employment

Measuring the casualisation of your workforce

Published by Anonymous (not verified) on Thu, 06/09/2018 - 2:53pm in

The ‘gig economy’ is the most recent incarnation of a decades-long trend toward under-employment and the ‘casualisation’ of our workforce. But how do you tell if this trend is playing out in your area?

When you think of under-employment, what do you think of?

Uni students working weekend hours at the local shopping centre? Retirees working part-time or casual jobs, just to ‘keep their hand in’?

What about people picking up a few hours in the gig economy, driving an Uber, helping someone on Airtasker move their fridge, or weaving their bike through peak-hour traffic with your bowl of steaming-hot Pho strapped to their back?

These people are all employed, but they’re probably not working 38-hour-weeks.

Therein lies the importance of measuring Full-Time-Equivalent (FTE) employment data, rather than simply ’employment’ data.

We recently sat down with Peter Brain, the founder and chief economist of National Institue for Economic and Industry Research (NIEIR) to discuss how councils can better understand the casualisation of their local workforce.

(NIEIR produce the economic data used in our economic profiles, economy.id; they’re also well known in the local government sector for their annual State of the Regions report)

It’s not actually ‘casualisation’

The term “casualisation” is actually a bit of a misnomer because the shift to more part-time work doesn’t necessarily mean more casual employees. In fact, the percentage of workers in Australia described as “casual” (i.e. workers without paid holiday or sick leave) hasn’t really changed since the 1990’s.

What has changed is the percentage of workers who are working part-time – from less than 10% in the late 1960’s to over 30% today.

The following charts are from the RBA Bulletin report The Rising Share of Part-Time Employment, 2017


Source: Reserve Bank of Australia https://www.rba.gov.au/publications/bulletin/2017/sep/3.html

Why the shift?

The shift to part-time work has occurred for a number of reasons.

The increase in Australia’s population, combined with a growing older age cohort (65+) has given rise to an increase in service industries employment. Many of these service industries (industries which exist essentially to “service” the population, such as retail, accommodation and food services and health care) are more likely to employ part-time workers.

But also, a large part of the change has occurred because it’s what many of the workers want.

A recent HILDA survey (Household, Income and Labour Dynamics in Australia) conducted by the University of Melbourne, suggests that the main reasons for part-time work are for students to study while working part-time, and also for parents to work whilst caring for children.

In the older populations, as older workers transition to retirement, the most common reason for working part-time is simply a preference for that type of work.

Employment vs Full-Time-Equivalent (FTE) employment

The significant change in Australia’s employment landscape means care should be taken when making decisions or plans based purely on employment, or unemployment statistics, because they may not tell the full story – a person can be described as “employed” even if they only one hour per week.

So, to reflect the real trends of employment growth (or decline) in industries within Council areas, it’s more effective to look at Full-time equivalent (FTE) employment.

FTE, calculated simply from hours worked per industry, can reveal if employment growth in an industry is aligned to an increase in overall hours worked – or simply more workers, each working fewer hours.

Compare employment and FTE data for your area

To complete this section you will need access to our community profile and economic profile tools in your area. If your council subscribes to these resources, you can access them via our demographic resource centre here.

The graph below shows a decline in full-time employment and growth in part-time employment – a trend you will see in many community profiles.

 

Find this data: Open your community profile > What do we do? > Employment status

Chart the trend in part-time employment

The Time series industry sector analysis page in your economic profile lets you easily compare employment (total) and employment (FTE) on a chart, showing how the two have changed over time.

Below is a textbook example, showing a steady increase in employment that belies the underlying drop in full-time-equivalent employment.

Find this data: Open your economic profile > Industry focus > Time series industry sector analysis

Scroll down to see the time series chart above, and use the Measure menu to toggle between Total and FTE employment.

How employment data is calculated in our economic profiles

The employment data used in our economic profiles (economy.id) is developed by the National Institute of Economic and Industry Research (NIEIR). We recently spoke with Peter Brain, the principal of NIEIR, about why they prefer using FTE as a true measure of local employment for Local Government economic analysis.

Have you seen this trend in your area?

If you’ve noticed the impact of an increasingly part-time local workforce, we’d love to hear from you.

If you’re responsible for economic development, how are you measuring and addressing under-employment in your area? Let us know in the comments!

Education’s Role in Earnings, Employment, and Economic Mobility

Published by Anonymous (not verified) on Wed, 05/09/2018 - 9:00pm in

Rajashri Chakrabarti and Michelle Jiang

LSE_Education’s Role in Earnings, Employment, and Economic Mobility

Amid dialogue about the soaring student loan burden, questions arise about how educational characteristics (school type, selectivity, and major) affect disparities in post-college labor market outcomes. In this post, we specifically explore the impact of such school and major choices on employment, earnings, and upward economic mobility. Insight into determinants of economic disparity is key for understanding long-term consumption and inequality patterns. In addition, this gives us a window into factors that could be used to ameliorate income inequality and promote economic mobility.

We hope to answer the following questions:

  • Do school and major choice significantly affect differences in employment and earnings?
  • Do these differences persist in the long term?
  • Do certain educational background characteristics promote upward economic mobility more than others?

To answer these questions, we use a data set that matches earnings and employment data of college cohorts with corresponding college-cohort characteristics, college characteristics, and enrollment, obtained from the U.S. Department of Education. We analyze labor market outcomes data for fall freshman entry cohorts in the 1997-2007 period. Labor market outcomes include earnings and employment, measured in the medium term (six years after enrollment) and the long term (ten years after enrollment), with earnings conditional on employment. Our selectivity measure comes from Barron’s Profiles of American Colleges (2001), which ranks schools based on their acceptance rates, students’ median entrance exam scores (on the SAT and ACT), the grade point averages for their freshman classes, and the percentage of freshman ranking in the top of their high school graduating classes. For simplicity, we classify four-year colleges in the top three of Barron’s six tiers as “selective” and the rest as “nonselective.”

After controlling for invariant characteristics of counties where the colleges are located, invariant characteristics of cohorts, and time-variant characteristics of cohorts (such as cohort size, racial composition, gender composition, family income, and parental education), we analyze the effect of college choice (two-year versus four-year; public versus private not-for-profit and private for-profit; and selective versus nonselective) and major composition (calculated as the percentage in “Arts” [arts and humanities], “Business,” “STEM” [science, technology, engineering, and math], and “Vocational” fields) on labor market outcomes and economic mobility (defined below).

First, we explore whether college choice and major choice affect medium-term earnings and employment measured six years after enrollment. For four-year colleges, we find that college type and selectivity strikingly matter, as does major (see the chart below). For enrollees who attend selective colleges, we find an earnings premium of 11 percent compared with similar students (along the dimensions defined above) who attend nonselective colleges. By contrast, for-profit college attendance leads to 17 percent lower earnings relative to attendance at private not-for-profit four-year colleges. The right panel in the chart casts light on the returns to various majors relative to Arts and depicts the percentage change in mean earnings of a cohort in a school if the share of a certain major in that cohort goes up by 10 percentage points. The chart shows that STEM majors have the highest earnings premium followed by Business majors. If a school cohort increases its share of STEM majors (relative to Arts majors) by 10 percentage points, there is a 6 percent increase in that cohort’s earnings six years after enrollment. These findings are qualitatively similar for two-year colleges.

LSE_2018_educations-role-in-earnings_chakrabarti_ch1

While this data is not charted here, we find that the employment effects are relatively modest in comparison to the earnings effects. Selective college enrollment leads to only 1 percent higher employment than nonselective college enrollment, while for-profit enrollees have a 4 percent lower probability of employment relative to their counterparts in private not-for-profit colleges. The employment and earnings results collectively imply a markedly higher job quality for selective college and not-for-profit enrollees.

For long-term earnings measured ten years after enrollment, we find that college-type effects become more pronounced, while major-choice effects remain similar (see the chart below). Attendees of selective colleges find themselves with a 20 percent premium in earnings compared with nonselective college students. For-profit attendees experience 18 percent lower earnings than students enrolled at private not-for-profit colleges. Meanwhile, a 10 percentage point increase in a college cohort’s share of STEM majors (relative to Arts majors) gives a 6 percent boost to its students’ average earnings, while a 10 percentage point increase in a school’s share of Business majors (relative to Arts majors) provides a 3 percent long-term earnings premium. In contrast, employment probabilities remain similar in the long run for these comparison groups. This indicates that the quality of jobs, rather than the probability of employment, is more relevant for the broadening of the earnings distribution across individuals.

LSE_2018_educations-role-in-earnings_chakrabarti_ch2

Next, we consider economic mobility. Following prior work, we define economic mobility as the phenomenon by which individuals move up or down the income distribution over time. Our chart below presents differences in mean earnings six years after enrollment between students in the top and bottom terciles of family income at the time of enrollment in a four-year institution. We continue to include the various covariates and invariant characteristics in our regression as described above.

The average earnings gap between enrollees in the top and bottom terciles in our sample was $6,348. We find that for-profit college attendance widened income disparities in our data, increasing the earnings gap by $7,428 (+117 percent), compared with private not-for-profit college. In contrast, four-year public college serves as an equalizer by decreasing the earnings gap by $1,584 (-25%) compared with four-year not-for-profit college. In addition, selective college attendance decreases the earnings gap by $2,736 (-43%) relative to nonselective college attendance. A 10 percentage point increase in Business majors and STEM majors relative to Arts majors exacerbates the gap by $1,586 (+25%) and $181 (+3%) , respectively, while a 10 percentage point increase in Vocational majors relative to Arts majors decreases the disparity by $170 (-3%).

LSE_2018_educations-role-in-earnings_chakrabarti_ch3

In the long run, however, the inequality penalties for for-profit schools decrease in intensity, while the equality premium for public school increases. While patterns for other majors are approximately the same in the medium term as in the long run, a STEM major becomes more of an equalizer.

Earnings and employment outcomes are clearly heterogeneous across college and major choice. We see that these choices matter much more for earnings than employment, which suggests that school and major choice play a large role in job quality. Overall, we find large positive premiums to selective college attendance and choice of a STEM major, and find large penalties for for-profit college attendance. In the long run, premiums and penalties related to college type further accentuate, while premiums to major remain similar to what they are in the medium term. Recent trends in college enrollment, which show marked decrease in for-profit enrollment, imply that overall earnings of college graduates should improve in the medium and long terms due to this factor. In terms of economic mobility, we find that selective colleges are particularly equalizing (conditional on access). Further, we find that attendance at for-profit colleges has led to wider income gaps subsequently, despite catering overwhelmingly to low-income students. These findings have important implications for policy, specifically for “gainful employment” regulations, which stipulate that educational programs must offer worthwhile preparation in a recognized occupation to be eligible for student-assistance funding under the Higher Education Act, and the recent start of a rollback of these provisions. They also highlight the importance of the availability of information about college and major choices since these choices can matter not only for labor market outcomes but also in affecting income inequalities in the medium to long term.


Disclaimer


The views expressed in this post are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.

Rajashri ChakrabartiRajashri Chakrabarti is a senior economist in the Federal Reserve Bank of New York’s Research and Statistics Group.

Michelle Jiang
Michelle Jiang is a former senior research analyst in the Federal Reserve Bank of New York’s Research and Statistics Group.


How to cite this blog post:


Rajashri Chakrabarti and Michelle Jiang, “Education’s Role in Earnings, Employment, and Economic Mobility,” Federal Reserve Bank of New York Liberty Street Economics (blog), September 5, 2018, http://libertystreeteconomics.newyorkfed.org/2018/09/educations-role-in-....

Job Prospects for Philosophy Majors: Perception and Reality

Published by Anonymous (not verified) on Wed, 05/09/2018 - 12:24am in

The number of philosophy majors in the U.S. is down 35% since its recent peak in 2007, and today, philosophy majors make up only around 0.137% of the student population.

These figures, based on data from Humanities Indicators, are among those discussed in a recent article in The Atlantic by Benjamin Schmidt, assistant professor of history at Northeastern University.

Over the past decade there has been a significant decline in the numbers of all humanities majors, as the following graph depicts.


Graph from The Atlantic, based on data from Humanities Indicators

And while the longer view (in the graph below) shows that the numbers in philosophy are less volatile than in some of the other humanities disciplines, there is the possibility that the recent steeper decline can be informative for those interested in the long term prospects of philosophy offerings in U.S. colleges and universities.


Graph from The Atlantic, based on data from Humanities Indicators

Professor Schmidt thinks that the culprit is not a general sudden decline in people being interested in the humanities, nor is it politics (“Do you think students are put off by liberal pieties in the classroom? It’s difficult to square that argument with the two decades of stability that followed the beginning of the culture wars in the late 1980s”).

Rather, he says: “In the wake of the 2008 financial crisis, students seem to have shifted their view of what they should be studying—in a largely misguided effort to enhance their chances on the job market… Students fled the humanities after the financial crisis because they became more fearful of the job market.”

The students are misinformed, he argues. The “actual career prospects of humanities majors” don’t do the explanatory work:

Evidence does indicate that humanities majors are probably slightly worse off than average—maybe as much as one more point of unemployment and $5,000 to $10,000 a year in income. Finance and computer-science majors make more; biology and business majors make about the same. But most of the differences are slight—well within the margins of error of the surveys. One analysis actually found that humanities majors under the age of 35 are actually less likely to be unemployed than life-science or social-science majors. Other factors, like gender, matter more: Men with terminal humanities B.A.’s make more money than women in any field but engineering. Being the type of person inclined to view a college major in terms of return on investment will probably make a much bigger difference in your earnings than the actual major does.

In other areas of the economy, we view these kinds of differences with equanimity. The difference between humanities majors and science majors, in median income and unemployment, seems to be no more than the difference between residents of Virginia and North Carolina. If someone told to me not to move to Charlotte because no one there can make a living, I would never take them seriously. But worried relatives express the same concerns about classics majors every day, with no sounder evidence.

This suggests that efforts by philosophers, philosophy departments, and organizations such as the American Philosophical Association to provide more information about the employment prospects of philosophy majors could be an effective part of a strategy for increasing the number of students studying philosophy—especially since philosophy majors seem to do pretty well compared to other humanities majors.

The post Job Prospects for Philosophy Majors: Perception and Reality appeared first on Daily Nous.

Job Candidate Mentoring Program for Women

Published by Anonymous (not verified) on Thu, 30/08/2018 - 10:23pm in

The Job Candidate Mentoring Program for Women in Philosophy is currently recruiting both mentors and mentees for the upcoming job market season.

The program, started in 2014, is run entirely by volunteers.

Amanda Greene (UCL), on behalf of the program’s steering team, writes:

Mentors should currently hold a permanent academic post and have had job market experience at the junior level in the past seven years. The application deadline for mentees is Sept 8th. Preference will be given to job candidates who have not participated in this mentoring program before.

Other job candidates seeking mentorship are encouraged to participate in the Cocoon Mentoring Project.

Job Market Mentoring Women image

The post Job Candidate Mentoring Program for Women appeared first on Daily Nous.

Tcherneva and Wray on the Public Service Employment (PSE) Program

Published by Anonymous (not verified) on Thu, 16/08/2018 - 7:03am in

The job guarantee proposal fleshed out and analyzed by L. Randall Wray, Flavia Dantas, Scott Fullwiler, Pavlina Tcherneva, and Stephanie Kelton — dubbed the Public Service Employment (PSE) program — garnered a considerable amount of media attention as support for some version of a job guarantee began appearing on the agendas of various 2020 Democratic hopefuls. This panel discussion at the Levy Institute’s 27th Annual Hyman P. Minsky Conference, featuring Tcherneva and Wray along with critical engagement from John Henry, provides more background on the rationale behind the PSE proposal as well as its potential economic impact:

 

Video from all the panels at the Minsky Conference can be found here.

Tcherneva and Wray on the Public Service Employment (PSE) Program

Published by Anonymous (not verified) on Thu, 16/08/2018 - 7:03am in

The job guarantee proposal fleshed out and analyzed by L. Randall Wray, Flavia Dantas, Scott Fullwiler, Pavlina Tcherneva, and Stephanie Kelton — dubbed the Public Service Employment (PSE) program — garnered a considerable amount of media attention as support for some version of a job guarantee began appearing on the agendas of various 2020 Democratic hopefuls. This panel discussion at the Levy Institute’s 27th Annual Hyman P. Minsky Conference, featuring Tcherneva and Wray along with critical engagement from John Henry, provides more background on the rationale behind the PSE proposal as well as its potential economic impact:

 

Video from all the panels at the Minsky Conference can be found here.

From Basic Income to Poor Law and Back Again – Part 4: Designing a Viable Basic Income

Published by Anonymous (not verified) on Mon, 06/08/2018 - 4:23pm in

Tags 

employment

This is the final in my four part series on basic income. In Part 3, I highlighted potential impacts of  different basic income options on the labour market and social security system.  This demonstrated that basic income schemes can have adverse unintended consequences, especially for low paid workers.  In this final Part 4, I examine three possible responses to these dilemmas:

(1) a means-tested Basic Living Income;

(2) a less strictly means-tested ‘life cycle’ Living Income; and

(3) a set of smaller Supplements to meet particular costs.

These could be combined to form a two-tier Basic Income scheme with a base rate of payment to meet general living costs and a supplementary tier to meet additional costs.

(1) A Basic Living Income

The most comprehensive proposal for a Basic Living Income in Australia comes from the Australian Council of Social Service (ACOSS). It advocates replacing the pension and allowance payments for people of working age with a single basic payment (with different rates for singles and couples).

The payment level would be set to meet the full minimum living costs of a single adult or couple. In setting payment rates, the government would be advised by a statutory expert Social Security Commission which would undertake research on living costs for people with low incomes and report regularly to Parliament. The Age Pension and Family payments would remain in place. Rates of payment would be indexed to wage movements and consumer prices, and the payment would be income-tested.

In this way, the present income support system for adults of working age would be converted from a hodge-podge of payments with different rates and eligibility requirements into a form of Basic Living Income or minimum income guarantee.

This is not a new idea. When the Whitlam government was elected, Social Security Minister Hayden announced that:

‘The New Labour Government hopes to completely scrap the present confusing system of pension and social security benefits and replace it with a more simply administered and easily understood system of guaranteed income.’ (Hayden 1973)

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Reciprocity and conditionality

A key issue is the extent to which a Basic Living Income should be conditional. Should activity requirements such as job search or training apply? On what basis people should be exempted from them (e.g. disability or caring roles)?

This raises issues of reciprocity: what (if anything) should people be expected to do in return for a living income from the State?

Prominent British welfare theorist, Richard Titmuss explained in 1960:

“Modern social welfare has really to be thought of as ‘help given to the stranger, not to the person who by reason of personal bond commands it without asking’ [citing Wilensky & Lebeaux (1958)]. It has therefore, to be formally organised, to be administered by strangers, and to be paid for collectively by strangers.” (In Abel-Smith & Titmuss 1987, p85)

An impartial, rights-based approach is what distinguishes social security from charity. The entitlements to this ‘support from strangers’ rest on a combination of political and institutional power (the balance of interests represented in Parliament) and a supportive ideology based on social solidarity and reciprocity among recipients and taxpayers – who are ultimately the same people. We see this every year in the ebb and flow of federal budget debate on social security.

Conditionality has many variants, from the Poor Law system of punishment for the ‘undeserving’ (virtually everyone except older people and those with a disability) to the Nordic ‘active line’ in which employed and unemployed workers are expected to ‘do your duty and demand your rights’ (Dølvik et al 2015). Expectations of what government will provide range from unpaid work for benefits in Australia’s ‘Work for the Dole’ scheme to a right to employment and training programs, as well as benefits, in Denmark (Kvist 2007).

The purpose of activity requirements has been to promote self-reliance through job search and participation in employment and training programs. The risk, as discussed in Part 2 is that those requirements become so demanding and so out of touch with people’s actual employment prospects that they become a form of punishment.

In recent years, a ‘new paternalism’ has taken hold in social security policy, which takes activity requirements a step further. It aims to curb what it calls ‘welfare dependency’ by regulating the social behaviour of recipients of income support. New paternalists call for drug tests and compulsory treatment, good parenting requirements and restrictions on how people spend benefits such as ‘income management’ of benefits by Centrelink or ‘cashless welfare cards’ that ban spending on drugs or alcohol.

This is a slippery slope towards a new category of second-class citizen. People receiving working–age social security payments are increasingly expected not only to make reasonable efforts to attain financial self-reliance, but also to accept invasions of privacy and behavioral restrictions that in the past may only applied to people convicted by the courts of serious offences. Predictably and regrettably, in Australia, the first group singled out for this treatment have been people in Aboriginal and Torres Strait Island communities, who weren’t even granted citizenship until about 50 years ago.

A Basic Living Income could be paid unconditionally or the range of justifications for payment could be broadened as Atkinson (1996) proposed with his ‘Participation Income’, to include unemployment, disability, education and training, and parenting and other caring roles. The Australian social security system does this already in its own parsimonious way. Parenting Payment supports the primary carers of children, but only for preschoolers. Youth Allowance and Austudy Payment support full-time study, but are deliberately paid at a lower rate than Newstart Allowance.

To adapt the system to present-day conditions and needs, we could broaden these definitions, extend eligibility to more people and pay all at the same rate based on need.

(2) Life cycle payments

In Part 3, I discussed how supplementing low pay and insecure work with a small universal payment could have adverse unintended effects. Yet unemployment, low pay and inadequate or insecure paid working hours are not the only income risks people face through life. In addition to a Basic Living Income, there is a role for ‘life cycle’ payments to cushion people’s incomes as they undergo other changes in their lives that put their incomes at risk.

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The two biggest life-course income risks most people face are the costs of children and supporting ourselves in old age. Australia’s social security system recognizes these risks through family payments (Family Tax Benefits A and B) and the Age Pension. As it is recognized that most of us face these risks and these payments are not income-tested as strictly as income support for people of working age. In 2014, 60% of families with a child under 16 years received a family payment and in 2016, 66% of people over 64 years received an Age Pension, compared with just 18% of people of working age receiving income support in 2015.

This chink in the armour of Australia’s defenses against so-called ‘middle class welfare’ is well justified (Henderson & Spies-Butcher 2017). Most countries provide some form of social insurance against these risks. Whether these payments should be more loosely income-tested depends on our priorities for the federal budget. If we ‘target’ them to such a degree that less than half the eligible population is entitled to full or part-payment (and we may be approaching this benchmark with FTB, with the tightening of income tests after 2014), then we have probably gone too far.

(3) Supplements

There is also a strong case for smaller supplementary payments to meet non-discretionary costs above the basic living expenses that we all face. Examples include Rent Assistance (for low income households renting privately), Carer Allowance (to assist carers of people with disabilities with the costs of care), and proposals for a costs of disability allowance to assist with the direct costs of a disability (ACOSS 2014).

Since these costs exist whether a person is unemployed or in paid work, there is a strong (and publicly supportable) argument for broadly-based public support to meet them. Another advantage of supplements is that they are less likely to be viewed by employers, governments or Fair Work Commission as de facto wage subsidies because not all employees would receive them. This is one way around the risk of triggering a ‘race to the bottom’ on wages.

Designing a basic living income

A guarantee of a Basic Living Income to provide income security for all is a hallmark of a good society. Australia’s current social security system fails to achieve this.

On the face of it, the Australian system is a long way removed from proposals for universal Basic Income. Indeed, it is more strictly income-tested than any other wealthy OECD country (Whiteford 2016). Yet the design of Australia’s system, being based on need, means that it comes closer to Basic Income principles than other wealthy countries where payments are based on the insurance principle and linked to the previous income of the recipient. This is important for those at greatest risk of poverty, including people with disabilities and women who have spent years out of paid work while caring for children.

Support for a Basic Income is weakest in those European countries with robust social insurance systems such as the Nordic countries, as shown in Figure 2. In countries with ‘Beveridgean’ social security systems like the United Kingdom, people are more supportive of the idea of a basic minimum income for all. This suggests that popular support for a need-based Basic Living Income might be stronger in Australia than in most OECD countries, but that our preference for means-testing means that universal payments are more likely to be resisted.

Figure 2: Support in Europe for a Universal Basic Income to replace existing social security payments

supportforubigraph

Source: Fitzgerald R (2017)

At its best, the Australian social policy tradition offers support based on need and the redistribution of resources to reduce poverty and social inequality. At its worst, it applies an outdated Poor Law distinction between ‘deserving’ and ‘undeserving’ recipients and punishes the undeserving with increasingly intrusive and unrealistic activity requirements. Our ‘liberal welfare regime’ (Esping Andersen 1999) means that adequate income support is too often regarded as a last resort to be offered reluctantly and sparingly, to discourage so-called ‘welfare dependency’.

John Quiggin’s argument that we should give more weight to the ‘Basic’ than the ‘Universal’ in Basic Income schemes makes sense. A Basic Living Income would give priority to those in most need of support, and reduce the risk that they end up with lower social security payments or lower wages as an unintended consequence of reform. This suggests two directions for reform:

First, we should do away with the distinction between pension and allowance payments for people of working age and replace both with a means-tested Basic Living Income scheme.

Secondly, the system should reach beyond those at immediate risk of poverty to assist low and middle income earners to negotiate life-cycle risks such as the costs of children and retirement, and provide supplements to meet unavoidable costs above and beyond the basic expenses faced by everyone. How strictly these lifecycle and supplemental payments should be income-tested is a pragmatic question of budget priorities.

The social minimum is about much more than social security legislation. Income security for all requires full employment, decent hourly wages, adequate and secure paid working hours, and a strong foundation of support services including employment assistance, lifelong education and training and child and elder care. A decent basic income, full employment and a welfare state are complementary, each supporting the other.

This four part series is written based on the presentation, ‘From basic income to poor law and back again: can a UBI break the Gordian Knot between social security and waged labour?’, by Peter Davidson at the Australian Social Policy Conference at UNSW on 27 September 2017. 

It is serialised on this site, and on the Austaxpolicy blog, at: Davidson, Peter (2018), From Basic Income to Poor Law and Back Again – Part 4: Designing a Viable Basic Income,  Austaxpolicy: Tax and Transfer Policy Blog,  22 March 2018, Available from: http://www.austaxpolicy.com/basic-income-poor-law-back-part-4-designing-viable-basic-income/

Can a Universal Basic Income rid the world of bullshit jobs?

Published by Anonymous (not verified) on Wed, 01/08/2018 - 10:15am in

This piece was originally published on Patreon.

In his best-selling book, Bullshit Jobs: A Theory, professor David Graeber makes the case for a Universal Basic Income (UBI) as a means to move away from the wage labour system.

Perhaps it is my cultural background — I am the product of two, very hard-working Jewish / Catholic parents both with an insanely Protestant work ethic — but the idea that we are moving into an age of post-employment is a little terrifying to me.

As I look around even my local community, I see so many different areas of the economy that are poorly served or simply non-existent. Surely, there must be enough meaningful ones to replace the bullshit ones?

So, I caught up with Graeber to ask him a couple of questions, namely: why a UBI and not a job guarantee?

“I mean there’s enough meaningful work, right?,” says Professor Graeber.

“But does it have to be organised into jobs? To me the difference between the job guarantee and the UBI is simply who’s going to decide how the labor is allocated.”

“I don’t have a problem with the jobs guarantee as a supplement to a Basic Income. But one of the interesting things is who the burden is on.”

Who gets to create jobs?

Graeber credits prolific Twitter user @rattlecans who recently made the very valid point that when governments or industry talk about job guarantees, they always assume they’re going to be the ones deciding who should do what.

“So if a job guarantee was based on, ‘I’m trained as a chemist, find me a job as a chemist’. Well, sure,” he says. “Nobody would object. Yet somehow that doesn’t seem to be what they are talking about.”

The anthropologist says it is telling why so many in the professional managerial class love of the concept of a job guarantee and are suspicious of a basic income.

“They fantasise that once work becomes completely automated, workers of the world will just sit around getting drunk, playing darts and fighting all day,” he says.

“Because they don’t trust people. Because they have no imagination about what people are like.”

As an anthropologist, Graeber says he is keenly aware that people, even with only two-or-three hours of actual work a day, can come up with of all sorts of interesting things to do with the rest of their time, if you give them enough time to work on it.

“It’s a vicious circle,” he says. “We imagine people can’t think of things to do.”

The 30-year war on community

With regards to the concept of work and how it is organised, Graeber says there has been a 30-year war against community relations: People don’t know their neighbours. They wouldn’t even know how to begin forming groups together to address local, regional or federal problems.

“So if there’s a problem like the canal needs cleaning or something, in a functional community where everybody has a basic income, people can get together to clean the canal, for example,” he says.

“But you could make the argument that this will be harder in societies where people are really atomised. On the other hand, all you need is one or two people with initiative on a UBI to dedicate themselves to these things.

“To some degree the The Works Progress Administration, some of those examples, they did actually pay people to do things that people came up with locally.”

(The WPA was a public works agency that grew out of the New Deal which employed millions of people in public works programs like infrastructure, construction, roads, teaching and literacy).

“That’s one of the reasons everybody always pulls that example out,” he says. “But that’s a little different than what they’re talking about.

A jobs guarantee that, like: ‘if you are unemployed and come to me with a project, I guarantee I will fund it’, well that would be ok. Who would object to that? We need a post office. Ok, we’ll hire you all to build a post office. But I haven’t seen a proposal that looks like that.”

Does your job matter? The pay probably sucks

In his book and in a recent presentation to the Bank of England, Graeber outlined that, particularly in Britain, but also in the United States and other parts of the world, austerity policies have been most punishing on those with the most socially useful occupations.

This is particularly the case in health, education, and care industries, but also police, transit workers and others, while private sector resources appear to have been distributed upwards to the administrative and executive sector.

The obvious question this leads me to is: would a UBI reflate the value of meaningful work that pays poorly? (Like, journalism, say…?).

“Well that’s a good question,” he says.

“I think it would definitely inflate the value of trash collection.

“I imagine journalists would manage to get paid exactly the same as what they are paid now, but on top of a UBI. That is what I am guessing would happen.”

The danger is we might end up getting paid less…

“The thing is, if you have UBI, what you’re validating is the people,” says Graeber.

“So there’s an assumption you start at, which is that everybody is valuable, that is why you have a living allowance.”

Graeber says that the effect a UBI would have on different types of work is an interesting question morally.

“I think the moral advantage of saying that your existence and your freedom is the ultimate value, that is going to more than compensate for other discrepancies,” he says.

“The whole thing about a UBI, is that there is no structure to say who gets it. There’s no minimal requirement for annoying people deciding whether you get it or not.”

How much should a UBI pay?

So, how much would each member of the public need to receive in order to rid the world of bullshit jobs? And does the anthropologist really expect the governments of today to shell out that kind of money?

“Well, first of all, governments are already shelling out that kind of money,” says Graeber. “They’re just doing it in really stupid, bad ways.

“Take even Quantitative Easing. They calculated recently that spending per person in Europe is like €6000 a year or something. They could have just given it to them. I mean, that’s not enough, but it’s a good start.

“Obviously you can make the argument that one reason it wasn’t inflationary is because people sat on it anyway. Whereas, if they gave it to people, they’d spend it, but that would also stimulate the economy. I think with QE they were trying to create inflation and failed.

“Inflation is harder to create than you think.”

But, the ‘where do we get the money’ argument, that comes from a broad misunderstanding of money, what it is and where it comes from, the anthropologist says.

“They, (the government), can make it up, (issue the currency),” he says.

The question is: what would be the larger effects?”

Graeber’s UBI proposal is a transitional demand.

“It would be the kind of thing which would move us maximally in the direction of moving away from the wage labour system,” he says.

Change the tax code

In the meantime, governments ought to be changing their tax codes to address the casualisation of the work force.

“One of the British Labour party’s platforms is to change the tax code to make it easier for self employed people,” says Graeber.

“More than half of the money I make on my books is taken away from me. But if I were a parasitic investor, it would be like 7%. Instead, it’s like 55%, if you’re actually producing something and you’re not somebody’s slave.

“I kind of like the French tax system. It’s still not that bad, but back in the ’80s, it was entirely value-added, but it was negative on stuff they thought were necessities: wine, bread and meat, basically,” he said.

“Most groceries aren’t taxed. Things considered a human right are subsidised. And if you buy a Maserati, it’s like 300%. Because you want to boast about how much you paid for your Maserati.”

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Preview: Can a Universal Basic Income rid the world of bullshit jobs?

Published by Anonymous (not verified) on Sat, 14/07/2018 - 12:31pm in

In his best-selling book, Bullshit Jobs: A Theory, professor David Graeber makes the case for a Universal Basic Income (UBI) as a means to move away from the wage labour system.

I recently caught up Graeber to ask him a couple of questions, namely: why a UBI and not a job guarantee?

“I mean there’s enough meaningful work, right?,” says Professor Graeber.

“But does it have to be organised into jobs? To me the difference between the job guarantee and the UBI is simply who’s going to decide how the labor is allocated.”

“I don’t have a problem with the jobs guarantee as a supplement to a Basic Income. But one of the interesting things is who the burden is on.”

Read the rest of the interview by subscribing to my Patreon for as little as $3 a month.

Why New York City Subway Delays Don’t Affect All Riders Equally

Published by Anonymous (not verified) on Wed, 27/06/2018 - 9:00pm in

Nicole Gorton and Maxim Pinkovskiy

LSE_2018_Why New York City Subway Delays Don’t Affect All Riders Equally

The state of the New York City subway system has worsened considerably over the past few years. As a consequence of rising ridership and decaying infrastructure, the network is plagued by delays and frequently fails to deliver New Yorkers to their destinations on time. While these delays are a headache for anyone who depends on the subway to get around, they do not affect all riders in the same way. In this post, we explain why subway delays disproportionately affect low-income New Yorkers. We show that wealthier commuters who rely on the subway are less likely to experience extensive issues on their commutes.

Roughly half of employed New Yorkers living in the Bronx, Brooklyn, Manhattan, or Queens rely on the subway to get to work each day. The subway is one of the few commute methods where the distribution of incomes among riders roughly reflects the distribution of incomes throughout the city. In comparison, communities where most people walk to work or take a taxi tend to be far wealthier than the median New York City community, whereas communities in which most people take the bus tend to be poorer than the median. But even though all of these subway users are riding the same trains and waiting in many of the same stations, commute experiences (and especially commute duration) vary widely. What drives these differences?

In the figure below, the upper panel shows the distribution of median household incomes across the city’s census block groups, the smallest geographic level for which aggregate data are available, using 2012-16 data from the American Community Survey (ACS). Lighter colors indicate lower-income communities. The lower panel shows average commute times among census block groups where the majority of commuters rely on the subway each day. Lighter colors indicate relatively shorter commutes. In both maps, areas where a majority of commuters do not rely on the subway each day are grayed out.

Comparing the two panels, it is clear that higher incomes are associated with lower commute times. A short commute is often expensive because housing demand is high in city centers where many people work and hence want to live, and because people are willing to pay a premium for easy access to efficient transportation. Thus, house prices and rents are higher around transportation centers, reflecting the value that residents place on this amenity. However, this relationship between income and commute time is actually more pronounced in places that rely on the subway (subway-dependent communities) than in places that do not (subway-independent communities). In other words, the elasticity of commute time with respect to income—how commute time changes as household income changes—is significantly more negative in subway-dependent communities.

One potential explanation is that within subway-dependent communities, there is significant heterogeneity in terms of subway access, and that subway access is correlated with both household income and commute time. Individuals who live closer to a subway station spend less time walking, and those living closer to a larger number of lines and stations can take the most efficient route to their destinations and substitute away from troubled lines and stations when delays and construction affect service. And because of the housing cost premium placed on transportation access, these elements are correlated with household income.

Why New York City Subway Delays Don’t Affect All Riders Equally

When we control for these factors, we find that the relationship between income and commute time shrinks considerably, to a magnitude similar to that within subway-independent areas. This finding provides some suggestive evidence that subway access is expensive, and that access has a measurable impact on commute duration for riders. Many of these measures of access, like proximity to different train lines, are expensive in part because they are permanent, while some other measures are harder to predict—for example, when and where delays and planned work will occur. What happens to commute times when extensive delays and construction strike, and how do the effects vary across the income distribution?

Spending more time on the train necessarily increases the risk of experiencing some kind of service disruption. And as we discussed above, subway riders with the longest commute times are also less able to substitute away from a troubled line because the next subway line or station may be very far away. In addition, workers traveling during off hours (for example, to cover a nightshift) are far more likely to be at the mercy of planned work. We explore the implications of delays and planned work across the income distribution by simulating morning commutes, using data from the Metropolitan Transportation Authority on subway service status that we have collected over the past few months.

For each subway-dependent block group, we use data from the ACS on average commute time and the most common morning departure time. We also identify the set of trains available within three-quarters of a mile from each block group center. Using these inputs, we find the number of minutes during the commute that the lines available to that block group are not experiencing “good service ” for each day in our sample (subway “downtime”).

For example, say the average commute time for a certain block group is forty-five minutes and the most common departure time is 9:00 a.m. We would then identify the number of downtime minutes that occurred between 9:00 a.m. and 9:45 a.m. for each weekday in our sample and every train line available to that block group. Note that this figure is not necessarily a measure of how long people are waiting on or for a train, as our data do not allow us to calculate that, nor do we interpret it as the number of minutes added to a trip. Instead, it is simply a measure of downtime severity: for example, in a census block group that only has access to the C train, we measure twenty minutes of “downtime” on a morning when the C line was having signal problems for twenty minutes of a thirty-minute commute window. In addition, it is worth noting that, to the extent they are able, commuters probably choose departure times and trains to reduce the effect of delays on their commute.

In the figure below, we plot median household income against subway performance, as measured by the worst-case delay recorded during the morning commute period for each census block group—more precisely, the number of minutes at the 95th percentile of the morning downtime distribution for each group. We look at this measure, instead of at the mean or median downtime, because when risks are high (for example, if a job is at stake) individuals make decisions based upon the worst possible scenario, not the average scenario. Even if an extreme delay occurs only once every ten or twenty trips, individuals must commit more time to commuting every day to insure against lengthy delays. As an area’s household income declines, the length of extreme subway downtime spells increases. This result is a combination of the increased risk of experiencing downtime associated with a longer commute, the distribution of trains to which each block group has access, and differences in morning departure times.

Why New York City Subway Delays Don’t Affect All Riders Equally

We have presented some descriptive evidence that subway delays disproportionately affect lower-income New Yorkers because their already long commutes get even longer and they may have no choice but to wait out even the worst delays. There are also other mechanisms, not discussed in this post, through which subway delays make long commutes worse for low-income people relative to wealthier people. For example, low-income people may not be able to spend money on a taxi or rideshare service to get to work in the case of an extreme delay. We also do not consider differential time value of money, which may mitigate these effects. Aside from the obvious frustration of unanticipated delays, longer commutes mean people risk losing pay—or even their jobs—and may have less time to invest in their health, education, and children. That is bad news for all New Yorkers.

Chart data
Excel

Disclaimer


The views expressed in this post are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.

Nicole GortonNicole Gorton is a senior research analyst in the Federal Reserve Bank of New York’s Research and Statistics Group.

Maxim Pinkovskiy
Maxim Pinkovskiy is a senior economist in the Bank’s Research and Statistics Group


How to cite this blog post:


Nicole Gorton and Maxim Pinkovskiy, “Why New York City Subway Delays Don’t Affect All Riders Equally,” Federal Reserve Bank of New York Liberty Street Economics (blog), June 27, 2018, http://libertystreeteconomics.newyorkfed.org/2018/06/why-new-york-city-s....

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