Though the US economy remains about 10 million jobs short of its pre-pandemic levels, employers and commentators have begun to express fears over a reduction in the labor supply, prompting debates over the possible causes of this shortage.
A new article by JOSH BIVENS and HEIDI SHIERHOLZ questions the grounds for these fears using data from the most recent jobs report.
From the piece:
"Policymakers currently face a choice of guarding against growth constraints driven by demand or driven by supply. The Biden administration has chosen to zealously guard against demand shortfalls, even at the risk of running into some supply constraints in the near term. If policymakers change this orientation and reel back macroeconomic stimulus and cut off UI benefits, they will be making the other choice—guarding zealously against supply-constrained growth and being willing to risk growth running into demand constraints. This would be a huge mistake for human welfare, even if it were true that some workers were choosing to pass on available jobs due to enhanced UI benefits. A worker who is jobless because they have voluntarily decided that they’d rather wait out the next month or two on enhanced UI benefits—rather than throwing their caregiving responsibilities into disarray by taking on work in the face of continued school closures or braving a job they feel might be unsafe for them—suffers far less than a worker desperate for work who just can’t find it because the economy is unnecessarily running at too cool a pace.
Many face-to-face service-sector jobs have become unambiguously worse places to work over the past year. This has in no way been fully restored to the pre-COVID normal, as the coronavirus remains far from fully suppressed. Well-functioning labor markets should account for this degraded quality of jobs by offering higher wages to induce workers back. If enhanced UI benefits and a demand-increasing dose of fiscal stimulus are allowing these higher wages to be quickly offered in the face of supply constraints, then it seems like they’re improving labor market efficiency in this regard. Policy boosts to labor supply that aim to expand opportunities and remove key barriers to work—like the investments in care work provided in the American Jobs Plan and the American Families Plan—are excellent examples of this kind of progressive labor supply policy."
Link to the post.
- "If UI were driving things, you would absolutely expect to see low-wage workers less likely to be coming back to work. And in fact, it’s the opposite. That is compelling evidence that UI is not in the driver seat." Shierholz elaborates in Mother Jones. Link. And in the NYT, David Leonhardt explains the trend through stagnanating wages, weakening unions, and rising coroporate profits. Link.
- For other takes on the JOLTS figures, see Matt Klein on the manufacturing sector and Skanda Amarnath on sectoral data. Link, link.
- "Using empirical evidence from the Prussian districts of Imperial Germany during the period between 1871 and 1912, we show that relative labor market shortages of agricultural workers increased the willingness of rural voters to 'take electoral risks' and vote for the opposition Social Democratic Party." Martin Ardanaz and Isabela Mares on labor shortages and democratization. Link.
Self-entrepreneurialism & Inequality
PhD candidate in sociology at Princeton University SOPHIE MOULLIN studies the culture of inequality. In a recent paper, she probes the concept of "self-entrepreneurialism."
From the paper:
"Several social theorists describe a culture of self-entrepreneurialism: a subjectivity in which individuals see themselves as determining their objective economic outcomes or earnings. This culture, it is thought, is institutionalized in contemporary employment practices such that, as in human capital theory, self-entrepreneurialism is widespread among employees, and the more self-entrepreneurial earn more. I contribute a quantitative and comprehensive response to these largely untested claims using survey data from the mid-1990s through mid-2010s, representative of working-age Americans. I find that self-entrepreneurialism, defined as a latent, reflective self-concept of self-growth, mastery, directedness, and foresight, is associated in the cross-section with a significant earnings premium – of between 5% and 10% of average earnings – between individuals within the same occupation. However, differences in degrees of self-entrepreneurialism do almost nothing to explain the earnings differences between different occupations. Further, within individuals over their working lives, there is no significant longitudinal association, in either direction, between changes in self-entrepreneurialism and earnings. Self-entrepreneurialism is economically rewarded, but within – not between or against – the enduring occupational and life-course structure to earnings inequality."
+ + +
- "How the 1 percent’s savings buried the middle class in debt." A review of recent literature on wealth and savings by Rebecca Stropoli. Link.
- Dennis Sullivan and Andrea Ziegert study the Black-white poverty differential between 1980 and 2014, looking at tax and transfer policy, demographics, and labor market structure. Link.
- Sumudu Perera, Ananda Rathnayake, Janaka Fernando, Thilani Navaratne, and Dilan Rajapakshe examine the shift from in-kind transfers to direct cash transfer fertilizer subsidies in Sri Lanka. Link.
- "If world leaders don’t act now, the end of the Covid pandemic may come with a horrible form of herd immunity, as more transmissible variants that are taking hold around the world kill millions." Zeynep Tufekci on new variants and vaccine distribution. Link.
- "This paper employs the multisectoral balance-of-payments constrained economic growth model to capture the influence of structural changes on the exports and economic growth of Vietnam over the period 1997–2016." By Woocheol Lee. Link.
- Isabella Weber in Fortune on China and cryptocurrency. Link.
- Stephen Redding on explanations for suburbanization in the US from 1970 to 2010. Link.
- Sebastian Kohl and Jardar Sørvoll compare social democracy and housing cooperatives in German and Nordic-speaking countries. Link.
- A new report from the Century Foundation and Data for Progress finds overwhelming support for a stronger Supplemental Security Income (SSI). Link.
- "Major epidemics of plague in Germany and France in the early 18th century and in Moscow in the 1770s brought an end to a series of epidemic disasters in Europe which had started with the Black Death. The article examines what they had in common, and seeks to understand why they should have ended when they did. It shows that European governors were unanimous in insisting on rigid quarantine and other measures for containing the disease developed over previous centuries, despite their ignorance of plague's precise causes. It shows also that physicians across Europe were more deeply divided than they had ever been on the issue of contagion, and now engaged in an international dispute about whether the acknowledged cruelties inflicted by compulsory quarantines were wholly counterproductive, or a price worth paying for the prevention of still worse disasters." By Paul Slack. Link.