Wednesday, November 30, 2011

Some data on the impact of a job loss on earnings

Over at Macroblog (see here) John Robertson takes a look at some recent research on the impact of a job loss on job earnings (using data from the research of Princeton Professor Henry Farber).  He summarizes some of the data in the chart below (click to enlarge):


Mr. Robertson says,

My reading of this information is that the lower earnings of re-employed displaced workers don't appear to be contributing to the current sluggish aggregate income picture significantly more so than in the past. Instead we have to look at other factors, such as the continuing difficulty job losers have had finding a new job and especially a full-time job.
 

Restaurant performance index data

Over at CalculatedRisk (see here) they have the following chart (click to enlarge):


Restaurant spending is considered discretionary spending and, as such, is strongly impacted by the overall health of the economy.  Not much improvement seen here yet.

With Dr. Berwick's resignation, we incur another political loss

I suppose most of the people following the political fiasco regarding Dr. Donald Berwick, MD (Interim Administrator for the Centers for Medicaid and Medicare Services), weren't surprised that he chose to exit the stage rather than stay and fight with the 42 Senate Republicans that were hell bent on not letting the facts come between them and their ideologies.  John McDonough has a nice piece (see here) on this and the extent of our loss.  Some of what he says is given below.

When the history of American medicine since, say, 1910 (around the time, it is suggested, the chance that an encounter with a physician would help more than harm a patient, surpassed 50/50) is written, Berwick will be recognized as one of our most important and influential physicians. What has he done to deserve that?

Back in the 1980s, Berwick was a pediatrician at the Kenmore Center of the Harvard Community Health Plan in Boston, and in charge of "quality assurance" for the plan. His intellectual curiosity led him to wonder how non-medical parts of U.S. society addressed quality, a heretical notion in the snobby, clubby world of organized U.S. medicine.

In his search, Berwick stumbled onto a fast moving and worldwide intellectual revolution in industry and manufacturing. A key thought leader was another former heretic named W. Edwards Deming who taught the Japanese in the 1950s and the US in the 1970s and '80s that the path to economic success required a relentless focus on customer satisfaction and quality improvement, and that better quality -- doing the right thing and doing it right -- was a way to save money by eliminating rework. The term of art was "total quality management." 

Inspired by Dr. Deming's work, Dr. Berwick wrote a landmark article in 1989 about quality improvement in healthcare.  Those 42 Republicans saved us!!  We sure wouldn't want anyone running CMS that was focused on quality and the role of evidence in reforming healthcare.

Please!! Not Newt Gingrich

Like most people, I have been watching the Republican presidential candidates more to see who might survive than anything else.  But I have to make one comment, since this blog claims to respect the presentation of good data.  Newt Gingrich may be the most anti-evidence candidate of the bunch.  His basic approach has been:  if you don't like the data, then attack the analysts.  A fellow Republican had this to say about him recently regarding his tendency to attack the Congressional Budget Office - which is nonpartisan-  (see here):

In short, Mr. Gingrich’s unprovoked attack on the C.B.O. is part of a pattern. He disdains the expertise of anyone other than himself and is willing to undercut any institution that stands in his way. Unfortunately, we are still living with the consequences of his foolish actions as speaker.

High tech, jobs, and the future

Over at Business Insider (see here) there is a very interesting piece about Apple's new data center in North Carolina (see pic below).


It is high tech, state of the art, huge, and it only employs 50 people.  The author makes the following argument:

It is true that having more companies like Apple would certainly help the US.

But we would need a lot more companies like Apple to make a dent in our unemployment and inequality problems.

Why?

Because Apple also actually exemplifies some of the reasons why we have such huge unemployment and inequality problems:
  • "Digital" businesses like Apple employ far fewer people (per profit) than traditional manufacturing businesses.
  • Apple's 60,000+ jobs are not just in the US--they're spread around the world.
  • Apple's extraordinary ~25% profit margin means that the benefits of its success accrue primarily to a relatively small group of (rich) shareholders rather than a broad base of (middle-class) employees.

We can always blame ....

Sunday, November 27, 2011

Robert Shiller reminds us about ..... jobs

Robert Shiller (see here) has a very timely essay today that I hope many people read.  He addresses the lack of political will to do much of anything about the continuing jobs crisis.  Below is a part of his essay that should make us all pause:

As anger rises in today’s economy, I’m reminded of Thomas Jefferson’s words about the danger of “angry passions” arising between the North and South over the question of extending slavery to the Missouri territory. In an 1820 letter he wrote that “this momentous question, like a fire bell in the night, awakened and filled me with terror.” He went on to predict, from his observations of such rancor, the secession of the South that was to come 40 years later.

Our country is a much more stable and just society now than it was in 1820. Still, we should regard the current economic dispute as another fire bell in the night. It is important to recreate the sense of a just society, without anger — and an important step in that direction is to ensure that there are enough jobs.

Tuesday, November 15, 2011

Timothy Taylor on grade inflation

Timothy Taylor (an award winning economics professor) has a very interesting post on grade inflation (see full post here).  In part he says,

Like so many other bad habits, grade inflation is lots of fun until someone gets hurt. Students are happy with higher grades. Faculty are happy not quarreling with students about grades.

When I refer to someone getting hurt by grade inflation, I'm not talking about the sanctity of the academic grading process, which is a mildly farcical concept to begin with and at any rate too abstract for me. I'm also not referring to how it gets harder for law and business schools to sort out applicants when so many students have high grades. In the great list of social problems, the difficulties of law and B-school admissions offices don't rank very high.


To me, the real and practical problem of grade inflation is that it causes students to alter their choices, away from fields with tougher grading, like the sciences and economics, and toward fields with easier grading. 


As an economist, Mr. Taylor gets to one of the more important issues for society at large.  In an economy built around the fundamental issues of "supply and demand," grade inflation ends up distorting the choice of a vocation (relative to the needs of the economy).  Mr. Taylor is adding his voice to several recent articles discussing data that shows students are increasingly choosing "the path of least resistance" in college.  Mr. Taylor concludes his piece as follows:

In short, grade inflation in the humanities has been contributing to college students moving away from science, technology, engineering, and math fields, as well as economics, for the last half century. It's time for the pendulum to start swinging back. A gentle starting point would be to making the distribution of grades by institution and by academic department (or for small departments, perhaps grouping a few departments together) publicly available, and perhaps even to add this information to student transcripts. If that answer isn't institutionally acceptable, I'm open to alternatives.

Interesting data on "percent born in state of residence"

Catherine Rampell over at Economix (see here) has some interesting data from the Census Bureau regarding the "percent born in state of residence by state" (see below).


According to the post, "The share of Americans who move their homes in a year has reached a record low..."

Data on spendng and earnings

Jared Bernstein (see here) has an interesting graph from Marketwatch showing spending and earnings growth (see below).  Bernstein says:

Confidence remains low but at least in some surveys is climbing off the bottom.  Still, it’s shaky and could head south again if things worsen.  Retail sales have actually been pretty steady, but there’s a disconnect, as the figure below reveals, between, earnings and sales growth.  Hmmm…spending out of savings when earnings are weak…where have I seen that before?

Friday, November 11, 2011

Interesting data on earnings and unemployment by college major

The Wall Street Journal has some very interesting data (see here) on annual earnings and unemployment by college undergraduate major.  It is worth a look.

Wednesday, November 9, 2011

The elections are over; now what Mississippi

So the elections in Mississippi yesterday contained some surprises.  Now what?

First, Governor-elect Bryant, how about rethinking your priorities for the state?  Too much of your acceptance speech sounded like the same old partisan cliches (as if you are working for some national Republican campaign).  Let's concentrate on Mississippi.  And you could do worse than start by looking at the following data (from John McDonough's blog, see here).  The first graph is from the Commonwealth Fund and it clearly shows an increase in employer health care premiums from 2003 to 2009.  Note that Mississippi is in the "highest percentage of Median Household Income" group.


The second graph is from research that Mr. McDonough has access to from the Harvard School of Public Health.  The graph compares the State uninsurance Rate for 2010 (vertical axis) with "Family Premiums as a percentage of Median Income, 2009."  Yes, that is Mississippi way over there on the right of the graph.


The relationship isn't perfect and there is a lot left unexplained, but in general the ability to pay makes a big difference.  So, Governor-elect, you want to set an agenda for the state:  you can begin by taking seriously the growing impact of health care costs on the economic success of Mississippi families.  You don't like "Obamacare"?  Fine.  Tell us what should be done and show us the evidence that it will make things better.  Because one thing is for sure:  people in Mississippi are going to get sick and it is isn't getting any cheaper to treat them.  If you think there is something more important and relevant to the working families of Mississippi (of all income levels), I'm all ears.

Peter Orzag weighs in on the debate over a college degree

Yesterday at Bloomberg (see here) Peter Orzag made the following comments:

The effects of globalization are already moving up the wage scale, though, and that trend will likely continue. As Alan Blinder of Princeton University trenchantly noted in 2006, “Many people blithely assume that the critical labor-market distinction is, and will remain, between highly educated (or highly skilled) people and less-educated (or less-skilled) people -- doctors versus call-center operators, for example.” Instead, the crucial distinction is between those tasks that are easily digitized (and thus subject to substantial competition from workers abroad) and those that are not. 

As with most prediction, we tend to begin from the past.  If economists like Orzag and Blinder are correct (and I'm pretty convinced they are), the rules of the past are not going to be good predictors in this case.  Orzag goes on in the piece to name three serious challenges facing college-age Americans.
  • "a college degree by itself will be less likely to guarantee a high wage"
  • the evidence is that there is declining state support for public higher education which drives higher tuition
  • college graduates are entering a labor market with a "higher-than-usual unemployment rate"

Tuesday, November 1, 2011

Some data on tax subsidies

One of the odd developments in the continuing saga over taxes, the debt, etc. is the argument made by some that the "middle class" and the "upper class" aren't also benefiting (rather largely in come cases) from U. S. tax policy.  Take a look at the graph below from Suzanne Mettler (see here).  It is revealing.

CBO data on income inequality

The CBO (see here) published a report recently on income inequality that deserves a read.  One of the key graphs is shown below (click to enlarge).


There is an entire "cottage industry" of people who deny that income disparity has grown at all.  What???  Econbrowser (see here) summarizes as follows (see the graph below).

What is of most interest is (i) real after-tax income of the top 1 percentile has risen about 275%, and (ii) the pre-transfers/pre-tax income share of the top 1% has increased most profoundly.