Worþy Reads: For 2021-12-03 Fr
A preview of my weekly read-around for Equitable Growth
Worthy Reads from Equitable Growth:
1) This remains the best single place to go to get an immediate, timely handle on what each month’s Bureau of Labor Statistics report brings us in the way of news about the state of the American labor market and the American economy. This months report is especially puzzling. The household survey unemployment rate down to 4.2%. Disappointing payroll employment growth at barely over 200,000. Private sector employment up. Public sector employment down. There should not be this much divergence between a payroll survey that is close to comprehensive and a household survey that is a very good near-random sample by all the standards of survey research. And yet there are these differences. They arise from the fact that even though the payroll survey is near comprehensive, it has powerful and changing biases in its failure of full comprehension. I think we badly need to spend more money figuring out exactly how these biases are evolving:
Kathryn Zickuhr & Carmen Sanchez Cumming: Equitable Growth’s Jobs Day Graphs: November 2021 Report Edition: ’On December 3, the U.S. Bureau of Labor Statistics released new data on the U.S. labor market during the month of November. Below are five graphs compiled by Equitable Growth staff highlighting important trends in the data. Total nonfarm employment increased by 210,000 in November, and the employment rate for prime-age workers rose to 78.8 percent. The unemployment rate declined to 4.2 percent in November, remaining higher for Black workers (6.7 percent) and Latinx workers (5.2 percent) compared to Asian American workers (3.8 percent) and White workers (3.7 percent). The overall employment rate rose to 65.0 percent for men and 53.8 percent for women, still below pre-pandemic levels for both groups. Private-sector employment continued to make gains in November, but public-sector employment gains have faltered. Despite recent gains, the jobs recovery remains fragile. Employment in many industries has increased more slowly than in recent months, and remains below pre-pandemic levels…
LINK: <https://equitablegrowth.org/equitable-growths-jobs-day-graphs-november-2021-report-edition-2/>
2) I want to hoist this back again to the top. I think it is really, really important and really, really good. Many employers have decided—and make stick—the principle that they simply do not bargain: they post a wage for the job, and then even if they get a very good match for the position， they would rather let a good worker well-matched walk then bargain over the wage with somebody who has already taken the job. This economizes on administrative effort, yes. But it has always seemed to me that it is more a matter of social power than of economic logic. One bargains with equals or neither equals. One commands those who are subordinated：
Marta Lachowska, Alexandre Mas, Raffaele Saggio, & Stephen Woodbury: Wage Bargaining Is an Important, Yet Unavailable, Tool for Many U.S. Workers to Increase Their Incomes: ’This paper examines the behavior of dual jobholders to test a simple model of wage bargaining and wage posting. We estimate the sensitivity of wages and separation rates to wage shocks in a worker’s secondary job to assess the degree of bargaining versus wage posting in the labor market. We interpret the evidence within a model where workers facing hours constraints in their primary job may take a second, flexible-hours job for additional income. When a secondary job offers a sufficiently high wage, a worker either bargains with the primary employer for a wage increase or separates. The model provides a number of predictions that we test using matched employer-employee administrative data from Washington State. In the aggregate, wage bargaining appears to be a limited determinant of wage setting. The estimated wage response to improved outside options, which we interpret as bargaining, is precisely estimated, but qualitatively small. Wage posting appears to be more important than bargaining for wage determination overall, and especially in lower parts of the wage distribution. Observed wage bargaining takes place mainly among workers in the highest wage quartile. For this group, improved outside options translate to higher wages, but not higher separation rates. In contrast, for workers in the lowest wage quartile, wage increases in the secondary job lead to higher separation rates but no significant wage increase in the primary job, consistent with wage posting. We also find evidence in support of the hours-constraint model for dual jobholding. In particular, work hours in the primary job do not respond to wages in the secondary job, but hours and separations in the secondary job are sensitive to wages in the primary job due to income effects…
3) This “Visual Economy” is, I think, one of the greatest recent Equitable Growth initiatives:
Equitable Growth: ’For the second month in a row, our top visual looks at how income impacts the likelihood of voting in midterm AND presidential elections. Interested in seeing other key graphics on 31 different economics topics? Check out A Visual Economy_ <https://equitablegrowth.org/a-visual-economy/>…
LINK:
Worthy Reads from Elsewhere:
1) Paul Krugman continues to remain the paragon for not just useful and applicable macroeconomic theory, not just for opening-up new literatures for research, not just for teaching students who will be future professional economists, but for explining whatis going on in the economy to the broad public sphere:
Paul Krugman: Why Workers Are Quitting: ‘Unlike the “skills gap” invoked to explain persistent unemployment after the 2008 crisis, this time labor shortages seem to be real. Workers are quitting at record rates, an indication that they feel confident about finding new jobs…. So workers are clearly feeling empowered, even though many fewer Americans are employed than in the past. Why? Earlier this year many people insisted that enhanced unemployment benefits were reducing the incentive to accept jobs. But those extra benefits were eliminated…. Another story… says that the extensive aid families received during the pandemic left many… [with] the financial space to be choosier about their next job. A less upbeat story says that some employees are still afraid to go back to work, and/or that many can’t go back to work because their child care arrangements are still disrupted. But there’s at least one more possibility…. The experience of the pandemic may have led many workers to explore opportunities they wouldn’t have looked at previously…. People have a strong status quo bias…. I can easily believe that there were many workers who should have quit their lousy jobs in, say, 2019, but didn’t because they weren’t really considering the alternatives. And it’s at least possible that the disruptions of the pandemic led to a great rethink…. [That] is actually a good thing—a small silver lining…
LINK: <https://www.nytimes.com/2021/11/05/opinion/great-resignation-quit-job.html>
2) This is, I think, correct. The strong balance of the evidence is still on the side of “team transitory” as far as the very moderate inflation of 2021 is concerned. If we still see moderate inflation in late 2022, come back and talk to me then about the appropriate Federal Reserve response:
Michael Hiltzik: Why Do We Fear Inflation?: ‘There’s a right way and a wrong way to think about inflation. Here’s a right way…. There are no signs that the inflation surge showing up in the latest statistics is caused by sustained overheating of the U.S. economy. The signs point to several short-term factors coming together all at once…
LINK: <https://www.latimes.com/business/story/2021-11-26/right-way-and-wrong-way-to-think-about-inflation>
3) The very smart Nathan Newman is interesting here, but wrong. As a matter of fact, Republican politicians do not have a plan for shifting more of the collective surplus from the globalized economy to the United States and distributing it to blue-collar workers in export and import-competing sectors:
Nathan Newman: Education Polarization in Elections: People are Voting Their Class Interests: ‘Our Two Parties Reflect Two Class Strategies for Addressing Stagnating Incomes…. Americans could… either seek to expropriate some of the burgeoning growth among emerging economies or go after the wealth of the superelite, the global top 1% holding 43% of all global wealth in 2020. Arguably, our two political parties have increasingly sorted themselves along the line of those two strategies…. Workers who have found themselves directly in competition with developing world workers… have allied with a portion of the economic elite willing to help them extract some additional income and jobs from those emerging economies, including via trade wars, energy policy, agricultural policy, and other economic and occasionally military actions, all in exchange for support for the Republican Party policies that help that elite keep their wealth…. Workers whose industries are largely outside global competition, such as service work or public employment, or in what has been dubbed the “creative economy”… require extracting some of the income of the economic elite…. As an analysis by the Peterson Institute’s Marcus Nolan detailed, white voters in regions with employment impacted by the “China shock” seemed to adopt “harsher attitudes towards immigrants and racial minorities” and even to gravitate towards more fundamentalist versions of Christianity…
LINK:
4) Just think: I all the right-wing grandees and worthies who have had their anti-Fox News Road-to-Damascus moment ahadt all had that moment together back in the mid–1990s. Think of how much healthier and stronger and richer America would be:
David French: The Fox News Distortion Field & Other Media Maladies: ‘It’s now been a little more than a week since my friends, colleagues, and Dispatch co-founders Steve Hayes and Jonah Goldberg announced their resignations from Fox News. After days of online vitriol (and support), the dust has settled a bit, and it’s worth reflecting a bit on what they did and why it mattered…. Fox is the 800-pound gorilla of conservative media…. And of course Fox doesn’t just dominate online, it dominates on television…. Fox is conservative media, and almost everything that is not Fox is some variation on the Fox product…. That reality, combined with Fox’s own aggressive defense of its brand, is one reason why so very little right-wing “media criticism” is aimed at the largest, most powerful, and most profitable cable network in the land…. The cultural and political consequences in the right-wing grassroots are considerable…. Activists don’t know what they don’t know in part because telling them the truth in right-wing spaces carries a cost—and not just in reader disapproval. Fox, the most potent player in the market, will be displeased, and when it is displeased the ceiling on your career gets a little bit lower…
LINK:
5) my friend Noah Smith thinks that it is easy, nay trivial, to make massive, massive improvements in Twitter’s ability to avoid misinformation and reduce generating polarization. I think he is correct. It shows how very strong desire to scrape the last dollar from the bottom of the advertising barrel is the Twitter has not made these changes yet:
Noah Smith: How to Fix Twitter: ‘Three changes—1) dropping blocked users’ tweets from thread view, 2) allowing people more control over who can reply to their tweets, and 3) allowing people to opt out of being quote-tweeted—will remove much of the platform’s shoutiness and toxicity, without restricting dissent or speech on the platform overall. In addition, Twitter should implement the dislike button…
LINK:
6) Excellent on “popularism” and “Sister Souljah” moments, from the brillian Jamelle Bouie. I do, however, have a few quibbles of my own about the history, and our memory of it:
Jamelle Bouie: Bill Clinton, Race & the Politics of the 1990s: ‘Clinton concluded his remarks with a now-notorious denunciation of the rapper and activist Sister Souljah, an attack by proxy on Jackson, who had brought Souljah to the event…. “What Clinton got out of the Sister Souljah affair,” noted the historian Kenneth O’Reilly, “were votes, particularly the votes of the so-called Reagan Democrats like the North Philadelphia electrician who said ‘the day he told off that [expletive] Jackson is the day he got [mine].’”… If Shor’s analysis is correct, then this is what it could be like to change course. Progressives would complain, as they did in 1992, but—a proponent of this approach might say—Clinton still won 85 percent of the Black vote. And once in office, he would try to reverse course: to moderate and to show his commitment to the people who put him in the White House…. But there is no such thing as idle presidential rhetoric…
LINK: <https://www.nytimes.com/2021/10/09/opinion/democrat-shor-politics-bill-clinton.html>
Re the Lachowska, Mas, et al., paper: It would be interesting to measure the attitudes of employers in other developed economies on the topic of negotiating wages to see if it differs from the American attitude. I am thinking here about the latest DeLong/Smith podcast which touched upon the possibility that the experience with a slave economy may have affected the American labor market even today.