Friday, August 27, 2004
Unemployment
"Campaign Rhetoric" by Matthew Miller in the current Forbes takes on just some of the problems in each major party's political platform. One of the items itemizes the 142 million Americans who do not work.In 2000, the U.S. population was approximately 275 million. Of those, 135 million worked and 5.5 million were unemployed. The civilian labor force was just shy of 141 million.
We read almost everyday that the accounting is shaky. The proportions working, not-working-but-looking, not-working-and-not-looking interact in complex ways.
The Miller tally shows 72 million children, 33 million retired, 11 million college students, 8 million unemployed, 8 million disabled, 5 million stay-at-home moms, 3 million gave up looking for work and 2 million are in prison.
Travel surveys have, for years, shown that most daily person-trips are for non-work reasons. The proportion has been rising and hovers near 80%. In most cities one-half of AM-peak person-trips are non-work and two-thirds of PM-peak person trips are non-work. This is, of course, great ammunition for the advocates of peak-load pricing who are constantly berated by know-nothings talking about the "need" for workers to be on the roads at particular times.
It also responds to the question: "Who are all these people?" that those working regular hours ask when they occasionally pop out and see so many restaurants, malls and highways near filled to capacity.
Take away the prisoners and the busy stay-at-home moms and 137 million do whatever they do all day supported and served by a slightly smaller army of 135 million at work.
Conventional labor force participation is up but it's really not. More women are working outside the home than ever but they were always working. Adolescence is longer than ever. Etymologists report that the word was not even in use before 1785.
Monday, August 23, 2004
Networks
"In many economics faculty lounges, the mere suggestion that markets are something less than efficient is likely to elicit cool stares. But Kenneth J. Arrow, a 1972 Nobel laureate and professor emeritus at Stanford, recently turned a skeptical eye on the efficiency of one vast market -- the labor market -- and reached some intriguing conclusions about what distinguishes better paid workers from their lower-paid peers. It's not what you know, Professor Arrow, a prolific theorist suggests; it's who you know." So writes Daniel Gross in yesterday's NY Times, referring to the findings reported in "Limited Network Connections and the Distribution of Wages" by Arrow and Brozekowski.Actually, many (perhaps most) economists are not averse to "market failure" findings. In fact, they like these every bit as much as liberal columnists do.
Yet, it's the straw man all over again. Who can take a labor market without an information market seriously? Information networks surely matter. Everyone knows this and business school (and other) students are reminded of it all the time.
Also, it is not good to be poor. Networking is much tougher. This is well known and Arrow and Borzekowski explain that networking differentials explain 15% of unexplained variations in wages.
The Gross column ends with the inevitable policy prescription: "To improve the lot and prospects of middle-income workers and the working poor, it may not be enough merely to focus on the traditional twin pillars of job training and education. Policy makers may also need to focus on upgrading the number and quality of workers' links to companies."
Will we ever hear from commentators on just how successful government job training has been? Will they ever tell us just how policy makers will facilitate networking?
Having botched job training and education, are they ready for a brand new task?
