Looking at Gender Gap, Claudia Goldin Sees: “Lots of Evidence of People Making Rational Choices”

(p. A2) Cornell University economists Francine D. Blau and Lawrence M. Kahn found that after adjusting for factors such as education, experience, occupation and industry, the remaining, “unexplained” gender gap in 1998 was nine percentage points. Women also are likely to interrupt their careers, often to start a family, and such breaks can derail promotions and raises.

“When you first see the numbers, you would say there is a glass ceiling,” says Harvard University economist Claudia Goldin. “And yet when you scrutinize the data, you find lots of evidence of people making rational choices.”

For the full commentary, see:
CARL BIALIK. “THE NUMBERS GUY; Not All Differences in Earnings Are Created Equal.” The Wall Street Journal (Sat., APRIL 10, 2010): A2.

Districts with More Government Pork Have Less Private Hiring

(p. A19) You can’t read models, but you do talk to entrepreneurs in Racine and Yakima. Higher deficits will make them more insecure and more risk-averse, not less. They’re afraid of a fiscal crisis. They’re afraid of future tax increases. They don’t believe government-stimulated growth is real and lasting. Maybe they are wrong to feel this way, but they do. And they are the ones who invest and hire, not the theorists.

The Demand Siders are brilliant, but they write as if changing fiscal policy were as easy as adjusting the knob on your stove. In fact, it’s very hard to get money out the door and impossible to do it quickly. It’s hard to find worthwhile programs to pour money into. Once programs exist, it’s nearly impossible to kill them. Spending now creates debt forever and ever.
Moreover, public spending seems to have odd knock-off effects. Professors Lauren Cohen, Joshua Coval and Christopher Malloy of Harvard surveyed 42 years of government spending increases in certain Congressional districts. They found that federal spending increases dampened corporate hiring and investment in those districts.

For the full commentary, see:

DAVID BROOKS. “A Little Economic Realism.” The New York Times (Tues., July 6, 2010): A19.
(Note: the online version of the article is dated July 5, 2010.)

The research referenced is:
Cohen, Lauren, Joshua D. Coval, and Christopher J. Malloy. “Do Powerful Politicians Cause Corporate Downsizing?” NBER Working Paper No.15839, March 2010.

“Pork Actually Pushes Private Investment Out of a State”

Some West Virginia miners may have faced unemployment due to technological progress. But what they needed to improve their situation was economic growth from private enterprise, rather than Senator Robert Byrd’s federal pork.

(p. A11) . . . mining companies developed more efficient techniques for extracting coal and natural gas, which eliminated the need for many blue collar jobs. Laid-off workers lacked the skills to attract other types of businesses and college students couldn’t find jobs after graduation, so they left. Such dramatic changes would be serious obstacles for any politician.

. . .
By contrast, Byrd’s solution was to steer federal largess to his state.
. . .
Take Route 50. Thirty years ago, the federal government extended the route from two lanes to four with the hopes of spurring development. But hit the open road today and you’ll notice it’s just that–open. “You won’t see another car for two hours,” says Russell Sobel, a professor of economics at West Virginia University. “You can’t just build roads and expect that things will happen. People who want to transport goods and services need to be there.”
. . .
“We’ve created this culture of dependency,” warns Mr. Sobel, “Our human capital is not good at competing in the marketplace; it’s good at securing federal grants.”
Federal funding is a shaky foundation for an economy because no one can replace Big Daddy. In their recently released paper “Do Powerful Politicians Cause Corporate Downsizing?” Harvard professors Lauren Cohen, Joshua Coval and Christopher Malloy found that states that lose chairmanships on important congressional committees lose 20% to 30% in earmarks.
Even worse, they found that pork actually pushes private investment out of a state. When the federal government intrudes, it raises demand for the state’s workers and real estate, jacking up prices. Often, companies can’t compete, so they flee.

For the full commentary, see:
BRIAN BOLDUC. “CROSS COUNTRY; Robert Byrd’s Highways to Nowhere; Government pork hasn’t made West Virginia prosperous.” The Wall Street Journal (Sat., JULY 10, 2010): A11.
(Note: ellipses added.)

The research referenced is:
Cohen, Lauren, Joshua D. Coval, and Christopher J. Malloy. “Do Powerful Politicians Cause Corporate Downsizing?” NBER Working Paper No.15839, March 2010.

Employment Further Below Trend than Any Time in Half Century

EmploymentRelativeToJobGrowthTrendGraph2010-08-05.gif

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

(p. A15) The number of nonfarm private jobs has been growing steadily since the 1950s. That number reached a peak at the end of 2007. Between 1958 and 2007, the number of U.S. jobs grew to 115.4 million from 43.5 million–about 2% per year on average. The steady upward trend reflects the long-run growth of the economy and increased participation in the labor force.

The nearby chart compares employment and that trend. It shows the percentage difference between employment and the trend line generated from monthly employment figures over the past 50 years (July 1960 through June 2010).
What we see is astounding. For almost 25 years–between 1984 and late 2008–the level of employment never fell to more than 3% below the trend line. Over that period, total employment grew by more than 36 million.
Employment fell briefly to about 6% below the trend during two previous recessions: in 1975 and again in 1982-1983. During those periods, the unemployment-rate peaks were 9% (in 1974) and 10.8% (in 1982). The unemployment rate in 2009 peaked at 10.1%.
By 2010, however, employment had fallen to about 10% below the trend, far below any previous level in the last half-century.

For the full commentary, see:
PAUL GODEK. “Jobless Numbers Are Worse Than You Think; The situation is much more dire now than it was during the 1980s.” The Wall Street Journal (Fri., JULY 23, 2010): A15.

Apple Fired Mike Scott for Firing the Laggards

Wozniak writes of pre-1983 management troubles at Apple, in the passage quoted below. The passage highlights that large companies usually lose flexibility in hiring and firing. Good managers who have tacit (or just insufficiently documented) judgment about who the best employees are, have limited ability to act on that knowledge.
I wonder if this is a necessary disadvantage of size, or a disadvantage that is due to our laws, customs and institutions?

(p. 231) By this time, I should point out, Mike Scott–our president who took us public and the guy who took us through the phenomenally successful IPO–was gone. During the time the Apple III was being developed, he thought we’d grown a bit too large. There were good engineers, sure, but there were also a lot of lousy engineers floating around. That happens in any big company.

It’s not necessarily the lousy engineer’s fault, by the way. There’s always going to be some mismatch between an engineer’s interests and the job he’s doing.
Anyway, Scotty had told Tom Whitney, our engineering manager, to take a vacation for a week. And meanwhile he did some research. He went around and talked to every engineer in the company and found out who was doing what and who was working and who wasn’t doing much of anything.
Then he fired a whole bunch of people. That was called Bloody Monday. Or, at least, that’s what it ended up being called in the Apple history books. I thought that, pretty much, he fired all the right ones. The laggards, I mean.
And then Mike Scott himself was fired. The board was just very pissed that he’d done this without a lot of backing and enough due process, the kind of procedure you’re supposed to follow at a big company.
Also, Mike Markulla told me Mike Scott had been making a lot of rash decisions and decisions that just weren’t right. Mike thought Scotty wasn’t really capable of handling the company given the point and size it had gotten to.
I did not like this one bit. I liked Scotty very, very much as a person. I liked his way of thinking. I liked his way of being able to joke and be serious. With Scotty, I didn’t see many things fall (p. 232) through the cracks. And I felt that he respected the good work that I did–the engineering work. He came from engineering.
And as I said, Scotty had been our president, our leader from day one of incorporation until we’d gone public in one of the biggest IPOs in U.S. history. And now, all of a sudden, he was just pushed aside and forgotten.
I think it’s sad that none of the books today even seem to recall him. Nobody knows his name. Yet Mike Scott was the president that took us through the earliest days.

Source:
Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

HP Turns Down Wozniak Again

(p. 193) But I went to talk to the project manager, Kent Stockwell. Although I had done all these computer things with the Apple I and Apple II, I wanted to work on a computer at HP so bad I would have done anything. I would even be a measely printer interface engineer. Something tiny.

I told him, “My whole interest in life has been computers. Not calculators.”
(p. 194) After a few days, I was turned down again.
I still believe HP made a huge mistake by not letting me go to its computer project. I was so loyal to HP. I wanted to work there for life. When you have an employee who says he’s tired of calculators and is really productive in computers, you should put him where he’s productive. Where he’s happy. The only thing I can figure is there were managers and submanagers on this computer project who felt threatened. I had already done a whole computer. Maybe they bypassed me because I had done this single-handedly. I don’t know what they were thinking.
But they should’ve said to themselves, “How do we get Steve Wozniak on board? Just make him a little printer interface engineer.” I would’ve been so happy, but they didn’t bother to put me where I would’ve been happiest.

Source:
Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

More New Jobs Created Are Higher Skill Jobs

(p. A1) As unlikely as it would seem against this backdrop, manufacturers who want to expand find that hiring is not always easy. During the recession, domestic manufacturers appear to have accelerated the long-term move (p. A3) toward greater automation, laying off more of their lowest-skilled workers and replacing them with cheaper labor abroad.

Now they are looking to hire people who can operate sophisticated computerized machinery, follow complex blueprints and demonstrate higher math proficiency than was previously required of the typical assembly line worker.
Makers of innovative products like advanced medical devices and wind turbines are among those growing quickly and looking to hire, and they too need higher skills.
. . .
Manufacturers who profess to being shorthanded say they have retooled the way they make products, calling for higher-skilled employees. “It’s not just what is being made,” said David Autor, an economist at the Massachusetts Institute of Technology, “but to the degree that you make it at all, you make it differently.”
In a survey last year of 779 industrial companies by the National Association of Manufacturers, the Manufacturing Institute and Deloitte, the accounting and consulting firm, 32 percent of companies reported “moderate to serious” skills shortages. Sixty-three percent of life science companies, and 45 percent of energy firms cited such shortages.

For the full story, see:
MOTOKO RICH. “Jobs Go Begging as Gap is Exposed in Worker Skills.” The New York Times (Fri., July 1, 2010): A1 & A3.
(Note: ellipsis added.)
(Note: the online version of the article is dated July 1, 2010 and has the title “Factory Jobs Return, but Employers Find Skills Shortage.”)

Chicago’s South Side Welcomes Wal-Mart: “The Audience Stood and Cheered”

WalmartChicagoSupporters2010-06-29.jpg“Supporters of a proposed Wal-Mart store in Chicago demonstrated at a City Coumcil zoning panel hearing Thursday.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B4) “We need jobs for our neighborhood, and Wal-Mart is willing to come, and they’re willing to provide the jobs,” said the Rev. Dr. D. Darrell Griffin, the pastor at Oakdale Covenant Church.

Politicians who supported the Wal-Mart store said they did so in part because of employment and revenue for the city.
“There are major corporations willing to invest significant money within our communities, which has not been done, really, since the ’60s, when a lot of the corporations left the communities after the riots,” said Howard B. Brookins Jr., a member of the council. “This is huge for us.”
. . .
On Thursday, the zoning committee meeting was filled with about 200 onlookers wearing T-shirts with the Wal-Mart logo and slogans like, “Our neighborhood. Our jobs. Our decision.”
Before he asked for a simple yes or no vote, Daniel Solis, chairman of the zoning committee, told the crowd, “We are now the model in this country.”
After the unanimous vote — which sends the proposal to the full City Council, where it is expected to pass next week — the audience stood and cheered.
“It’s going to bring jobs and help the community,” Shawn Polk, 20, a college student who lives near the proposed store, said afterward.

For the full story, see:
STEPHANIE CLIFFORD. “Wal-Mart Gains in Its Wooing of Chicago.” The New York Times (Fri., June 25, 2010): B1 & B4.
(Note: the online version of the article is dated June 24, 2010.)
(Note: ellipsis added.)

Former French Student Protest Leader: “We’ve Decided that We Can’t Expect Everything from the State”

DynamismEuropeAndUnitedStatesGraph.gif

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

(p. A16) “The euro was supposed to achieve higher productivity and growth by bringing about a deeper integration between economies,” says Simon Tilford, chief economist at the Centre for European Reform, a London think tank. “Instead, integration is slowing. The lack of flexibility in labor and product markets raises serious questions about the likelihood of the euro delivering on its potential.”

Structural changes are the last great hope in part because euro zone members have few other levers for lifting their economies. Individual members can’t tweak interest rates to encourage lending, because those policies are set by the zone’s central bank. The shared euro means countries don’t have a sovereign currency to devalue, a move that would make exports cheaper and boost receipts abroad.
The remaining prescription, many economists say: chip away at the cherished “social model.” That means limiting pensions and benefits to those who really need them, ensuring the able-bodied are working rather than living off the state, and eliminating business and labor laws that deter entrepreneurship and job creation.
That path suits Carlos Bock. The business-studies graduate from Bavaria spent months navigating Germany’s dense bureaucracy in order to open a computer store and Internet café in 2004. Before he could offer a Web-surfing customer a mug of filter coffee, he said, he had to obtain a license to run a “gastronomic enterprise.” One of its 38 requirements compelled Mr. Bock to attend a course on the hygienic handling of mincemeat.
Mr. Bock closed his store in 2008. Germany’s strict regulations and social protections favor established businesses and workers over young ones, he said. He also struggled against German consumers’ reluctance to spend, a problem economists blame in part on steep payroll taxes that cut into workers’ takehome pay, and on high savings rates among Germans who are worried the country’s pension system is unsustainable.
“If markets were freer, there might be chaos to begin with,” Mr. Bock said. “But over time we’d reach a better economic level.”
Even in France, some erstwhile opponents of reforms are changing their tune. Julie Coudry became a French household name four years ago when she helped organize huge student protests against a law introducing short-term contracts for young workers, a move the government believed would put unemployed youths to work.
With her blonde locks and signature beret, Ms. Coudry gave fiery speeches on television, arguing that young people deserved the cradle-to-grave contracts that older employees enjoy at most French companies. Critics in France and abroad saw the protests as a shocking sign that twentysomethings were among the strongest opponents of efforts to modernize the European economy. The measure was eventually repealed.
Today, the now 31-year-old Ms. Coudry runs a nonprofit organization that encourages French corporations to hire more university graduates. Ms. Coudry, while not repudiating her activism, says she realizes that past job protections are untenable.
“The state has huge debt, 25% of young people are jobless, and so I am part of a new generation that has decided to take matters into our own hands,” she says. “We’ve decided that we can’t expect everything from the state.”

For the full story, see:
MARCUS WALKER And ALESSANDRA GALLONI. “Europe’s Choice: Growth or Safety Net.” The Wall Street Journal (Thurs., MARCH 25, 2010): A1 & A16.

Smarter Info Technology Frees Workers from Routine and Creates Jobs

(p. A22) Smarter computing technology, experts say, ought to make the most skilled workers — in science, the arts and business — even more productive and prosperous by freeing them from routine tasks. Their prosperity translates to spending that creates jobs in stores, schools, gyms, construction and elsewhere.

Artificial intelligence, experts say, should also generate new jobs even as it displaces others. The smart machines of the future will need programming, servicing and upgrading — work done, perhaps, by a new class of digital technicians. The intelligent machines, experts add, will be specialists in a field, like the medical assistant project at Microsoft. They must be tailored with specialized software, perhaps igniting a new industry for artificial intelligence applications.
Of course, no one really knows just what artificial intelligence will mean for jobs and the economy, but the technology is marching ahead. “Its potential is far greater than simply substituting technology for human labor,” said Erik Brynjolfsson, an economist at the M.I.T Sloan School of Management.

For the full story, see:
STEVE LOHR. “Jobs Created and Displaced.” The New York Times (Fri., June 25, 2010): A22.
(Note: the date of the online version of the article was June 24, 2010.)

U.S. Jobs Lost Due to Law Restricting Mexican Truck Drivers

CarbonlessPaperMachine2010-05-20.jpg“Carbonless paper comes off a coating machine at Appleton Papers in March. Mexican tariffs have hit sales.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A5) APPLETON, Wis.–Congress’s vote last year to keep Mexican truck drivers south of the border was good news for DuWayne Marshall.

Mr. Marshall, 49 years old, owns a truck and hauls loads all over the U.S. from his home in Wisconsin. “Why should I have to compete against Third World drivers within my own borders?” Mr. Marshall asked during a break on a run to San Diego. “By closing down the borders, we are saving American jobs.”
Elizabeth Villagomez, 38, isn’t so sure. A single mother of two teens, she has worked at a paper plant in this community near Green Bay for 15 years. After the Mexican government retaliated against the trucking ban by slapping $2 billion in tariffs on U.S. paper, produce and other goods, orders plunged and managers began slashing shifts and overtime for the unionized work force.
“The company has done all it can to cut costs,” Ms. Villagomez said. “I’m at the bottom of the list if they have layoffs. It’s kind of scary, not knowing if you’re going to have a job.”
. . .
At Appleton Papers Inc., the fight over who can drive a truck across a border 1,600 miles away has translated into falling wages and rising anxiety.
Rick Bahr, head of the United Steelworkers union local that represents more than 500 employees at the Appleton plant, said six shifts have already been cut, cutting down on overtime.
“The battle ends up union versus union, truckers versus the paper workers,” Mr. Bahr said. The national steelworkers’ union has been supporting the Teamsters on the issue of Mexican trucks in the U.S.
Nearly half the company’s revenue, about $420 million last year, comes from carbonless paper sales. Its largest foreign customer is Mexico. After Mexico put a 10% tariff on carbonless paper, revenue from Mexico fell to $37 million in 2009 from $46 million in 2008.
Now, more Mexican customers say they will look for alternative suppliers to avoid having to bear part of the tariff costs. Just last month a major customer told Appleton it was going to get its carbonless paper from a European producer.
Even before the tariffs were imposed, the company had seen business hit by the economic slowdown and had cut its work force in 2008 and stopped other benefits, such as reimbursing tuition and matching workers’ contributions to their 401K retirement plans. Company officials said it was hard to quantify what part of the business downturn could be blamed directly on the tariffs, but they noted that Appleton sold 18% fewer tons of carbonless paper in the U.S. last year, compared with 2008. The number of tons sold to Mexican customers was down 24%.
Inside the plant, the machine that coats 4,000-pound rolls of paper to make it carbonless was idle one recent afternoon. Once run 24 hours a day, it is now used only half that time.
Kevin Bunnow, 50, a 33-year veteran of the plant, said the reduction in shifts had meant a wage cut of several thousand dollars last year.
“When elephants fight, the grass loses,” he said. “It didn’t take me long to realize, we’re the grass.”

For the full story, see:
GARY FIELDS. “Trade Dispute Divides Workers; It’s ‘Union vs. Union’ as Ban on Mexican Trucks Cheers Drivers, Triggers Cut in Hours at Paper Plant.” The Wall Street Journal (Tues., April 6, 2010): A5.
(Note: ellipsis added.)