PSR: A Gem

Sometimes, there is a thread on PSR that amuses me.  Here's one:

Theory Presenter: [Snipping 75 minutes of reading without eye contact.] "...so as you can see, I have reconceptualized and reconsidered and -icized and -atized until this problem I talk about is clearly both like and unlike what Hobbes, Locke, Rousseau, Plato, and Arendt implied by choosing one word instead of a universe of other words in these few sentences no one else has really talked much about." 

Theory Search Committee Member: "Well, certainly, but since we have clear answers about this philosophical problem deriving from Augustine's flirtation with manichaeism [snipping 15 minutes of bibliographic citations] ... what could we turn to in order to understand why what you have presented improves our understanding of the problem at hand?" 

Audience Member In the Back: "Data."* 

*This totally happened.

The future of work?

As AI and globalization chew up good jobs for the non-elites, there is a bright spot on the career horizon. The market for household staff is booming.

According to the WSJ, "A good housekeeper earns $60,000 to $90,000 a year. A lady's maid can make $75,000 a year. A butler may start at $80,000 a year and can earn as much as $200,000."

And, there are openings, "Demand for the well-staffed home is on the rise, according to agencies and house managers alike. Clients are calling for live-in couples, live-out housekeepers, flight attendants for private jets, stewards for the yachts and chefs for the summer house. In San Francisco, Town and Country Resources, a staffing agency for domestic help, has seen demand for estate managers and trained housekeepers grow so fast the agency is going to offer its own training programs in subjects like laundry, ironing and spring cleaning starting in 2014. Claudia Kahn, founder of The Help Company, a staffing agency based in Los Angeles, says she used to get one call a month for a butler but has gotten three in the past week alone."

If your skill set is more exotic, don't despair:

"She will also be bringing with her the two animal trainers who come seven days a week to care for Prince Mikey, a white-faced capuchin monkey. Prince Mikey's trainers work with him five to six hours a day during the week and three hours a day on weekends.  The annual cost is in the six figures"

Behold the future of American mass employment!

Minimum Wage

The Montana Department of Employment, Division of Labor Standards got an anonymous tip that a small rancher was not paying proper wages to his help.  They immediately sent an official  agent out to investigate him.

GOVT AGENT: I need a list of your employees and how much you pay them.

RANCHER: Well, there's my hired hand who's been with me for 3 years. I pay him $350 a week plus free room and board.

GOVT AGENT:  Well, those payments and conditions are within the law.  Anybody else work here?
 
RANCHER:  Well, I wasn't going to say.  But there's also a mentally challenged guy. He works about 18 hours every day and does about 90% of all the work on the ranch. He makes about $10 per week, sometimes less.  He pays his own room and board.  I do buy him a bottle of bourbon every Saturday night so he can cope with life, but then sometimes he tries to make love to my wife.

GOVT AGENT:   Okay, yes, then THAT's the guy I heard about, and need to talk to -- the mentally challenged one.

RANCHER: That would be me.

It's just me and Christy, me and Christy, me, me, me & Christy!

Last week, I begged to differ with a guy claiming that manufacturing was indeed special because people earned a wage premium simply by entering the sector, or as he put it, that there were "labor market rents" associated with getting a manufacturing job.

Turns out Christina Romer has my back!

She points out that (a) on the low skill end, manufacturing pay premia have shrunk and likely will continue to shrink, and (b) increased technical sophistication in manufacturing has created more jobs that require higher skills. She points out that the number of manufacturing workers with some college education has more than doubled.  Thus, subsidizing manufacturing is NOT likely to reduce income inequality in the US.

Romer attributes the shrinking premium to low skill workers to increased international competition, while I attributed it to both that factor and the decline of union strength. She doesn't point out that there is an upside to increased international competition, namely lower priced goods for American consumers.

They're not your father's manufacturing jobs

Here's an awesome anti-Yglesias screed where the author states the following:

I support high employment in manufacturing. The reason is that I believe that people are paid more if they work in manufacturing than if they work in other sectors.

And the following:

 People get something for nothing if they switch from employment in services to employment in manufacturing -- well the data show they lose big if they move the other way. 

 This guy is saying that there are, in his words, "labor market rents" in the manufacturing sector.

I think what the recent evidence shows though is that there WERE labor market rents in the manufacturing sector.

These rents came from the power of unions. But (1) they weren't a free lunch, as they were partly paid for by higher prices to consumers. (2) These rents are, to a large extent, gone. Virtually every story I've seen about new manufacturing jobs talks about the two-tiered wage schemes where the incumbent workers earn the higher wages and better benefits and the new workers get significantly lower hourly wages and weaker benefits.

 Globalization is bringing this about and it's not going to go away. "Labor market rents" to unskilled (and indeed many skilled workers) are not sustainable as more and more countries join the global system.

I see little benefit in glamorizing and subsidizing manufacturing jobs in a specific way, as they are more and more $15/hour positions with limited upsides.

Of course, I don't even agree with the general notion that the government should be actively planning where its citizens will work.

I do see a role for subsidizing basic research. I have views about subsidizing the acquiring of skills, but my position in academia probably makes them suspect so I'll just leave that alone.

Jobs: The Good, the Bad, and the Texas

The Blonde sends a very interesting map of job changes in the U.S. Here is my county, Wake County, NC. (Do click for a more glorious image; this is a screen shot, so no interactivity. To get the interactive map, go back to here)

Notice that we are back where we were in 2007, for total jobs. (Unemp rate is up, though, becuase we have had in-migration and growth from births)

The big hammer down was construction jobs. Biggest employment sector, professional services, has just about tread water, though it is moving up slowly.

You can do it by state, also. Here is Oklahoma.

A foolproof plan to balance the budget and stimulate the economy

As you may know, one of the ideas tossed around for dealing with the debt limit was to have the Treasury mint a trillion $ coin and then have the Fed "buy" it from them.

It is not well known, but totally true that Congress has already put the Fed on such a path since 2005 with an extra economic stimulus twist.

The Fed is mandated to buy new "presidential" dollar coins every year from the Treasury. It costs $0.30 to make them so Treasury is making bank. Plus, no one wants to use them so the Fed has to find/build storage facilities to house the unwanted coins.

I am not making this up!

Currently the Fed is holding over a billion of these coins in 28 different storage facilities.

People, all we need to do in these troubled times is double down on this excellent starter program. Make the Fed buy, say a trillion of these coins every year and store them.

That's $700 billion a year in new revenue and lots of construction jobs building new storage facilities. Plus those facilities will need managers, forklift operators, maintenance workers, security guards...

Hey, maybe the Treasury could make the coins even bigger!

I really don't see what could go wrong here.

Hat tip to 7im.

Mr. Gov: Do you mind if I work, please?

Only one in 20 workers needed the government's permission to pursue their chosen occupation in the 1950s, notes University of Minnesota Prof. Morris Kleiner. Today that figure is nearly one in three...To work as a manicurist requires only about 12 hours worth of training in Alaska and 40 in Iowa, but 600 hours in Oregon and 700 in Alabama. Does anyone believe consumers in Oregon and Alabama are in need of that much more protection from unsafe manicurists? Or that there is much difference as far as consumer complaints are concerned? Mr. Kleiner compared consumer complaints between Minnesota and Wisconsin in certain health-care occupations and found no differences in the number of complaints between tightly regulated Wisconsin and less-regulated Minnesota. [Chip Mellor & Dick Carpenter, WSJ op-ed]

Damon Root elaborates...

(Nod to Kevin Lewis)

The Takeaway

Got to be on The Takeaway this morning.

Are new jobs numbers good news? Not so fast, there, Dusty!

An Economy Produces Goods for Consumers, Not "Jobs"

From my talk today at the Locke Foundation. (Big props to my man, Mitch Kokai)



UPDATE: And here is the entire talk, 40 minutes worth, if you are a streamer.

.

The 244,000

All in all a decent jobs report. 244,000 net new jobs in total, 268,000 net new private sector jobs. 29,000 new jobs in manufacturing and the median duration of a spell of unemployment fell below 21 weeks for the first time in over a year. However the overall unemployment rate did rise back up to 9%.

Green Non-jobs

Wow. Either we have different definitions of "success," or our Prez just doesn't even care about actual facts. Check this:

WASHINGTON – In this week’s address, President Obama called Orion Energy Systems in Manitowoc, Wisconsin an example of how America can win the future by being the best place on Earth to do business. Orion was able to open with the help of small business loans and incentives that are creating demand for clean energy technologies. By sparking innovation and spurring new products and technologies, America will unleash the talent and ingenuity of American workers and businesses, which will lead to new, good jobs.

As Doug North would say, "BUHH-uht..." (he says it with two syllables, really he does). The "but" in this case is more like a "but, but, but, but...wtf?...but..."

Orion Energy is well on its way to bankruptcy. It produces no products that anyone wants to buy. It's a boondoggle. Here's a 4 year stock price chart on AMEX for you: The Obama Admin has a two part test for "succes":

1. Are you receiving money taken at gunpoint from taxpayers, and using it for some purpose that makes lefties happy? Most important, is this something that has no actual market, in the market?

2. Did you spend the money? All of it?

If you can answer "yes" to both sets of questions...you are a SUCCESS! So we'll give you more money.

Archimides is reported to have said, "Give me a large enough lever, and a fulcrum on which to place it, and I will move the whole world!"

Obama says, "Give me enough deficit-financed subsidies, and a second term, and I will employ the whole world in failing to produce products that no one wanted to buy in the first place."

Nod to the Blonde

I Told You So, I Did

Now even the NYT admits that the idea of subsidizing "green jobs" isn't working, and can't work.

I did say this, myself.

(To be fair, that's not the NYT, really. That's Ed Glaeser. He's really really smart. Not sure how the NYT made the mistake of letting him write for them.)

(Nod to Anonyman, who has a green thumb)

Food Trucks Create Jobs

Interesting new business.

(Nod to Anonyman, who is going to stick with his LocoPops, thankyouverymuch)

Green Jobs: They Don't Exist

Delicious. Rich. I told you so. (etc)

We gave Evergreen Solar millions and millions of dollars, nearly $50 million, to subsidize production of solar energy panels.

But they closed shop and moved to China.

Now the U.S. is mad at China...FOR SUBSIDIZING PRODUCTION OF SOLAR ENERGY PANELS! ("The cops finally busted Madame Marie, for telling fortunes better than they do...")

Look, if the only way you can make money is to pay more than 100% of the purchase price in subsidies, you don't want to be in that business.

(Nod to Anonyman)

Small Business Myth

Veronique dR does a nice of abusing a silly myth.

Small businesses do create the most jobs. And destroy. It's like saying I have lost 600 pounds in the last year; true. But I have gained 860 pounds, and I still weigh 260. You need to worry about the NET change.

And government policies not only do not help small business produce more jobs, but those policies actually hurt. Veronique does a nice job of making it understandable.

Peter Principle

Peter Principle is an old laugh line.

But it is plausible, it turns out.

Universities promote administrators WELL beyond their level of incompetence. After all, I was a chair for ten years. Just THINK about that.....scary.

Universities, it appears, actually use the Dilbert Principle: The least competent people are "promoted" to administration, where they can do the least harm.

Get a Job!

Get a job and keep it! High school employment and adult wealth accumulation

Matthew Painter, Research in Social Stratification and Mobility, June 2010, Pages 233-249

Abstract: Wealth inequality receives substantial scholarly attention, but mounting evidence suggests that childhood and adolescent traits and experiences contribute to financial disparities in the United States. This study examines the relationship between adolescent labor force participation and adult wealth accumulation. I argue that employed high school students gain practical life skills, abilities, and knowledge from work experience and business exposure that shape investment decisions and affect overall net worth. I use the National Longitudinal Survey of Youth, 1979 cohort, to empirically explore this idea. This study extends the wealth literature by
identifying adolescent employment as an important mechanism that improves adult net worth and financial well-being.

Plausible, but it may confuse cause and effect. If you get a job in high school, you are likely a bit more ambitious. Those jobs are NOT fun (not even if you are "Welder / Union Steward Angus"), and anyone who sticks it out is pretty tough, and willing to work hard.

Still, it is likely to staying with a job teaches you to be more hard-working, also.

(Nod to Kevin L)

Markets in everything: Lactation edition

People, meet Freda Rosenfeld, the "breast whisperer".

Freda is a "certified lactation consultant" and for $200 she will come to your house and teach you how to nurse your baby.

How is it possible that someone could actually earn a living by consulting on what has been a fairly natural and instinctive act in mammals for millennia?

Because of people like this I guess:

“Once you go home from the hospital, you’re on your own with this little alien creature, and you have to figure out how to keep it alive,” Ms. Brill, 39, recalled of her daughter’s birth 16 months ago. “So you put it on your nipple and wait for it to eat, and hope all is right. But you really have no idea. Are they doing it right? Are they not doing it right? Are they eating enough? Are they starving?"

YIKES!

 

  

The Jobless Recovery

from the WSJ:

"The economy is experiencing another huge increase in productivity in the third quarter. Nonfarm labor productivity grew at an annual rate of 6.6% in the second quarter. Look for something in that eye-popping range for the current quarter. Here’s a rough sketch of the numbers: Today’s jobs numbers showed that the Labor Department’s index of aggregate hours worked by Americans was at 98.9 in August, down steeply from a second quarter average of 99.7. That’s from a combination of job cuts, reductions in overtime and other cuts to work shifts. Let’s assume there’s no change in hours worked in September. That would mean the total amount of hours that Americans worked in the third quarter would be down at about a 2.8% annual rate. The economy seems to be on track to grow at an annual rate of 3% or more. More output and fewer hours worked means more productivity in the neighborhood of 6%. You’ll be hearing a lot of talk about a jobless recovery in the months ahead. The upside is that this is good for corporate profits. The downside is that workers will suffer even after the economy comes back."

YIKES!