Friday, April 16, 2021

The American Jobs Plan, With Some Infrastructure Too – Where from Here?

We can’t accuse our president of not trying to do enough.  His first 100 days were barely two-thirds over when he proposed what Peter W. Stevenson called in The Washington Post’s April 1st “The Five-Minute Fix” his “second proposal for a signature piece of legislation – this time focusing on more than $2 trillion in proposed spending on infrastructure and jobs.”  But is it the bill we had expected, and why is it so cluttered?

Per Stevenson’s graphic, the bill’s “transportation infrastructure” section includes $115 billion for “highways, bridges, and roads” and $42 billion for “airports, water transit and ports,” adding up to $157 billion or about 7%.  If we add the $85 billion for “public transit,” we’re still less than 11%, and would need almost half of the $80 billion intended for “passenger and freight rail” for heavy infrastructure to make up one-eighth of what Joe Biden wants to spend.  It’s reasonable to add, under Stevenson’s “infrastructure at home” category, the “clean drinking water” ($111 billion), “high-speed broadband” ($100 billion), and “electrical infrastructure” (also $100 billion), to reach $592.375 billion or 26.3%. 

The rest is projects of different kinds.  The bill offers $174 billion for “electric vehicles,” which would be marginally acceptable if our federal government, subsidizing and otherwise pushing them for over 40 years with only 4% of auto sales, including hybrids, to show for it, finally gave up if those numbers didn’t greatly change by, say, 2030.  I see $50 billion for “infrastructure resilience” (suspiciously vague), $45 billion for “transportation inequities” (subsidies for largely black neighborhoods?), and $30 billion for “other,” but no true infrastructure there.  The “at home” section also includes $28 billion of “other,” and extends infrastructure’s meaning to include “affordable and sustainable housing” ($213 billion), “public schools, early-learning centers and community colleges” for $137 billion (perhaps worthy, but in an infrastructure bill?).  The same can be said for the remaining four items, “research and development” ($180 billion), “manufacturing and small business” ($300 billion), “workforce development” ($100 billion), and “home and community-based care for elderly and disabled people” ($400 billion).

There is no problem with paying for maintenance we need, but the $1,658,625,000,000 proposed for other things works out to more than $5,000 per American.  I can see why it could be the best technique to bundle things together, to allow congresspeople to vote only once and assure enactment of the parts of the bill they like, but is it the fairest to our citizens?

Here we have several different schemes.  The core infrastructure proposal, that almost $600 billion, could, after some tweaking, get true bipartisan support and could remind us of the days when legislation often passed with healthy majorities.  The others could each stand alone, where Biden would need to choose whether to force them through with little or no Republican support or to soften their content.  That could, at least potentially, give us some idea on what is really important to our representatives and, hopefully by extension, to ourselves.  It also would prevent people from being required to accept, for example, yet more Amtrak subsidies, about which late columnist Charley Reese said a quarter-century ago “either there is a market for intercity trains or there isn’t,” in order to get clearly needed bridge repairs.  It would also let Congress assess the relative value of social programs, and adjust the dollars involved, as they determined which is more important for the 2020s United States, such as more care for older people or better local schools.  It could also facilitate some well-needed debate about how much the jobs required should pay.  All of this work could be bolstered by comments from constituents as well as by more incisive editorializing. 

Separating the ideas seems most logical and effective to me.  If I am wrong, what am I not understanding?  Please let me know. 

Friday, April 9, 2021

Banks, the Stock Market, Interest Rates, the National Debt, Inflation, Taxes, Bonds, and the Fed – What’s Happening?

It’s time to take a look at what might be called the large factors and institutions in our economy.  Here are a series of articles which may, or may not, give you insight.

One, “The Looming Bank Collapse” by Frank Partnoy in the July/August 2020 Atlantic, made a case for a new vulnerability.  Before “the financial crisis of 2008,” which “was about home mortgages,” “hundreds of billions of dollars in loans to home buyers were repackaged into securities called collateralized debt obligations, or CDOs.”  These instruments contained paper for mortgages of varying qualities, ranging from those solid and current to others on which no more money would ever be paid.  After “Lehman Brothers went under, taking the economy with it,” these CDOs “fell out of favor,” but “demand” for them shifted to “the CLO, or collateralized loan obligation,” each example of which includes “loans made to businesses – troubled businesses.”  If these instruments collapse in large numbers, per Partnoy they could take the rest of the economy along.

Something we have long implicitly known was articulated in “The Hutchins Roundup,” issued by Brookings on October 15th, namely that the “Stock market is less representative of the economy than it was in the 1970s.”  Two researchers found that publicly traded companies’ shares of total nonfarm payroll employment dropped from 41% in 1973 to 29% in 2019, a cause of fewer people below the top 1% holding securities.  That also may be a root of the market’s strength, as those accumulating more and more money have less need than others to sell.

Maybe I’m missing something, but isn’t “The Puzzle of Low Interest Rates” (N. Gregory Mankiw, The New York Times, December 4th) easy to solve?  The author found six “hypotheses” which “might explain the decline in the natural rate of interest,” five of which with merit, but only grazed the main explanation, that we are awash with capital, and that, combined with low business interest in large projects, means money usually sits in place with low demand.  This situation may change if taxes dramatically increase, and the upcoming infrastructure effort creates millions of jobs, but for now don’t be surprised if the Dow Jones Industrial Average continues to go up more in a typical month than balances in money-market savings accounts rise in a year.

“How much should we worry today about the rising federal debt?,” asked David Wessel in a December 14th Brookings report.  Not much, he said, as our government is paying less than 1% interest on its 10-year obligations.  It would do well though to follow the prudent individual spending practice and “pay for things today that we consume today” such as defense, Social Security payments, and most salaries, but that “we should not hesitate to borrow at today’s very low interest rates for public investments that will pay off in the future,” including infrastructure and human development.  However, low borrowing costs only “buy us some time,” and eventually we will need a reckoning.

Is it true that we have seen “Biden and the Fed Leave 1970s Inflation Fears Behind” (Jim Tankersley and Jeanna Smialek, The New York Times, February 15th)?  Yes, and that was the right thing to do.  As a corollary to money pooling up, inflation is much less of a risk than it was 40 years ago, and rates of 3% to 4% would hardly be disastrous.  With pent-up demand soon to explode, and, per “Janet Yellen Drops Hints” by Andrew Ross Sorkin et al. in the same publication on February 23rd we can expect further stimuli, we’re facing a real test of this theory, but we have a long way to go to see a real problem. 

How are bond prices doing, and can we see “What the Bond Market Is Telling Us About the Biden Economy” (The New York Times, February 23rd)?  Per author Neil Irwin, bond returns are not well, as many pay below inflation.  With our presidential administration carefully watching them we can expect generally freer spending, but “the line between too hot and just right is a narrow one,” meaning Washington’s willingness to fund more things may quickly change – if rates do indeed increase.

As for the Federal Reserve itself, we saw that chair “Jerome Powell Promises Not to Take Away the Punch Bowl” (by Neil Irwin, also in the Times, March 17th).  Powell denied the central bank would let forecasts alone, such as what Irwin called “a veritable boom” later this year, stop its monthly $80 billion bond purchases, but would “wait to see actual data.”  That is another optimistic indicator – so let’s get ready to party hearty!  In the meantime, we need to stay safe until our coronavirus independence days – two weeks after our last vaccinations – have arrived.

Friday, April 2, 2021

Fine Progress in March, as Almost All Employment and Coronavirus Numbers Improve Including AJSN, Down Over 700,000 To a Deficiency of 20.5 Million Jobs

This morning’s Employment Situation Summary from the Bureau of Labor Statistics was easy to assess.  We did far better than the forecasted 650,000 net new nonfarm payroll positions with 916,000.  Seasonally adjusted and unadjusted joblessness improved 0.2% and 0.4% respectively to 6.0% and 6.2%.  There were 9.7 million unemployed people, or 300,000 fewer than a month before.  The reduced count of those on temporary layoff included 200,000 of those and is now at 2.0 million.  The two best measures of how many Americans are either working or officially jobless, the employment-population ratio and the labor force participation rate, grew 0.2% and 0.1% and are now at 57.8% and 61.5%.  The number of those working part-time for economic reasons, or keeping short-hours propositions while looking thus far unsuccessfully for full-time ones, lost 300,000 to 5.8 million.  The figure which we now want to get worse, since its height means many low-paying jobs have gone away, average private nonfarm payroll earnings, lost 5 cents to $29.96 per hour.  The sole major statistic not to improve in March, the count of those technically unemployed for 27 weeks or longer, rose 100,000 to 4.1 million.

The American Job Shortage Number or AJSN, the metric showing how many positions, on top of those now open, could be quickly filled if all knew they could get them, had a good month as well, as follows:

 

 

Two-thirds of the AJSN’s 765,000 improvement over February was from lower unemployment, with over 80% of the rest from a reduced count of those wanting work but not looking for it for a year or more.  The share of the AJSN from those officially jobless, 43.6%, was down 0.9%. 

On the Covid-19 front we made superb headway as well, even though the numbers here do not reflect the full effect of massively greater dose manufacturing and distribution.  Per The New York Times, from February 16th to March 16th, the seven-day average of new American cases fell 32% from 81,217 to 54,959, while that for deaths was off from 2,183 to 1,303 or 40%, and hospitalizations lost 43% from 73,187 to 41,660.  The same average of daily vaccinations gained 42% from 1,716,311 to 2,435,037. 

It all looks like a great month, and it was, but what’s the catch?  It’s that we can’t forget how far behind we still are.  Compared with March 2020, when the pandemic had already added almost two million to the AJSN, we are still 3.1 million higher, and the difference is broad-based.  Other employment measures, such as the naggingly high new weekly jobless claims most recently at 719,000 or triple a typical pre-pandemic reading, would still be out of place as recently as early last year.  We are doing the job admirably on both fronts, but we have a long way to go.  Accordingly, the turtle, while taking a tendon-taxing step forward, can still see way in front of him territory he already passed through.

 

Thursday, March 25, 2021

No Post This Week

 Due to a serious family problem, I will not be posting this week.  Expect me back with the AJSN on April 2nd.

Friday, March 19, 2021

The Pandemic: Three Whirlwind Weeks, and Where We Are Now

This topic does not allow articles, updates, and blog posts a long life.  I posted with accuracy on it on February 26th, but most of that is now obsolete.  Why?

The first reason is that, per Noah Welland and Sharon LaFraniere in the February 27th New York Times, “F.D.A. Clears Johnson & Johnson’s Shot, the Third Vaccine for U.S.”  This American-Belgian product only requires one application per person, and, as of the article’s date, its consortium “has pledged to provide the United States with 100 million doses by the end of June,” allowing, by July 31st, “more than enough shots to cover any American adult who wants one.”  Three days later we heard from Elliot Hannon in Slate that “Merck Will Reportedly Start Manufacturing Johnson & Johnson Coronavirus Vaccine,” including sequestering “two facilities,” one of which will be dedicated to making the drug, with people at the other providing ““fill-finish” services, the last stage of the production process during which the vaccine substance is placed in vials and packaged for distribution.”  This kind of cooperation is exactly what seemed to be missing in December and January, and will make a huge difference in both quality and saving of lives.  A noble move. 

The result of these two news items, written by Sheryl Gay Stolberg et al. in The New York Times, also on March 2nd, was that “Biden Vows Enough Vaccine ‘for Every Adult American’ by End of May.”  The president Joe, knowing what he did about the supply of the Pfizer-BioNTech and Moderna products as well as the new one, made what then looked like an aggressive statement or stretch objective but, in the time since, has seemed increasingly realistic.  The first two vaccine manufacturers “pledged last month to deliver together enough to cover 200 million Americans by that date,” and the U.S. has committed to buy 600 million doses from these two companies alone. 

Almost immediately after it was approved, the Johnson & Johnson vaccine got into a controversy.  The Moderna and Pfizer-BioNTech drugs were rated at 94 and 95 percent “efficacy,” whereas Johnson & Johnson’s came in at only 72 percent.  As a result, probably also due to this product’s requiring only one dose, people started saying it was inferior.  Not so, said Hilda Bastian in a well-documented seven-plus-page March 7th exposition in The Atlantic.  Bastian’s main points were that first, the American-approved drugs are “essentially perfect when it comes to preventing the gravest outcomes,” with “zero cases of hospitalization or death in clinical trials for all (three) of these vaccines” (italics hers); second, the products do vary in “preventing illness” and frequency of “adverse reactions”; third, the rates of bad outcomes have been so tiny that in some cases adding only one infected test subject would have dramatically changed that vaccine’s published numbers;  and fourth, despite failure rates being microscopic for all of them we cannot be assured that will continue forever, but the three are all superb.

Two other recent articles were noteworthy.  In “The Pandemic Economy and the Rise of the ‘Noxious Contract,’” in the March 9th New York Times, David Grusky discussed how we could compensate people choosing to work in dangerous settings.  With the federal government’s Occupational Safety and Health Administration (OSHA) almost invisible, many environments, perhaps sources of the majority of the American total of 29.6 million coronavirus cases so far, have been unacceptably risky.  Biden is working to fix that through the Labor Department and by “trying to ensure that workers who turn down health-jeopardizing employment can still qualify for unemployment insurance,” and Grusky suggested other measures, particularly a “new G.I. Bill” allowing workers in infection-hazardous jobs military veteran’s benefits and subsidized housing qualification.  Katherine J. Wu’s “You’re Not Fully Vaccinated the Day of Your Last Dose” (The Atlantic, March 17th) reminded us, backed up with a description of how vaccines work, that two weeks need to elapse after that.

What are the latest American pandemic statistics?  On the New York Times website for March 17th, the 7-day averages of daily new cases, daily deaths, and number of people hospitalized were 55,001, 1,260, and 41,275 respectively.  Twelve percent of Americans have now been fully vaccinated, with another 11% having received one dose and needing another.  As of yesterday, the 7-day average of people getting vaccines each day was 2,503,771.  Compared with the worst overall day of the pandemic, January 9th, the four average numbers above are, in order, down 78%, down 60%, down 70%, and up 611%.  Here is a map, rather changed since the last one I posted, of average new daily cases by county, with those in white showing none, those with the lightest color otherwise less than 10 per day per 100,000 population, and the most intense over 250 per 100,000:

            

These figures show that we are doing the Covid-stopping job in all respects.  As long as we stay the course with getting vaccinated, practicing social distancing, and wearing masks, we will most likely be out of this by early summer.  Let’s get there!

Friday, March 12, 2021

Eleven Brutal Truths on Office Design and Working from Home

Our pandemic, which has cut back workers’ on-site hours in amounts varying with time and organization, has caused differing reactions from employees and their management.  Three articles have shown that – “July Is the New January:  More Companies Delay Return to the Office” by Gillian Friedman and Kellen Browning in the October 13th New York Times, “Has the Pandemic Transformed the Office Forever?” by John Seabrook in the February 1st New Yorker, and “When will office workers return?”, by Bartleby in the February 20th Economist.  They all have valuable insights, particularly the Seabrook effort, a panoramic view of both title subjects.

There seems still to be, however, a failure of too many people to look at the actual effects of what was once called “telecommuting” and how offices are configured.  With AT&T, Dictaphone, and others, along with related MBA and management Ph.D. study, from 1989 to 2008 I had a ringside seat for pertinent trends, attitudes, and results.  From the three articles above and my accumulated knowledge and experience, I offer eleven unfashionable but valid ideas.

First, some employees, especially those with a tendency to underwork in the office, will ease up more if they are at home.  While many do better there, it does not make sense that people with trouble focusing in an environment designed for productivity turn into hard workers when in a place they have created for their own relaxation and distraction.

Second, as was consistently the situation in my AT&T groups, to a great extent the very people a supervisor would trust least to be effective at home are the ones wanting to work there the most.  That forces managers, who often prefer to think of employees as being identically productive, to choose between evaluating their charges more incisively and taking real production losses. 

Third, in a time where management has been so conscious of economic differences between workers that Zoom has been criticized for showing employee-residence backgrounds, working from home exacerbates those disparities, as not all people have equally compatible family arrangements or highly suitable work areas. 

Fourth, since about 1990 a pendulum has swung back and forth twice between working remotely and in offices.  As described by Friedman and Browning as well as by Seabrook, just before Covid-19 became widespread, management preference had shifted away from home offices, and they influenced employee behavior with both carrots (the likes of onsite yoga rooms, sushi bars, and free beverages and snacks) and sticks (IBM’s 2017 edict that, per Seabrook, “everyone must return to the office or leave the company,” and a similar measure by Yahoo).  That was a 180-degree change from IBM’s Smarter Workforce Institute proclaiming eight years earlier that those working from home “were highly engaged, more likely to consider their workplaces as innovative, happier about their job prospects and less stressed than their more traditional, office-bound colleagues,” and was not too similar to Bartleby’s observation that “employees have become less loyal as the pandemic has progressed,” as “workers are spending more time looking for other jobs and updating their LinkedIn profiles.” 

Fifth, consistent with many of Seabrook’s examples along with these corporate decisions to end it, when working at home the social side of employment and the ability of people to work closely together are each impeded at best and crushed at worst. 

Sixth, the choice between working at home or in a company office, if companies accept that, would still, if nothing else, be useful as an employee perquisite, as ultimately that is what it would be.

Seventh, in many cases real estate expenses saved by companies from more people working at home are only transferred to the workers themselves.  Per Seabrook, office space for each employee in San Francisco can cost $20,000 per year – someone feeling obliged to upgrade from, say, a one-bedroom apartment to a place with two can end up absorbing much of that $1,667 monthly difference.

Eighth, office design factors intended to encourage workers to put in extra hours, as shown by examples in the first two articles, are, whatever they happen to be, at best marginally ethical.

Ninth, forced “collaboration,” as Seabrook put it, created by requiring people to work in public spaces, is as much of a failure now as it was when it first became popular in the 1990s. 

Tenth, a pendulum has also swung between preferred office designs, from cubicles to desks in open rooms and back again, with an entertaining example, found by Seabrook, of a company conjuring up “” focus pods” that resembled three-sided restaurant booths” and “could be made higher, so they are more like an enclosed-booth experience.”  As the author pointed out, those are cubicles.  Out of style as they are, cubicles may still be the best office arrangement, as they offer much privacy and relative quiet with only short walks to coworkers and meeting areas. 

Eleventh, while business publications have long been notorious for rediscovering ideas and labeling them innovations, in nowhere other than in the combined area of working at home and designing offices is it clearer that, as per a song title from the 1974 movie All That Jazz, “everything old is new again.”  Offices were around before the days of Bob Cratchit’s perch in A Christmas Carol, and we are approaching 30 years of widespread remote-work-enabling Internet access.  It is time to look more at business history, with emphasis on what has been successful and what has not.  In the meantime, nobody should be surprised if old tactics, especially if forgotten, get us the same results.

Friday, March 5, 2021

Today’s Jobs Report: Strong Total Increase, Latent Demand Down 564,000 to 21.2 Million, Otherwise Indifferent – With Coronavirus Progress, That’s Fine

 

I didn’t know what to expect in this morning’s Bureau of Labor Statistics Employment Situation Summary.  The only estimate I saw on net new nonfarm positions was 182,000, and knew the pandemic had eased considerably, taking pressure off any need for employment progress.  So what happened?

We came in at 379,000 new positions as above, more than double the often highly accurate Fox News projection.  The other results were indifferent.  Seasonally adjusted unemployment edged down from 6.3% to 6.2%, with the unadjusted version, showing we are in a generally below average month for work, fell from 6.8% to 6.6%.  As of mid-February we had 10.0 million officially jobless, down 100,000, but the share of people on temporary layoff was off 500,000 to 2.2 million, meaning that those unemployed without that status actually numbered 400,000 more.  Those out for 27 weeks or longer rose 100,000 to 4.1 million, and those working part-time for economic reasons, or keeping short-hours positions while thus far unsuccessfully seeking longer-hours ones, gained the same amount and is now 6.1 million.  The two measures of how common it is for Americans to be working or one step away, the labor force participation rate and the employment-population ratio, held and gained 0.1% respectively to reach 61.4% and 57.6%.  Average hourly earnings for all employees on private nonfarm payrolls, a reverse indicator in these economic conditions since higher pay means fewer low-end jobs, gained 5 cents per hour, a hair above inflation, to $30.01. 

The American Job Shortage Number or AJSN, the indicator showing how many new positions could be quickly filled if all knew they would be easy to get, improved from 21,792,000 as follows:


Most of this month’s drop was from lower official unemployment, with about 100,000 apiece from reduced numbers of people claiming discouragement and wanting work but not looking for it for at least a year.  Over the past 12 months, though, the AJSN, pre-pandemic, was more than 5.3 million lower.  The share of the AJSN from official unemployment dropped 0.4% and is now 44.5%.

As for Covid-19 relief, we had a tremendous month.  From January 16th to February 16th, per The New York Times, the 7-day average of new daily cases fell from 224,298 to 81,200 or 64%.  Daily deaths, measured the same way, were off from 3,319 to 2,183 or 34%, and the same measure of hospitalizations came down 46% from 129,008 to 69,856.  The 7-day average of vaccinations given increased 115% then, from 798,707 to 1,716,311.

How can we rate the February employment situation?  Given that our coronavirus progress has been so strong, a so-so economic month is no problem.  Progress on vaccinations has been real but too piecemeal, with most or many people receiving full doses in families with others who have not and thus unable to enjoy events freely with their primary group, for real economic advancement, and that shows in this morning’s results.  But our focus was well-chosen.  It may be several months before unemployment gets below 5.5%, or monthly net new jobs exceeds half a million, but as long as we do generally well with masks and social distancing, and keep increasing our vaccination rate, they will.  The turtle feels a lot better, and, accordingly, managed a full step forward.