Category Archives: Unemployment

Welfare Benefits and Unemployment in Affluent Democracies: The Moderating Role of the Institutional Insider/Outsider Divide

Source: Thomas Biegert, American Sociological Review, First Published August 29, 2017
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From the abstract:
The effect of generous welfare benefits on unemployment is highly contested. The dominant perspective contends that benefits provide disincentive to work, whereas others portray benefits as job-search subsidies that facilitate better job matches. Despite many studies of welfare benefits and unemployment, the literature has neglected how this relationship might vary across institutional contexts. This article investigates how unemployment benefits and minimum income benefits affect unemployment across levels of the institutional insider/outsider divide. I analyze the moderating role of the disparity in employment protection for holders of permanent and temporary contracts and of the configuration of wage bargaining. The analysis combines data from 20 European countries and the United States using the European Union Labour Force Survey and the Current Population Survey 1992–2009. I use a pseudo-panel approach, including fixed effects for sociodemographic groups within countries and interactions between benefits and institutions. The results indicate that unemployment benefits and minimum income benefits successfully subsidize job search and reduce unemployment in labor markets with a moderate institutional insider/outsider divide. However, when there is greater disparity in employment protection and when bargaining either combines low unionization with high centralization or high unionization with low centralization, generous benefits create a disincentive to work, plausibly because attractive job opportunities are scarce.

Employment trends by typical entry-level education requirement

Source: Audrey L. Watson, U.S. Department of Labor, Monthly Labor Review, September 2017

From May 2007 to May 2010, the U.S. economy lost nearly 7.4 million jobs in occupations that typically require a high school diploma or no formal educational credential for entry. In contrast, the economy had no statistically significant employment change in occupations that typically require postsecondary education for entry. During the recovery, the economy gained jobs in almost all the typical entry-level education categories. By May 2016, employment exceeded May 2007 levels for occupations that typically require no formal educational credential for entry and occupations that typically require postsecondary education. However, employment in occupations that typically require a high school diploma or the equivalent for entry remained nearly 1.3 million lower than in May 2007. This trend is projected to continue. From 2014 to 2024, occupations that typically require a high school diploma for entry are projected to grow more slowly than average, causing a further employment shift away from these occupations and toward occupations that typically require postsecondary education.

Why Trump Won’t Keep His Promise to Create Jobs

Source: Matthew A. Winkler, Bloomberg View, August 29, 2017

President Donald Trump has been in office just seven months, but it’s not too soon to make this prediction: He’ll break his promise to create 25 million new jobs.

That’s because Trump inherited the strongest labor market in modern times, with record openings exceeding the supply of applicants. Today, corporate America is struggling to find the help it wants….

Disaster Unemployment Assistance: How Workers Can Access the Program After Hurricane Harvey

Source: National Employment Law Project (NELP), Fact Sheet, August 30, 2017

What is Disaster Unemployment Assistance (DUA)?
Disaster Unemployment Assistance (DUA), also referred to as Disaster Relief and Emergency Assistance, is a federal program that provides temporary financial assistance to individuals unemployed as a result of a “major disaster” declared by the president. As of August 25, 2017, a major disaster was declared due to Hurricane Harvey in 18 counties in Texas, and on August 30th another 11 counties in Texas were added to the declaration, making DUA benefits available to workers in the 29 counties listed below. As of August 30th, a major disaster has not yet been declared in Louisiana. For a current list of the states and counties, see FEMA’s website (http://www.fema.gov/disasters)….

What are the Basic Eligibility Requirements for DUA?
There are two major requirements for an individual to qualify for DUA: 1) The individual must be out of work as a “direct result” of a major disaster; and 2) The individual does not qualify for regular unemployment insurance (UI) from any state. Once found to be eligible for DUA, workers must actively look for work and accept suitable work offered them, not unlike UI recipients. In addition, the individual must show that for every week he or she is collecting DUA, his or her unemployment continues to be the direct result of the disaster, not other factors….

After Work: Automation and Employment Law, Part Three

Source: Cynthia Estlund, OnLabor blog, August 4, 2017

Automation and Work: A Path Forward in the Face of Uncertainty
For over a century, workers and their organizations have struggled to raise labor standards and expand employee rights and benefits. Whatever the benefits to workers and the society, to any one private firm those laws represent a tax on employing human labor, and part of the calculus in decisions to contract out work or to replace people with machines. A logical though dispiriting response to plausible predictions of escalating net job losses would be to find ways to unburden the employment relationship.

There are arguments against any such response to the automation threat, and I discuss them in my paper. But they are partial and qualified. If we remain concerned (as I do) that labor and employment laws are contributing in some measure to net job losses, we would do well to consider whether it is possible to reduce the legal tax on employing human labor without undermining the quality and rewards of work for all those who work for a living in the future. The beginning of an answer lies, I believe, in separating the question of what entitlements workers (or people) should have from the question of where the attendant costs should fall…..

Related:

After Work: Automation and Employment Law, Part One
Source: Cynthia Estlund, OnLabor blog, August 1, 2017

The labor world took notice when Andy Stern emerged from a years-long deep dive into the future of work, and concluded that the future will bring a lot less work. His book, Raising the Floor, helped to spur a debate over the universal basic income (UBI), including on this blog. But the underlying issue of technology-related job loss has not yet engaged the close attention of labor and employment law scholars. That should change. Even more than firms’ flight from direct employment through fissuring, their replacement of human labor with ever more capable and cost-effective technology threatens the foundations of economic and social life, and calls for a reexamination of prevailing approaches to regulation of employment.

I recently posted a paper on SSRN about the problem of automation and job loss. Here I will take up three of its points in highly condensed form. This post will briefly review the debate on automation and job loss. The second post will discuss the role of labor costs, including those attributable to labor and employment law, in motivating firms both to automate and to contract out labor needs through “fissuring.” The third post will ask what can be done within the boundaries of labor and employment law to address the risk of impending job losses, considering the high degree of uncertainty about that risk….

After Work: Automation and Employment Law, Part Two
Source: Cynthia Estlund, OnLabor blog, August 2, 2017

Automation and Job Loss: What’s Law Got To Do With It?
The challenge of automation is in many ways continuous with the challenges of “fissured” work – to use David Weil’s influential formulation. In particular, both trends are driven in significant part by the costs and risks of employing human beings. According to investment banker Steven Berkenfeld, CEOs these days ask, “’Can I automate it? If not, can I outsource it? If not, can I give it to an independent contractor?’ Hiring an employee is the last resort.”

Part of the cost of employing humans stems from labor and employment laws. Some laws entail predictable direct costs, such as payroll taxes for social insurance programs, minimum wage and overtime laws, and the “pay or play” mandate of the Affordable Care Act. Other laws raise the cost of employing people by injecting risk, like the risk of litigation under laws prohibiting discrimination, harassment, or retaliation. Large corporate compliance departments, costing billions of dollars per year, are devoted in part to avoiding or managing these risks and liabilities…..

The Promise of the State-Federal Partnership on Workforce and Job Training

Source: National Governors Association and the National Associations of State Workforce Liaisons and State Workforce Board Chairs, 2017

Report from the National Governors Association and the National Associations of State Workforce Liaisons and State Workforce Board Chairs on the importance of strong partnership between states and the federal government on workforce development.

The labor market in the US, 2000−2016

Source: Daniel S. Hamermesh, IZA World of Labor, April 2017

Recovery from the Great Recession is essentially complete, but there are difficult unemployment and wage issues

From the blog post:
A new IZA World of Labor report looking at the US labor market (2000-2016) finds a remarkable drop in the labor force participation rate; the nearly full recovery of unemployment from the depths of the Great Recession; and the continuing growth in post-inflation average earnings while earnings inequality continues to rise.

The report by IZA Network Coordinator Dan Hamermesh (Royal Holloway, University of London) looks at the development of the American labor market since before the 2001 recession. In the aggregate the US labor market is doing quite well today. Unemployment is currently below 5%, and real weekly earnings of full-time workers increased from the 2000 cyclical peak to the current period of near full employment.
Related:
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The Closing of the Jobs Gap: A Decade of Recession and Recovery

Source: Diane Whitmore Schanzenbach, Ryan Nunn, Lauren Bauer, Audrey Breitwieser, Brookings Institution, Hamilton Project, Economic Analysis, August 4, 2017

From the summary:
The Great Recession caused labor market devastation on a scale not seen for many decades. Millions of jobs were lost in the United States during 2008 and 2009, leaving the labor market with a hard road to recovery. Indeed, that recovery has required many years of job growth, and it was only in April 2014 that total employment reached its pre-recession level.

However, this milestone did not mark a return to pre-recession labor market conditions. Because the U.S. population is growing, simply reaching the previous number of jobs is not sufficient to return to pre-recession employment rates. At the same time, more baby boomers have entered retirement, somewhat offsetting the effects of population growth and reducing the number of jobs needed for a full economic recovery.

In order to accurately track the progress of the labor market recovery, The Hamilton Project developed a measure of labor market health—the “jobs gap”—that reflects changes in both the level and the demographic composition of the U.S. population (more details regarding the jobs gap methodology are provided in appendix A). Beginning in May of 2010, The Hamilton Project has calculated the number of jobs needed to return to the national employment rate prior to the Great Recession, accounting for population growth and aging.

Employment, Hours, and Earnings Consequences of Job Loss: US Evidence from the Displaced Workers Survey

Source: Henry S. Farber, Journal of Labor Economics 35, no. S1, July 2017
(subscription required)

From the abstract:
Data are used from the 1984–2016 Displaced Workers Surveys (DWS) to investigate the incidence and consequences of job loss, 1981–2015. These data show a record high rate of job loss in the Great Recession, with serious employment consequences for job losers, including very low rates of re-employment and difficulty finding full-time employment. The average reduction in weekly earnings for job losers making a full-time–full-time transition are relatively small, with a substantial minority reporting earning more on their new job than on the lost job. Most of the cost of job loss comes from difficulty finding new full-time employment.