We have blogged and written extensively about the gender pay gap, much of which is not attributable to discrimination, as is commonly invoked. President Obama has taken up the cause; he recently signed two executive orders aimed at closing the gap. Business Insider recently posted a state-by-state breakdown of the gender wage gap. It is interesting to look at but keep in mind the non-discriminatory factors that contribute to the gap, and therefore consider these numbers with some skepticism:
Wyoming has the biggest pay gap — the median male full-time worker made $51,932, and the median female full-time worker made $33,152. The male worker thus made 56.6% more than the female worker.
Washington, D.C. had the smallest gap — there, men make 11.0% more than women. Among the states, Maryland and Nevada had the smallest gaps, both at 17.2%.
A recent one-day strike by fast-food workers has called attention to the low wages in the industry. James Surowieckioffers one reason that the issue’s visibility has increased recently:
Still, the reason this has become a big political issue is not that the jobs have changed; it’s that the people doing the jobs have. Historically, low-wage work tended to be done either by the young or by women looking for part-time jobs to supplement family income. As the historian Bethany Moreton has shown, Walmart in its early days sought explicitly to hire underemployed married women. Fast-food workforces, meanwhile, were dominated by teen-agers. Now, though, plenty of family breadwinners are stuck in these jobs. That’s because, over the past three decades, the U.S. economy has done a poor job of creating good middle-class jobs; five of the six fastest-growing job categories today pay less than the median wage. That’s why, as a recent study by the economists John Schmitt and Janelle Jones has shown, low-wage workers are older and better educated than ever. More important, more of them are relying on their paychecks not for pin money or to pay for Friday-night dates but, rather, to support families. Forty years ago, there was no expectation that fast-food or discount-retail jobs would provide a living wage, because these were not jobs that, in the main, adult heads of household did. Today, low-wage workers provide forty-six per cent of their family’s income. It is that change which is driving the demand for higher pay.
Given that reality, Surowiecki writes, raising the minimum wage by a few bucks a hour won’t fix the problem. His prescription: more truly middle-class jobs and an expansion of the social safety net. “Fast-food jobs in Germany and the Netherlands,” he writes, “aren’t much better-paid than in the U.S., but a stronger safety net makes workers much better off.”
Sarah Halzack, writing for The Washington Post, explores how LinkedIn is changing job-searching and recruiting:
As LinkedIn has exploded — perhaps because it has exploded — there has been a major shift in the way employers find new workers. Gone are the days of “post and pray,” a recruiter’s adage for the practice of advertising a job opening and then idly hoping that good candidates swim up to the bait.
Now the process of talent acquisition is something of a hunt.
“We’re really at a point now where all of your employees are vulnerable to being poached. Every single one,” said Josh Bersin, principal and founder of talent consulting firm Bersin by Deloitte.
The change is happening rapidly: A 2013 study by the Society for Human Resource Management found that 77 percent of employers are using social networks to recruit, a sharp increase from the 56 percent who reported doing so in 2011. And among the recruiters using social tools, 94 percent said they are using LinkedIn.
Recruiter Chris Scalia told Halzack that the type of candidates he sees on LinkedIn is also changing. “LinkedIn was always known for where you would go to find that really critical, challenging hire,” Scalia said. “It was never really where you would go for a PC technician or something at the lower end of the career mobility scale. Now I see both. It is completely flooded.”
Three of my colleagues and friends at the University of Chicago — Kerwin Charles, Erik Hurst, and Matt Notowidigdo — recently presented some new research that aims to understand the ups and downs in the U.S. labor market. It’s more serious and important than the usual stuff we deal with on the blog, but every once in a while we deviate from trivialities when something really good comes along.
They’ve been kind enough to put together a layperson’s version of the research below. For those looking for the full-blown academic version, you can find that here.
A Structural Explanation for the Weak Labor Market By Kerwin Charles, Erik Hurst, and Matt Notowidigdo
In the aftermath of the Great Recession, the labor market has remained anemic. Between 2007 and 2010, the employment-to-population ratio of men between the ages of 21 and 55 with less than a four-year degree fell from 82.8 percent to 73.8 percent. As of mid-2012, the employment-to-population ratio for these men remained depressed at 75.6 percent.
In our new working paper (abstract; full PDF), we show that the recent sluggish labor market in the U.S. – particularly for prime age workers without a college degree – can be traced back to the large sectoral decline in manufacturing employment that occurred during the 2000s. After decades of relative stability, total manufacturing employment in the U.S. fell by 3.5 million jobs between the beginning of 2000 and the end of 2007 (see chart below). These manufacturing jobs were lost even before the Great Recession started. During the recent recession, another 2 million manufacturing jobs were lost. While there is talk of a recent manufacturing rebound in the U.S., the recent increase is only a tiny fraction of the total manufacturing jobs lost during the 2000s.
A few weeks back, we posted a query from a young economist who, before heading for the job market, was looking to pick up freelance work. She (yes, she) promised to report back with her progress, and now she has:
Thank you for posting my email. I received a decent handful of responses, but was not flooded with emails. I did get one big project that I am very excited about and will carry me through to the job market, so it worked out very well for me, but is probably not a good career strategy. I had no idea what to charge, so started with the rate I would have received from the employer that didn’t work out, which was clearly too high. I tried to make it clear that it was negotiable, but fear I may have scared off a few people.
A lot of people write to us looking for work — which, sadly, we are nearly always unable to provide. But once in a while we do hear of a good opportunity for the Freakonomically inclined. To wit:
The U.K. Cabinet Office’s Behavioural Insight Team — better known as the Nudge Unit because of its allegiance to the excellent Richard Thaler/Cass Sunstein book Nudge — is looking to expand. Here’s the job listing. Some relevant excerpts:
Successful candidates will need to show that they: 1. have a good understanding of the behavioural science literature 2. have an understanding and ideally ability to conduct randomised controlled trials to test policy interventions; and 3. are highly motivated individuals capable of developing innovative solutions to often complex policy problems. 4. are strong team players
Candidates should be prepared to work on potentially any aspect of government or wider public sector policy. For example, over the past year the team has led work on health, energy, fraud, electoral registration, charitable giving, consumer affairs, the labour market, and access to finance for SMEs [that’s Euro-speak for “small and medium enterprises“]
“Audit studies” have been popular in labor economics research for 10 years. The researcher sends resumés of artificial job applicants in response to job openings. Typically there is a crucial difference in some characteristic of the person that indicates a particular racial/gender/ethnic or other group to which one person within a pair of resumés belongs while the other does not. The differential response of employers to the difference in the characteristic implied by the resumés is taken as a measure of discrimination in hiring.
We recently solicited your questions for Alan Krueger, chairman of the President’s Council of Economic Advisers. Below are Krueger’s answers, in which he talks about the Bush tax cuts, the American Jobs Act, and why NFL coaches should go for it on fourth down. Thanks to everyone for participating.
Q. The recovery from the recent recession has been great for corporate profits, but not so great for employment. I think that this is a natural result of the fact that when demand is insufficient, corporations focus on improving productivity rather than on producing more goods and services.
Hierarchy fundamentally shapes how we act at work. In this paper, we explore the relationship between the words people write in workplace email and the rank of the email’s recipient. Using the Enron corpus as a dataset, we perform a close study of the words and phrases people send to those above them in the corporate hierarchy versus those at the same level or lower.
The picture on this t-shirt is a joke. It states: “Always give 100% at Work: 12% Monday; 23% Tuesday; 40% Wednesday; 20% Thursday; 5% Friday.”
But it’s interesting that its creator chose not to spread the work evenly across the week. His/her view of labor supply suggests a temporal dimension that seems sensible: More work on Monday than on Friday, more on Tuesday than on Thursday, with peak work effort on Wednesday. In terms of labor productivity, this does not seem very far wrong.
Our latest Freakonomics Radio on Marketplace podcast is called “The Dilbert Index?” (Download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript below.) It’s about workplace morale and the measurement thereof.
This segment was largely crowd-sourced from Freakonomics blog readers — so: thanks! It began with a blog post in which a reader named Tim Wadlow asserted that the direction you park in your company lot may say something about company morale. We then opened up the blog to further observations on company morale. One of the most interesting: the “Dilbert Index,” as described by a reader named Damon Beaven:
BEAVEN: I look for the number of Dilbert comics and that seems to be inversely proportional to the level of morale. A lot of Dilbert comics seems to be like a passive aggressive way of an employee complaining.
We also take a step back and ask the basic questions like: How much does company morale matter to a company’s bottom line? What’s the best way to measure morale? And, in the realm of unintended consequences, what happens when a company tries to cut down on sick days?
Our latest Freakonomics Radio onMarketplace podcast is called “A Cheap Employee Is … a Cheap Employee.”
(You can download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript below.)
It’s about the question of whether low-paid employees are indeed a good deal for a retailer’s bottom line as the conventional wisdom states.
The piece begins with a couple of stories from blog readers, Eric M. Jones and Jamie Crouthamel, which were solicited earlier here. (One of the true pleasures of operating this blog is having a channel by which to turn readers into radio guests — thanks!)
We’re working on a new podcast episode about morale in the workplace, and need your help. The episode was inspired a recent blog post in which a reader posited an interesting theory: morale is higher at companies where a lot of employees park nose-in (indicating they’re eager to get to work) rather than nose-out (indicating they can’t wait to get home).
My request here is two-fold:
1. We’ve started poking into the academic literature on company morale but haven’t gotten very far, so please let us know any good leads.
2. We’re also interested in hearing stories about morale at your workplace, be it high or low, and especially any clever/strange indicators of morale and unusual methods that have been used to measure morale.
The U.S. Department of Labor is proposing to end the overtime exemption of “companions” (home assistants typically employed to assist/watch the infirm elderly) employed by an agency. The exemption would remain for companions employed directly by a private individual. This rule would lead to classic results: 1) Higher labor costs through agencies, no doubt passed onto older people in the form of higher prices, leading to less employment through agencies; 2) A shift to more companions employed directly by individuals.
I’m not sure what the demand elasticity for companions is, but it is unlikely to be small.
What would we do with our time if we suddenly didn’t have to work as much but were just as healthy and had the same income? This question is ages-old, was posed by Keynes in 1930, but is very hard to answer: sudden, permanent drops in work time that change nothing else are very rare. They did occur in Japan in the 1990s and Korea in the 2000s, when their governments induced employers to cut work hours. In a recent paperJungmin Lee, Daiji Kawaguchi and I use time diaries from before and after the changes to see what happened. In Japan, almost half the free time was devoted to additional TV-watching, while in Korea, much was devoted to increased personal care, particularly grooming. But in neither was there any increase in home production — child care, cooking, gardening, etc. I like to think the same would occur in the U.S. — that we would use permanent cuts in work time to enjoy ourselves and take more care of ourselves. Regrettably in the workaholism champion of the Western world, these cuts don’t seem likely any time soon.
A reader named Tim Wadlow writes in with an interesting theory:
I spent about 10 years as a operations management consultant, working with dirty, dull, and dangerous manufacturing companies.
After spending time at roughly 100 manufacturing locations around the world, I noticed an odd trend: the direction that employees parked in their parking spots highly correlated with employee morale and satisfaction with their jobs. Most of the cars parked forward? A good company to work for, with employees who want to get to work. Most cars backwards? It seems as though the moment that the employee got to work, he or she was planning a quick exit.
Next time you drive by a manufacturing company check it out.
Maybe CEO’s should study Google Earth maps of their parking lots to determine if they are changing a companies culture?
Conventional wisdom holds that instituting or raising the minimum wage will increase unemployment. But a recent paper by Jeremy Magruder, an economist at Berekley, finds the opposite effect. Magruder examines the case of Indonesia in the 1990s, “where real minimum wages rose rapidly in a varied way and then dropped quickly with the inflation rate in the South East Asian financial crash.” Here’s an excerpt:
When minimum wages rose in one district relative to their neighbors, that district observed an increase in formal sector employment and a decrease in informal employment. It also observed an increase in local expenditures, which is consistent with the hypothesized mechanism of the big push: that local product demand increases labor demand. Moreover, this increase was only observed in local industries which can be industrialized and do supply local demand, supporting the model further. Tradable manufacturing firms saw no growth in employment, and un-tradable, but non-industrializable services saw an increase in informal employment.
In 2009, the OECD concluded that half the world’s workers (almost 1.8 billion people) were employed in the shadow economy. By 2020, the OECD predicts the shadow economy will employ two-thirds of the world’s workers.
This new economy even has a name: “System D.”
In a new article (accompanying photoessay here) for Foreign Policy, Robert Neuwirth explains:
System D is a slang phrase pirated from French-speaking Africa and the Caribbean. The French have a word that they often use to describe particularly effective and motivated people. They call them débrouillards. To say a man is a débrouillard is to tell people how resourceful and ingenious he is. The former French colonies have sculpted this word to their own social and economic reality. They say that inventive, self-starting, entrepreneurial merchants who are doing business on their own, without registering or being regulated by the bureaucracy and, for the most part, without paying taxes, are part of “l’economie de la débrouillardise.” Or, sweetened for street use, “Systeme D.” This essentially translates as the ingenuity economy, the economy of improvisation and self-reliance, the do-it-yourself, or DIY, economy.
Bruce Sacerdote andJames Feyrer, both of Dartmouth, have produced a paper that looks at how the stimulus package (American Recovery and Reinvestment Act) affected employment, and which type of spending had the most (and least) amount of impact. It’s among the first detailed analyses of employment and earnings effects from the stimulus that uses actual employment outcomes. Here’s the abstract (full version here):
A Brookings report shows that for the first time, the share of working-age immigrants in the U.S. who have college degrees (29.6%) exceeds the share without a high school education (27.8%). In 1980, there were more than twice as many low-skilled immigrants living in the U.S. as high-skilled ones.
The report focuses on demographic trends in the 100 biggest metropolitan areas of the country over the past 15 years. While the Southwest and Great Plains remain destinations for low-skilled immigrant labor, much of the Northeast and Rust Belt now attract more immigrants with college degrees than those without.
A new Census report finds that for the first time, more women in the workforce have bachelor’s degrees than men (37 percent vs. 35). Women are gaining on the education front in general: for ages 25 to 29, 36 percent of women had a bachelor’s or advanced degree versus 28 percent for men. Women were also slightly more likely to have a high school diploma than men: for age 25 and above, it’s 87.6 percent versus 86.6 percent.
The woman right next to me was alive one second, then a taxi came up on the sidewalk of 42nd Street between 6th and 7th Avenue, hit her and veered off, and now the woman was dead. This happened on the first or second day of my job at HBO. I tried to call 911 on the payphone (there were still payphones in August, 1994), and then I had to go. The woman was dead.
The Brooking Institution’s Hamilton Project has announced a competition to “identify new and innovative thinking about policies to create jobs in the United States and enhance productivity.” The contest winner will receive a $15,000 prize, while the runners-up will share $10,000.
One of the exceptional things about the U.S. is how mobile our workers are. It means that worker shortages in North Dakota won’t last long, as workers will move there from jobless Nevada. There’s been a lot of concern that the housing crisis has halted this important adjustment mechanism. According to the Census Bureau, the number of people moving across state lines has plummeted in recent years. Problem is: It’s just not true.
If you think your multitasking skills are improving your productivity, think again. Consistent with other multitasking research, a new working paper (ungated version) by Decio Coviello, Andrea Ichino and Nicola Persico analyzes a sample of Italian judges with different caseloads and finds that “task juggling, i.e., the spreading of effort across too many active projects, decreases the performance of workers, raising the chances of low throughput, long duration of projects and exploding backlogs.”
The College of Liberal Arts at UT is offering its first ever “buyout.” If a faculty member retires at the end of this semester, s/he receives two years of pay as a lump sum. To be eligible, the sum of age plus years at UT must be at least 93. Of the 88 eligibles, I’m told that over 40 are taking the buyout.
Raghuram Rajan, a University of Chicago economics professor and former chief economist of the IMF, has been popping up on the blog a lot lately – answering our questions about his new book Fault Lines and weighing in on the financial reform bill. Now he’s back with a guest post, clarifying and expanding his views on the Federal Reserve’s ultra-low interest rate policy.