Friday, February 27, 2015

The Sharing Economy and Jobs – I

It’s way past time that I looked at the newest major way for people to make money. 

The first time I read about it was a year and a half ago in a Thomas Friedman New York Times column.  Titled “Welcome to the Sharing Economy,” it described Airbnb, an accommodations-reserving company then less than five years old but gigantic, with places to rent available in 34,000 cities and 192 countries.  The piece was informative, but displayed two of Friedman’s most irritating tendencies.  First, it seemed giddy about the possibility of people selling access to their resources, combined with the let-them-eat cake mentality he has shown on other topics (“The skills required for any good job keep rising – a lot of people who might not be able to acquire those skills can still earn a good living now by building their own branded reputations, whether it is to rent their kids’ rooms, their cars or their power tools.”).  Second, he once again tied a barely related subject into green politics (“Just think how much better all this is for the environment – for people to be renting their spare bedrooms rather than building another Holiday Inn and another and another”). 

Yet the final two sentences of Friedman’s column were prescient:  “The sharing economy – watch this space.  This is powerful.”  Although Airbnb was, in fact, a huge company when he wrote the piece, it has continued to prosper.  It is joined by amateur taxi providers Uber and Lyft, the former of which does business in over 50 countries, and any number of other similar businesses with the same or other specialties.  A lot has been written more recently on the sharing economy, with views of it ranging from glowing to execrable, so it is clear to many that, somehow, it must be dealt with. 

So how can we assess this movement?  This week, the positives. 

First, the sharing economy is indeed a legitimate means for people needing money to get it.  The sharers not only pass along their resources for a price, but also invest their time, energy, and knowledge in the process.  All of these things are often surplus for them, especially among those without regular jobs.

Second, it is a proper descendant of eBay.  People have been selling their unneeded items there for almost 20 years now, with the company, as with Uber, Lyft, and Airbnb, not owning anything that changes hands but only taking money from those executing the transactions.  EBay has been a boon for vast numbers of people, for collectors, suppliers, and bargain shoppers as well as its investors, and it would be silly to say that its overall effect has not been positive.

Third, other sharing sites, such as TaskRabbit, help people get paid for their surplus time.  They have no minimum wage as such, but allowing the otherwise unemployed to earn something, somehow, is in itself a good thing.

Fourth, the sharing economy fits well with the times we are in.  Although there is a permanent jobs crisis, neither political side has been doing much of anything to end or even alleviate it, so, improving employment levels notwithstanding, many people are stuck not working.  It allows them ways of earning money, in some cases, even without being physically present.   It also helps those who have lost good-paying work without finding it at similar compensation but have fixed expenses, especially for cars and housing, by providing the means to defray them without giving up their houses and vehicles altogether. 

Fifth, it is strongly market-based.  With so many companies and providers, the amounts charged for tasks, rides, and night’s stays will settle at amounts determined by supply and demand.  There will be little concern about wide-scale overcharging, as the systems will allow others to easily undercut prices that are truly, as opposed to seemingly, too high.  Sharing applications also have the potential to slash market prices for products which are, in fact, grossly overpriced due to not enough people selling them.

Sixth, those offering resources through Uber and Lyft, and to some extent Airbnb, can be seen as franchisees, a well-established category of business with its own sets of strengths and restrictions.  More franchises, held by willing entrepreneurs, generally mean more solid, taxpaying business activity.

Seventh, it provides opportunity, even if often meager, for people to sell skills nationwide.

These seven points, of course, are only half the story.  For the problems and disadvantages of the sharing economy, along with how we should best handle it, come back for next week’s post.  

Friday, February 20, 2015

Lessons of the Persian Gulf

This week, I go off-topic. 

In January, I spent two days apiece in Qatar, Bahrain, Oman, and Kuwait, almost entirely in the largest cities of Doha, Manama, Muscat, and Kuwait City.  Not business – I had been to Dubai several years ago and liked what I saw, so returned to the area. 

So what did I see this time?

First, note that I handpicked probably the four safest, most prosperous countries in the region.  I stayed out of much poorer Yemen, a good thing since machine guns went off in its capital that week, and Saudi Arabia, still not big on general sightseers.  Although all four are more or less absolute monarchies, with the king or sultan taking at least the role of permanent president, they have done superbly at not only getting into the 20th century, where not all were 50 years ago, but further into the 21st than almost any others.  Their infrastructure is first-rate and getting better.  I have never seen more construction anywhere than in Doha.  The new airport with free Internet computers was finished last year, a city rail system is being assembled underground, and it seemed like every other building was either going up or being remodeled. 

Second, every single person I encountered, with the possible exception of a man who didn’t want me leaning back in my airline seat, seemed civilized.  Although my ordinary Western wear of polo shirts and khakis was not rare, it was in the minority, but nobody seemed offended that I was there.  People at hotels, restaurants, or even market stalls even went well past that to be solicitous.  When I went to the desk of my unassuming lodging for more toilet paper, I was assured that all I needed to have done was to call them and they would have brought it up to my room.  I like to think that the cause was that the locals’ Bedouin ancestors, going through the desert, were critically dependent on the hospitality of others, and passed it along in cultural form.

Third, those countries were excellent travel values.  The round-trip airfare from JFK to Doha was $680, which seems substantial until you see that much closer locations such as Rio de Janeiro, Casablanca, and even London and Dublin were priced higher.  On the ground, I stayed at places costing $37 to $85 per night, choosing as I usually do low-end hotels with private rooms and baths and decent online ratings, and ate somewhat like a local at smaller restaurants and food stands.  The meals rarely cost me more than $15 and usually much less.  Each hotel also had a fine free breakfast buffet, and I had hummus, olives, feta cheese, orange juice and pita bread for eight days straight.  Taxis cost less than in American cities, and museum admission charges and the like were nominal or nonexistent.

Fourth, the weather was wonderful.  It was dry, in the 70s and 80s during the day with ample but not intense sun, and in the 60s at night.  Given that I returned to a second straight unseasonably cold Catskills winter, which has continued throughout the three weeks since, it was just the break I needed.

Fifth, whatever you think about the first Gulf War, in which Iraq invaded Kuwait and was repulsed by Operation Desert Storm, the Kuwaitis have not forgotten the efforts of others.  When arriving there, someone said I should consider their country “my second home,” and my visa was free.  I visited the Memorial Museum, dedicated to the invasion – they had display after display of the nations which had liberated them, and an entire wall, including the names of every American soldier who had died there, honoring the United States.  Although it may seem that people in countries we have rescued “should” have that attitude, it doesn’t take much international travel to see that such a viewpoint is hardly the norm.

Sixth, physical safety in all four places was complete.  Whether on fairly dark streets near the market in Muscat, walking through a construction zone in Kuwait City, or though the mazelike narrow streets of Manama, there was clearly nothing to fear.  To be sure, they were all worthy of big-city precautions, but beyond that there were no problems.

Seventh, with their British colonial heritage, English is the second language in all four countries, and is on almost all signs.  That is convenient for those of us who know little Arabic.  English also served as a common tongue; in Muscat I often heard Indians, quite common there, and locals doing business in English, even though it was primary for neither.  I also talked with a man working at a candy store, found out he was from Iran, and determined that his English was better than his Arabic.  Tourists traveling to those places, at least in the cities, are not at all handicapped by not knowing other languages.   

Eighth, I never did see another known American.  I also talked with people from Bosnia, Sudan, Sri Lanka, India, and Great Britain, but not from here. 

Ninth, a few scattered observations.  As expected, there were any mosques, with loudly broadcasted calls to prayer.  It is not necessary to dress formally for public buildings, but the shorts and jeans should stay home.  In general, the countries were good places to see how people do things differently but still effectively. 

So, it was a great week-plus without thinking much about American jobs.  One of my usual topics, though, did present itself.  The quality of what and how much they are building made the case for a national American infrastructure project even stronger.  It would be a shame for Americans to consistently note, upon return, that places like Qatar and Kuwait are more advanced than we are, but at the rate we are going we will be there soon.  There is a lesson here – if we cannot accept that not all success comes from our country and ideology, we will not be the world’s leader for long.        

Friday, February 13, 2015

The State of the Union Address, Mixed on Jobs and Thus an Improvement Over ’14, Moves Pressure to Republicans

Last month had President Barack Obama’s sixth State of the Union address, with only one from him to come.  It drew comments ranging from “meaningless” (Jennifer Rubin in the Washington Post), to “combative” (the New York Times Editorial Board) and “replete with a certain swagger” (Eugene Robinson, also from the Post, on to his “best yet” for its relative lack of citizen vignettes (Alexandra Petri, likewise). 

I was glad to see the emphasis Obama put not only on the American economy, but on jobs in particular.  While some of his claims were narrowly selective, such as that “over the past five years, our businesses (emphasis mine) have created more than 11 million new jobs” when either including other positions lost or changing the time to four or six years would make it much less favorable-looking, politicians will be politicians, and of more concern was what he said about the future.

The president’s stated wishes were a mixture of ideas, some good for employment and some bad.  On the down side, we heard yet again, though thankfully not in a belabored way, about the need for a higher minimum wage, defended by the difficulty to “support a family on less than $15,000 a year.”  To name just one objection, when we have a permanent jobs crisis, we do not have the luxury of legally mandating that all positions pay enough to fully provide for multiple people. 

Other of Obama’s proposals would also, as Rubin wrote, “put more burdens on employers.”  Two were federally required paid sick leave and paid maternity leave.  He also called for a “law that makes sure a woman is paid the same as a man for doing the same work,” presumably stronger or more results-based than the one designed to serve that exact purpose that has already been on the books for some 51 years.  While it is true, as he said, that “nothing helps families make ends meet like higher wages,” nothing gives families a more sudden and severe financial setback than being put out of work, possibly due to one’s employer being simply unable to pay higher mandated costs.

The other points in the speech, though, were favorable to jobs.  I counted six, which were four or five more than he had a year before. 

First, he said we have emerged from the recession.  Though self-serving, that statement still has a no-excuses flavor which might stifle contrary, action-inhibiting words from other Democrats.  Second, he mentioned the need to pay people properly for overtime.  Abuse of statuses such as “manager” and “contractor” have too often facilitated employers circumventing such laws, which, even in a job-scarce environment, should not be allowed to deteriorate.  Third, his requested strong connections between community colleges and the companies most suitable for hiring their graduates are not only critically necessary but in need of ongoing, proactive maintenance.  Fourth, although vaguely presented, his idea of rewarding companies investing in the United States should affect tax laws much more than it does.  Fifth, his call at the end of the speech, “if you disagree with parts of it, I hope you’ll at least work with me where you do agree,” makes it clear that responsibility for refusals to discuss or negotiate falls, barring the absurd idea that none of his proposals could under any circumstances be acceptable, squarely on Republicans.

Obama’s sixth pro-jobs view was perhaps the first one to take substantive form thereafter.  He mentioned the need for a large infrastructure initiative, which became a $478 billion item in the budget he sent to Congress earlier this month.  He said on February 1 that he thought Republicans were in favor of extensive infrastructure work, and that he and they should negotiate not the general idea, but how it should be financed.  He was right, as people of both parties can see that American bridges, ports, highways, airports, sewer systems and so on need repair, upgrading, and replacement, which must happen somehow.  If congressional Republicans refused to even debate how these things could be done, that would mean that they were going beyond their beliefs and would be, for some other reason, simply acting in bad faith.

One more thing became distinct last month.  Obama being a Democrat, and in many ways a liberal, does not mean he consistently wants a larger government.  One reason why the 11 million new business jobs he cited was not as good as it sounds was that, during that time of his presidency, government positions had decreased 500,000.  Not increased less than expected, not increased less than the pattern of the past few years, not “cut” in the old Washington sense of asking for two million but only getting 1,500,000 – but actually down overall.  He said in the speech that his proposed tax increases on the wealthiest Americans would not go for more workers in Washington, but would ease burdens on the middle class.  So, taking those two things together, it was completely unfitting for House Speaker John Boehner to rally Republicans by saying, as he did, that “making government bigger isn't going to help the middle class.”     

Overall, the 2015 State of the Union Address was true to type.  It was self-congratulatory, filled with wishful thinking, and too vague in spots for even its general purpose.  I stay with what I wrote a year ago, that there will be no fundamental American employment progress under this administration.  However, as our president’s views on jobs have improved, the reason for that is shifting.  Barring tragedy, Barack Obama will be President of the United States for almost two more years, with almost no chance that he will be replaced by a Republican before January 20, 2017 – at the soonest.  It is now up to people of that party to decide whether to negotiate and implement what they as well as Democrats, know we need, or to throw out babies such as the infrastructure initiative with the bathwater of further burdens on employers in the name of unconnected ideology.  

Friday, February 6, 2015

AJSN: America Now 19.5 Million New Jobs Short, as Number of Unemployed and People Not Looking Increase Greatly in January

Another data month, another set of seemingly similar results.  There were 257,000 net new seasonally adjusted United States jobs in January, very close to the 252,000 gained in December.  Headline unemployment ticked up 0.1% to 5.7%.  Labor force participation reversed its 0.2% December fall and is now at 62.9%, whereas the employment to population ratio, steady last month, gained 0.1% to reach 59.3 percent.  The number of long-term unemployed, or those officially jobless for 27 weeks or longer, held at 2.8 million, and there are still 6.8 million working part-time for economic reasons, or wanting a full-time position but not finding one.

When looking at seasonally unadjusted numbers, though, January, as always with that month, was less favorable.  There are now almost 9.5 million people jobless, up over 1.1 million from December.  Unadjusted official unemployment jumped from 5.4% to 6.1%.  As for people marginally attached to the labor force, those wanting work but not looking for it for a year or longer shot up about 10% to 3.6 million, though there were 58,000 fewer describing themselves as discouraged.  With no other significant changes in other work statuses, the AJSN, or American Job Shortage Number, is now over 19.5 million, as follows:


Although much of this data, net of clear seasonal differences, has leveled off over the past several months, the American jobs situation is still better than a year ago.  In January 2014 the AJSN was 20.6 million, with many more officially unemployed and discouraged.  Two numbers which have worsened since then, though, are those not looking for the previous year, up 129,000, and expatriates, almost 1.3 million higher. 

So how good is the American employment condition now?  The last year or two remind me of a dieter losing half a pound a week – improving admirably but never greatly.  Can our economy continue to progress this steadily for a few more years, with no recessions?  I am not optimistic, and still see no reason for much larger gains no matter what happens.  However we are doing better, with the turtle plodding forward once again. 

Saturday, January 31, 2015

The AJSN vs. Other Economic Data, 2012-2014

We’ve just finished the second full year of the American Job Shortage Number, the key economic indicator which shows how many additional jobs could be quickly absorbed in the United States.  As per earlier this month, the past several months’ AJSN’s have been retroactively adjusted, to reflect the U.S. State Department’s Bureau of Consular Affairs’ determination that as of May 2014 there were 7.6 million American-citizen expatriates living in other countries.  That is now the most recent data available, and I will be keeping up with them to see if and when they will be updating it.

Over the past 2½ years, the main jobs story has been what has been called either a recovery or a partial recovery from the 2008-2010 Great Recession.  I agree with the former, with the gap between employment now and as it was seven years ago belonging to the permanent jobs crisis, but whatever it is, times have got steadily better. 

So what has the AJSN worked out to since it started?  Here is a chart:

Since the AJSN is not seasonally adjusted, it varies according to annual tendencies.  If we graph it by month, we get the following, showing both the annual flow and the AJSN’s consistent year-over-year improvement.  

Although the AJSN has got lower, which means better, it has not followed the trend of other economic indicators.  Here are the monthly AJSN’s again, along with the unemployment rates, labor force participation rates, and employment to population ratios, all also unadjusted.

Graphed, they look like this, with the right-hand scale used for the three smaller numbers:

Although times have been relatively good, the number of additional jobs that could be easily filled has not decreased as much as the jobless rate:

This graph shows that while unemployment has fallen more than a third, the AJSN has not followed, and in fact has dropped only 17%, or about half that amount. 

The failure of the AJSN to follow along with official joblessness shows how much more broad-based that statistic actually is, and documents what millions of people looking for work already know – that positions are not as easy to come by as the unemployment rate suggests.  It also explains why average wages, which actually fell last month, have not kept pace either.  There are simply too many people who want to work.  It may take another recession to address this issue, but it will happen someday.    

Tuesday, January 20, 2015

Obama’s Community College Proposal: Good, Bad, and Different

On January 9th, President Barack Obama presented, in person, something intriguing.  He proposed that all American community college students enrolled in 2-year associate’s degree programs maintaining at least 2.5 grade point averages receive free tuition and fees.

I have a lot to say about this, and my background on it comes from both sides.  In the past decade I taught at two community colleges, Seminole and Valencia near Orlando.  I was always impressed by my students, who were often not only working full-time but raising children, sometimes even as single parents, yet managed to get to class and to do their work well.  I have long thought two-year schools to be fine places to start higher education, with not only lower rates but settings facilitating marginal students easing into college, and when associate’s degree recipients transfer to and graduate from four-year schools their diplomas look the same as those who attended the whole time.    

In contrast, though, I have been reactionary about school as an unemployment solution.  In the Work’s New Age book I called education and training “one applicant over another,” and tagged Obama for saying that more such expenditures were necessary to reduce joblessness.  When the problem is that the number of applicants is burying the number of available positions, formal learning programs will only affect who gets hired, not whether anyone will.  Community colleges, which generally prepared people for entry-level jobs already in excessive demand, were no better than four-year schools benefiting inordinately from their long-false reputation of assuring entry into the middle class.

So what can I say about Obama’s free-tuition proposal? 

First, the positive things.  Free community college tuition would reduce the amount students owe for education, which soared over $1 trillion several years ago and might be the next bubble to burst, as much of that will never be repaid.  It will steer more people into community colleges who should be going there anyway, the marginal students statistically unlikely to get degrees and those lacking in family money.  It will encourage states, such as Wisconsin, where almost all go to four-year schools right away, to save money by implementing and expanding two-year institutions. 

Next, the plan’s disadvantages.  As above, it could perpetuate the illusion of colleges automatically conferring middle-class status, which they have not done successfully for decades.  If it turns out overly easy to maintain a required grade point average, and controls on ensuring students are making steady, even if slow, progress toward graduation prove to be weak, the proposal may allow people to consume educational resources indefinitely.  The idea should not be seen as a first step toward free tuition at 4-year institutions, which would not be viable without admission requirements tougher than Americans would accept. 

Beyond the good and bad points, the free tuition plan would have effects hard to predict.  It would put the first two years of post-secondary schooling in the same category as elementary and high school, available publicly at no charge but with more expensive alternatives also possible.  It would become the default for high school graduates, to an even greater extent than college is now.  It would shrink the sizes and change the missions of lower-tier four-year schools.  It could either raise or lower community college completion rates, depending on whether students become more likely to enter degree programs, whether those struggling but not clearly wanting to leave decide to complete their 2-year degrees in the name of finishing successfully, or if more choose just to drop out and leave that phase, free tuition and all, behind, with no further obligations. 

The fascinating question is whether free community college would help improve mobility, or only entrench financial inequality.  It would certainly help some poor but smart and motivated students to pull themselves up, by providing education they might not be able to get otherwise.  It would also, though, solidify a three-tiered (or more) system, in which after high school people go to community colleges, the stronger four-year state schools and the like, or Ivy League or other elite private universities, resulting in tightly circumscribed work opportunities for each.  Although inequality as such is overrated as a problem in itself, it would be a shame for a country long called “the land of opportunity” to have career outcomes more predetermined than the descendants of the old European monarchies.

Overall, though, the strengths and weaknesses of free community college are irrelevant.  Although it is based on an originally Republican idea, Congress will not pass it into law.  Many will agree with the Wall Street Journal’s view that it would be “just another federal entitlement,” and, right or wrong, that will be the end of it.  Whether that will be a good or bad thing is for you to decide.       

Friday, January 16, 2015

Women, Jobs, and the Great Recession

Lately, a number of my Work’s New Age blog posts and WORK SHIFT radio episodes have focused on the problems faced by men in getting employment.  Women, though, have hardly got off freely, despite having lost only 25% of jobs that disappeared in 2008 through 2010.  What else can we say about how they have fared?

First, although men’s official seasonally adjusted unemployment was far worse at the end of the Great Recession – for example, 10.2% in January 2010 compared with 7.9% for women – the sexes were much closer before and after.  During 2004, about 5.0% of men were jobless, compared with 4.8% of women.  By 2007, the difference was the same, 4.2% and 4.0%.  In August 2008 the gap went up to 5.7% against 5.0% and it remained high, until in 2011 men’s unemployment dropped almost month-by-month and women’s stayed about the same to reach 8.0% and 7.8% in December.  Since then, more jobs have been added, and the difference between the sexes has continued to be small; at the end of 2014, 5.3% of men were officially jobless compared with 5.0% of women, a gap actually wider than most recent months.  That means that we are not moving, as some analysts have feared, toward huge employment gender gaps.

Second, when measured by the total number of jobs, men have done much worse.  In January of 2007, men had about 4.7 million more than women, 70.9 million to 66.2 million.  Early in 2008, men’s jobs, even in absolute numbers, began to go away, when women’s were still rising – in the first half of 2009, men were losing over 400,000 net positions per month, compared with women’s 200,000.  By January 2010, the sexes were about even, at just over 64,600,000 apiece.  Afterwards they started to diverge, but even by the end of 2012 they were much closer than they had been before the recession, with about 1.7 million more for men.  The difference between unemployment rates, which include only those actively looking, and the number of jobs confirms that more men than women, indeed, have left the workforce. 

Third, per a detailed New York Times look at sets of 147 25 to 54-year-old men and women not employed, there are some real differences between the things they do.  Women spent much less time watching TV and movies and at other entertainment, and much more doing housework and caring for others.  Men put more hours toward education, and toward looking for their next employment opportunities.

Fourth, the reactions of men and women to being out of work were even more different.  As shown in a December 15th New York Times article, men had more interest in getting hired again and more willingness to take long commutes, but were less likely to accept low-paying positions.  Personally, men were more like fish out of water, with 41% and 43% reporting worse physical and mental health against 16% and 19% respectively seeing improvement, compared with women claiming 25% better and 29% worse mental health and, per the article, “almost no difference” physically.  Sixty percent of women said that being out of work had improved relations with their children, but only 22% of men agreed.

Fifth, another December Times piece, “Why U.S. Women Are Leaving Jobs Behind,” made the case that more mothers could return to the workforce if they were accommodated with longer mandated maternity leave, more flexible work times, more telecommuting, and government-subsidized child care.  That brings up the problem of whether, when not only men but many women without children are also out of work, a lot of money and laws should go for things that cost jobs.  That is not sexist but practical, especially if women with children are likely to do generally better with unemployment.  Perhaps that is unfair, but hard public policy choices are made all the time.

Overall and once again, the jobs crisis may affect different sets of people in different ways, but it is ultimately an equal-opportunity transition.  That women tend to do better personally and organizationally does not mean they wouldn’t rather be working.  That is the key to understanding what is happening with employment now – it is not the official jobless rate that shows the trouble we are in, but the number of people, not totally by choice, on the sidelines.  Only when we understand that will we be poised for the progress we need.