Friday, July 30, 2021

The Pandemic and the Economy: Where We Are and Why We Got Here

It’s been an eventful Covid-19 week.

To clear up two spreading misconceptions, per Apoorva Mandavilli’s “As Infections Rise, C.D.C. Urges Some Vaccinated Americans to Wear Masks Again (The New York Times, July 27th), the Centers for Disease Control and Prevention “said on Tuesday that people vaccinated against the coronavirus should resume wearing masks in public indoor spaces in parts of the country where the virus is surging.”  That organization neither ordered Americans to comply nor suggested that for the entire country.  It released the following map, and said that those fully vaccinated in the counties colored blue or yellow need not resume wearing masks:


The orange and red counties were those with 50 new recent weekly cases per 100,000 in population.  Businesses are still free to name their own masking policies, but in the safer counties this pronouncement should not encourage them to reinstate such requirements.

“Will the Delta Variant Wreck the Recovery?”  That was the title of a July 28th New York Times piece, in which author Neil Irwin attempted to judge that.  First, though, according to “Flush with COVID stimulus money and boosted by reopenings, the U.S. economy grew sharply in the spring but slower than projected” (Paul Davidson, USA Today, July 29th), our gross domestic product gained 6.5%, annually and seasonally adjusted, in the second calendar quarter.  That did not match 8.5% forecasts, but is still strongly positive, given that, per Davidson, we still have “supply chain bottlenecks” and “shortages of materials and workers.” 

Irwin, though, missed the point.  He said that this more contagious coronavirus version could have the effect of “throwing sand in the gears,” even though business is continuing, feared damage if “schools were to return to remote learning” when the C.D.C. recently announced that they would not need to, and “that the pandemic policy story… is starting to repeat itself,” when it does not even approach that.  We have enough problems dealing with reasonable fears to add others.

However, we do have a sort of time bomb now set and ready to go off, as described in “The Delta variant is jeopardizing the economic recovery, but Congress isn’t budging as 20 million workers are set to lose unemployment aid” (Juliana Caplan and Joseph Zeballos-Roig, Yahoo News, July 27th).  That many “are poised to lose all jobless aid on Labor Day,” and the current 8 or 9 million advertised positions aren’t enough.  Expect much more on this issue over the next week or two, including continuation proposals.

The special pandemic problems of an unusual place make up “How to Reopen a Festival City When a Virus Lurks:  Very Anxiously” (Katy Rockdahl, The New York Times, July 25th).  New Orleans, with an economy heavily dependent on close-quarters face-to-face activities, has an above-average vaccination rate, but also vast numbers of visitors of unknown status.  Ultimately, concerns there are only a more intense version of those elsewhere, in response to which getting the shots is even more important.

Consistent with conversations I have had with other fully inoculated people, I agree with David Frum that “Vaccinated America Has Had Enough” (The Atlantic, July).  Indeed, “this pandemic could be almost over by now,” and “the reasons it’s still going are pretty clear,” namely “vaccine resistance among conservative, evangelical, and rural Americans.”  I don’t fault the last set as much as the other two, since people living in the country are often isolated and get into contact with a small and limited set of others, resulting in tiny numbers of new Covid-19 cases – for verification of that, see the concentration of blue-colored counties in the Great Plains – but the other two have been a national embarrassment.  They remind me of the church sign I saw which ended by saying that if you want to meet Jesus now, text while driving, and have made a mockery of calls to “make America great again.”  See the Northeast region above, and imagine the entire country like that – that’s what imprudent people have blocked.

I end with a pungent and remarkably humorous July 26th article by Ryan Cooper, “Is the American economy about to fall back into the pandemic pit?,” in The Week.  That magazine usually reviews news and commentary from elsewhere, but went beyond that here.  As you have seen I don’t think our economy will do any such thing, but I enjoyed reading “as infrastructure negotiations drag on interminably, depressing liberal base voters about the dysfunctional U.S. political system,” “you should never underestimate the irresponsibility of the conservative propaganda apparatus” as shown by “months and months of deranged anti-vaccine propaganda,” “for decades the hegemonic view among American political elites has been that the government needs to force people to work,” and, my favorite, “seemingly all it took for the entire political establishment of both parties to abandon (the $300 federal unemployment supplement) was a handful of restaurant owners whining on television that they couldn’t find enough workers at the wages they were offering.”  Whether you agree or disagree – and I did both while reading Cooper’s piece – I hope you too want to see more from this man.

Friday, July 23, 2021

Covid-19 As It Is: Four Facts, and Five Clear Conclusions

We have reached yet another new pandemic stage.  Wednesday’s 7-day average of new American cases, according to The New York Times, was 41,310, more than any day before June 30th or between May 19th and July 20th.  Deaths, with daily average 249, are doing much better, and hospitalizations, with 25,917 on most recent data date July 20th, are somewhere in the middle.  Vaccinations have leveled at 530,000 per day, less than one-sixth of the April 13th 3.384 million peak but still remarkably high given how many people, 49% fully vaccinated and 7% more having had one shot and needing another (60% and 9% of adults), have already completed that. 

There have been numerous recent articles about our current situation, many misleading and poorly summarized.  Where actually are we?

First, the pandemic is now a problem of the unvaccinated.  Per the Center for Disease Control, at of July 6th only 5,186 out of 156 million fully vaccinated Americans have contracted Covid-19.  While more who have had the shots have been transmitting the disease to others, their chance of getting it themselves is tiny.

Second, even the more contagious Delta variant is no real danger to the vaccinated, even those who have had the Johnson & Johnson one-shot formula.  We may well establish a need for booster doses, but we haven’t yet, and if so they will probably be more akin to tetanus and polio vaccines than anything urgent. 

Third, there is another Covid-19 version, named Beta, which is rare here.  Per Emily Anthes in July 19th’s New York Times “The Beta Variant: What Scientists Know,” it has been around since last year, yet has only one of every thousand American infections.  At one point it accounted for 95% of South African virus samples, but has failed to have anywhere near Delta’s growth or the original strain’s total cases.

Fourth, the worst American infection rates are all in red states.  The highest are now in southwestern Texas, the Jacksonville area, and all over the three columnar states Missouri, Arkansas, and Louisiana.  That coincides with low vaccination levels, which in turn correlate strongly with percentages of Republican voters.

Starting with the above, what should we be doing and not doing?

First, there is a case for requiring fully vaccinated people to wear masks, but it is weak.  It prevents requiring others to trust, and it cuts down transmission of the virus by those who have had the shots.  Otherwise, all points are in favor of continuing to end that as a requirement. 

Second, businesses are completely entitled to set rules.  Whether for employees, customers, or walk-ins, they can decide what to require, including mask wearing and documentation of vaccination status.  There is nothing immoral or overly invasive about asking for the latter.

Third, we can debate the issue of paying unvaccinated people to get that done, but we need to do that quickly.  I think that, beyond incentives worth about $50 apiece or less, that is inappropriate, as it establishes doubt about the medicine’s value and rewards the wrong people, but it still may be worth it, as more of them are getting sick and dying every day.

Fourth, we cannot justify mandating that people get the vaccine, but can restrict public access to locations and resources on that basis.  It is past time for our governments to clearly state these two things.

Fifth, getting vaccinated is a choice, but an obvious one.  At least it is from my standpoint.  However, the past five or six years have taught us how powerful tribal identities can be even here, and how they can, in George Orwell’s words, convince many pursuing them to “reject the evidence of (their) eyes and ears.”  If those seeking to belong are willing to die for that, it is their business, but it gives the appearance of dragging the rest of us down.  That is sad, but, along with the first four points, it is reality, and we need to, like it or not, accept it.

Friday, July 16, 2021

Americans Going Back to Work: Seven Points to Understand

Is it true that great masses of people are refusing to take jobs, when they worked before the pandemic started?  I’ll give that partial credit, as millions still fit that category, but what do we need to know about what is really taking place?

First, people collecting unemployment benefits are once more consistently required to show evidence that they are looking for work and not turning down opportunities.  With more open positions, that is a tougher requirement than once.  Some states are only now reinstating that, but with ready vaccine eligibility and availability it has been fully justified for months.

Second, while on May 19th we could have read about “21 states now canceling federal unemployment benefits” (Denitsa Tsekova in Yahoo! Money), none northeast of West Virginia, that is less relevant now for the reason above, which is just as well since the problem that was intended to solve would have been better fixed through mandatory job searches.

Third, it is good for all of us that the Federal Reserve chair is wary of acting, that even when “The Economic Gauges Are Going Nuts, Jerome Powell Is Taking a Longer View” (Neil Irwin, The New York Times, June 17th).  Per the author, Powell believes that “the labor market can run hotter for longer than a lot of economists once assumed, with widely beneficial results,” “there are many powerful structural forces that will keep inflation in check,” and “the Fed should move cautiously in raising interest rates, rather than risk choking off a full economic recovery too soon.”  He also “does not see the labor shortages of 2021 as evidence of lasting scars to the potential of American workers, but rather as a reflection of the difficulty of reopening large sectors of the economy and reallocating labor after a pandemic.”  Despite the Labor Department’s subsequent finding that “the Consumer Price Index jumped by 5.4 percent in the year through June” (“Prices Pop Again, and Fed and White House Seek to Ease Inflation Fears,” Jeanna Smialek and Jim Tankersley, The New York Times, July 13th), which rates to be temporary, that still holds true.

Fourth, new unemployment claims, while less than one-sixth of a year ago, are still sitting at more than 50% over their pre-coronavirus levels, at 364,000 the last week of June and 373,000 the first of July.  That means a high number of positions are still being discontinued.  We also still have 5.8 million fewer people employed than in February 2020, which means we have a long way to go to reach where we were, let alone where we would be if the growth rate of jobs had continued its 2019-20 pace.

Fifth, we’re in a transitional time, between what working practices and compensation were like in February 2020 and how they will emerge from the pandemic.  Despite many confident predictions, we have no idea what share of people will be working remotely in a year, how many will end up changing careers, and, accordingly, what will happen to housing prices and commuter-dependent businesses. 

Sixth, companies hiring for low-end positions are trying everything – sign-on bonuses, tuition assistance, improved health care and other benefits – instead of hiking pay adequately, and as a result, “A record number of U.S. small businesses are raising wages, NFIB says, but skilled workers still hard to find” (Jeffry Bartash, MarketWatch, July 13th).  Give them another month of missing robust sales and many will see the light, whereupon they may be amazed at how many people are suddenly willing to work for them.

Seventh, ultimately what we need to do is heed the headline of a Neil Irwin March 5th New York Times article, “For the Economy, the Present Doesn’t Matter.  It’s All About the Near Future.”  Current economic results, beyond being in some kind of a recovery, are chaotic and should not be taken as meaningful trends.  For those, we’ll just have to wait and see.

Friday, July 9, 2021

A Shortage of Workers? Our Situation Assessed, Followed by the Winning Strategy

Why are more advertised positions going unfilled?

First, that “more” is accurate.  Per “U.S. job openings, quits hit record highs in April” (Lucia Mutikani, Reuters, June 8th), on April 30th there were 9.3 million of them, at least a 20-year high.  Yet the American Job Shortage Number (AJSN), based on data collected two or three weeks later, showed latent demand for 19.9 million additional positions, almost 4 million more than its 2019-2020 pre-pandemic low.  Clearly something is happening, but what is it?

We have seen two cases of dueling headlines here.  Combatants on the first, on the effect of higher jobless compensation, included  “Job searches haven’t jumped in states canceling unemployment benefits early” (Denitsa Tsekova, Yahoo Money, June 22nd) and “U.S. jobless claims dropping faster in states ending federal benefit” (Howard Schneider, Reuters, June 24th), followed by a left-of-center synthesis attempt by Patricia Cohen in the June 27th New York Times, “Where Jobless Benefits Were Cut, Jobs Are Still Hard to Fill.”  All three pieces use largely different sets of seemingly legitimate data, so it is hard to argue with any of them, but the most insight came from a photo included with Cohen’s article.  It was captioned as a restaurant in St. Louis, with two signs reading “Now Hiring!  Experienced Servers and Bartenders!”  With such positions needing only a week or two of training and practice for adequate initial performance, it was interesting to see one unmentioned solution next to several hundred words bemoaning a problem. 

The second controversial area was exemplified by Jeffrey Bartash’s July 6th MarketWatch “The red-hot U.S. economy cools off, ISM finds, because of major shortages and not enough workers.”  The author here cited an Institute for Supply Management pronouncement that not only are too few people taking jobs for “restaurants and retailers,” but such firms cannot “get all the supplies they need.”  However, four days before in HuffPost, Arthur Delaney had a piece titled “Despite ‘Worker Shortage,’ Businesses Keep Finding Workers,” in which he maintained that June’s 850,000 net new nonfarm payroll growth was exceedingly high, logistically, to process for one month.  He also cited a source saying that restaurant hourly pay was 11.2% higher than a year ago.

Other weak apparent-worker-shortage explanations came from two other sources.  Quentin Fottrell’s May 25th MarketWatch “’Contagious unemployment’ is one theory why companies have difficulty hiring workers,” which on closer scrutiny was only the old practice of disregarding or factoring down the credentials of applicants long jobless, with responsibility properly shifted by author and Wharton professor Peter Cappelli to companies’ hiring practices.  Many especially on the left would be glad to see that “There isn’t a worker shortage in the U.S. – there’s been a worker awakening” (Hope King, Axios, June 16th), but while I agree with the first headline clause, it’s too soon to assume that the second, though possibly in progress, is at hand already.  Christopher Rugaber got warmer with “Fewer working-age people could slow the economy” (Times Herald-Record, July 5th), pointing out that people from the late 1950s, when more American babies were born than in any other time in history, are now turning 65 and causing historic, though, small, drops in the 16-64 age cohort.  Still, the AJSN tells us that latent demand for employment is deeper and wider than the 0.1% reduction Rugaber named.

So what is the solution?  Bartash may not have seen it this way, but why have restaurant wages, in times of too few employees chasing potentially surging sales, increased just over 10%?  Why not 20%, 30%, or more?  If employers fear that paying what they need to get the workers they require must be permanent, they can frame their money offerings as temporary.  If they think raising prices will boot away customers forever, they should recheck that assumption – most have heard about inflation, along with scarcer low-paid labor, for months now, and they, who are often flush from not spending as much for over a year, want that restaurant meal or what’s been missing on Walmart shelves.  If managers have always hired only workers with experience, the personalities they prefer, or current employment, not to mention illegal attributes, they are paying a steep price in lost business for what are now luxuries.  We know much less than we think we do about what working life will be like after, say, the first of the year, but we can’t wait to find out.  Money’s a wasting – companies as well as people wanting jobs need to get it while they can.

Friday, July 2, 2021

They’re Coming Back: 850,000 More Jobs, but 1.4 Million More in Labor Force Means 800,000 Rise in Latent Demand Per AJSN, to 20.75 Million

The number of advertised jobs keeps rising to new highs, but the seekers are there too, and they’re not all connecting.

That’s one of the findings from this morning’s Bureau of Labor Statistics Employment Situation Summary.  That report started with the marquee result of 850,000 net new nonfarm payroll positions, which beat out 675,000 and 700,000 published projections.  The adjusted employment rate fell 0.2% from 6.1% to 5.9%, and people working part-time for economic reasons, or holding onto that sort of job while seeking and not finding a full-time one, dropped 700,000, or over one-eighth, to 4.6 million.

Otherwise the numbers were weak or neutral.  Unadjusted joblessness, reflecting a normal drop in the count of people working from mid-May to mid-June, rose 0.6% from 5.5% to 6.1%.  The adjusted number of unemployed people was up 200,000 to 9.5 million.  There were also 200,000 more out for 27 weeks or longer, or 4.0 million.  Results unchanged were the number of those on temporary layoff (1.8 million), the labor force participation rate (61.6%), the employment-population ratio (58.0%), and, in effect, average private nonfarm payroll hourly earnings (up 7 cents to $30.40). 

The real changes were among inputs to the American Job Shortage Number or AJSN, the metric showing how many more positions could be filled if everyone knew that getting one would be as easy as running an errand.  That gained 827,000, to reach the following:


The total number of unemployed, unadjusted as is the entire AJSN, which jumped up over 1 million, was responsible for more than the measure’s entire gain.  Other factors, though, changed by unusual amounts.  The count of those out of the labor force fell from 100,603,000 to 99,172,000, a large difference for one month.  The number claiming no interest in working, here, was off just over 1.2 million.  The catchall “Other” category, also above, fell 16%.  As a result, even though we added jobs, so many people returned that we needed more positions than before.

Otherwise on the AJSN front, its share from those officially unemployed rose from 39.9% to 42.9%.  Compared with a year before, which was deeper into the Covid-19 crisis than now, the metric is 8.4 million lower, with all but one million of that from higher joblessness.

How did we do on the pandemic front?  From May 16th to June 16th, the 7-day average of daily cases dove 61% from 33,040 to 12,729, the same count of deaths dropped 45% from 611 to 333, hospitalizations were down 44% from 33,693 to 18,803, and vaccine doses given, figured the same way, shrank 38% from 1,886,917 to 1,165,916.  The last statistic is a result of the other three, on which we continued to make outstanding progress.    

How can we best assess all of this?  We are still gaining filled jobs, but not huge quantities of them.  As always, people change their mind about whether they want to work depending on how they see their prospects, and many, this time, decided they had improved.  However, our 9.3 million advertised positions were lacking, as the count of those unemployed rose more than the net number of opportunities filled.  The coronavirus results say we were not sending people back to work too soon.  Overall, good but not great – the turtle has taken larger steps forward, but he did make another substantial one.

Friday, June 25, 2021

Pay and Minimum Wage: Sometimes it Evolves, Sometimes it Shouldn’t

Cash compensation is the most common and basic reason for working.  It has recently changed in some ways and may do that more soon.  What have we seen and considered over the past several months, and how good or bad is it or would it be?

First, per an undated chart from Yahoo Finance, we now have 30 states plus the District of Columbia with minimum wages more than the national $7.25 per hour.  Given that each decided to mandate a level above that of the whole nation, that is favorable.  It is better still when cities or counties set higher or lower rates, such as in Oregon where, as of July 1st, Portland will have $14 lowest hourly pay with the rest of the state at $12.75.  When the cost of living varies so much across the country, with southern Texas’s $7.25 buying much more locally than Hawaii’s $10.10, it is clear to leave that national floor where it is and let smaller areas choose for themselves.

Another good thing, since it is a result of the free market reacting to the pandemic and its effects, is that “Some workers finally have the upper hand in the job market” (Denitsa Tsekova, Yahoo Money, May 13th).  While there is no reason for the number of positions to approximate the number of people wanting to work, there is also none for jobs, at all places and times, to be scarcer than people willing to fill them.  Here we have workers refusing opportunities that are unsafe, unsuitable, or just pay too little, making employers do more than post an ad and get bombarded with applicants.  The situation will shift back, especially as unemployment compensation resumes requiring people look for work, but will fluctuate, and that is fine.  A similar message came from Neil Irwin’s June 5th New York Times “Workers Are Gaining Leverage Over Employers Right Before Our Eyes,” in which the author noted that “companies are becoming more willing to pay a little more, to train workers, to take chances on people without traditional qualifications, and to show greater flexibility in where and how people work.”  As the perceived labor shortage continues, employers will also need to dig deeper in identifying candidates, to think “more expansively about who is qualified for a job in the first place,” and to disregard certification requirements, such as those for teachers, originally implemented to shrink the number of candidates.  If there are not enough applicants for entry-level business positions, that could mean a return to not requiring bachelor’s degrees, or possibly even any college at all – that worked well before the 1970s and could succeed again.  All of these emerging and possible changes are, and would be, healthy.

We had a different view than the usual from Rick Newman in the May 24th Yahoo Finance.  It was titled “Jobs are back – but pay isn’t,” but could have said job listings instead. I documented the growing gap between hiring and advertisements nine years ago in Work’s New Age, and it is still with us.  Newman cited “a recent study by Bank of America” which determined “that the average pay of open jobs is lower than before the pandemic in 12 of 15 sectors” and “flat” in another.  For better or worse, employers will get workers only at fair market pay, and as always, if they don’t, that means, broadly but accurately, that they need to boost it.  The reason that “Wage Growth Is Holding Up in Aftermath of the Economic Crash” (Ben Casselman and Jeanna Smialek, The New York Times, June 3rd), per Newman, is that the raises are going mostly to existing jobs. 

Wrong ways to go are amply included in Kevin J. Delaney’s March 20th New York Times “What Is Work Worth?”  Forcing an end to situations in which “low-wage workers at companies including Amazon, McDonald’s and Walmart rely on public assistance such as food stamps to make ends meet” (usually a result of low hours as well as low pay, and better than if they had no job at all) and “women and people of color generally earn less than their peers” (illegal and the source of serious penalties if caused by discrimination), would be na├»ve and anti-market.  Any line manager will tell you that if you “set pay for positions, not people,” employees will improve far less than if they can get merit raises, and few observers of any kind would think workplaces would be more dynamic if they returned to pay based on seniority.  The same is true for the author’s invoking the old saw that workers need “a wage that can support their families,” which may be nonexistent or contain other earners, is impossible to define, and cannot be implemented without stopping those willing to earn less and being able to live on it.

Over the 150 to 200 years since the Industrial Revolution’s United States widespread beginning, workers’ pay has varied.  It will continue to do so, even after this minor if real pattern break we are experiencing now has completed.  The choice we face is how to control it.  If we choose well, we individually as well as collectively will prosper.  If we do not, we will not.  It is up to us.

Friday, June 18, 2021

Working From Home: Problems, Implications, and One Prominent Exception

Thank you for most likely being among the 1,700-plus people who read my March 12th post, “Eleven Brutal Truths on Office Design and Working from Home”!  I’m back to that topic, looking at four pieces published since then.  What did they have to say?

The oldest, “Stuck on Zoom:  How having more tech at home during COVID-19 creates longer, more stressful workdays,” by Terry Collins in the March 22nd USA Today, described a problem reminiscent of the early Industrial Revolution, when employers had to learn that workers being physically able to stand and move for 19 hours a day didn’t mean that was what they should be doing.  Per Collins, but not unique to him, “the workday… doesn’t just feel longer.  For many of us, it actually is longer,” and “screens, keyboards, and computer mice on dining room tables are now commonplace,” which “is creating a never-ending workday for some employees who struggle to decide when it’s time to turn off the switch.”  He found people were working between 48 minutes and 3 hours longer daily, extended by “email, texts, and distractions,” to which I add porous personal boundaries and poor time management.  Exactly how this issue will be resolved is unknown – as it was about 200 years ago, it could be through labor unions, or just by enough people refusing to answer communications outside of their negotiated availability hours – but it will be.

A week later in the New York Times, we got Matthew Haag’s “Remote Work Is Here to Stay.  Manhattan May Never Be the Same.”  While as I wrote before the trendiness of working from home has swung like a pendulum, this central borough may never again match its “more than 1.6 million commuters every day” which has “sustained” it throughout, “from the corner hot dog vendor to Broadway theaters.”  As of the story’s date, Haag claimed that 90 percent of office workers there were working remotely – that number has shrunk greatly since, but must still be high.  It is wrong to expect the share of people working from home to settle at any approximate percentage – as it has for over 30 years, it will continue oscillating.

That assumption of indefinitely large amounts of remote work is at the center of Derek Thompson’s June 14th The Atlantic “Winners and Losers of the Work-From-Home Revolution.”  The author, similar to what I wrote in the post above, started with studies showing the best and the worst views of remote labor.  His apparent contradictions, such as “It obliterates focus and extends working hours, but people want more of it?”, can be understood by realizing that workers don’t always want what is best for their productivity, and that companies are hardly unified over time or with others on its merits and drawbacks.  The article had an informative section on skills and attributes which working from home favored, such as introversion, “being a clear and fast writer,” and those skilled with Zoom and other tools, but does not mean they would attract raises, promotions, or even good performance reviews, so saying that it will “reward certain skills” overstates.  Other doubtful items are that “young people and new hires” are hurt from remote work though it is easy to disappear in a cubicle farm, with a “post-pandemic shift to WFH… spending in downtown restaurants, movie theaters, barbershops, and other retailers” will drop much more than 10%, and organizations, if they keep individual desks, will not reduce their footprints if people work only part-time from home.  As well, some business activity, especially restaurant lunches, will not resume around employees’ houses but will, truly, “disappear into the ether.”  Providing technical and other resources to support remote work, though, is indeed a good area for future ventures, and, yes, it will widen the social and political gap between educated people with good jobs and everyone else.

Then we have the opposite side, with “Google’s Plan for the Future of Work:  Privacy Robots and Balloon Walls” (Daisuke Wakabayashi, The New York Times, May 3rd).  A picture here showed something far better than possible at home offices, a semi-circular Campfire meeting room with seats for people physically present alternating with large screens displaying the life-size heads and shoulders of remote attendees.  There were other views of innovative office space, such as movable work areas with heating and ventilation ducts to match, outdoor conference areas, and lower density plans.  Many of these ideas may become the norm even when the pandemic is a decade or more in the past, but the question remains:  What would happen to these offices if, in 2035 or 2040, Google discovers a great innovation called “independent work” or letting employees do their tasks where they live?  Then they wouldn’t need to commute, would be more productive, would be able to balance work and life better, would like it more…

Friday, June 11, 2021

Employment, Unemployment, the Economy, and the Pandemic: Where We Are Now and Where We Are Headed, Beyond the Numbers

Per last week’s post, the May jobless numbers were favorable, but mainly because our Covid-19 progress was so good.  How are we doing otherwise, and where might we be going?

Before the month started, the National Bureau of Economic Research released a working paper, “The Donut Effect of Covid-19 on Cities,” by Arjun Ramani and Nicholas Bloom.  It’s 12 printed pages and academic, but comes down to two ideas.  First, many people are leaving the centers of large cities but not small ones, but, second, they are staying in the same metropolitan areas.

Moving on to June 1st, we learned “How the World Ran Out of Everything,” from Peter S. Goodman and Niraj Chokshi in The New York Times.  The authors accurately blame “Just In Time” inventory management, in which suppliers must provide parts or raw materials quickly when their customers need them.  That achieves its purpose of cutting carrying costs when everything moves smoothly, but in times such as the past year-plus, with a widespread set of pandemic-related problems as well as a ship blocking the Suez Canal, it has not.  From a customer’s standpoint I have long been grouchy about that system, as some places practiced it so aggressively that I might find what I wanted unavailable simply because another customer had just been there.  Two lessons for all participating in Just In Time:  Things do not always work smoothly, and business you lose from not having product may disappear forever.

Could it be that “U.S. labor market worse than it appears, Fed paper suggests” (Reuters, June 1st)?  Yes, this article’s indication that statistics “suggesting labor market slack should be given more weight than those pointing to tightness,” seems right, as latent demand, as shown by the AJSN, is still pushing 20 million new positions, and we have the real possibility that applicants will return quicker than their opportunities.  On the other side, “Americans Don’t Want to Return to Lousy Low Wage Jobs,” as put by Daniel Alpert in The New York Times also on June 1st.  That is the case now, but over the next few months the issues of Covid-19 safety, extra-high unemployment benefits (with “all extra federal supplements” over by September 6th), and child-care availability will be resolved, and the bulk of laborers will have no choice, even if wages return to their 2019 levels.  It could well happen, also, that we get “a contraction in household incomes this autumn.”

In the meantime, “Companies struggling to hire workers, coping with rising prices, Fed says” (Megan Henney, Fox Business, June 2nd).  That is also a temporary situation, and what is happening by about August should tell the true ongoing story.  There were some good scattered remarks in the June 4th Lauren Bauer et al. Brookings Up Front blog post “Examining the uneven and hard-to-predict labor market recovery,” such as April’s 266,000 jobs gain hiding 6.6 million going “from being employed to unemployed or out of the labor force,” applications filed by startups “likely to employ people” rising from 2019’s 110,000 average to 150,000 even since July, and that some employees may be taking time off “after a very difficult year,” but we know we are recovering, with only the pace unknown.

In the June 4th Times, Giovanni Russonello told us “Was the Jobs Report Good?  It’s in the Eye of the Beholder.”  It was an interview with frequent business reporter Ben Casselman, who said that “the report was exactly good enough to allow everyone to hold on to their existing beliefs, and for us all to get to do it again a month from now,” and “that things are getting better… just not as quickly as anyone would like.”  Casselman pointed out that between the mid-May data collection time and the article date, 12 million Americans have been fully vaccinated, and noted that inflation should not be a large concern since it was “tame” even with pre-pandemic 3.5% joblessness.  Then, in the same publication on the same date, we had former chief Department of Labor economist Betsey Stevenson’s “The Jobs Report Takeaway:  A Huge Reallocation of People and Work Is Underway.”  Her observations include “the unemployed aren’t leaving work, they are changing work, and change takes time” with “a giant mixer” between those looking and those hiring, and, like it or not, it will be a while to achieve movement of “workers into the jobs in which they can be most productive.”  We don’t know the extent or permanence of these coronavirus-caused shifts, but we know there will be some.

On June 6th, also in the New York Times, Heidi Shierholz worked to get us together with “Republicans, Don’t Ignore the Evidence on ‘Labor Shortages.’”  She wrote that “the main problem in the U.S. labor market remains one of labor demand, not of labor supply,” that we are still 7.6 million positions down from February 2020, and that higher pay is a sign of “a healthy labor market.”  All true, but we don’t yet know ongoing significances.  Then, in the June 8th Times, we had advice from Glenn Hubbard on “How to Keep the Economy Booming – And Meet the Demand for Workers,” including that “policy should support returning to work and matching workers to jobs by supporting re-employment and training for new skills, not just boosting demand.”  Indeed, it is clear to me that, now, all unemployment benefit recipients should be required, as pre-pandemic, to apply for jobs. 

Just how strong will the economy be late this summer?  The title of Neil Irwin’s “Hot Vax Summer Is Looking Lukewarm,” in the June 4th New York Times, came out more pessimistic than the author may have intended – “lukewarm” is quite a bit cooler than “warm” – but by now it seems likely that we will not be completely back that soon.  With the share of Americans becoming fully vaccinated creeping along, to only 43% having that status as of yesterday, we are not going to have an easy “reopening spurred on by vaccination.”  As well, “at the job creation rate of the last three months, it would take 14 months to return to February 2020 employment levels.”  So let’s expect our July and August prosperity to be warm, like the weather, but hardly a heat wave.  And that is where we stand.

Friday, June 4, 2021

May: In Strong Employment Month, Latent Demand Increased with AJSN Showing We Could Fill 19.9 Million More Jobs

With last month’s issue causing concern about the intensity of the expected recovery, this morning’s Bureau of Labor Statistics Employment Situation Summary was a particularly important one.  Last time was superficially disappointing, but once we got under the surface, especially in conjunction with our pandemic results, it was generally good. 

This time, though, was better even at first glance.  Although the number of net new nonfarm payroll positions, at 559,000, did not reach the consensus 650,000 to 675,000 prediction, it was still a healthy gain.  Seasonally adjusted unemployment fell from 6.1% to 5.8%, with the unadjusted version off from 5.7% to 5.5%.  The count of those jobless dropped 500,000 to 9.3 million, with those on temporary layoff down 300,000 to 1.8 million and people out for 27 weeks or longer decreasing 400,000 to 3.8 million.  The two measures of how many Americans are either working or one step away, the labor force participation rate and the employment-population ratio, were mixed, with the former down 0.1% to 61.6% and the latter up the same amount to 58.0%.  The total of people working part-time for economic reasons, or holding on to part-time work while thus far unsuccessfully seeking full-time propositions, gained 100,000 to 5.3 million.  Average hourly private nonfarm payroll earnings increased substantially again, this time 16 cents higher to reach $30.33 – that continues to reflect higher wages as well as lower paying positions still unrestored.

The American Job Shortage Number or AJSN, the measure showing how many new positions could be quickly filled if all knew they were easy and routine to get, increased 169,000, to reach the following:

    

The largest differences from April were the effect of those unemployed, reducing the AJSN by 351,000, along with people not looking for a year or more, adding 278,000 to the metric, and a jump in those non-civilian, institutionalized, or off the grid, which was in effect a correction since newly implemented census results showed about two million more Americans than previously projected, which added 201,000.  If the overall population were the same for both months, the AJSN would have been almost unchanged.  The AJSN’s share from official joblessness for May was 39.9%, down from April’s 42.0%.  The statistic may now be somewhat overstated, due to those getting unemployment compensation not being required to search for work, but that was nothing new in May, has already changed in some states, and will follow in more.   

The overall results here were only slightly positive, so how did we do at the same time with the coronavirus?  Per the New York Times, the 7-day average of new daily cases fell 53% from April 16th to May 16th, reaching 33,040.  The same average of deaths was off 18% to 611, and the number of people hospitalized, calculated the same way from the same dates, lost 25% and is now at 33,693.  The number of daily vaccinations, though, decreased 44% to 1,886,917, reflecting, with 41% of Americans now fully vaccinated, quickly dropping demand. 

It is simple, then to evaluate how we did with employment this time.  We did fine.  We can see that the increase in people going back to work, though not massive, did not interfere with national pandemic recovery.  While this month was not flawless, the turtle took another solid step forward.

Friday, May 28, 2021

The Past Seven Months for Uber and Lyft: Plenty Has Changed, But Their Prospects Haven’t

While Americans patronizing the country’s two largest unregulated cab companies may not have noticed much difference, the firms have dramatically shifted in three ways. 

The first happened when, as per “Uber and Lyft Drivers in California Will Remain Independent” by Kate Conger in the November 4th New York Times, the state’s hotly contested “Proposition 22, a ballot measure that allows gig economy companies to continue treating drivers as independent contractors,” passed with 59% of voters agreeing, despite solid conceptual reasons why workers called by apps were true employees.  While only in one state, the result has taken the wind out of the sails of status-conferring efforts elsewhere, has damaged true taxicab providers, and was described by Conger as “a bitter loss for state and local officials who have long seen the ride-hailing companies as obstinate upstarts that shrugged off any effort to make them follow the rules.”  Following reactions were well summarized in the titles of two other articles, “Fight Over Gig Workers Persists Despite Win for Uber and Lyft” (Noam Scheiber and Kate Conger, The New York Times, November 11th) and “New U.S. rule could boost ‘gig economy’ companies while costing American workers billions” (Levi Sumagaysay, MarketWatch, January 6th).  Since then, though, we learned from Henry Grabar in the April 30th Slate “What Uber and DoorDash’s Investors Are Suddenly Afraid Of,” that being a comment by Secretary of Labor Marty Walsh that “in a lot of cases gig workers should be classified as employees.”  Perhaps such a pronouncement, here applied to a local delivery service as well, will direct legal changes, but for now California’s decision is fully in effect.

The second change was in what Uber and Lyft are planning.  That was shown by three divestments of what these companies were developing to rescue them from indefinite money losses, as “Uber, After Years of Trying, Is Handing Off Its Self-Driving Car Project” by Cade Metz and Kate Conger in the December 7th New York Times, “Uber Jettisons Flying Car Project” also by Metz in the December 8th Times, and “Lyft sells self-driving unit to Toyota’s Woven Planet for $550M” by Kirsten Korosec on April 25th in TechCrunch.  While it’s no surprise that after the past two years driverless vehicles have lost their immediate promise, it is noteworthy that Uber and Lyft, neither of which have ever been profitable as public companies despite billions in annual revenue, are seemingly staying the same. 

The final large ridesharing swerve, actually a winding road, was delivered by the coronavirus, as “COVID didn’t kill gig economy, the pandemic accelerated it” (Brian Straight, FreightWaves, February 5th).  The previous calendar year was a good one for such positions, with a daVinci Payments survey showing that total payments for gigs were one-third more, or $1.6 trillion-plus, than in 2019.  However, USA Today reported on May 24th that “Permanent jobs rise as employers sweeten pay, benefits for gig workers amid labor shortages” (by Paul Davidson).  That will last only as long as high numbers of candidates stay off the job, though, which will most likely end within a few months.  That will leave Uber and Lyft once again in doubtful territory.  As I said years ago and which still holds now, you can ride them to your heart’s content, but find better companies in which to invest. 

Friday, May 21, 2021

Effects of the Pandemic: Expected, Unexpected, and Unknown

Beyond the coronavirus case, hospitalization, and death statistics, all steadily improving, related things are happening in America.

One is a failure to understand how small the risks are once we are two weeks past our final shots, as shown in Linsey Marr, Juliet Morrison, and Caitlin Rivers’ “I Got My Covid Vaccine.  Now Can I Hug My Mom?,” in the March 19th New York Times.  All three authors are professionals in pandemic-related fields, but two recommended meals, even between two fully vaccinated people, be taken outside of restaurants to stay away from “new variants circulating” and “lots of people” who “will be indoors and unmasked.”  They offered similar answers to related situations.  I trust that now, two months later, they have noticed that only microscopic shares of those immunized have either received or spread the virus, and that new variants have thus far shown no real ability to overcome existing vaccines.  We have done well thus far to be cautious, but, if we don’t need to be any longer, we should stop.

A month-plus later, was it true, though, that “America’s Workplaces Are Still Too Dangerous” (David Michaels, The New York Times, April 28th).  This former OSHA leader bemoaned how small and recently ineffective that agency has become, and exemplified their lack of legal sanction by saying that “the maximum fine for a serous OSHA violation is $13,353 – petty cash to any large employer – and the criminal charge for the work-related death of an employee is a misdemeanor, not a felony.”  Now that vaccines have been available to all American adults for weeks, it is safer to be on the job, whether protected or not, but that is a recent development.

To little surprise, we learned from Edmund DeMarch in the May 3rd Fox News that “’Herd Immunity’ looking unlikely in US, report says.”  That expression “means that a virus is no longer easily jumping from person to person,” as good a definition as any, and “nobody knows for sure what the herd immunity threshold is for the coronavirus, though many experts say it’s 70% or higher.”  According to The New York Times yesterday, we now have 38% fully inoculated, meaning it will be fall, later, or never to reach seven-tenths. 

Less expected, per Michael Wilson in the May 4th Times, was that the “Sudden Decision to Reopen Leaves New Yorkers Dizzy and Divided.”  The announcement two days before that many, but hardly all, restrictions in the city would be lifted May 19th got reactions such as “it’s too fast” and “seems a little hasty,” though also the likes of “it’s about time.”  Although restaurants, for example, are now allowed 100 percent capacity, they still need to keep patrons six feet apart, which in many means little change.  What has happened, though, appropriately most benefits those fully vaccinated.   

An emphatic David Brooks opinion piece, published May 6th also in The New York Times, described “Our Pathetic Herd Immunity Failure.”   He asked something posed often in recent years, “Could today’s version of America have been able to win World War II?” and concluded that “it hardly seems possible,” decrying immunization refusal with “we’re not asking you to storm the beaches of Iwo Jima; we’re asking you to walk into a damn CVS.”  Perhaps we and our leaders have underplayed this civic-duty aspect, but Brooks didn’t, devoting this entire column to it.  I find it noteworthy that those in our political segment most likely to call themselves patriotic have here been, in general, the worst.

We have seen various pieces, usually premature, projecting how the truly post-pandemic United States will be affected by our shared experience, and we can all propose possibilities.  Two from my sphere of interest are American Contract Bridge League customers and management discovering the advantages and disadvantages of online tournaments, which will certainly continue after widespread in-person play resumes, and local public radio station WJFF learning how effective it was to hold a fundraising auction on Facebook.  More generally we have “Pandemic forces many to consider new jobs,” by Dee-Ann Durbin et al. in the May 19th Times Herald-Record.  Not only additional labor opportunities have caused that, but “many workers don’t want to go back to the jobs they once had” for personal reasons.  Strong employment markets have always meant a lot of job-hopping, and this one clearly is no exception.

If there is an overall message here, it is the same as before.  Ending the pandemic is now, above all, a matter of personal choice.  If you want to do that, get vaccinated.

Friday, May 14, 2021

Eight Takes on Joblessness – What Do They Offer Us?

Not only is it a strange time for unemployment, with work coming back but weekly unemployment applications still way high, but there has been a lot of discussion. 

Going back to The New York Times on February 22nd, Jeanna Smialek wrote on “Why Top Economists Are Citing a Higher-Than-Reported Jobless Rate.”  The “alternative statistic” she mentioned is more cumbersome and arbitrarily defined than the American Job Shortage Number, which I have been compiling for almost ten years.  To get to the core of how many additional positions we could quickly fill if getting one were as easy as going out for groceries, look in this blog at the first post of each month. 

A day later in the same publication, Giovanni Russonello answered the question “How Is the Fed Thinking About Unemployment?”  This secondhand report of a Senate hearing that day told us that chair Jerome Powell needed “full employment, 2 percent inflation, and an outlook for above-2 percent inflation” – all three – for higher interest rates, and he would only consider the first item fulfilled with a high-enough “employment-to-population rate,” possibly the same as the Bureau of Labor Statistics’ ratio of almost identical name.  That is still well short of its pre-pandemic levels, so we, rightfully, will continue having interest rates close to zero.

Also in The New York Times, Ben Casselman worked to explain the mystery in the first paragraph, on March 18th, with “Why Are Jobless Claims Still High?  For Some, It’s the Multiple Layoffs.”  That explains why we have over two million applications each month but half-million-range net new positions.  It is, per a policy director of an unemployment advocacy group, “oscillation of employed, unemployed, employed, unemployed.”  That should slow down, even if reopenings, such as next week’s scheduled one for New York City, precipitate overly optimistic and thus in-effect temporary job creation – I expect new weekly claims to be below 350,000 almost every week starting July. 

The fourth and final Times piece, by Neil Irwin on April 16th, asked and answered “Unemployment Is High.  Why Are Businesses Struggling to Hire?”  We now have an “apparent labor shortage,” with “news articles” by the “dozens,” “in which businesses, especially in the restaurant and other service industries, say they face a potentially catastrophic inability to hire.”  It’s caused by five factors – high unemployment compensation causing people required to look for work be less diligent and sincere about it; many jobs, not coincidentally in service fields, still virally unsafe; general uncertainty, also shown by the employment churn, about what positions will last, making relocation in particular ill-advised; doubt about whether non-office opportunities will stay that way; and, more than anything else, insufficient pay offers.  I maintain that most employers not finding workers would get them with twenty percent higher compensation, which reflects true current market values.  Irwin also mentioned parents and other caregivers being needed at home, a valid sixth reason.

Is it shocking or expected that “Nearly half of 2020 college grads remain jobless” (Daniella Genovese, FOXBusiness, April 16th)?  The author found a Monster survey showing 45%, in which “85% of new graduates say their goals have been pushed back by at least a month,” and “69% of recent and impending graduates expect lower salaries due to the pandemic and the subsequent economic downturn.”  All of these should improve within months, and people have long had to reduce their expectations when testing the market after getting degrees – expect stories like this one to read differently by November.

Another clear combination of facts, that “Businesses are hiring and layoffs are falling, but jobs aren’t returning all at once,” was written by Jeffry Bartash in the April 17th MarketWatch.  It hurts companies to create positions prematurely, and they need not only legal sanction to continue in the way they would like but enough customers, which is more difficult to forecast.  Bartash also echoed points made elsewhere, including widespread skepticism that jobs would be safe.

Employers are responding in ways other than paying more, as Paul Davidson showed in USA Today’s April 19th “Want a new job?  As fewer workers respond to ads in the COVID era, more firms are turning to aggressive hiring tactics.”  Those approaches include finding potential employees on LinkedIn, “poaching people” at lower organizational levels than before, allowing remote work for more positions, and speeding up the hiring process.  Accordingly, successful “truck drivers, nurses, software developers, and grocery store managers,” among others, have good chances of being offered career upgrades.

Finally, some advice from Brent Orrell and Matthew Leger, also in the April 19th USA Today: “COVID-19 has reshaped our economy for the long haul.  Here’s how to help workers adapt.”  The authors, looking governmentally, recommended “flexibility in employment and workforce development financing and services,” including allowing “personal reemployment accounts,” along with improving websites and digital “enhancements to the nation’s American Job Centers.”  What they need more than any of this is closer ties between employers and candidates, who need to know that training will help them. 

Soon the employment situation may change drastically, with vaccination rates well higher, new coronavirus cases way down, and a boom clearly in progress.  Until then, though, we need to do what we can.  For applicants, that starts with getting vaccinated.  For hirers, it means improving salaries, wages, and benefits.  If the two sides can do these things, they will succeed sooner.

Friday, May 7, 2021

April Jobs Data: Nonfarm Payroll Employment Up 266,000 But 660,000 More Working Total – AJSN Latent Demand Down 700,000 to Less Than 19.8 Million

A confusing title perhaps, but this morning’s Bureau of Labor Statistics Employment Situation Summary was as well.  It started with 266,000 net new nonfarm payroll jobs, about 700,000 lower than the only projection I saw, but more broadly the report played like 660,000 or so more were on the job.  That was the difference between March’s and April’s “number employed,” meaning that we added about 400,000 net positions either on farms or not on payrolls.  Some of the other metrics reflected a strong month, with the labor force participation rate and employment-population ratio, now 61.7% and 57.9%, up 0.2% and 0.1% respectively, seasonally unadjusted unemployment off 0.4% to 5.7%, and the count of those working part-time for economic reasons, or holding short-hours positions while thus far unsuccessfully seeking longer ones, crashed almost 600,000 to 5.2 million.  The number of those out for 27 weeks or longer stayed at 4.2 million.  Figures getting worse included the adjusted unemployment rate up from 6.0% to 6.1%, the tally of those jobless up 100,000 to 9.8 million, and the number of people on temporary layoff increasing the same to 2.1 million.  The hardest to interpret was “average hourly earnings for all employees on private nonfarm payrolls” up 21 cents to $30.17 – such gains have lately been bad, as they have reflected lower-paid people disproportionally losing their jobs, but this time it may mean higher pay in general. 

The American Job Shortage Number or AJSN, the measure showing how many new positions could be quickly filled if all knew they were truly available, had a large decline to the following:




Almost 80% of the improvement from March came from lower official unemployment, but the count of people not searching for work for a year or more contributed over 100,000.  The year-over-year comparison, with the worst employment month of the pandemic, showed a 14.5 million improvement from 34.3 million, with over 2½ million of that from statuses other than straight joblessness.  The share of the AJSN from unemployment was 42.0 percent, down 1.9%. 

On the coronavirus side, numbers were also mixed.  The 7-day average of new daily American cases gained 28% to 70,075, and that of people hospitalized rose 8% to 44,950.  The average of daily deaths, though, plummeted 43% to 749, while the total of vaccine doses administered each day gained a robust 38% to 3,349,306. 

How can we sort all of this out?  For one thing, we are no longer improving across the board.  We’re reaching limits both on people accepting vaccinations and on employers’ willingness to pay more.  We are nowhere near herd immunity, however you define that, and will not get there until our share of fully vaccinated people, still only 33%, more than doubles.  Legal reopenings, such as the one authorized for later this month in New York City, will help, but only to the extent that customers return.  The rest of the year, then, is murkier than I thought it was a year ago, and does not look as spectacular.  For now, though, the turtle did take a real step forward.

Friday, April 30, 2021

The Pandemic: Where Are We Now, and How Can We End It?

On this topic, my objectivity is limited by the milestone I reached yesterday.  It’s now two weeks since my last coronavirus vaccination, so the chance of my getting infected is minimal.  Almost all other American adults can choose to join me. 

How encouraging are our recent Covid-19 statistics?  Looking at the charts of 7-day averages of new cases, deaths, and hospitalizations, on the New York Times website, we see different shapes.  The count of new cases stopped drastically declining on February 21st with 66,439, wiggled around mostly downwards, and this past Wednesday reached 52,605.  Hospitalizations bottomed out on March 25th with 39,903 and have been sloping up ever since, with the most recent figure, Tuesday’s, 44,015.  Deaths ended their steady decrease on April 12th with 721, and have been slowly dropping since, to 712 on Wednesday.  Vaccination doses administered went up sort of a craggy mountain to summit April 13th at 3,384,387, and have subsequently been falling, to reach 2,630,407 yesterday.  All of these numbers show a maturing, so to speak, of the recovery, with disease results down but not out and the tally of vaccinations, including the Times’s figures (conflicting with others who say it is higher, claiming 43% with at least one dose but 13% more needing another) indicating that we are beginning to run out of customers. 

Worldwide, we are only now reaching all-time highs in new daily cases, and are almost at that level with daily deaths.  As of yesterday, the map looked like this, with darker colors meaning higher new per-capita infections: 



As you can see, Europe and South America are generally doing the worst. We have read about India setting national records, but yesterday’s 349,378 all-time-high average daily new cases there is barely one-third of the highest United States percentage.  The American vaccination rate, even if it levels off, should assure that our country will continue to improve.

Otherwise, what’s in the coronavirus news?  Per Rebecca Robbins in the April 25th New York Times, “Millions Are Skipping Their Second Doses of Covid Vaccines.”  A discouraging piece, with the major causes being concern about side effects, snags with places running out of specific products between doses, and decisions that the second shot was unnecessary.  The good part is that 92% of people having  one Pfizer or Moderna dose have returned for the second, but 8% not is still too high.

One idea to get vaccination rates higher was presented by Ben Mathis-Lilley in the April 23rd Slate: “There Is a Glaringly Obvious Way to Get Everyone to Take the Vaccine.”  Per the subtitle, “it’s money.”  An Oxford professor and a Democratic presidential candidate endorsed payments of $1,000 and $1,500 respectively.  The author bounced around the idea, ultimately agreeing with it, but two of his counterpoints, that it would encourage people to wait for payments for such things in the future and that it could get them thinking it is riskier than it actually is, along with concern about stiffing or going through $100-$150 billion for each 100 million Americans already vaccinated, carry the day.

Now is the right time for “As Virus Rages Abroad, Biden Promises to Ship Millions of Vaccine Doses” (Sheryl Gay Stolberg, The New York Times, April 26th.)  Already our production capability is way beyond the number of doses we need, so we can and should continue making them for free export.  We can’t be expected to provide all of the vaccine other countries need, appeals to guilt are inappropriate, and whining about sending less being like “showing up to a four-alarm fire with an eyedropper full of water” is grotesquely inaccurate, but we can make a massive difference, by saving possibly millions of lives, just by keeping the factories going. 

My clear answer to Aaron E. Carroll’s April 27th New York Times question, “When Can We Declare the Pandemic Over?”, is that it will end for us individually.  Per Carroll, “normal has never meant “perfectly safe,”” “a safer world will likely still have Covid-19 in it,” and “if we can get the pandemic to a point that a vast majority of people who become sick get well, that the number of people who are hospitalized and dying is low and that this really isn’t any worse than your average seasonal respiratory virus, then it’s time to start seriously relaxing our restrictions.”  We should expect and encourage a falling-away of government regulations, with individual businesses choosing what rules to have and, of course, consumers doing what they think is right. 

And as for us?  In all, if you are not getting vaccinated because of religious beliefs, that is the price you pay for them.  If you are holding back because you believe some sort of conspiracy, such as a recurrence of the generations-ago Tuskegee abuses, you are a fool.  If you think one dose is enough, you are practicing medicine without a license.  If logistical problems have stopped you from getting your second shot, you need to aggressively overcome them.  If you fear general side effects, you have the cart in front of the horse.  If you are waiting for some kind of herd immunity, you are misguided.  If you think that because our last president did not take the pandemic seriously you do not need to be protected, you are worse than that.  If you have a true medical reason, you have my sympathy.  The pandemic is over for me – will it soon be over for you?


Friday, April 23, 2021

What Should and Shouldn’t Our Government Do? Nine Possible Policy Changes Briefly Assessed

 A year’s worth of Covid-19 has given us at least a year’s worth of proposals.  What are they and how good would they be?

In the August 11th New York Times, per Lauren Frias, “It’s time to implement a 4-day workweek, Andrew Yang says.  The pandemic has made it important now more than ever.”  From a former Democratic presidential candidate and current one for New York City mayor, this thought, now in its second half-century, would only have a chance if each day would be ten hours or more, as businesses are getting thoroughly acclimated to unpaid extra time from their fearful cubicle workers.  That isn’t worth as much money to them than they think, but it’s too beneficial to them to agree to relinquish.

From the same source, we have a thought of more recent vintage (“Andrew Yang Wants You to Own and Sell Your Data,” Hannah Klein, Slate.com, June 23rd) that may get traction someday.  It’s hardly nonexistent now, as in 2020 “Facebook paid some of its users $5 for voice recordings in order to improve its speech recognition technology.”  That general idea was formally proposed in Congress the previous year by a Republican, one John Kennedy of Louisiana, so if bipartisanism were more valued we could hear more on it.  It also has plenty of merit, and could well end up law.

“How Can Biden Bring Back Manufacturing Jobs?  Weaken the Dollar,” posed Noam Scheiber in the March 1st New York Times.  Sure, that would get us there, but at the cost of more expensive imports and lower overall prosperity.  Each political side has its own detrimental subconstituencies, and this one, rooting for a return to the 1950s and 1960s, is harmful to the party now in power.  Helping a small minority of Americans at the expense of the majority, by propping up otherwise noncompetitive businesses, is not what we need.

Another losing Democratic idea was well and fairly debunked by George F. Will’s “Will:  Student loan forgiveness is a gift to the well-off,” reprinted in The Roanoke Times on February 11th.  Aside from insulting this blogger, who chose to pay off his five-figure university obligation twelve years ago and worked during previous college and graduate school experiences to prevent more of that, this intensely proposed notion would help those with higher income (as 56% of such debt “is owed by those with masters or professional degrees, and almost 35 percent of loan balances are owed by individuals in the top 20 percent of income distribution”), and, beyond that, would work to worsen our situation where “the nation is overproducing college graduates.”  Let “the typical college graduate with debt ($28,500) … retire it in 20 years with $181 monthly payments.”  Most of such people can, and I suspect the doctors and lawyers could handle that as well.

“Who Will Pay to Get America Back on Its Feet?,” asked Kara Swisher in the January 27th New York Times, and answered it with “an immediate, one-time “wealth tax” covering the last year.”  A direct if crude and grabby way of using the pools of money in private and corporate hands, it is tempting, as it would let us, when during the pandemic “those who have sacrificed the most so far are the disadvantaged,” “flip that script,” but is it right?  Debatable – and, with the merit here, we should do just that.

Easy to agree with on the surface is “Bernie Sanders supporters call for postal banking,” by Brittany De Lea in the December 8th Fox Business.  In such a system, here from 1911 to 1967 and in place in France, Germany, and a dozen or more countries worldwide, “local Post Office locations would be authorized to provide financial services,” possibly including “low-interest loans, checking and savings accounts, debit cards, check cashing, bill payment, ATM services, online banking services and electronic money transfers.”  It is a true populist idea, and would help numerous unwanted-by-banks people now subject to high fees and rates get personal business done locally.  It has, though, two large downsides:  the expense, as such would not be profitable, and conflict with probable removal or consolidation of small local post offices.  Once again, a worthy idea that could be explored and appropriately accepted or rejected.

“Should the Feds Guarantee You a Job”?  This question, here from Eduardo Porter in the February 18th New York Times, has been asked for most of the past century, and its best answer is still “no.”  Our government is marginally extended at best with much less massive and dauntingly complicated efforts, which would need to deal with such matters as promotions, poor workers, and transfers as well as establishing and maintaining tens of millions of constructive assignments.  There are better ways, even those in place now, of keeping people working.

We can all see the existence of “America’s Amazon Problems” (Ross Douthat, The New York Times, April 20th), but can we agree on what they are?  Douthat tried to show how what is really an antitrust issue is fundamentally different from those before and didn’t quite get there, leaving us with the unsettling prospect of punishing a company for superbly providing what its customers wanted.  We’re never going back to using dozens of online vendors for routine products, let alone widespread in-person shopping on old-fashioned Main Streets, and trying to legislatively accomplish either is futile and damaging.  Perhaps Amazon should be broken up by separating its online hosting services from its interest-conflicting product offerings, but not because it has been too successful.

That brings us back to Andrew Yang, and to his signature policy change proposal.  Early in the coronavirus era, Ishaan Tharoor maintained in The Washington Post that “The pandemic strengthens the cast for universal basic income” (April 10, 2020), though that has now faded.  Three weeks later, Chris Hughes sought to explain in The New York Times “Why Americans Need a Guaranteed Income,” but had little new.  On March 3rd we had Paul Davidson’s USA Today “Is universal income closer to reality?  Cities from Stockton to St. Paul are already testing monthly checks for residents.”  We wouldn’t know from these efforts, as they, being directed to people with lower income, are not guaranteed income but welfare.  We can argue the merits of giving more money to those who need it, but “universal” means just that.  A real test, perhaps by randomly choosing a zip code and giving all residents, say, $1,000 per month, would take more political will than we have seen.  Otherwise, it’s still too early for universal basic income, but not to soon to discuss and socialize it – we may discover within our lifetimes that we must decide, like it or not.  The same goes, though to a lesser extent, for the other policy changes described here – so let’s move along. 

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.