Sociologist argues shorter work weeks would reduce unemployment

Alongside a report last week suggesting the 40 hour work week was simply a cultural norm we could change, a sociologist argues that shorter work weeks would reduce unemployment levels:

[Juliet Schor, professor of Sociology at Boston College] claimed that working hour reductions have “a long history” of successfully leading to lower rates of unemployment.

“What progressive reductions in working hours financed by productivity do is allow a society to take some or all, depending on its choices, of its economic dividend of the productivity growth that it generates, and use it to give people more leisure time rather than more income,” Prof Schor added…

She cited the example of the Netherlands, where such a policy was implemented in 1980.

The Dutch began a 15-year project to alter the look of the working week, long enough to have a limited, if any, impact on real wages.

I wonder if Americans would like this trade off: fewer hours on the job and less pay for a lower unemployment rate. Would any politician have the guts or political capital to even make this a talking point? Everyone does want to reduce unemployment, don’t they…

At the same time, this could also lead to larger discussions in the United States about the emphasis on productivity and income growth over other desirable outcomes. Could you imagine lots of companies talking about wanting their employees to flourish rather than simply be more productive? Even discussions of living wages seem to focus on properly paying workers so they can survive rather than allowing them to pursue relationships and leisure time.

Jump in usage of food stamps in the Chicago suburbs

The effects of the American economic crisis are also being felt in the suburbs. In the Chicago area, usage of food stamps has increased dramatically since 2006:

Since 2006, the state’s Supplemental Nutrition Assistance Program, commonly called food stamps and administered via Link cards, has seen a rise in the number of people in the program in an average month by 46 percent in Cook County, 133 percent in DuPage County, 84 percent in Lake County, 96 percent in Kane County, 168 percent in McHenry County and 74 percent in Will County.

“It’s easy to assume hunger is an urban problem,” said Lake, whose food bank serves 13 counties. “But the fact of the matter is, hunger is everywhere.”

In the suburbs, the increase in food stamps use could be the result of previously middle-income families getting caught by a tough break, said Jennifer Yonan, a vice president of the United Way of Lake County…

To qualify for food stamps, a household has to meet certain income requirements. A family of four, for example, must have a gross monthly income of less than $2,389 to qualify.

The suburbs were once considered the bastion of the wealthy but this is changing as more suburbs encounter issues that were once thought to be big city problems.

The 133% rise in DuPage County is particularly interesting. In recent decades, DuPage County was transformed from more of a bedroom county, meaning that workers lived in DuPage but commuted elsewhere for work, to a job center. In figures from the early 2000s, DuPage County had more jobs than eligible workers, meaning that the county needed outside workers to fill all of its jobs. If you look at the unemployment rate for DuPage County (not seasonally adjusted), the rate was as low as 2.7% in October 2006, as high as 9.4% in January 2010, and is now at 8.6%.

It would be interesting to see more exact data to figure who exactly has started using food stamps since 2006.

This rise in food stamp usage is a similar phenomenon to reports about the black middle class or the increase in foreclosures: when an economic crisis hits, people living on or near the economic edge will have more difficulty.

California housing forecast includes fewer McMansions, depressed construction industry

Several researchers from UCLA suggest California housing industry will experience some changes in the next few years including a construction industry that will need years to recover:

UCLA forecasters have seen the future of California’s housing market, and it looks like this: more apartments near the coast, fewer McMansions in the desert…

That’s bad news for the state economy, however, for two reasons. One is that construction of multifamily homes requires less labor than construction of single-family homes. Second, areas such as the Inland Empire and Central Valley that were hit hardest by the housing bust won’t get a construction boom to help pull them out of the economic doldrums.

This means “there is an even larger structural unemployment problem in California than we originally thought,” Nickelsburg wrote in the forecast. “Not only do we have excess construction, real estate and support skills, but some of those that will be demanded will be in the wrong geography.”

California won’t start adding a significant number of building permits until 2013, forecasters say, which is one of the reasons the state’s unemployment rate will stay above 10% until the middle of that year. Nonfarm employment in the state won’t return to pre-recession levels until 2014, and construction employment won’t reach those levels until at least 2021.

The demographic shifts and move away from McMansions have been predicted elsewhere but the longer-term impact of a troubled construction industry has sort of flown under the radar. I wonder how much of the current unemployment troubles in the US are the result of the lack of home construction, i.e., what percent of the unemployed are construction workers? Where do construction workers end up working in a prolonged housing industry slump?

All of this is a reminder that the housing crisis which helped lead to the economic crisis is a longer-term issue. Lower housing prices don’t just influence homeowners who wish they could sell or get a return on their home or large lending institutions who lost a lot of money – millions of construction workers are under- or unemployed and communities can no longer rely on quick single-family home construction to help revive their economies.

The decline of men in the American workforce

The Economist examines some recent figures showing that men, particularly less-skilled workers, have lower levels of participation in the labor force:

The decline of the working American man has been most marked among the less educated and blacks. If you adjust official data to include men in prison or the armed forces (who are left out of the raw numbers), around 35% of 25- to 54-year-old men with no high-school diploma have no job, up from around 10% in the 1960s. Of those who finished high school but did not go to college, the fraction without work has climbed from below 5% in the 1960s to almost 25% (see chart 2). Among blacks, more than 30% overall and almost 70% of high-school dropouts have no job…

The main reason why fewer men are working is that sweeping structural changes in rich economies have reduced the demand for all less-skilled workers. Manufacturing has declined as a share of GDP, and productivity growth has enabled factories to produce more with fewer people. Technological advances require higher skills. For the low-skilled, low demand has meant lower wages, both relative and absolute. This in turn reduces the incentive to find a job, especially if disability payments or a working spouse provide an income.

Men have been hit harder than women by these shifts. They are likelier to work in manufacturing; women have been better represented in sectors, such as health care and education, where most job growth has taken place. Women have also done more than men to improve their academic credentials: in most rich countries they are likelier than men to go to university.

There is a lot to think about here. One reason that the article cites for this trend is the numbers of women (compared to men) who are getting college degrees. This has been noted by others (with some interesting data from the White House here) and it really does seem to be a sizable shift in American society.

A few other questions come to mind:

1. Could politicians promote policies that specifically target less-skilled male workers?

2. What are some of the broader consequences of this trend, such as the impact on community life or family life?

3. How could schools, particularly high schools and colleges, tackle this issue?

More appealing measurements of the American economy

The Economist looks at several ways in which the US federal government calculates certain economic statistics that might make our economic situation look most appealing. Here is their conclusion:

Conspiracy theorists might conclude that the American government is trying to nip and tuck its way to attractiveness. The persistent downward revisions to GDP growth do look suspicious. But in other areas American number-crunchers seem to believe that their measures are better; indeed, history shows that European statistical agencies have often later adopted their methods. The world’s biggest economy is also much less bothered about the international comparability of its numbers than smaller European countries. True, when the statisticians at the IMF or the OECD produce comparative data, they do so on the basis of standardised definitions. The snag comes if investors fail to grasp that official national figures can show the American economy in an overly flattering light.

Complex numbers, such as these, can be difficult to operationalize or calculate but they also need to be interpreted. Economic experts may know about these methodological differences and can account for these but I’m guessing that the average citizen of the US or European countries has less of an idea about what is going on.

Another US figure that has recently attracted methodological attention is unemployment. While the US unemployment rate has undoubtedly risen in the economic crisis of recent years, it has its own quirks. One part that has been discussed in that people have to be actively looking for work in the last 4 weeks and once people move beyond that cut-off point, they are no longer counted as being unemployed. Another area involves those who work less than full-time but want full-time work and could be classified as “underemployed.” (You can see how the Bureau of Labor Statistics calculates unemployment here.)

(It is also interesting in this story that they compare the calculation of these statistics to cosmetic surgery, apparently an important marker of American culture.)

White House report on “Women in America”

The White House Council on Women and Girls recently released an 85 page report on “Women in America.” According to the administration, “it is the first comprehensive look at the status of women in America since the Kennedy administration released a similar report in 1963.” There is a lot of interesting data in here. Here are two graphs out of the report:

1. Comparing bachelor’s degrees granted to men and women in 1998 and 2008, by field:

Outside of engineering and computer sciences and mathematics and physical sciences, women are getting more bachelors’ (and master’s) degrees.

2. Unemployment rates by gender, going back to the late 1940s:

 

A shift seems to take place in the late 1970s and early 1980s where it is men who become more affected by recessions than women. This would line up with the loss of manufacturing jobs and the move to a post-Fordist, information-based economy.

 

Different definitions for welfare

Apparently the gubernatorial race in Maine has included discussions about how welfare provided by the government might be defined differently:

“Essentially, we all get welfare in some fundamental form or another,” said Luisa Deprez, a sociology professor at the University of Maine.

Unemployment, Social Security, school lunches, subsidized college loans and even federal tax refunds can be considered forms of public assistance, according to those who favor a broader definition.

In the context of the gubernatorial campaign, however, welfare has been discussed in its more common, narrow definition: public anti-poverty programs that help provide basic needs, such as food and shelter.

I’ve other studies that suggest the public favors government intervention more when it is called something like “government assistance” as opposed to “welfare.”

This is a reminder that there are very few people who really want no government involvement in the lives of individuals. In reality, people who are supposedly at different ends of the political spectrum are debating how much government should be involved. How many people, of any political persuasion, are willing to completely give up unemployment benefits, Social Security, or Medicare?

Judges: a dying breed?

According to the reporters over at CNBC, judges are “disappearing” from the workforce:

It seems counterintuitive that we’re increasingly becoming a lawsuit-happy nation and yet, the need for judges is shrinking. The reason is simple: Budget. From the federal government on down to states, cities and towns, cash-strapped governments are slashing their budgets.

This trend is having and will have profound effects on the U.S. legal environmental.  It is true that today most cases settle (civil) or plea bargain (criminal) long before they reach trial, but they do so under the so-called “shadow of the law.”  In other words, litigants choose not to waste time and money fully arguing their cases when the payoff (winning or losing) is not worth the transaction costs of trial (years of litigation, lawyer fees, etc.).

These settlements and plea bargainings are attractive alternatives to full trials, however, only if trials (1) are an actual possibility and (2) it is reasonably certain who will win.  If there are fewer judges, (1) is undermined.  Moreover, if there are fewer trials–resulting in fewer judicial opinions–(2) is undermined insofar as there are precedents to indicate how current controversies will resolve.  In a world with few judges, potential litigants are thus left with a less-attractive reason to settle/bargain:  uncertainty.

A potentially huge penalty for losing, combined with the cost of not knowing, results in a rational decision to resolve the problem quickly.  This is fine to the extent that it lessens legal combativeness.  It is problematic to the degree that it encourages wasteful payments of “go away money” (civil) or guilty pleas to lesser crimes by the innocent (criminal).

Disagreement about unemployment figures between government and Gallup

Gallup suggests that the unemployment figures to be released by the federal government at the end of this week are underestimates. While the government figures are expected to be around 9.6-9.8%, Gallup says the unemployment is really closer to 10.1%.

The main issue seems to be that Gallup is measuring through the end of September while the government figures are based on data that ended in mid-September. And Gallup found that unemployment increased quite a bit in the last few weeks of September.

Matching workers to job slots in the American economy

In economic times like the United States is in now, it would seem logical that all open jobs would attract workers. But this is not the case, according to an article in the Wall Street Journal. Economic changes have “created a glut of people who can’t qualify for highly skilled jobs but have a hard time adjusting to low-pay, unskilled work.”

One way to think of the job market is a process where workers are matched with job slots. If the workers change or the job slots change, the system can get out of whack. From the article:

Matching people with available jobs is always difficult after a recession as the economy remakes itself. But Labor Department data suggest the disconnect is particularly acute this time around. Since the economy bottomed out in mid-2009, the number of job openings has risen more than twice as fast as actual hires, a gap that didn’t appear until much later in the last recovery. The disparity is most notable in manufacturing, which has had among the biggest increases in openings. But it is also appearing in other areas, such as business services, education and health care.

If the job market were working normally—that is, if openings were getting filled as they usually do—the U.S. should have about five million more gainfully employed people than it does, estimates David Altig, research director at the Federal Reserve Bank of Atlanta. That would correspond to an unemployment rate of 6.8%, instead of 9.5%.

So it is not as easy turning around the economy by simply creating jobs – there also have to be workers to fill these slots. This is a process that involves workers acquiring particular educations and skills and employers shifting their expectations for employees to take advantage of who may be available to work at that time.