wages

Making the COVID19 Wage Subsidy Program work better for workers

Published by Anonymous (not verified) on Mon, 30/03/2020 - 3:13pm in

Tags 

Recession, wages

With the federal government is increasing its temporary wage subsidy to 75%, other reforms are needed to ensure the public funding goes to maintain workers, and not pad the profits of businesses. 

In the face of the COVID19 crisis, the Canadian government has done a good job of both limiting the spread of the virus and putting in place measures to prevent a health pandemic from also turning into an economic pandemic.

On the economic side, Prime Minister Trudeau and Finance Minister Bill Morneau took important steps to reassure individuals and businesses that the federal government would “do whatever it takes” to support them, ensure sick and emergency leave for workers that need it, provide liquidity to financial markets, enable individuals and employers to defer tax and other payments, and provide income support for households and wage subsidies for employers. 

They should have of course moved faster, particularly in certain areas, but hindsight is 20/20 and governments are constrained by the immediate tools and resources they have available. And when some initial measures have been inadequate, the federal government has moved quickly to make improvements. We only need to look to the United States and to some European countries to see how much worse it could have been here both in health and economic terms. And there is much more that needs to be done.

One area where there was broad agreement of the need for improvement was that the initial 10% temporary wage subsidy for small employers was inadequate. This amount was clearly too little for employers with plunging revenues to keep workers on the payroll. The commitment a week later to increase this to 75% is welcome, and puts it in line with wage subsidies promised by other countries such as the Denmark and the UK, but it also needs to be better targeted.

But a 75% wage subsidy for private employers could be very expensive and go to employers that don’t need it. The federal government didn’t provide details or cost estimates but will announce more details by the end of this month.  TD Bank estimated a 75% wage subsidy could cost $25 billion, on the basis that it would be seven and a half times the cost of the original $3.5 billion 10% wage subsidy proposal.  The CD Howe Institute estimates a wage subsidy for all businesses could cost considerably more: $6.3 billion a week, which would add up to about $80 billion over three months. 

These amounts are enormous. The federal government’s total major transfers to provinces, territories and municipalities for health care, social assistance, equalization and many other areas were projected to be just below $79 billion—over $2,000 for every Canadian—and that’s for the whole year, not three months.

Given this cost it is important that the federal government not just move quickly but also get the program right so billions aren’t wasted going to profitable businesses.  Affordable childcare, pharmacare, and many other important reforms that cost much less have been delayed for decades because they supposedly cost too much.  

How should the wage subsidy be designed so it is effective and goes to those employers who truly need it?  

The program should be limited to small medium sized employers, including non-profits and charities, with a cap per employee and employer and tied explicitly to preserving jobs and wages. Larger employers in specific sectors may also need support, but that should be on a case by case basis, and with strict conditions including provisions for equity ownership. 

Support must also be limited to employers that have suffered a significant decline in revenues.

  • Ireland’s program provides 70% of wages up to €410a week per worker at employers who have suffered at least a 25% reduction in revenue.  
  • The UK’s Coronavirus Job Retention Scheme will pay for 80% of usual wage costs up to £2,500 a month for furloughed employees: those still on the books, but who aren’t working or being paid because of the COVID crisis.  
  • Denmark’s program provides up to 75% of employee salaries for employers that have suffered a decline in revenues and would otherwise have to lay off at least 30% of their workforce or at least 50 employees, and is also limited to “furloughed” employees. 
  •  New Zealand’s scheme is limited to employers that have suffered a minimum 30% decline in revenues and pays a max of NZ$585.80 a week for full-time employees. 

The original temporary 10% wage subsidy plan was also flawed in another way. The way it is designed, an employer could potentially claim back more in a subsidy in respect of each individual employee than it pays them in wages.  This is because the 10% subsidy (which is actually a tax credit) is to be calculated on the aggregatesalaries paid and the totalnumber of employees over the period (because that’s the way the payroll tax system works) and not in respect of each individual employee’s wages.  

This means an employer could have an employee in for just one shift (or one shift per month) for which they are paid just $100, but still claim a $1,375 subsidy for each employee and have that credited against income taxes paid for much higher paid employees, including the owners. This is clearly not what was intended by the program. This problem could be easily fixed by clearly specifying that the wage subsidy is to be provided only in respect of each individual workers’ wages, and by also requiring employers to report on each individual employee’s wages by pay period in their end-of-the year reporting.

The federal government is planning to put well over $100 billion to keeping the individuals and employers afloat during this crisis. This could push the federal deficit to $150 billion or higher: triplethe previous high. Very soon the discussion will turn to how we’re ultimately going to pay for this.

Not all businesses are suffering through this crisis, and some are increasing their sales and profits, just as many did during the wartime, and many of those could take advantage of these public support programs. The federal government should take steps to recover public support provided to businesses but don’t need it by recovering or taxing it back later. While so many are making sacrifices, corporations shouldn’t be making super-sized profits. The federal government should introduce an excess profits tax, just as Canada had during wartime, when corporate profits at rates above 7.5% were taxed at rates of 80% or higher.

Strict conditions should also be part of any government support for larger corporations. These should include maintaining workforce levels and labour rights, restrictions on executive pay and stock buybacks, and strong transparency and accountability provisions, including forbidding use of anonymous making contracts publicly accessible, and including anti-corruptions and clawback clauses in contracts.

There’s a need to get funding out quickly to individuals and employers to prevent this health pandemic from turning into a deeper economic crisis. But this money needs to go to to those who really need it and not to pad the profits of already profitable businesses.

Making the COVID19 Wage Subsidy Program work better for workers

Published by Anonymous (not verified) on Mon, 30/03/2020 - 3:13pm in

Tags 

Recession, wages

With the federal government is increasing its temporary wage subsidy to 75%, other reforms are needed to ensure the public funding goes to maintain workers, and not pad the profits of businesses. 

In the face of the COVID19 crisis, the Canadian government has done a good job of both limiting the spread of the virus and putting in place measures to prevent a health pandemic from also turning into an economic pandemic.

On the economic side, Prime Minister Trudeau and Finance Minister Bill Morneau took important steps to reassure individuals and businesses that the federal government would “do whatever it takes” to support them, ensure sick and emergency leave for workers that need it, provide liquidity to financial markets, enable individuals and employers to defer tax and other payments, and provide income support for households and wage subsidies for employers. 

They should have of course moved faster, particularly in certain areas, but hindsight is 20/20 and governments are constrained by the immediate tools and resources they have available. And when some initial measures have been inadequate, the federal government has moved quickly to make improvements. We only need to look to the United States and to some European countries to see how much worse it could have been here both in health and economic terms. And there is much more that needs to be done.

One area where there was broad agreement of the need for improvement was that the initial 10% temporary wage subsidy for small employers was inadequate. This amount was clearly too little for employers with plunging revenues to keep workers on the payroll. The commitment a week later to increase this to 75% is welcome, and puts it in line with wage subsidies promised by other countries such as the Denmark and the UK, but it also needs to be better targeted.

But a 75% wage subsidy for private employers could be very expensive and go to employers that don’t need it. The federal government didn’t provide details or cost estimates but will announce more details by the end of this month.  TD Bank estimated a 75% wage subsidy could cost $25 billion, on the basis that it would be seven and a half times the cost of the original $3.5 billion 10% wage subsidy proposal.  The CD Howe Institute estimates a wage subsidy for all businesses could cost considerably more: $6.3 billion a week, which would add up to about $80 billion over three months. 

These amounts are enormous. The federal government’s total major transfers to provinces, territories and municipalities for health care, social assistance, equalization and many other areas were projected to be just below $79 billion—over $2,000 for every Canadian—and that’s for the whole year, not three months.

Given this cost it is important that the federal government not just move quickly but also get the program right so billions aren’t wasted going to profitable businesses.  Affordable childcare, pharmacare, and many other important reforms that cost much less have been delayed for decades because they supposedly cost too much.  

How should the wage subsidy be designed so it is effective and goes to those employers who truly need it?  

The program should be limited to small medium sized employers, including non-profits and charities, with a cap per employee and employer and tied explicitly to preserving jobs and wages. Larger employers in specific sectors may also need support, but that should be on a case by case basis, and with strict conditions including provisions for equity ownership. 

Support must also be limited to employers that have suffered a significant decline in revenues.

  • Ireland’s program provides 70% of wages up to €410a week per worker at employers who have suffered at least a 25% reduction in revenue.  
  • The UK’s Coronavirus Job Retention Scheme will pay for 80% of usual wage costs up to £2,500 a month for furloughed employees: those still on the books, but who aren’t working or being paid because of the COVID crisis.  
  • Denmark’s program provides up to 75% of employee salaries for employers that have suffered a decline in revenues and would otherwise have to lay off at least 30% of their workforce or at least 50 employees, and is also limited to “furloughed” employees. 
  •  New Zealand’s scheme is limited to employers that have suffered a minimum 30% decline in revenues and pays a max of NZ$585.80 a week for full-time employees. 

The original temporary 10% wage subsidy plan was also flawed in another way. The way it is designed, an employer could potentially claim back more in a subsidy in respect of each individual employee than it pays them in wages.  This is because the 10% subsidy (which is actually a tax credit) is to be calculated on the aggregatesalaries paid and the totalnumber of employees over the period (because that’s the way the payroll tax system works) and not in respect of each individual employee’s wages.  

This means an employer could have an employee in for just one shift (or one shift per month) for which they are paid just $100, but still claim a $1,375 subsidy for each employee and have that credited against income taxes paid for much higher paid employees, including the owners. This is clearly not what was intended by the program. This problem could be easily fixed by clearly specifying that the wage subsidy is to be provided only in respect of each individual workers’ wages, and by also requiring employers to report on each individual employee’s wages by pay period in their end-of-the year reporting.

The federal government is planning to put well over $100 billion to keeping the individuals and employers afloat during this crisis. This could push the federal deficit to $150 billion or higher: triplethe previous high. Very soon the discussion will turn to how we’re ultimately going to pay for this.

Not all businesses are suffering through this crisis, and some are increasing their sales and profits, just as many did during the wartime, and many of those could take advantage of these public support programs. The federal government should take steps to recover public support provided to businesses but don’t need it by recovering or taxing it back later. While so many are making sacrifices, corporations shouldn’t be making super-sized profits. The federal government should introduce an excess profits tax, just as Canada had during wartime, when corporate profits at rates above 7.5% were taxed at rates of 80% or higher.

Strict conditions should also be part of any government support for larger corporations. These should include maintaining workforce levels and labour rights, restrictions on executive pay and stock buybacks, and strong transparency and accountability provisions, including forbidding use of anonymous making contracts publicly accessible, and including anti-corruptions and clawback clauses in contracts.

There’s a need to get funding out quickly to individuals and employers to prevent this health pandemic from turning into a deeper economic crisis. But this money needs to go to to those who really need it and not to pad the profits of already profitable businesses.

Toby Sanger is director of Canadians for Tax Fairness. Twitter: @toby_sanger @CdnTaxFairness

Searching for Higher Job Satisfaction

Published by Anonymous (not verified) on Wed, 04/03/2020 - 11:30pm in

Tags 

wages

Gizem Kosar, Leo Goldman, and Kyle Smith

Searching for Higher Job Satisfaction

Job-to-job transitions—those job moves that occur without an intervening spell of unemployment—have been discussed in the literature as a driver of wage growth. Economists typically describe the labor market as a “job ladder” that workers climb by moving to jobs with higher pay, stronger wage growth, and better benefits. It is important, however, that these transitions not be interspersed with periods of unemployment, both because such downtime could lead to a loss in accumulated human capital and because “on-the-job search” is more effective than searching while unemployed. Yet little is known about what leads workers to search for jobs while employed. This post aims to shed light on one such possible mechanism—namely, how current job satisfaction is related to job search behavior.

We use novel data from the New York Fed’s Survey of Consumer Expectations (SCE) Labor Market module, which has been fielded since March 2014. With this data, we document the heterogeneity in job satisfaction, analyze workers’ preferences for different job amenities, and discuss the impact of these preferences on labor market behavior.

How Satisfied Are Workers with Their Current Jobs?

To explore overall job satisfaction, we focus on the following question from the SCE:

“Taking everything into consideration, how satisfied would you say you are, overall, in your current job?”

Respondents are asked to provide a rating from 1 to 5, with 1 representing “Very dissatisfied” and 5 representing “Very satisfied.” Sixty-nine percent of employed respondents say they are satisfied (defined as somewhat or very satisfied) with their current jobs. However, respondents’ overall satisfaction with their current job differs significantly for full-time and part-time workers. While 70 percent of full-time workers report being satisfied with their current jobs, only 60 percent of part-time workers feel similarly. Some of this heterogeneity stems from the fact that part-time and full-time jobs have considerably different characteristics when it comes to compensation and nonwage amenities.

Overall job satisfaction differs across other subgroups in the sample as well (see chart below). Statistically significant differences arise by gender, education, and income group, though these effects are economically small, with the exception of the difference across income groups.

Searching for Higher Job Satisfaction

In addition to asking about overall job satisfaction, the survey elicits information about respondents’ satisfaction with specific job characteristics, namely compensation, nonwage amenities (such as benefits, maternity or paternity leave, and availability of flexible work hours), how well the job fits their experience and skills, and promotion opportunities. By analyzing responses to these questions, we can document the possible source of the difference in overall job satisfaction for different subgroups in the sample.

We observe essentially the same trends as we do for overall satisfaction, with one exception: although no significant difference exists in respondents’ overall job satisfaction across age groups, we see that younger respondents (those below age 45) are more likely to be satisfied with compensation and nonwage amenities. Aside from this disparity, the overall job satisfaction question seems to offer a good summary measure that is representative of respondents’ degree of contentment with the particular characteristics of their current jobs.

Searching for New Jobs

As a first step toward understanding the relationship between current job satisfaction and labor supply behavior, we examine whether job satisfaction is related to respondents’ decisions to search for other jobs. The table below shows the ordinary least squares (OLS) estimates from the regression of whether the respondent has engaged in any search activities for a new job in the last four weeks on our measure of overall job satisfaction. We find that after we control for worker characteristics and other job traits, having lower job satisfaction is associated with a significantly—both economically and statistically—higher likelihood of searching for a new job. Specifically, a one unit decrease in job satisfaction (which is measured on a scale of 1 to 5) is associated with a 14 percentage point increase in the likelihood that the respondent is searching for a new job. This relationship is robust across different demographic, age, and income groups. For college graduates, there is an even stronger relationship between job satisfaction and job search.

Searching for Higher Job Satisfaction

Using responses to questions about satisfaction with specific job characteristics, we can break down respondents’ preferences for job amenities and analyze the differences in how they act on these preferences in the labor market. The table below shows that respondents’ satisfaction with experience/skills fit is the most important job characteristic overall when deciding whether to search for a new job. However, the second most important characteristic differs among groups. While satisfaction with nonwage amenities is the second most important factor in the search decisions of women, satisfaction with current compensation ranks as the next most important factor for men and for college graduates.

Searching for Higher Job Satisfaction

Realized Mobility

Now that we’ve learned about individuals’ preferences, the next step is to understand whether job satisfaction is an important factor for actual, realized job-to-job movements. If it is, we would expect workers with lower satisfaction to both seek and accept outside offers at a higher rate. To test this theory, we look at whether respondents with lower job satisfaction are more likely to accept the job offers they receive in the next four months, after controlling for other current job and worker characteristics. The table below presents the results from this regression. We find that even after controlling for worker characteristics and other job traits, a one unit decrease in job satisfaction is associated with an 8 percentage point higher likelihood of accepting an outside offer, conditional on receiving an offer. This relationship is both economically and statistically significant, as it corresponds to a 38.6 percent (0.081/0.21) increase in the average likelihood of accepting an outside offer.

Searching for Higher Job Satisfaction

When we consider the same regression by gender and education groups, we see that for women and college graduates, the link between overall job satisfaction and job mobility is even stronger. Interestingly, we find more muted effects of job satisfaction on men’s future likelihood of actually leaving their jobs.

Following our earlier approach, we can again break down the relationship between overall job satisfaction and job-to-job transitions based on respondents’ satisfaction with different job characteristics. This analysis gives us important information about which job characteristics respondents value the most, as well as the drivers of job-to-job mobility for different demographic groups. Interesting patterns arise from this analysis, as shown in the table below. When we consider female respondents or respondents without a college degree only, satisfaction with compensation is the sole driver of job-to-job mobility. In the overall sample and when we consider college graduates only, however, we see that experience/skills fit at one’s current job is also an important job attribute that matters for the mobility decision, in addition to satisfaction with compensation. But for male respondents, the only current job characteristic that matters when evaluating an outside job offer is the satisfaction with experience/skills fit at one’s current job.

Searching for Higher Job Satisfaction

Conclusion

In sum, we find that how well a job matches a workers’ skills or experience is an important factor in driving search behavior. We also find that job satisfaction is highly correlated with realized mobility, because workers with a lower overall job satisfaction are around 39 percent more likely to accept outside offers, conditional on receiving an offer. These results, based on novel data from the SCE, provide another explanation for why job-to-job movements may not always lead to a wage increase. If workers with lower job satisfaction are the ones leaving their jobs, they might accept outside offers that have lower compensation and less generous nonwage amenities. In future work, we plan to continue investigating more broadly the different channels leading to job-to-job movements as well as their long-term outcomes.

Related Reading:

LSE Series on Heterogeneity

Gizem KosarGizem Kosar is an economist in the Federal Reserve Bank of New York’s Research and Statistics Group.

Leo Goldman was a summer analyst in the Bank’s Research and Statistics Group.

Kyle SmithKyle Smith is a senior research analyst in the Bank’s Research and Statistics Group.

How to cite this post:

Gizem Kosar, Leo Goldman, and Kyle Smith, “Searching for Higher Job Satisfaction,” Federal Reserve Bank of New York Liberty Street Economics, March 4, 2020, https://libertystreeteconomics.newyorkfed.org/2020/03/searching-for-high....




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.

Is the Tide Lifting All Boats? A Closer Look at the Earnings Growth Experiences of U.S. Workers

Published by Anonymous (not verified) on Wed, 04/03/2020 - 11:15pm in

René Chalom, Fatih Karahan, Brendan Moore, and Giorgio Topa

Is the Tide Lifting All Boats? A Closer Look at the Earnings Growth Experiences of U.S. Workers

The growth rate of hourly earnings is a widely used indicator to assess the economic progress of U.S. workers, as well as the health of the labor market. It is also a measure of wage pressures that could potentially spill over into inflationary pressures in a tightening labor market. Hourly earnings growth, on average, has gradually risen over the course of the current expansion, under way since the end of the Great Recession. But how have different groups of workers fared in this regard? Have hourly earnings risen uniformly at all points of the wage distribution, or have some segments of the workforce been left behind? In this post, we take a close look at earnings growth over the past two decades at different points of the wage distribution and for various demographic groups. Our goal is to examine whether there are any significant patterns in the evolution of the distribution of earnings, as opposed to just looking at the behavior of aggregate earnings growth. We focus primarily on hourly earnings growth, although our findings apply to total earnings as well.

We perform our analysis using data from the Bureau of Labor Statistics’ Current Population Survey (CPS). In particular, we focus on prime-age (25 to 54 years of age) workers who are present in two consecutive CPS March supplements (the Annual Social and Economic Supplement), to compute earnings growth from one year to the next for the same individual. In order to minimize volatility and measurement error in our estimates, we further restrict the sample to look at full-time employees, defined as individuals who worked for at least forty-five weeks and usually worked at least ten hours per week in both years. Hourly earnings are computed as annual labor earnings divided by the product of weeks worked last year and usual weekly hours. Workers with hourly wages below the federal minimum wage are dropped from the sample.

The chart below reports average hourly earnings growth by quartile of the initial hourly earnings distribution in each year. We find that—perhaps surprisingly—average hourly earnings at the bottom of the wage distribution have been consistently growing faster than those at the top of the distribution. This pattern is partly driven by the fact that it is more common for low-wage workers to receive large wage increases in percentage terms than for high-wage workers, even though such increases are not that large in absolute terms. As a consequence, it is worth noting that these results are still consistent with increasing income inequality as measured by the variance of earnings. More importantly, the pattern we observe may also be the result of negative shocks to incomes that turn out to be transitory: a worker may have low earnings today because of an adverse event, but if that event is transitory there is a good chance that the worker’s earnings will recover next year.

The finding reported in the chart holds true even within age groups, so it is not just the result of lifecycle patterns (typically, earnings growth is more rapid at the beginning of one’s career and slows down as the worker becomes more mature). Interestingly, the top and bottom of the earnings distribution have experienced a stronger increase in the rate of earnings growth than the middle portion of the distribution over the past four years: this could be related to the gradual decline of “routine,” middle-skill jobs, a process that might accelerate following recessions, as various researchers have highlighted.

Is the Tide Lifting All Boats? A Closer Look at the Earnings Growth Experiences of U.S. Workers

Turning to the evolution of earnings growth by education, hourly earnings of more educated workers (with a college or advanced degree) have tended to grow faster than for less educated ones (those with a high school diploma or less). On average between 2010 and 2016, hourly earnings of workers with a bachelor’s degree grew by 7.8 percent annually, whereas wages grew by 6.5 percent for those with a high school diploma or less. This finding is especially evident in the current expansion (2009-16), although the pattern reversed in 2017. This is consistent with increasing returns to education, a trend that has been operating at least since the 1990s.

Is the Tide Lifting All Boats? A Closer Look at the Earnings Growth Experiences of U.S. Workers

Finally, the last chart presents average hourly earnings (in constant 2017 dollars) by race and ethnicity. Here we find that, if anything, hourly earnings of Hispanic and especially African American workers seem to have been catching up with those of Whites, at least in more recent years. Hourly earnings of Asian workers have been growing faster than for any other group.

Is the Tide Lifting All Boats? A Closer Look at the Earnings Growth Experiences of U.S. Workers

Conclusion

In this post, we have focused on the experiences of U.S. workers over the past two decades through the lens of earnings growth. We have investigated the evolution of earnings growth, breaking down the aggregate numbers into a more disaggregated picture. The analysis paints a nuanced picture. While there is some evidence that workers at the bottom of the earnings distribution may be catching up with those at the top of the distribution, we also find some indications that the returns to higher education may be increasing, with hourly earnings growth of college graduates outpacing that of high school graduates. Finally, we also find some evidence that—at least in recent years—hourly earnings of minority workers may be starting to catch up with those of white workers. This, together with the fact that the unemployment rate for African American workers has reached record lows, is an encouraging sign for the broadening of the current economic expansion.

Chart data

Related Reading:

LSE Series on Heterogeneity

René Chalom is an economics Ph.D. candidate at Columbia University.

Fatih KarahanFatih Karahan is a senior economist in the Federal Reserve Bank of New York’s Research and Statistics Group.

Brendan MooreBrendan Moore is a senior research analyst in the Bank’s Research and Statistics Group.

Giorgio Topa
Giorgio Topa is a vice president in the Bank’s Research and Statistics Group.

How to cite this post:

René Chalom, Fatih Karahan, Brendan Moore, and Giorgio Topa, “Is the Tide Lifting All Boats? A Closer Look at the Earnings Growth Experiences of U.S. Workers,” Federal Reserve Bank of New York Liberty Street Economics, March 4, 2020, https://libertystreeteconomics.newyorkfed.org/2020/03/is-the-tide-liftin....




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.

Introduction to Heterogeneity Series II: Labor Market Outcomes

Published by Anonymous (not verified) on Tue, 03/03/2020 - 11:00pm in

Rajashri Chakrabarti

 Labor Market Outcomes

While average outcomes serve as important yardsticks for how the economy is doing, understanding heterogeneity—how outcomes vary across a population—is key to understanding both the whole picture and the implications of any given policy. Following our six-part look at heterogeneity in October 2019, we now turn our focus to heterogeneity in the labor market—the subject of four posts set for release tomorrow morning. Average labor market statistics mask a lot of underlying variability—disparities that factor into labor market dynamics. While we have written about labor market heterogeneity before, this series is an attempt to pull together in a cohesive way new insights on the labor market and highlight details that are not immediately obvious when we study aggregate labor market statistics.

Here is a brief look at each post in the series:

Women Have Been Hit Hard by the Loss of Routine Jobs

1. Women Have Been Hit Hard by the Loss of Routine Jobs, Too

Technological change and globalization have eliminated many “routine jobs”—positions that center on physically intensive activities, such as assembly line work, or on certain cognitively intensive tasks, such as number-crunching. Jaison Abel and Richard Deitz investigate whether the repercussions have differed for male and female workers. Here’s what they found:

  • While both men and women have experienced a decline in routine jobs, the decline was markedly steeper for women.
  • As routine jobs have disappeared, men and women have sorted into different occupations: men are more likely to take engineering positions while women are more likely to take healthcare jobs.
  • In addition, an increasing share of both men and women sorted into low-skilled service jobs or left the labor force altogether.

Is the Tide Lifting All Boats? A Closer Look at the Earnings Growth Experiences of U.S. Workers

2. Is the Tide Lifting All Boats? A Closer Look at the Earnings Growth Experiences of U.S. Workers

Rene Chalom, Fatih Karahan, Brendan Moore, and Giorgio Topa look at the pace of earnings growth across the wage distribution.

  • Average hourly earnings have grown considerably faster at the bottom of the wage distribution than at the top over the past two decades.
  • Workers in the top and bottom quartiles of the earnings distribution have experienced a stronger increase in the rate of earnings growth than those in the middle of the distribution, a pattern that may be related to the decline of routine jobs referenced above.
  • Earnings of more educated workers have grown faster than those for less educated ones. Earnings of Hispanic and African American workers have moved closer to those of white Americans, particularly in the past few years.

Searching for Higher Job Satisfaction

3. Searching for Higher Job Satisfaction

Gizem Kosar, Leo Goldman, and Kyle Smith explore the role of job satisfaction in job search and job-to-job mobility, examining differences by gender and other characteristics.

  • Regardless of race, age, or income level, lower job satisfaction is associated with a higher likelihood of searching for a job.
  • However, differences exist in the job components that men and women care about when choosing whether to search for a new position.
  • Different factors also determine job-to-job mobility for men and women. Compensation is the strongest driver for women while men primarily care about satisfaction with the experience and skills attached to their current job.

How Does Credit Access Affect Job-Search Outcomes and Sorting?

4. How Does Credit Access Affect Job-Search Outcomes and Sorting?

Kyle Herkenhoff, Gordon Phillips, and Ethan Cohen-Cole investigate the effects of credit access on job searches by displaced workers.

  • Displaced workers who have greater credit access take longer to take a new job.
  • Additionally, workers with greater credit access have higher annual earnings a year after losing their jobs, and are more likely to work for more productive firms.
  • The findings suggest that individuals with enough credit have the ability to prolong their search to look for a better job match.

As these posts will demonstrate in greater detail tomorrow, the average outcome doesn’t provide a full picture of the labor market, where outcomes are determined by a range of factors, including differences in race, gender, and credit access, among others. We will continue to study and write about the importance of heterogeneity in the labor market and other segments of the economy.

Related Reading:
LSE Series on Heterogeneity

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

How to cite this post:

Rajashri Chakrabarti, “Introduction to Heterogeneity Series II: Labor Market Outcomes,” Federal Reserve Bank of New York Liberty Street Economics, March 3, 2020, https://libertystreeteconomics.newyorkfed.org/2020/02/introduction-to-he....



Disclaimer

The views expressed in this post are those of the author 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 author.

Imnmigration Rights Organisations Write Letter of Protest Against Patel’s Deportations

Published by Anonymous (not verified) on Sun, 23/02/2020 - 10:24pm in

This comes from last Friday’s I for 21st February 2020, and reports that two organisations dealing with immigrants and detainees have written a letter of protest against the Tories latest deportation of ex-convicts. They complain that the deportees may not have had access to proper legal advice. The article, by Chloe Chaplain, runs

The Home Office has been warned a planeload of people due to be deported from the UK contains “asylum seekers and vulnerable victims of trafficking” who might not have had access to proper legal support.

In a joint letter, Detention Action and the Immigration Law Practitioners’ Association have written to the Home Secretary, Priti Patel, claiming that those on board a flight scheduled to leave the UK yesterday might not have been given “adequate access to justice”. 

The Home Office said that all cases had been properly considered and that all detainees were “given simple opportunities to seek any legal advice they require” while in the centres.

But Ms Lenegan said her concerns stemmed from the quality of advice available to these people.

“What I imagine the Home Office is referring to is the detained duty advice scheme – and that is what we are concerned about,” she said. “All the detention centres have this scheme where lawyers will sit in the removal centre for a day, and there will be 10 half-hour slots to speak to people.”

I think I’ve come across this story before, or something like it. These questions were being raised when the deportations first occurred. Now it seems that the organisations involved have raised an official complaint.

It also looks like they’re trying to refute the Tories’ claim that the legal advice they’ve received is adequate. To my, admittedly inexpert eyes, a half-hour slot is nowhere near adequate for someone in an immigration detention centre to get propler legal advice. However, it does fit the Tories’ and Blairite’s strategy of presenting a bare minimum of support and then claiming that it was somehow full or adequate. From personal experience, I know that people writing letters of complaint to the authorities are warned how they phrase these letters, so that the Tories do not subsequently misrepresent them as a kind of public discussion when no such thing has occurred.

As for Patel herself, Mike yesterday raised the question whether she was ‘self-hating’. Is she a member of an ethnic minority who hates their own race? Patel had made a statement denying that Boris Johnson was racist after the rapper Dave changed his lyrics to attack BoJob at the Brit awards. But Johnson certainly looks like one, with his racist caricatures of Blacks, Muslims and Jews in his execrable novel, 72 Virgins. Not to mention his remarks about ‘grinning picanninies’ and not shaking the hands of the Black people attending the Tory party conference.

Patel claims that her parents arrived in this family in 1972 as part of the Ugandan Asian community expelled by Idi Amin. They were given sanctuary by Ted Heath when every other country, including India, refused them. But her parents actually arrived before that, in the 1960s, meaning that they may not have been allowed into this country as asylum seekers as she claims. Under her rules then, she’d have had her own mother deported.

See: https://voxpoliticalonline.com/2020/02/22/patels-policies-would-deport-her-own-mother-why-believe-her-when-she-says-johnson-isnt-racist/

Mike’s article is also worth reading as he demolishes the Tories’ simple equation of low-paid with low-skilled. The Tories want to refuse entry to migrants unless they’re going to a job that pays £25,600 plus. But Mike states that when he was working as a journalist and editor, he was never paid anywhere near that amount.

And I’m absolutely sure Mike’s experience is common. There is now a wave of graduates seeking low-paid jobs for which they are ridiculously overqualified, because the graduate-level opportunities simply aren’t there. And I heard from academic friends over a decade ago that even academics may be on extraordinarily low wages due to the way the profession’s been restructured so that the upper management are vastly overpaid. The people, who do the actual teaching work, on the other hand, may be on part-time contracts and other devices, which would keep their salaries under that £25,600 amount.

This is more toxic, racist exploitative nonsense from a toxic, racist and exploitative government seeking to capitalise and inflame hatred against immigrants.

 

Keir Starmer’s 10 Pledges for the Labour Party

I’ve just received a pamphlet from Keir Starmer’s campaign team, promoting him as the future of leader of the Labour Party. It begins with this quote

“I’ve spent my life fighting injustice. I’m standing to be leader of our Labour Party because I’m determined to unite our movement, take on the Tories and build a better future. If all parts of our movement come together, we can achieve anything.”

There’s a brief biography that runs

A Life Devoted to Fighting Injustice

Keir is the son of an NHS nurse and a toolmaker. As a former human rights lawyer, Keir is dedicated to Labour’s core principles of fairness and justice.

He has devoted his whole life to fighting injustice and defending the powerless against the powerful, as his ten-year unpaid battle over the McLibel case goes to show. he has fought against the death penalty abroad, defended mining communities against pit closures, and taken up hundreds of employment rights and trade union cases. After being the Director of Public Prosecutions, he was elected MP for Holborn & St Pancras in 2015, later becoming Shadow Brexit Secretary. Defeating Boris Johnson is a huge task but Keir knows that if we bring our movement together and stay true to our values, we can win, and change Britain for the better.

As leader of the Labour Party, Keir will contine to fight for justice in all its forms: social justice, climate justice, economic justice.

There’s then three columns of endorsement from people such as Dawn French, Rokhsana Fiaz, the elected mayor of Lewisham, Laura Parker, the former National Coordinator of Momentum, Emma Hardy, the MP for Hull West and Hessle, Aneira Thomas, the first baby born on the NHS, Sarah Sackman, a public and environmental lawyer, Alf Dubs, the refugee campaigner, Paul Sweeney, the former MP for Glasgow North East, Ricky Tomlinson, David Lammy, the MP for Tottenham, Doreen Lawrence, Konnie Huq, the TV presenter and writer, Mick Antoniw, the member of the Welsh Assembly for Pontypridd, Ross Millard of the Sunderland band, the Futureheads, Lucio Buffone, a member of ASLEF and LGBT+ Labour national committee member, and the Unison General Secretary, Dave Prentis.

The back page contains his ‘My Pledges To You’. He says

My  promise is that I will maintain our radical values and work tirelessly to get Labour in to power – so that we can advance the interests of the people our party was created to serve. Based on the moral case for socialism, here is where I stand.

His pledges are as follows

  1. Economic Justice.

Increase income tax for the top 5% of earners, reverse the Tories’ cuts in corporation tax and clamp down on tax avoidance, particularly of large corporations. No stepping back from our core principles.

2. Social Justice.

Abolish Universal Credit and end the Tories’ cruel sanctions regime. Set a national goal for wellbeing to make health as important as GDP; invest in services that help shift to a preventive approach. Stand up for universal services and defend our NHS. Support the abolition of tuition fees and invest in lifelong learning.

3. Climate Justice

Put the Green New Deal at the heart of everything we do. There is no issue more important to our future than the climate emergency. A Clean Air Act to tackle pollution locally. Demand international action on climate rights.

4. Promote Peace and Human Rights.

No more illegal wars. Introduce a Prevention of Military Intervention Act and put human rights at the heart of foreign policy. Review all UK arms sales and make us a force for international  peace and justice.

5. Common Ownership.

Public services should be in public hands, not making profits for shareholders. Support common ownership of rail, mail, energy and water; end outsourcing in our NHS, local government and justice system.

6. Defend Migrant’s Rights.

Full voting rights for EU nationals. Defend free movement as we leave the EU. An immigration system based on compassion and dignity. End indefinite detention and call for the closure of centres such as Yarl’s Wood.

7. Strengthen Workers’ Rights and Trade Unions.

Work shoulder to should with trade unions to stand up for working people, tackle insecure work and low pay. Repeal the Trade Union Act. Oppose Tory attacks on the right to take industrial action and the weakening of workplace rights.

8. Radical Devolution of Power, Wealth and Opportunity.

Push power, wealth and opportunity away from Whitehall. A federal system to devolve powers – including through regional investment banks and control over regional industrial strategy. Abolish the House of Lords – replace it with an elected chamber of regions and nations.

9. Equality.

Pull down obstacles that limit opportunities and talent. we are the party of the Equal Pay Act, Sure Start, BAME representation and the abolition of Section 28 – we must build on that for a new decade.

10. Effective Opposition to the Tories.

Forensic, effective opposition to the Tories in Parliament – linked up to our mass membership and a professional election operation. Never lose sight of the votes ‘leant’ to the Tories in 2019. Unite our party, promote pluralism and improve our culture. Robust action to eradicate the scourge of antisemitism. Maintain our collective link with the unions.

This is all good, radical stuff, but there are problems. Firstly, his commitment to taking ‘robust action to eradicate the scourge of antisemitism’ and his decision, along with the rest of the Labour leadership contenders, to sign the Board of Deputies’ highly manipulative pledges, means that more people are going to be thrown out of the party without any opportunity to defend themselves, based only the allegations of anonymous accusers. We’ve seen innocents like Jackie Walker, Ken Livingstone, Marc Wadsworth, Mike Sivier, Tony Greenstein, Martin Odoni and so many others suspended and thrown out through the party’s kangaroo courts. One poor lady has died through the shock of being so expelled, even though she was a passionate anti-racist. This isn’t justice, it’s a pledge to renew the witch hunt.

As for promoting peace and human rights – how long will that last with the Board of Deputies demanding to supervise everything relating to Jews? Israel is a gross violator of human rights, but the Board has consistently defended it and its deplorable actions. Their demands that Labour adopt the IHRC definition of anti-Semitism was to stifle criticism of Israel by declaring them ‘anti-Semitic’. This pledge might be genuine, but the momentum anyone applies it to Israel the BoD will start howling ‘anti-Semitism!’ again and decent people will start getting expelled. Especially if they’re Jewish.

And his plan for giving Britain a federal constitution doesn’t seem to be a good one. From what I’ve read, it has been discussed before, and while it may solve some problems it creates others. It’s supposed to be no better than the current arrangement, which is why it hasn’t been implemented.

I also don’t back him on Europe. Oh, I’m a remainer at heart, but I think a large part of  the reason we lost the election was because, instead of accepting the results of referendum, Labour pledged itself to return to the EU. This was partly on Starmer’s insistence. He is right, however, that EU nationals in the UK should have voting rights.

But I have to say that I don’t trust Starmer. His campaign team were all supporters of Owen Smith, one of those who challenged Corbyn’s leadership. They include Luke Akehurst, one of the leading figures of the Israel lobby within the Labour Party. Tony Greenstein a few days ago put up a piece arguing that, whatever he claims to the contrary, as Director of Public Prosecutions he always sided with the authorities – the police, military and intelligence services – against everyone else.

My fear is that if he becomes leader of the Labour Party, he will quietly forget these pledges and continue the Blair project.

See: http://azvsas.blogspot.com/2020/02/keir-starmer-is-candidate-that-deep.html

http://azvsas.blogspot.com/2020/02/pauline-hammerton-expelled-for.html

Therese Coffey: Another Tory Minister Who Thinks Food Banks Are Brilliant

Published by Anonymous (not verified) on Thu, 30/01/2020 - 9:41pm in

Yesterday the Canary reported that the Labour MP Zahra Sultana, who called food banks a ‘national disgrace’, wrote to Coffey about the obscene injustice of nurses having to use food banks while fat-cat bosses are rewarded with massive payouts. Sultana was understandably upset that there were now more food banks in the UK than branches of McDonald’s and that the British boss of the fast food firm had received a settlement of £30 million after they had fired him.

She got this bland reply from Coffey:

I visited a similar food bank in my own constituency that has been working together with food redistribution schemes. Marrying the two is a perfect way to try to address the challenges that people face at difficult times in their lives.

Coffey also called the people using food banks ‘customers’, thus giving the misleading the impression that they had some kind of choice over whether or not to be there.

Sultana wasn’t impressed, and neither were other commenters on twitter. She commented

I just asked the Secretary of State for Work & Pensions about the gross injustice of nurses relying on food banks while the rich get richer.

Her response? She called food banks a “perfect way” to meet the challenges of those in poverty.

The Tories are totally out of touch.

The article goes on to report that BristolLive had also said that they’d been told by one volunteer at a food bank that four or five nurses had visited a food bank in one week.

The Canary’s article also criticised Coffey for not mentioning that food banks run by volunteers are supported through donations. They’re there to help poor people struggling to feed themselves and their families because of ten years of Tory austerity, welfare cuts and Universal Credit. And Coffey certainly wasn’t going to tackle the problem of bloated salaries for fat-cat bosses and widening inequality.

The Canary further reported that the Trussell Trust had stated in April 2019 that food bank use had reached a record high point. Between 1st April 2018 and 31st March the charity had distributed 1.6 million food parcels. This was a rise of 19 per cent from the previous year. About half a million of them were given to children.

Sabine Goodwin, the head of the Independent Food Aid Network, commented that Coffey’s remarks showed how food bank use had been normalised in the UK, and that they were now the fourth emergency service.

The Canary concluded:

The DWP is not fit for purpose. And Coffey’s latest response highlights just how dangerous it truly is.

See: https://www.thecanary.co/trending/2020/01/28/dwp-minister-thinks-foodbanks-are-a-perfect-solution/

This is just the latest scandal in which a Tory minister has made a bland, evasive statement praising food banks and ignoring the underlying problem of the massive suffering the Tories themselves have caused. I think the last one was Jacob Rees-Mogg, who was similarly blasted for his complacency. In fact, food banks and the volunteers who run them are doing an excellent job. I know that two of the great commenters on this blog are involved with those in their communities. That isn’t the point. The point is, they shouldn’t be needed. There should be no benefit sanctions nor false or falsified fitness for work tests throwing people who are too ill or disabled to work off benefits. The unemployed and disabled should be given benefits at a level that allows them to live properly, paid the moment they request and need them. They should not have to wait a few days, let alone five weeks, before receiving a payment. Working people should also be paid a decent wage, so that they also can afford to feed, heat and clothe themselves and their families.

But this is precisely what Tories like Coffey do not want to happen. They are dismantling the welfare state because they wish to relieve high earners – the rich – of the tax burden of supporting the poor. They originally tried justifying this with specious arguments about ‘trickledown’. The money the rich saved would trickle down to the poor as their social superiors opened new businesses, employed more people and paid higher wages. But they don’t actually do any of that. It just stays in their banks accounts, accumulating interest while they boast about how many hundreds of K they’ve trousered. I also believe the Tories actually like food banks because they see them as the British counterpart to the American system of food stamps.

They also have absolutely no problem with rising inequality. In fact, I remember them openly being all for it. Right at the beginning of the Thatcher project in the 1980s, various Tories appeared on BBC documentaries about benefit cuts and wage restraint raving about how wonderful it was. They believed that conditions should be made worse for the poor, as this would encourage them to ‘do well’. Thatcher herself was a fan of the less eligibility system of Victorian poor relief. Like them, she believed conditions should be made as humiliating and oppressive as possible for those on welfare in order to make them get a job as quickly as possible. He successors have weaponised it further, and now see it as a means of culling the sick and poor. 130,000 people have been killed so far by austerity in a campaign described by Mike and other bloggers and welfare commenters and organisations as the genocide of the disabled.

Food banks are not a perfect solution for people people at a difficult point in their lives. They are a severely inadequate attempt to ameliorate some of the worse effects of Tory austerity and welfare cuts. It is great that people are there, trying to do something for the poor.

But it is a glaring disgrace that they should be needed in first place. Coffee is a smooth, smiling dissembler trying to put a good front over utterly disgraceful, murderous Tory policies. She and the wretched government she serves can’t fall soon enough.

Sanders Ahead of Biden in Race for Democratic Nomination

Great news from across the Pond! According to a brief report in today’s I, Bernie Sanders is ahead of Joe Biden for nomination as the Democratic candidate for the presidency in a poll in New Hampshire. The report reads

Surveys suggest US senator Bernie Sanders and former vice-president Joe Biden are locked in a tight race for the Democratic presidential nomination. Mr Sanders led a poll of New Hampshire voters with 25 per cent support. Mr Biden is on 16 per cent, according to a poll by CNN and the University of New Hampshire.

The American left-wing magazine, Counterpunch, had a piece about this last Friday by David Swanson. He stated that CNN had broadcast a very biased debate the week before intended to discredit Bernie’s campaign. The poll was intended to show CNN how successful they’d been. But they hadn’t. Support for Bernie was up 7 per cent, and down 2 per cent each for Biden and Warren. Swanson reports that Bernie won in the following categories, writing

Among men the winner is Bernie.
Among women the winner is Bernie.
Among whites the winner is Bernie.
Among non-whites the winner is Bernie.
Among registered voters the winner is Bernie.
Among those paid less than $50k the winner is Bernie.
Among those paid more than $50k the winner is Bernie.
Among non-college graduates the winner is Bernie.
Among college graduates the winner is Bernie.
Among non-white college graduates the winner is Bernie.
Among 18-49 year olds the winner is Bernie.
Among independents the winner is Bernie.
Among liberals the winner is Bernie.
Among those with their minds made up the winner is Bernie.
Among those without their minds made up the winner is Bernie.

Biden, by contrast, is only the winner among White college students, the over 45s, Democrats and moderates.

CNN asked people which candidate agreed the most on the issue that mattered to them, and who best understood the problems facing them. The answer to both was Bernie. But they reported that most people responded Biden when asked which candidate would best unite the Democrat party. This is highly questionable, as Biden is hugely offensive to large numbers of people. The broadcaster also reports that Biden is the candidate with the best chance of beating Trump. This is probably because the public has been told that Biden will, over and over.

Swanson concludes, however, that CNN’s bias is counterproductive. If people know that CNN wants them to vote against Bernie, then CNN has lost and Bernies wins. And Bernie should win, as he has the most support. But CNN has got to obscure that.

The good news is that what CNN tells people is becoming the opposite of effective. If CNN and its fellow corporate media outlets can convince people to vote against their own interests and to imagine that they came up with that idea themselves, Bernie Sanders is done. But if word leaks out that it’s CNN telling people to vote the way CNN wants, then CNN is done, and Bernie Sanders is headed to the White House.

The most electable candidate is the candidate with the most support. Only if this simple fact can be successfully hidden, can CNN continue its role as overseer of elections.

See: https://www.counterpunch.org/2020/01/24/cnn-poll-sanders-is-the-most-electable/

Although Sanders is running for the Democratic nomination, he’s a member of Democratic Socialists of America. He wants Americans to enjoy strong unions, worker-owned cooperatives, an America that supports working people, and most of all, Medicare For All. The state should pay for their medical treatment similar to the healthcare systems of the other western countries.

And the corporate elite have been desperate to stop him because of this, with the corporativist wing of the Democrats intriguing against him in favour of Hillary Clinton. And it was also pretty clear a few days ago that the extreme right was frightened of him after this poll, as Carl Benjamin aka Sargon of Akkad, the man who bust UKIP, put up another hit piece against Bernie on his YouTube channel.

But this is very optimistic news. If Bernie wins, he will transform America. And because America is still the dominant superpower, that influence will spread around the world to empower working women and men everywhere.

Go, Bernie, go! And win!

Reply to Argument that It’s the Poor’s Own Fault They Can’t Afford Food

Published by Anonymous (not verified) on Sun, 26/01/2020 - 2:38am in

We’ve all heard the arguments from the Tories and their lapdogs in the press denying the reality of hunger and starvation here in the UK. Tories like Edwina Currie, amongst others, have told us that people aren’t really desperate when they go to food banks. It’s just that’s free food. Or else they can’t cook properly, or when they do eat, they choose expensive meals that they can’t afford. Now there are some individuals, to which this does apply. But it is by no means the complete picture for everyone suffering ‘food poverty’. The real causes of people going to food banks or otherwise going hungry are benefit cuts and wage stagnation. Incomes now lag behind inflation, so that many people are simply unable to afford basic food items. Rebecca O’Connell and Laura Hamilton make this very clear in their chapter, ‘Hunger and Food Poverty’, in Cooper’s and Whyte’s The Violence of Austerity. They write

Reports of rising food poverty and food bank use have largely been ignored or dismissed by the UK government, with politicians suggesting that supply is fuelling demand and blaming the poor for lacking budgeting skills, making poor food ‘choices’ and being unable to cook. In contrast to government discourse, however, research shows that the cost of food relative to disposable income (affordability) is crucial and that in the wake of the financial crisis and the subsequent policies of economic austerity, the affordability of food was severely reduced. (p. 95).

I’ve put this up because this is an argument we have heard again and again. And it’s an argument you can bet the Tories will repeat ad nauseam. But it’s garbage. And it is going to need refuting again and again with passages like the above.

This Tory lie cannot be attacked and refuted too often.

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