Tag Archives: Jobs

Updates from Chicago Booth

How Norway reduced the rich-poor earnings gap
By Dwyer Gunn – In the United States, vocational and technical education at the high-school level has long been controversial. Critics argue that vocational schools serve as warehouses for disadvantaged students, depriving them of the opportunity to attend college. Advocates maintain that vocational schools provide valuable labor-market skills and may better serve students who struggle with traditional academics or who can’t or don’t wish to attend college.

In recent years, however, a new vision has emerged, one that emphasizes increasing access to alternative educational models while ensuring that students who choose these pathways can still ultimately pursue higher education. Many states are exploring or have launched high-school apprenticeship programs, and there’s been renewed interest in the Career Academies education model, a 35-year-old approach aimed at restructuring high schools to create alternative pathways that lead to higher education or the workplace.

American reformers may find further inspiration in the results of a 25-year-old overhaul of vocational education in Norway. Research by Chicago Booth’s Marianne Bertrand and Jack Mountjoy, along with University of Chicago’s Magne Mogstad, suggests the reforms helped reduce the eventual earnings gap experienced by poor students, particularly boys, although not without some unintended consequences.

The sweeping changes, known as Reform 94, increased access to apprenticeships and altered the country’s vocational-track high-school degrees to allow graduates to attend college after a semester of supplemental academic courses. Before the changes, students in Norway who obtained vocational-track degrees had to restart high school and secure an academic diploma if they wanted to attend college. more>

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This is the one secret to managing an organization

By Maynard Webb – It’s all about people. You don’t have anything if don’t have great people doing great things.

So, what’s the secret? You have to have conviction about what you are doing. You have to have a mindset that says you are doing something amazing and exciting and people will want to be a part of it. In order to attract people to your endeavor, you must believe that it’s an incredible opportunity for others and you must execute and deliver on that promise.

Always be on the lookout for great people, and do so with a mindset of abundance. People are yearning for good opportunities and you have the privilege of being able to offer them a chance. See what you have as what’s scarce—a rare and special opportunity. Instead of thinking of hiring as chore, see it as a gift that can change someone’s life.

Always pick and promote people who will help you and your culture grow.

Don’t eliminate people because they don’t seem like a “culture fit”—embrace differences and stay rigorously focused on the cultural attributes that actually define your company. more>

The Unwinnable Trade War

By Weijian Shan – There are at least two reasons why Chinese exports to the United States have not fallen as much as the Trump administration hoped they would. One is that there are no good substitutes for many of the products the United States imports from China, such as iPhones and consumer drones, so U.S. buyers are forced to absorb the tariffs in the form of higher prices.

The other reason is that despite recent headlines, much of the manufacturing of U.S.-bound goods isn’t leaving China anytime soon, since many companies depend on supply chains that exist only there. (In 2012, Apple attempted to move manufacturing of its high-end Mac Pro computer from China to Texas, but the difficulty of sourcing the tiny screws that hold it together prevented the relocation.)

Some export-oriented manufacturing is leaving China, but not for the United States. According to a May survey conducted by the American Chamber of Commerce in Shanghai, fewer than six percent of U.S. businesses in China plan to return home. Sixty percent of U.S. companies said they would stay in China.

The damage to the economy on the import side is even more pronounced for the United States than it is for China. Economists at the Federal Reserve Bank of New York and elsewhere found that in 2018, the tariffs did not compel Chinese exporters to reduce their prices; instead, the full cost of the tariffs hit American consumers. As tariffs raise the prices of goods imported from China, U.S. consumers will opt to buy substitutes (when available) from other countries, which may be more expensive than the original Chinese imports but are cheaper than those same goods after the tariffs. The price difference between the pre-tariff Chinese imports and these third-country substitutes constitutes what economists call a “dead-weight loss” to the economy.

Beijing’s nimble calculations are well illustrated by the example of lobsters. China imposed a 25 percent tariff on U.S. lobsters in July 2018, precipitating a 70 percent drop in U.S. lobster exports. At the same time, Beijing cut tariffs on Canadian lobsters by three percent, and as a result, Canadian lobster exports to China doubled. Chinese consumers now pay less for lobsters imported from essentially the same waters.

The uncomfortable truth for Trump is that U.S. trade deficits don’t spring from the practices of U.S. trading partners; they come from the United States’ own spending habits.

The United States has run a persistent trade deficit since 1975, both overall and with most of its trading partners. Over the past 20 years, U.S. domestic expenditures have always exceeded GDP, resulting in negative net exports, or a trade deficit.

The shortfall has shifted over time but has remained between three and six percent of GDP. Trump wants to boost U.S. exports to trim the deficit, but trade wars inevitably invite retaliation that leads to significant reductions in exports.

Even a total Chinese capitulation in the trade war wouldn’t make a dent in the overall U.S. trade deficit. more>

Updates from Chicago Booth

Whistle-blowers act out of a sense of morality
By Alice G. Walton – Say you witness a coworker subtly misleading a client, or rounding off sales numbers in her favor. Do you report it, or not?

Chicago Booth postdoctoral scholar James A. Dungan, Boston College’s Liane Young, and Northwestern’s Adam Waytz looked at what goes into the calculation people make when considering whether to report bad behavior. Moral concerns figure highly, they find, above employees’ feelings about their employers, fear of reprisal, and satisfaction with the recognition and rewards they receive at their job.

To understand the factors that predict the likelihood of whistle-blowing, the researchers analyzed data from more than 42,000 participants in the ongoing Merit Principles Survey, which has polled US government employees since 1979, and which covers whistle-blowing. Respondents answer questions about their past experiences with unethical behavior, the approaches they’d take in dealing with future unethical behavior, and their personal characteristics, including their concern for others and their feelings about their organizations.

Concern for others was the strongest predictor of whistle-blowing, the researchers find. This was true both of people who had already blown the whistle on bad behavior and of people who expected they might in the future.

Loyalty to an immediate community—or ingroup, in psychological terms—was also linked to whistle-blowing, but in an inverse way. “The greater people’s concern for loyalty, the less likely they were to blow the whistle,” write the researchers.

Organizational factors—such as people’s perceptions about their employer, their concern for their job, and their level of motivation or engagement—were largely unconnected to whether people spoke up. more>

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Economics Can’t Explain Why Inequality Decreases

A problem with Piketty’s explanation
By Peter Turchin – In September I went to an international conference in Vienna, Austria, The Haves and the Have Nots: Exploring the Global History of Wealth and Income Inequality. One thing I learned at the conference is that, apparently, economists don’t really know why inequality increases and decreases. Especially, why it decreases.

Let’s start with Thomas Piketty, since Capital in the Twenty First Century is currently the “bible” (or should I say “Das Kapital”?) of inequality scholars.

Piketty provides a good explanation of why inequality increases. It’s good not in the sense that everybody agrees with it, but in the sense of being good science: a general mechanism that is supported by mathematics and by data.

So far so good. But how does Piketty explain the decline of inequality during the middle of the twentieth century? It was a result of unique circumstances—two destructive world wars and the Great Depression. In other words, and forgive me for crudeness, shit happens.

This is not a particularly satisfactory conclusion. Of course, it’s possible that the general trend of inequality is always up, except for random exogenous events that knock it down once in a while. So devastating wars destroy property, and by making the wealthy poorer reduce inequality. This is one of the inequality-reducing forces that Piketty mentions several times in his book.

To me such exogenous explanations are not satisfactory. My intuition (which I understand may not be shared by all) is that when inequality gets too high, there are forces that bring it down. In other words, to some degree it’s a regulatory process, and that’s why we don’t see truly extreme forms of inequality (when one person owns everything).

In Piketty’s view, the only reason we don’t see such extremes is because some kind of random event always intervenes before we get to it. more>

Are wages rising, falling, or stagnating?

By Richard V. Reeves, Christopher Pulliam, and Ashley Schobert – What is really happening to wages in America?

Over the past 12 months, average hourly wages rose 3.2 percent, according to the latest jobs report from the Bureau of Labor Statistics. But the longer-term story is contested.

Many analysts and commentators lament the situation of stagnating wages, while others celebrate wage growth.

To take just two of hundreds of examples, our colleagues in the Hamilton Project here at Brookings report “long-run wage stagnation for lower-wage workers”, while Michael Strain over at AEI writes that “the wages of a typical worker have increased by 32% over the past three decades. That’s a significant increase in purchasing power”. Though we would be remiss if we did not point out that this corresponds to less than a one percent increase per year.

The honest but boring answer to the question of what is happening to wages is: It depends. Specifically, it depends on how you measure it.

As so often, methodology really, really, really matters.

In the case of wage growth, four analytical decisions bear heavily on the results: which time period, which deflator, which workers (by gender), and which workers (in terms of position). more>

‘American Factory’: It’s Not the Culture, It’s the Current

By Sunny Wang – Telling the story of a factory in Dayton, Ohio, that a Chinese manufacturer has invested in, the documentary “American Factory” has been gaining tons of attention in China. It’s currently #3 on the trending chart of documentaries on Tencent Video — a Chinese video streaming website with over 900 million monthly active users — as the only foreign documentary in top 10 of the chart.

The film offers clear views from both the Chinese and the Americans in the story, bringing out the unsettling conflict to the viewers – it’s not just about the differences between two cultures; it’s more about the conflict that comes with primitive accumulation of capital, the one that comes along with the changes taking place in the manufacturing industry.

I think this is a great metaphor describing how the Chinese workers are positioning themselves. The society is always moving forward; anyone standing still — not improving or educating themselves, or working extra hard constantly — can easily be left behind. Our current situation is even crueler than before, because we’re in the age of A.I. and automation, which would only accelerate the changes, or the “current” in this metaphor. The Chinese factory workers found their place in this “current” by being cost-efficient laborers in the manufacturing process — they chose to work harder to ensure high efficiency. But the conflict sets in on the other side of the ocean where automation outperforms labor at a lower cost.

As seen in the film, the working environment was dangerous, pay was low, and working shifts were long at FGA, yet the workers in the Dayton plant chose to stay and complain instead of leaving for better jobs that are safe, easy, and with better pay. Could it be because they didn’t have a choice? more>

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Low Wages, Sexual Harassment and Unreliable Tips. This Is Life in America’s Booming Service Industry

By Alana Semuels and Malcolm Burnley – The decade-long economic expansion has been a boon to those at the top of the economic ladder.

But it left millions of workers behind, particularly the 4.4 million workers who rely on tips to earn a living, fully two-thirds of them women. Even as wages have crept up–if slowly–in other sectors of the economy, the minimum wage for waitresses and other tipped workers hasn’t budged since 1991.

Indeed, there is an entirely separate federal minimum wage for those who live on tips. It varies by state from as low as $2.13 (the federal tipped minimum wage) in 17 states including Texas, Nebraska and Virginia, up to $9.35 in Hawaii. In 36 states, the tipped minimum wage is under $5 an hour. Legally, employers are supposed to make up the difference when tips don’t get servers to the minimum wage, but some restaurants don’t track this closely and the law is rarely enforced.

Waitresses are emblematic of the type of job expected to grow most in the American economy in the next decade--low-wage service work with no guaranteed hours or income. more>

America’s Hot New Job Is Being a Rich Person’s Servant

“Wealth work” is one of America’s fastest-growing industries. That’s not entirely a good thing.
By Derek Thompson – In an age of persistently high inequality, work in high-cost metros catering to the whims of the wealthy—grooming them, stretching them, feeding them, driving them—has become one of the fastest-growing industries.

The MIT economist David Autor calls it “wealth work.”

While there are reasons to be optimistic about this trend, there is also something queasy about the emergence of a new underclass of urban servants.

Wealth work falls into two basic categories. First, full-time retail and service jobs at places like nail salons and spas. “You’re talking about people with $30,000 incomes that are often employed in high-wealth metro areas, or resort economies,” Muro said.

Because they often cannot afford to live near their place o-f work, they endure long commutes from lower-cost neighborhoods. These arrangements aren’t merely time-consuming; they can also be exploitative. For example, New York City nail salons are notorious for flouting minimum-wage laws and other labor regulations, and massage parlors across Florida have served as fronts for human trafficking.

A second category is the “Uber for X” economy—that nebulous network of people contracted through online marketplaces for driving, delivery, and other on-demand services.

Optimistically, these jobs offer autonomy for workers and convenience for consumers, many of whom aren’t wealthy. But the business models that keep these firms aloft rely on the strategic avoidance of laws like the Fair Labor Standards Act, which regulates minimum wage and overtime pay. These laborers often do the work of employees with the legal protections of contractors—which is to say, hardly any. more>

Your Job Will Be Automated—Here’s How to Figure Out When A.I. Could Take Over

By Gwen Moran – Automation is increasingly making its way into the workplace, raising concerns among employees about the ways technology will change their jobs—or eliminate them entirely. A June 2019 report by Oxford Economics predicts that 8.5% of the world’s manufacturing positions alone—some 20 million jobs—will be displaced by robots by 2030.

Some tasks aren’t easy to evaluate. A 2013 paper, “The Future of Employment: How Susceptible are Jobs to Computerisation?” found that roughly 47% of jobs were at high risk of being automated with advances in artificial intelligence.

Carl Benedikt Frey, Ph.D., co-author of that paper and author of The Technology Trap: Capital, Labor, and Power in the Age of Automation says predictions around automation’s impact have become very polarized: Either you believe that the robots are coming for many jobs—leaving many with no employment—or you believe it’s going to change the nature of work. more>