Category Archives: Business and Economy

Average full-time work week is 47 hours; median is around 40 hours

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A number of headlines have screamed about a recent Gallup finding that the average American full-time worker works 47 hours a week. Yet, the median appears to conform to the typical 40-hour work week:

Adults employed full time in the U.S. report working an average of 47 hours per week, almost a full workday longer than what a standard five-day, 9-to-5 schedule entails. In fact, half of all full-time workers indicate they typically work more than 40 hours, and nearly four in 10 say they work at least 50 hours.

Average Hours Worked by Full-Time U.S. Workers, Aged 18+

 

 

 

 

 

 

 

 

 

The 40-hour workweek is widely regarded as the standard for full-time employment, and many federal employment laws — including the Affordable Care Act, or “Obamacare” — use this threshold to define what a full-time employee is. However, barely four in 10 full-time workers in the U.S. indicate they work precisely this much. The hefty proportion who tell Gallup they typically log more than 40 hours each week push the average number of hours worked up to 47. Only 8% of full-time employees claim to work less than 40 hours.

These findings are based on data from Gallup’s annual Work and Education Survey. The combined sample for 2013 and 2014 includes 1,271 adults, aged 18 and older, who are employed full time.

Is the average the best measure here? This is a classic case where the median and mean give you different conclusions. The median tells you that not much has changed from the standard: half of full-time workers work 40 hours or less. The average, on the other hand, is pulled up by those people working 50+ hours. As the Gallup analysis goes on, it notes that there is a difference between salaried and hourly employees with salaried workers working more of those 40+ hour weeks. These salaried workers are likely white-collar and professional workers, people who may be working more but likely have more credentials, are getting paid more, and have higher-status jobs.

So, perhaps the headlines might be more accurate by saying “Salaried full-time workers have higher [47? 50?] hour work week.”

US unemployment figures distorted by lack of response, repeated takings of the survey

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Two new studies suggest unemployment figures are pushed downward by the data collection process:

The first report, published by the National Bureau of Economic Research, found that the unemployment number released by the government suffers from a problem faced by other pollsters: Lack of response. This problem dates back to a 1994 redesign of the survey when it went from paper-based to computer-based, although neither the researchers nor anyone else has been able to offer a reason for why the redesign has affected the numbers.

What the researchers found was that, for whatever reason, unemployed workers, who are surveyed multiple times are most likely to respond to the survey when they are first given it and ignore the survey later on.

The report notes, “It is possible that unemployed respondents who have already been interviewed are more likely to change their responses to the labor force question, for example, if they want to minimize the length of the interview (now that they know the interview questions) or because they don’t want to admit that they are still unemployed.”

This ends up inaccurately weighting the later responses and skewing the unemployment rate downward. It also seems to have increased the number of people who once would have been designated as officially unemployed but today are labeled as out of the labor force, which means they are neither working nor looking for work.

And the second study suggests some of this data could be collected via Twitter by looking for key phrases.

This generally highlights the issue of survey fatigue where respondents are less likely to respond and completely fill out a survey. This hampers important data collection efforts across a wide range of fields. Given the enormity of the unemployment figures for American politics and economic life, this is a data problem worth solving.

A side thought: instead of searching Twitter for key words, why not deliver survey instruments like this through Twitter or smartphones? The surveys would have to be relatively short but they could have the advantage of seeming less time-consuming and could get better data.

Growth sector: catering to the wealthy

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Here is one area for economic opportunity: providing goods and services for the wealthy.

Nathan Wilmers, a sociology Ph.D. candidate at Harvard, looked at how the growing impact of wealthy consumers is reshaping the economy and wages. Others have termed this phenomenon “the plutonomy,” or an economy in which earnings and spending are dominated by those at the top.

Consumer spending by the top 5 percent of households has grown 5.2 percent a year since 1989, while spending by the bottom 95 percent has grown at 2.8 percent, Wilmers said. In the past, economists have estimated that the top 5 percent of consumers account for nearly 40 percent of consumption…

Wilmers said that “the increased influence of these consumers sets up big rewards for businesses that create and sell the sorts of products the affluent want.” Specifically, he looks at salaries for butlers, wine producers, Realtors, lawyers and bankers and found that those who are best at their professions and excel at skills valued by the wealthy have the highest wages.

Even within the same industry—say, law or household staff—people hired by wealthy patrons make more than those that serve the middle class or affluent. Companies favored by wealthy consumers also have higher margins (as anyone who’s looked at Hermes profits in Birkin bags can attest).

A few thoughts:

1. At what point does the market become saturated with people and businesses trying to sell to the wealthy?

2. Some historical context would be helpful here. How much does this differ from previous eras? It makes sense that the wealthy consume more but is this significantly different than a few decades ago?

3. Isn’t this a reasonable outcome for a capitalistic system? If you want to make money, you want to find consumers who can pay for your products. Having smaller profit margins may provide for a need or exhibit altruism but a purely profit-motivated firm would seek out the wealthy.

Quick Review: Cubed

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The book Cubedtackles what has become a ubiquitous space in today’s America: the white-collar office. Here are some thoughts about the book:

1. While the book might appear at first glance to be about office spaces, it is largely about the development and evolution of white-collar workers in the United States. This shift from farming and manufacturing in the late 1800s to office and clerical work was a profound shift in American society that affected everything from women in the workplace to educational aspirations to what it means to be middle class to what urban downtowns look like. It isn’t just about cubicles or desk chairs; it is about a shift toward knowledge workers increasingly laboring for big corporate America. It may seem normal now, but it is a remarkable shift over roughly 100 years.

2. While this shouldn’t be surprising given the field of architecture and design, it is still remarkable how much of office design was about trendy ideas and theories than on-the-ground information about what makes offices work. Thus, a history of American offices includes Taylorism, Le Corbusier, and Peter Drucker. Have a new idea about the intersection of work spaces and human interaction? If it is popular enough, it is likely going to going to be translated into office designs. Unfortunately, some of this theorizing comes at the expense of workers who were guinea pigs.

3. The book does well to include plenty of sociology, particularly picking up after World War II as sociologists like C. Wright Mills noticed the big shifts in society. At the same time, it strikes me that there isn’t enough well-known sociology about office life and American businesses more broadly. This may change in the near future with more economic and organizational sociology but it seems like a missed opportunity in the past from a field that focused on other topics.

4. This is the sort of book that would benefit from more pictures and architectural plans. There are some scattered throughout the book but I could easily imagine a coffee table companion book with rich photos and designs of iconic office arrangements. It can be hard at times to visualize the major patterns.

All in all, the book is a nice overview of American offices in the last 100+ years. There are numerous places where this book could have ballooned to many more pages but it doesn’t feel like the author is painting with too broad of strokes. Indeed, if we want to understand America in 2014, perhaps we should look less to Washington, glittering skylines, and the entertainment industry but rather examine what millions of Americans experience regularly in their offices.

Ikea is raising pay to help workers but many who need jobs can’t easily make it to their suburban locations

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Jamelle Bouie points out that Ikea is doing a good thing in raising wages but their jobs aren’t easily accessible to many who need them:

With that said, it’s worth noting that there’s less than meets the eye to Ikea’s promise to hew to local and municipal minimum wage hikes. Most Ikea stores are located in suburbs, as opposed to urban centers. The Ikea near Charlotte, North Carolina, for instance, is located on the outskirts of the area, as is the Ikea near Seattle (in Renton) and the one in Dallas (near Frisco). By virtue of geography, these stores will avoid city-mandated wage hikes.

What’s more, for as much as Ikea and similar stores might be good for workers, their overwhelmingly suburban locations make them isolated from large numbers of potential workers who lack employment opportunities in their own areas and neighborhoods…

The result is that, for both groups—but low-income blacks in particular—there is a “spatial mismatch” between neighborhoods and employment opportunities.

Put simply, the greater the sprawl of jobs in an area, the less likely it is that black residents will have easy and reliable access to them. Or, as UCLA professor Michael Stoll writes in a 2005 paper for the Brookings Institution, “Blacks are more geographically isolated from jobs in high job-sprawl areas regardless of region, metropolitan area size, and their share of metropolitan population.” And this isn’t an accident: “Metropolitan areas characterized by higher job sprawl also exhibit more severe racial segregation between blacks and whites,” he writes.

All of this is exacerbated by our shoddy, car-centric transportation policy. To get to any job in a place like Virginia Beach, Virginia—where 10- to 15-mile drives are a fact of life—you need a car. Yes, there is a public transportation system, but it’s irregular (the agency had a rate of 18 missed trips per day in March), limited in scope, and unreliable for most workers who need to be on time. But cars are expensive, and black and Latino households are much less likely to own cars than their white counterparts. What comes next is predictable: Plenty of low-income people can’t find or keep jobs because they are isolated from opportunities.

All correct though the increasing number of lower-income suburban residents may be closer to some of these Ikea stores. At the same time, most suburban residents will still need cars to get to the store, vehicles that are relatively expensive parts of household budgets.

Additionally, this helps highlight some of the contradictory nature of Ikea. On one hand, it is a quirky store in the American landscape, exposing Americans to interesting designs and promoting a more DIY mentality. On the other hand, it is just another big box store with locations near major highways, big parking lots, and lots of square footage.

Soccer won’t make it big in the US because it doesn’t have enough time for commercials?

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Forget cultural differences; perhaps soccer won’t make it big in the United States because there is not enough money to be made.

“Soccer is the least profitable sport on the planet,” says Stefan Szymanski, professor of sports management at the University of Michigan and co-author of Soccernomics. “The whole structure of soccer is totally at variance with the America model.”…

In America, TV contracts have a lot to do with a sport’s profitability. MLS recently took a step toward the big leagues with new contracts that will generate around $90 million in revenue per year, the most ever for the league. But that’s puny compared with leagues such as the NFL, which takes in about $5 billion per year from TV rights. The visibility generated by saturation TV coverage helps the NFL earn even more revenue from sponsorships, ticket fees and licensing deals.

It might be unfair to compare the MLS with the NFL, which is the world’s most profitable sports league and an almost unexplainable phenomenon. But pro soccer in the U.S. may face a chicken-and-egg problem that prevents it from ever following in the NFL’s cleats. Most NFL, NBA, MLB and NHL teams manage to be profitable whether they win or lose. That’s because of revenue-sharing deals, salary caps and other equalizers meant to keep leagues competitive and owners satisfied…

“The MLS is pursuing the America business model, which means it’s not pouring billions into making it successful but is actually limiting player spending,” Szymanski says. “There are probably 30 soccer leagues that spend more on wages per team than the MLS — including the Romanian soccer league.”

I wonder how American sports fans would react to the idea that sports “work” in the US because owners can make lots of money. Sure, the sports may be interesting and the athletes impressive but the owners have to make money and there have to be lots of commercials. The average football game has about 11 minutes of gameplay. It’s more like the sports play around the commercial breaks.

Does this mean American sports don’t really follow a free market model? It sounds more like team owners work together to guarantee their profitability and then others on the outside, like various corporations and television networks, can try to make money.

Can Costco thrive if younger Americans don’t have the big houses to store all the bulk items?

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Costco’s earnings have been down recently, leading to questions about whether younger Americans want the items they have:

The suburban, car-loving, McMansion-owning parents of millennials represent Costco’s core customer base. But what about millennials themselves?…

But the fact that in early March Costco reported lower-than-expected earnings and its stock price has slumped now has some wondering if the company can stay on its hot growth streak going forward. In particular, concern is being raised that Costco’s membership model and its bulk-goods products don’t appeal to the nation’s young consumers—and that the Costco experience might not be a good match for the millennial generation even after they grow older and have families.

It’s understandable that Costco’s customer base skews older. A car is all but a necessity for the typical “stock up” visit to Costco, and compared to older generations, millennials tend to not own cars and don’t seem to want to own cars. Most Costco stores are in suburban locations, while millennials tend to prefer urban living, and even if they are among the relatively few of their peers who could afford to buy a home, home ownership is less important to them than it was to their parents and grandparents as young adults. So … if you don’t have a car, and you don’t have the money or interest to stock up on two years’ worth of paper towels or mustard, and you wouldn’t have the space in your apartment to store this kind of stuff even if you wanted to, then there’s not much sense in shopping at Costco…

In general, Costco’s plan to win over the younger generation seems to be in the taking of baby steps toward meeting their preferences as consumers, while basically just waiting until millennials grow up, buy cars, move out to the suburbs, and (fingers crossed) feel like a Costco membership works for their households. For the time being, Costco doesn’t work for young people simply because “you’re not going to stick big vats of mayonnaise and big stacks of toilet paper in a small apartment,” McAdams Wright Ragen analyst Dan Geiman explained to the Seattle Times. Still, Geiman applauded Costco’s efforts to woo younger shoppers. “Anything you can do to lower the age of your target market is going to be a positive in the longer term,” he said.

Based on some of the metrics mentioned in this story (such as the number of Facebook likes Walmart and Target have compared to Costco), American consumers don’t see big box stores all in the same way. Could the same thing be true for millennials? While there is some data suggesting a number of them want to live in more urban areas, this does not necessarily preclude abandoning all of the shopping patterns more commonly associated with a suburban lifestyle. Perhaps Costco is not as well known, their marketing to younger shoppers has been limited, and these younger shoppers don’t see much appeal in a warehouse sort of store (where is the cool factor in that – Target, in contrast is a chicer big box store and Walmart can be enjoyed ironically).

While companies need to have a broad case of customers, I wonder if Costco could still survive for quite a while, like the TV networks, in focusing on the bulge of older Americans who are also more likely to have larger houses.

Economic output of American metro areas rival that of foreign countries

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One interesting indicator of the economic power of American metropolitan areas is how they match up with the output of foreign countries:

The greater New York metro, far and away America’s largest and richest, is projected to produce $1.4 trillion dollars in GMP in 2014. This makes it about the same size as Australia, equivalent the world’s 12th largest economy.

L.A., projected to account for almost $830 billion in GMP, has a larger economy than that of the Netherlands, and would therefore number among the world’s top 20 economies.

Chicago, with more than $610 billion in GMP, is about the same size as Switzerland and significantly bigger than Sweden…

And even far smaller metros can outpace some substantial national economies. With $180 billion in GMP, Denver’s economy is comparable to that of the entire country of New Zealand. Even Anchorage, Alaska, projected to produce nearly $30 billion in GMP, is about the same size as Latvia.

It strikes me that this is also a pretty fascinating look at America’s economic power overall. If each of these metropolitan areas could be their own city-states, having them all in one country is quite a feat. Of course, if they were split up, this could change their economic output. In fact, it would be interesting to play a what if game with that very question: which would US metros would thrive as independent states and which would falter?

Addressing the lack of big city toilets with an $8 a day NYC toilet membership

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It is not easy to find a decent restroom in many big American cities and a new company in New York City wants to fill this hole in the market:

A New York company has started marketing what amounts to an upscale pay toilet service. Posh Stow and Go will offer visitors to the Big Apple “clean, safe and soundproof” bathrooms worthy of “the greatest city in the world,” in addition to such other amenities as “luxury showers” and private storage rooms.

Prices for the Midtown facility, which is set to open around June, start at $24 for a three-day pass (or $8 a day), plus a mandatory $15 annual membership fee. The company envisions opening other locations throughout the city—lower Manhattan is next on the list—but warns that “only a limited number of memberships will be sold so as to provide the best possible experience.”…

Parks may have a point: The lack of clean and comfortable public restrooms in major American metropolitan areas—especially New York—is an issue that’s been raised for years. The aptly named Phlush , a public restroom advocacy group based in Portland, Oregon, goes so far as to argue that “toilet availability is a human right” and “well-designed sanitation systems restore health to our cities.”

But the issue for cities remains twofold: Public restrooms are expensive to build and maintain and they are seen as a potential magnet for vagrants. For the latter reason alone, the city of Pensacola, Fla., recently approved an ordinance making it illegal for homeless individuals to wash or shave in public restrooms. (The ordinance was part of a larger push to address problems involving the homeless, though city leaders are now considering reversing the policies.).

I had never heard of Phlush but they make some good points: it is hard to be in a city if bathrooms are not available for all. Additionally, a city planning expert is cited later in the article suggesting that pay toilets go against the “democratic urban ideal.” This seems like one of the basic requirements of having a truly public space. Think of a space like Times Square that is consistently full of people: if most bathrooms are privatized, what is everyone supposed to do?

It would be really interesting to see the business plan of Posh Stow and Go. Just how many memberships can they sell before they reach a tipping point and the restrooms are not as luxurious and exclusive? Just how much money do they think is in private bathrooms? How much does it cost to retrofit existing retail space to fit this new use?