Un-Brain Drain

Earlier this year, 50,000 additional H-1B visas were made available to U.S. companies for skilled workers under the proposed Immigration Innovation Act, which was introduced into the U.S. Senate in January.

The limit had been 65,000, which high-tech companies claimed was too few, thus hurting American business and innovation.

Walmart Buys American

Walmart, which centers its business on inexpensive items, started a program this year to increase its purchasing of American-made goods by $50 billion over the next 10 years. The company says that more than 150 projects are under way, with products ranging from socks to flat-screen TVs.

Of course, Walmart has an advantage that few other retailers can match: Because of its scale, it can pressure suppliers on cost.

Elasticities and Energy

A recent study has established that employment is affected by oil prices in a very particular way.  

Elasticities of Employment w/r to Oil Prices

Total U.S. Employment	-0.02
Coal Mining	0.24
Oil and Gas Extraction	0.40
Oil Field Machinery	0.29
Refining	-0.03
Petrochemicals	0.36

In other words, though a doubling in the price of oil would decrease employment in America by 2%, it would increase employment within most sectors of our oil production matrix by leaps and bounds. If accurate, this might shed light on some perverse political incentives.

Disability System Disabled

The combined spending on Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) has risen to a huge $200 billion a year, and it seems many of the nearly 12 million Americans who receive such benefits are merely scamming the system, a system that will soon run dry, provided that taxes on working people are not raised substantially.

The abuse and overspending in government disability programs is so bad that even National Public Radio and 60 Minutes have taken notice.

Who Pays Corporate Taxes?

Most economists agree that the burden of the corporate income tax falls on labor to some extent, but there is disagreement over the degree.

While Treasury economists conclude that 82 percent of the corporate tax falls on capital and 18 percent on labor, all assumptions may be called into question when dealing with any specific tax reform proposal.

For example, a change in depreciation allowances is mainly going to affect manufacturing companies, whereas a change in the taxes on foreign-source income will have an impact only on multinationals.

And Oxford University economist, Li Liu and a Rutgers economist, Rosanne Altshuler, argue that labor bears most of the burden of the corporate tax. They empirically examined wages among industries and concluded that labor bears about 60 percent of the corporate tax burden. That is, a $1 increase in corporate taxes will reduce wages by about 60 cents.

So, the incidence of corporate income tax remains, for the moment, an open question.

More Skilled Immigrants...More Divisive?

A recent study indicated that there is at least one serious setback associated with shifting immigration away from familial criteria and moving it toward skills criteria.

Skilled immigrants are more likely to be older with established family and cultural bonds, making them less likely to assimilate.

Office Types

After having taught for so many years, I've come to recognize that in any large assemblage or group, though individuals vary, there are "types" of students: the worrier, the rebel, the good little boy, the conformist, the apathetic, etc....

Essentially, the same holds true in office environments. Click this link to view an interesting graphic devoted to outlining the 13 Office Types.

Learn More, Earn More

In the last six years, American higher education institutions conferred nearly 3.5 million more degrees than they had over the previous six years. By last year, 29.8 percent of men and 37.2 percent of women ages 25 to 29 possessed four-year college degrees.

In time, it is likely that these young college graduates will find work and earn pay that is significantly higher than they would have earned had they not gone to college.

In 2012, two-year-degree holders earned close to $7,000 more per year than their high-school-diploma-only counterparts. Someone with a four-year degree earned roughly $15,000 more than that same someone with an associate degree. And a professional degree reaped nearly $35,000 more than a four-year college degree, according to the Department of Labor.

We're Number 8!

The recently released Newsweek/Daily Beast list of the top-ranked countries for women shows the United States in the respectable eighth position.

But as it’s easier to measure rights and achievements than obligations and commitments, it assesses women’s economic success in terms of their ability to emulate men’s traditional gender roles, with no consideration of support for raising children or caring for other dependent family members, burdens with which women are disproportionately more likely to be saddled than men.

Beyond GDP Gap

Reasonable measures of the “output gap” over the past five years — the difference between the value of goods and services America could and should have produced and what it actually produced — run well over $2 trillion. That’s trillions of dollars of pure waste, which we will never get back.

And consider an even more tragic waste of human potential. Before the crisis, 63 percent of adult Americans were employed; that number quickly fell to less than 59 percent, and there it remains.

Never Breaking Even

Two-year community colleges enroll 37 percent of American undergraduates. The Center on International Education Benchmarking reports that only 13 percent of students in two-year colleges graduate in two years and that figure rises to a still-dismal 28 percent after four years.

This elevated completion risk has consequences for both the student and the economy in which he participates. To wit, a student who takes on a typical amount of debt but drops out after two years never breaks even because wages of college dropouts are little better than those of high school graduates. And an economy with undertrained and less wealthy individuals will suffer from low aggregate demand and a limited capacity to produce.

Education and Economy at Risk

Four-year college degrees still pay off; however, one-quarter of recent college graduates are unemployed or underemployed. Meanwhile, total student debt now exceeds $1 trillion. And heavily indebted students face risks.

One is that they fall short of their income potential, through some combination of unemployment and inability to find a job in their chosen fields. Research has shown that on average a college student taking on $100,000 in student debt will still come out ahead by age 34. But that break-even age goes up if future income falls short of the average.

Wages, Productivity and Marx

In the classical terminology of Marx, a large reserve army of labor reduces both the individual and the collective bargaining power of workers, enabling capital to take a bigger piece of the economic pie.

The Economic Policy Institute estimates that between 2007 and 2012, wages fell for the lowest 70 percent of all wage earners, despite productivity growth of 7.7 percent.

Stagnant Wages For Most

Less-educated workers have been particularly hard hit by persistently high unemployment and declining wages.

Many businesses have also been hurt by the slow growth of consumer demand, a direct result of unemployment and wage stagnation.

Solution: Increased educational attainment leads to lower unemployment, higher compensation and ever growing demand for goods and services.

A Japanese Solution

Japan has one of the largest gender gaps in the world. Even though Japanese women are highly educated — indeed, the university enrollment rate for 18-year-old females now exceeds that for 18-year-old males — the female employment rate is about 25 percentage points lower than the rate for men, and ranks among the lowest in the developed countries.

The I.M.F. estimates that if Japan’s female labor participation rate climbed to the average of the Group of 7 industrial economies, Japan’s per-capita economic output would be 4 percentage points higher. If employment rates for Japanese women were to reach parity with those for Japanese men, Goldman Sachs estimates Japan’s work force would gain eight million people and its gross domestic product would be 14 percent larger.

Japan's Gender-Biased Labor Market

In the 2012 Global Gender Gap Report of the World Economic Forum, Japan ranked near the bottom — 102 out of 135 countries — on an index measuring gender parity in economic participation and opportunity. Japan has consistently had the worst ranking of any developed economy on this index since it was introduced in 2006.

Japan also has the largest gender pay gap of any country in the Organization for Economic Cooperation and Development, with the exception of South Korea. On average, Japanese women earn about 72 percent of the compensation of men for equivalent jobs. The gender pay gap rises during childbearing and child-rearing years indicating a “motherhood pay penalty”.” This penalty is larger in Japan than in any other O.E.C.D. country, including Korea.

Japan is Growing Old

The International Monetary Fund estimates that Japan’s working-age population will fall by almost 40 percent by 2050. The share of citizens older than 65 is expected to jump from 24 percent in 2012 to 38 percent in 2050, when the ratio of the working population to the elderly population will be 1 to 1.

Japan is growing older faster than anywhere else. Unless the nation can shore up its work force, it faces a long-term drag on economic growth at a time of soaring obligations for old-age entitlements.

Unemployment Rate Improves By Attrition

The seasonally adjusted July unemployment rate of 7.4 percent showed a slight decline from last year’s 8.2 percent, but the gains came largely as a result of declining labor force participation rather than job creation.

As with most raw statistics, the devil is only apparent upon inspecting the details.

Opportunity or Labor Abuse?

Unpaid internships are, at best, ethically iffy. A necessary precursor to jobs in certain fields, they act as both a gateway and a barrier to entry. Young people believe they have no choice. Anyone unable to forgo pay risks being shut out.

And legally, they’re murky. The Labor Department holds that unpaid internships in the nonprofit sector are “generally permissible,” meaning a stint at a nonprofit is probably legitimate. A similar arrangement at a moneymaking outfit wouldn’t pass the department’s six-point test, which says that interns cannot displace regular employees; that the experience must be “for the benefit of the intern”; and that the employer cannot derive an “immediate advantage” from the intern’s activities.

What is JOLTS?

The Job Openings and Labor Turnover Survey(JOLTS) is released monthly by the Bureau of Labor Statistics.

JOLTS data are a regular reminder that there is always a great deal of “churn” in the labor market. For example, when we learn that the labor market added 195,000 jobs in June, it is important to remember that this is a net change, which masks a lot of shuffling.

When the labor market is stronger, there is much more churn. In 2006 and 2007, there were 5.3 million people being hired and 5.1 million people separating from their jobs(voluntarily leaving jobs or being fired) each month on average.

There is less churn today because jobs are so scarce that employed workers are less likely to quit the job they have. In 2006 and 2007, nearly 3 million workers voluntarily quit their jobs each month. That dropped to a low of 1.6 million in September 2009. And though it has since increased, it remains quite low, approximately 2.2 million workers in any recent month.