,” he recalls. That might be speeding up a land-use review for a construction project or approving repairs on a school building.

“I’d have discussions with them about what made sense in a particular situation, and they would say, ‘I wish I could, but I can’t.’ ” Any careful or profitable plans were quickly blown up by union rules, such as limits on workers’ hours and duties.

This week the New York transit union gave an example for the ages. It blocked the subway system’s plan to sync its schedule to new ridership norms, with fewer trains on slow days and lightly traveled routes and more trains on busy ones. The change would have saved $1.5 million a year, benefited riders and preserved workers’ paid hours. But an arbitrator shelved it Tuesday because the union couldn’t bear the “variations in start and end times.”

“They’re not just inefficient,” Mr. Howard says of the unions. “They’re designed for inefficiency.”

“They’re designed to require a new work crew to come cut a tree limb because the people fixing the rails don’t have authority to remove a tree limb. They’re designed to prevent supervisors from observing teachers, except under very controlled circumstances. They’re designed to prevent the principal from giving extra training to a teacher. They’re designed to prevent a supervisor in an agency from going and talking to a worker and soliciting ideas about how to make things work better.”

Mr. Howard, 74, keeps listing examples until I jump in to stop him. They’re fresh in his mind because these schemes are the target of his new book, “Not Accountable: Rethinking the Constitutionality of Public Employee Unions.”

For the full interview, see:

Mene Ukueberuwa, interviewer. “THE WEEKEND INTERVIEW; Public Unions vs. the People.” The Wall Street Journal (Saturday, March 4, 2023): A13.

(Note: bracketed name added.)

(Note: the online version of the interview has the date March 23, 2023, and has the same title as the print version. In both versions, the word “designed” is in italics.)

Philip Howard’s book mentioned above is:

Howard, Philip K. Not Accountable: Rethinking the Constitutionality of Public Employee Unions. Garden City, NY: Rodin Books, 2023.