Wednesday, November 21, 2018

Hyperloop: A Successful 21st Century Transportation Mode, Or Not?

Two stories appeared this year about a potentially revolutionary travel method that could shake up American employment.  Their titles were sort of out of order, with “Hyperloop is edging closer to reality” by Daniel Cooper coming out on March 8th, and Will Nicol’s “What is the Hyperloop?  Here’s everything you need to know” released October 6th. 

Hyperloop, proposed by Tesla and SpaceX leader Elon Musk and being tested and developed by Hyperloop Transportation Technologies (HTT), is in effect a pneumatic tube designed to carry people and cargo.  It involves “a low pressure environment, surrounding the [passenger and freight-carrying] pod with a cushion of air that permits the pod to move safely at such high speeds, like a puck gliding over an air hockey table.”  Magnetic accelerators, fascinatingly using the rare-earth metal neodymium, provide impetus, and solar panels deliver power.  Travel speeds could exceed 700 miles per hour, and, on half-mile test tracks, have already reached 240.  Progress has been real if preliminary, with HTT already obtaining tens of millions of dollars and making a prototype passenger pod, Quintero One, available in October.  The company has established partnerships with Aecom, a business “involved in many high profile engineering projects,” and Oerlikon, “a leader in vacuum technology since the dawn of the 20th century.” 

As is clear to all, despite a claim by HTT chairman Bibop Gresta that a Hyperloop run from Los Angeles to San Francisco “will be fully optimized and ready for passengers in 2019,” the system may never materialize.  Yet it could.  What points are for and against it?

On the good side, with lower costs and easier implementation, Hyperloop may have bullet trains completely covered.  Its speeds are potentially much higher, and Musk’s $6 billion estimate for making the California run above operational is dwarfed by the $68 billion expected for only the first phase of that state’s under-construction high-speed rail network.  It has real potential to take less time, considering that dealing with airports, than flying for up to 1,000 miles.  It could eventually be built deeper into the earth, cutting distances to places on other parts of the planet and making the “core-tubes,” a fanciful 30th-century invention written about 50 years ago, a reality.

There are also several real problems.  As with other large infrastructure projects, Hyperloop construction will probably run way over budget, making its final LA-SF cost closer to that $68 billion than Musk would like to admit.  As with railroads Its structure is inflexible, and does not lend itself to other uses as vehicles and airplanes offer with theirs.  I am skeptical that solar panels can provide most or all the system’s power needs, as HTT executives have implied.  That company may have unnecessarily hurt perceptions of its seriousness by naming its pod construction material “vibranium,” an already-used name as familiar to many Marvel comic book readers as “kryptonite” was to DC fans.  The Quintero One photos also, fair or not, left me thinking their capacity was small.

Overall, can we predict whether Hyperloop will be by 2050 a common transportation choice, or only another Buck Rogers idea from the past?  It seems clear that it would work, but that is not the issue.  Why did commercial supersonic air travel fail?  Why did pneumatic technology, commonly used for mail in mid-century, go nowhere for decades after that?  Why are rail connections from airports to city centers so rare in the United States?  Until we can easily answer transportation-system questions like these, we will have no idea whether this, one more of Elon Musk’s visionary ideas, will turn out like CD’s to bullet-train’s cassettes, or the other way around.  In the meantime, let’s take Hyperloop, and the jobs it could create and eliminate, seriously but cautiously.

Friday, November 16, 2018

Minimum Wages: Where Are We Now, and How Can We Reach Agreement?

Over the past few years, the federal $7.25 lowest hourly pay level has stayed the same, but many cities and states have installed higher ones.

A good look at what happened this year was Paul Ausick’s “4.5 Million US Workers Get Wage Increases on January 1,” in Yahoo Finance on December 23rd.  Given how many areas hiked their minimum pay rates, that doesn’t seem like a lot, but many were set to take effect years from now, and fewer than I had thought are receiving the bottom amount.  Ausick named 18 states, with gains ranging from Alaska’s 4 cents per hour to Maine’s $1.00, with their new levels from Missouri’s $7.85 to Washington’s $11.50.  These seem to correlate only slightly with living costs, as Alaska’s $9.84 and Hawaii’s $10.10 are less than Arizona’s and the latter only matches Rhode Island’s, and don’t seem to reflect conservative or liberal majorities either.

On results, in “The effects of 137 minimum wage hikes, in one chart” (Washington Post, February 5th), Christopher Ingraham, with the help of Arindrajit Dube’s scholarly paper, went for a comprehensive look.  He claimed Dube found that while minimum wage raises do cause jobs below the new levels to go away, they also cause creation of a roughly equal number of positions above that level.  Jacob Vigdor, a co-author of a previous study, suggested that, at the current dollar value, raises to $11 per hour or less had much smaller detrimental effects than those $13 or more would have – not yet relevant, since no state currently mandates more than Washington’s $11.50.  On this issue we can use all the help we can get from the academic community, as many of these findings are still controversial and many more minimum wage boosts are on the way.

If the federal $7.25 rate were to be increased, there are better ways than an overall hike.  “A Smarter Minimum Wage,” by Jonathan Cowan and Jim Kessler (The New York Times, November 18th) presented, indeed, a real improvement.  It would allow federal minimum pay levels to vary from area to area, designed by a method “that recognizes the differences in living cost and labor markets in a way that is both flexible and permanent.” The authors provided implementation specifics, designed to cover situations such as same-apartment-size rents averaging 261% Jacksonville’s level in the Los Angeles area and a dozen eggs costing over four times their Fargo cost in Oakland.  As now, Cowan and Kessler’s proposal allows communities, if they see fit, to establish higher floors than the one assigned to them.  Overall, a powerful idea that attacks what is probably the largest problem with raising the lowest pay rate.
How can we best get together on minimum wages?  We can start with three propositions, on which it is reasonable for mainstream Democrats and Republicans to agree.

First, raising minimum legal pay almost always causes some jobs to go away.  We can be more agreeable on this fact of basic economics if we do not argue on how many positions would be lost, but instead only approve the statement that it will be more than zero.

Second, increasing minimum pay levels will encourage many businesses in many industries to consider technological solutions instead of workers.  That is obvious.  Again, if we can avoid getting hung up on the exact numbers, we can reach an accord.

Third, as, per Cowan and Kessler, “we are one country, but hundreds of different micro-economies,” the best level on which minimum wages should be decided is the lowest.  State governments are better positioned to know what they think is best for their people than the federal one, county governments are better than states, and municipal governments are more suitable still.  Let people in areas differing from what surrounds them decide for themselves.  I have not yet heard of a city neighborhood wanting to set their own minimum wage, but that, which could allow for parts of the Bronx choosing a lower floor than the likes of Midtown Manhattan, could be best of all. 

Maybe this is the way to resolve intractable-seeming political issues.  Find the areas of agreement, then and only then work out the details.  What do you think?

Friday, November 9, 2018

Guaranteed Income and a Guaranteed Job: What’s the Difference?

Four years ago September I posted about the subject of a recent article, a vast social program designed to kill off unemployment forever.  That was not a guaranteed basic income, on which I had written and would write more, but was similar in many ways.  The suggestion was for our federal government to provide work for anyone officially jobless, at a consistent $15 per hour. 

It is easy to compare or even conflate these two ideas.  Both are grand plans defensible despite their monumental costs.  Both are, in a sense, nuclear bombs against the jobs crisis.  Each would massively increase the amount of money in circulation, increasing tax revenue to partially offset their outlays.  Each would be susceptible to claims that the amounts involved were insufficient, especially as they would not be enough to support middle-class lifestyles.  However, their differences are less obvious and more profound.  What are they?

First, while guaranteed income would cut overall demand for employment opportunities, guaranteed jobs would increase it, especially at rates of pay above or equal to the government wage rate.

Second, while universal basic income would have little effect on the incentive workers have to perform well, assured government employment would savage it.  I don’t know just how that would play out, but it seems clear that when people are assured of being paid, many would not care about how effective they would be.

Third, guaranteed income would be relatively cheap to establish and maintain, while a program with tens of millions of jobs would be rife with labor needs, money needs, and complications.  Our government would need to implement solutions to a wide range of situations, such as workers who cannot or will not do their assigned jobs, workers who want to change positions, people physically relocating, advancement and training not pertaining to current assignments, employee management and supervision (how could the millions of people needed there be paid the same as their reports?), and so on. 

Fourth, assured stipends would precipitate a profusion of personal decisions, ranging from increased motivation to work from depression relief to doing nothing but collecting checks and everywhere in between.  Assured employment would create three tiers of employment – positions paying more than, about the same as, and less than the established government wage.  That would make it difficult for companies to obtain low-skilled labor at less than, in this example, $15 per hour, whereas if they made it $16 they could be flooded with applicants, with the likely result, with more time-saving word-of-mouth hiring, a drop in the importance of job-seekers’ merit.

Fifth, while assured government employment would not be cheap, its possible net $400 billion cost would be dwarfed by the $1-2 trillion for a $10,000 annual American citizen’s grant.

Sixth, while guaranteed income would be straightforward, the jobs program could quickly devolve into make-work, illegitimate favoritism, and tasks with far less than $15 per hour value.  We could easily end up with the likes of, as the Soviets had, people working in barbershops only to sweep up hair, crippling incentive for productivity increases and with what might be deleterious personal effects such as that country’s one-in-seven alcoholism rate.  We would like to think that inconsistent with our national character, but millions working dead-end jobs with no real incentive for high performance could attract the dark clouds that many observers have said have long hung over the Soviet and Russian spirit. 

In the late summer of 2014, while I acknowledged that guaranteed employment was one of only four comprehensive jobs-crisis solutions, with paid Internet contributions and reduced working hours along with universal basic income, I did not think it would work.  That is still my view, but if we decide it is the best way out of an indefinite job shortage, we could get the most of it by making its structure more like the postwar job market.  Government work could be assured, but would need different skill levels, diverse rates of pay, promotions, demotions, and be available to those not officially jobless.  The latest American Job Shortage Number or AJSN shows that those with other employment statuses make up more than two-thirds of latent demand – we cannot deny them these opportunities. 

Given its flaws, it is no surprise that assured government employment has got little press attention since Senator Bernie Sanders proposed it last spring.  However, we still need possible solutions for what will, within years, be clear to all as a permanent jobs crisis.  As you may have noticed above, my count of them is still where it was five summers ago, at four.  We cannot afford to stop there.

Friday, November 2, 2018

Another Fine Employment Month, but the American Job Shortage Number (AJSN) Says Latent Demand Is Up Almost 100,000 to 15.7 Million

Once again, this morning’s Bureau of Labor Statistics Employment Situation Summary not only exceeded expectations but showed our labor market is still improving.  Net nonfarm payroll positions, for which The Wall Street Journal publicized an analyst-projected 188,000 gain, went up 250,000.  The marquee seasonally-adjusted unemployment rate stayed at 3.7%, but the unadjusted one, despite little seasonal difference between September and October, fell from 3.6% to 3.5%.  There are still an adjusted 1.4 million people officially jobless and out for 27 weeks or longer, and 4.6 million working part-time for economic reasons or holding on to shorter-work-hours positions while thus far unsuccessfully seeking full-time ones, but we gained 100,000, to 6.1 million, total unemployed.  The two measures of how common it is for Americans to be working, the labor force participation rate and the employment-population ratio, each rose a substantial 0.2% to reach 62.9% and 60.6% respectively.  Average private nonfarm payroll wages went up a hair over inflation, 5 cents per hour, and are now at $27.30.

The American Job Shortage Number, which tells how many additional positions we could absorb if it was common knowledge that about anyone could quickly get one, gained 76,000, as follows:

Compared with a year ago the AJSN is down 461,000, with 424,000 of that from lower official unemployment.  That share of the AJSN reached another pre-Great Recession percentage low, and is now at 33.1%, meaning that more than two-thirds of gains in employed Americans would come from those with other statuses. 

There’s not much to debate about October’s jobs report – it is very strong.  It especially bolstered the shakiest measures above, the employment-population ratio and the labor force participation rate, and everything else is solid.  The AJSN’s small gain came mostly from those wanting work but discouraged or not having looked for 12 months or more, and is probably an effect of the half-million drop in those claiming no interest.  Despite much recent ink on the chances of a recession, there is no sign of it here.  The turtle took another step forward.