Posts tagged with: employment

gaplogoThe furniture store Ikea has announced they will begin to base their minimum pay on what’s considered to be a “living wage” in each local area, rather than on what competitors are paying. Similarly, the clothing retailer Gap says it will set $9 as the minimum hourly rate for its United States work force this year and then establish a minimum of $10 next year.

This makes good business sense — but will lead to a lot of bad economic reasoning.

A prime example is the latest column by Slate’s business and economic writer, Jordan Weissmann:

Notably, Ikea isn’t raising prices on its furniture to pay for the raise. Instead, the company’s management says it believes the pay hike will help them compete for and keep talent, which is of course good for business. The Gap used a similar justification when it announced it would raise its own minimum to $10 by 2015.

Which I think hints at something about what would likely happen if the U.S. raised the federal minimum. Conservatives who argue that higher pay floors kill jobs tend to assume that businesses are already running at pretty much peak efficiency, and so forcing them to spend more on labor will lead to less hiring. But left-leaning economists see it differently. They tend to argue that increasing wages can lead to savings for business by reducing worker turnover, for instance, and forcing managers to make better use of their staff.

Both the conservatives and the left-leaning economists are largely correct. Higher pay floors do tend to kill jobs and increasing wages can lead to savings for business by reducing worker turnover. But where Weissmann and other liberals go wrong is in assuming that businesses can still prevent worker turnover when the minimum wage is increased.
(more…)

Blog author: jcarter
posted by on Tuesday, June 10, 2014

long-term-unemploymentThe longer that Americans are unemployed, the more likely they are to report signs of poor psychological well-being. A recent Gallup survey found that about one in five Americans who have been unemployed for a year or more say they currently have or are being treated for depression.

Gallup finds that unemployed Americans are more than twice as likely to say they currently have or are being treated for depression than both those with full-time jobs and those who have been unemployed for five weeks or less. According to the U.S. Department of Labor, there are currently 3.4 million people who have been unemployed for 27 weeks or more. These individuals accounted for 34.6 percent of all the unemployed.

A 2011 study of the long-term unemployed published by the Heldrich Center for Workforce Development at Rutgers University also found that half of participants experienced shame and embarrassment that led them to isolate themselves from friends and associates. Among the long-term unemployed, 31.1 percent reported spending two hours or less with family or friends the previous day, versus 21.5 percent among short-term unemployed adults.

Long-term unemployment is not just a mental health crisis; it’s also a spiritual crisis. And the church is the only institution in American that can adequately respond. “Fortunately, the church is in a unique place to explain Christ’s restoration of work,” says Michael Jahr, “the meaning of suffering, and the hope and peace that result from putting our trust in him.”
(more…)

unemployedNote: This is the latest entry in the Acton blog series, “What Christians Should Know About Economics.” For other entries in the series see this post.

 The Term: Unemployment

What it Means: If you consult a dictionary, you’ll find a number of commonsensical definitions for unemployment: the state of being without a job; being without a paid job but available to work, etc. But like many other economic terms, the dictionary definition can vary significantly from how the term is often used. For example, since your teenage daughter, your neighbor’s stay-at-home spouse, or your retired grandfather are without a job, are they considered “unemployed”? In each case the answer is the same: It depends.

According to the federal government, to be unemployed a person must (a) be jobless, (b) looking for a job, and (c) available for work.

People are considered employed if they have a job (whether temporary, part-time, etc.). People who are neither employed nor unemployed are considered to be not in the labor force.

In America, the labor force consists of all persons 16 years old and over who are not serving on active duty in the military and are not confined to institutions such as nursing homes and prisons and either have a job or are looking for work. The labor force is made up of both the employed and the unemployed.

So unemployment refers to anyone who doesn’t have a job, wants one and is available to work, and is actively looking for work. That last part is particularly important because “discouraged workers” are not counted as unemployed. (See below for more on discouraged workers.)
(more…)

vergara-californiaNine California kids are suing their state over substandard teaching at their public schools. Campbell Brown explains why this case—which few people have ever heard of—may have a huge impact on education:

Win or lose, these students are reminding us of the activism that is born out of the inaction of our leaders and the frustration driven by inequity in education. Children and parents have resorted to acting on their own, finding inspiration in desperation.

Their fight stems from a basic belief that access to highly qualified teachers should be fair and widespread, that classroom safety is paramount, and that equity remains essential.

Vergara v. California takes aim at laws that go directly to the heart of a good education: the ability to have, keep, and respect good teachers and dismiss utterly failing ones. Specifically, the suit challenges California laws that create three sets of problems, all of them undermining a school’s ability to act in the best interest of students.

Read more . . .

Terminator-2-Judgement-Day-posterI oppose implementing Skynet and increasing minimum wage laws for the same reason: to forestall the robots.

It’s probably inevitable that a T-1000 will return from the future to terminate John Connor. But there is still something we can do to prevent a TIOS from eliminating the cashier at your local McDonalds.

In Europe, McDonalds has ordered 7,000 TIOSs (Touch Interface Ordering Systems) to take food orders and payment. In America, Panera Bread will replace all of their cashiers with wage-free robots in all of their 1,800 nationwide locations by 2016. There is even a burger-making robot that can churn out 360 gourmet hamburgers per hour.

I, for one, welcome our new fast-food robot overlords. I’m just not ready for them yet.
(more…)

mcdonalds“Clean up your own mess. Your mother doesn’t work here.”

That was a sign, printed on dot matrix printer paper, which hung in the breakroom of the McDonald’s where I worked. While that was nearly thirty years ago, I suspect that same sign is still there (though probably reprinted on a laser printer). But the idea behind it has changed. Your mother may not work at McDonalds, but the company—and others that hire low-skilled employees—are increasingly taking on the role of in loco parentis.

Lessons in basic life skills that were once taught by parents—such as punctuality, self-direction, basic personal hygiene—are increasingly being provided by the shift manager at the local fast food restaurant. That is why it’s absurd to claim that companies that are willing to hire people who are unqualified for the labor force are somehow getting over on the American taxpayer.

As Reihan Salam,
(more…)

Seattle-mystWhen I was growing up I had a buddy—let’s call him “Bob”—who was constantly asking, “What happens if we do . . . ?” Bob’s curiosity, however, only led him to wonder about foolish actions. He never pondered, for example, what would happen if we all volunteered at the senior citizens center. Instead, his thinking ran more along the lines of what would happen if we jumped off the senior citizens center.

The reaction of me and the rest of my friends was always, “Let’s find out!” But we were more prudent than Bob (or maybe just more cowardly) so we’d encourage him to try whatever reckless idea he had in mind so we could learn from his experience. We learned, for instance, that if jump off the 3-story senior citizens center, a stack of cardboard boxes will not be enough to sufficiently break your fall.

Bob’s shenanigans would daily provide for us what social scientists would call a “natural experiment.” A natural experiment is a study of the effect of an independent variable, which has not been planned or manipulated by the researchers, on a dependent variable. (The word ‘natural’ in the term natural experiment therefore refers to an event that is not planned by the researchers.)

The city of Seattle is about to pull a Bob, by foolishly raising the minimum wage to $15 per hour. The effect on the citizens of Seattle will be almost entirely harmful. But it will provide a natural experiment on the effect of raising the minimum wage laws that the rest of American can learn from. Anyone who isn’t already convinced that increasing the minimum wage has a detrimental impact on employment and harm minority workers will, in a few years, have solid proof. We will all be able to look to Seattle to see the difference between good, albeit naive, intentions and sound economic policy.

Here are some of the effects I predict the policy will have in the next three years:
(more…)

keep-calm-and-expect-the-unexpected-18Today at Bloomberg we find this unexpected news about unemployment:

Applications for U.S. unemployment benefits unexpectedly climbed to a nine-week high, underscoring the difficulty adjusting the data for seasonal variations such as the Easter holiday and spring recess at schools.

Jobless claims rose by 14,000 to 344,000 in the period ended April 26, the highest level since Feb. 22, Labor Department data showed today in Washington. The median forecast in a Bloomberg survey of economists called for 320,000.

There are two things the media never expects: (1) The Spanish Inquisition and (2) increases in jobless claims. Over the past five years, in 30 of the past 60 months,  the media has considered it “unexpected” when jobless claims increase:

(more…)

Subway at True Bethel Baptist Church

I have previously expressed my appreciation for the popular TV show, Undercover Boss, in which business leaders from large corporations spend several days working alongside lower-level employees.

In an episode on Subway, Don Fertman, the restaurant chain’s Chief Development Officer, goes undercover at several locations across the United States. Most of the episode includes your typical Undercover Boss fare — a bumbling executive, dedicated workers, teer-jerker employee recognitions — but I was struck by a particular branch that Fertman visits along the way.

Located in the heart of Buffalo, New York, the restaurant is located in the same building as True Bethel Baptist Church, and further, is owned and operated as a franchise by the church itself. The reason? To provide employment and job training to the surrounding neighborhood. (more…)

A recent report from the CBO contains an appendix detailing updated estimates of the labor market effects of the Affordable Care Act (ACA). Pundits for and against the ACA have wasted no time in putting their own particular spin on the projections. Republicans and some other opponents have seemingly celebrated the idea that these estimates may show that the ACA is “a job-killing, economy-crushing villain,” while Democrats and some other supporters have claimed that in times of high unemployment, it’s “an economic benefit” that some will be voluntarily reducing hours or dropping out of the labor force because that means greater demand for labor — those currently unemployed would therefore have more options.

So who’s right? These are mutually contradictory claims, or so it appears. The report is ultimately limited and mixed, but nevertheless raises some serious concerns, caused, in part, by the polarization of Congress both when the law was passed and up to the present. (more…)