Category Archives: Unemployment

Why Aren’t U.S. Workers Working?

Source: Mary C. Daly, Joseph H. Pedtke, Nicolas Petrosky-Nadeau, and Annemarie Schweinert, Federal Reserve Bank of San Francisco, FRBSF Economic Letter 2018-24, November 13, 2018

Labor force participation among U.S. men and women ages 25 to 54 has been declining for nearly 20 years, a stark contrast with rising participation in Canada over this period. Three-fourths of the difference between the two countries can be explained by the growing gap in labor force attachment of women. A key factor is the extensive parental leave policies in Canada. If the United States could reverse the trend in participation of prime-age women to match Canada, it would see 5 million additional prime-age workers join the labor force.

Is the Quality of Nursing Homes Countercyclical? Evidence From 2001 Through 2015

Source: Sean Shenghsiu Huang, John R Bowblis, The Gerontologist, Advance Articles, Published: December 7, 2018
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From the abstract:
Background and Objectives:
To examine whether nursing homes (NHs) provide better quality when unemployment rates rise (countercyclical) and explore mechanisms contributing to the relationship between quality and unemployment rates.

Research Design and Methods:
The study uses the data on privately owned, freestanding NHs in the continental United States that span a period from 2001 through 2015. The empirical analysis relies on panel fixed-effect regressions with the key independent variable being the county-level unemployment rate. NH quality is measured using deficiencies, outcomes, and care process measures. We also examine nursing staff levels, as well as employee turnover and retention.

Results:
NHs have better quality when unemployment rates increase. Higher unemployment rates are associated with fewer deficiencies and lower deficiency scores. This countercyclical relationship is also found among other quality measures. In terms of mechanisms, we find higher nursing staff levels, lower employee turnover, and better workforce retention when unemployment rates rise. Improvement in staffing is likely contributing to better quality during recessions. Interestingly, these effects predominately occur in for-profit NHs for deficiencies and staffing levels.

Discussions and Implications:
NH quality is countercyclical. With near record-low unemployment rates in 2018, regulatory agencies should pay close attention to NH quality when and where the local economy registers strong growth. On the other hand, the finding of the unemployment rate–staffing/turnover relationship also suggests that policies increasing staffing and reducing employee turnover may not only improve NH quality but also have the potential to smooth quality fluctuations between business cycles.

Local government – Ohio, Michigan and Maryland: General Motors’ plant closures underscore the importance of economic diversity

Source: Francis A Mamo, Rachel Cortez, Gregory W. Lipitz, Alexandra S. Parker, Moody’s, Sector Comment, November 28, 2018
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On 26 November, General Motors Company (Baa3 stable) announced it will halt production at four US manufacturing plants as soon as March 2019. The closures are credit negative for several local governments in Ohio (Aa1 stable), Michigan (Aa1 stable) and Maryland (Aaa stable).

Collectively, the four plants employ more than 3,800 people and had a 2017 payroll of $480 million (see exhibit 1). All of the closures are credit negative for the affected local governments, but closure of the Lordstown plant in Warren, Ohio (Baa1 negative) will have a pronounced negative effect on Trumbull County’s (Aa3) employment base….

New York’s Experience after the Tipped Minimum Wage Increase – Restaurant worker wages, employment, and number of establishments have grown in the past two years.

Source: Institute for Policy Studies and Restaurant Opportunities Centers United, October 2018

A new analysis of U.S. Bureau of Labor Statistics wage and jobs data shows that in the last two years since raising the tipped minimum wage, New York state saw a significant boost in take home pay — wages and tips — earned by full-service restaurant workers and, contrary to predictions by minimum wage skeptics, an increase in both the number of full-service restaurant jobs and full-service restaurant establishments.

A joint project by the Institute for Policy Studies and Restaurant Opportunities Centers United, this research advances previous findings published in the Washington Post on the impact of the 2015 increase in the tipped minimum wage in New York state.

Why Are Unemployment Insurance Claims So Low?

Source: Dante DeAntonio, Regional Financial Review, Vol. 29 no. 2, October 2018
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Initial claims for unemployment insurance continue to fall at an impressive rate, and the level of claims is low by any historical comparison. While the timeliness and frequency of UI data make it useful as an early labor market signal, it is important to understand the factors that impact the data. In this paper we show that recent changes in state UI laws have worked to depress new UI filings during the current expansion by as many as 100,000 claims per month.

Why Aren’t U.S. Workers Working?

Source: Mary C. Daly, Joseph H. Pedtke, Nicolas Petrosky-Nadeau, and Annemarie Schweinert, Federal Reserve Bank of San Francisco, FRBSF Economic Letter, 2018-24, November 13, 2018

Labor force participation among U.S. men and women ages 25 to 54 has been declining for nearly 20 years, a stark contrast with rising participation in Canada over this period. Three-fourths of the difference between the two countries can be explained by the growing gap in labor force attachment of women. A key factor is the extensive parental leave policies in Canada. If the United States could reverse the trend in participation of prime-age women to match Canada, it would see 5 million additional prime-age workers join the labor force.

The decline in labor force participation of U.S. men and women ages 25 to 54 stands in stark contrast with other industrialized nations, where participation rates for prime-age workers have increased over time. In this Economic Letter, we show how labor force participation rates have diverged for men and women in the United States and Canada. We find that three-fourths of the difference in participation between the two countries can be explained by the growing gap in labor force attachment of women. We discuss how employment and social policies in Canada have made it easier for women to remain in the labor force while raising children. Our findings suggest that policy interventions to reduce the structural barriers that keep many women on the sidelines could bring millions of prime-age Americans into the labor force.

Regional Impacts of a Minimum Wage Hike: A Pennsylvania Case Study

Source: Shannon Brobst, Regional Financial Review, May 2018
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Eighteen U.S. states and 20 cities rang in 2018 with increases in their minimum wage, bringing back into the spotlight the debate about whether to raise the federal minimum, which has remained at $7.25 since 2009 (see Chart 1). The question of whether it should be increased receives many different answers from Republicans, Democrats, economists and non-professional observers. Some argue that increasing the cost of labor hurts the economy because it could lead to jobs cuts for low-paid workers. Raising the minimum wage increases businesses’ labor costs, and thus, the cost of producing a good or service. Higher production costs may cause employers to lay off workers in order to contain costs and remain profitable, and could cause marginally profitable small or struggling businesses to close. Others counter this argument stating that a higher minimum wage helps the economy by boosting incomes and does not materially affect employment. This paper examines the positive and negative effects of raising the minimum wage from $7.25 to $12 and $15 in Pennsylvania and discusses policy implications at the local and federal levels.

Are Reemployment Services Effective? Experimental Evidence from the Great Recession

Source: Marios Michaelides, Peter Mueser, Journal of Policy Analysis and Management, Volume 37, Issue 3, Summer 2018
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From the abstract:
We examine an experimental‐design reemployment program implemented in Nevada during the Great Recession that required Unemployment Insurance (UI) recipients to: (1) undergo an eligibility review to confirm they were qualified for benefits and actively searching for work and, if deemed eligible, (2) receive job‐counseling services. Our results show that the program expedited participant exit from UI, produced UI savings that exceeded program costs, and improved participant employment outcomes. Analyses of program effects on the UI exit likelihood show that the program’s effects are partly associated with increased participant exit up through the time when program activities were scheduled, reflecting voluntary exit of participants from UI to avoid program activities and disqualifications of participants who failed to meet eligibility requirements. In addition, the program induced substantial participant exit from UI in the period after participants fulfilled requirements and their interactions with the program had ended, suggesting that the job‐counseling services offered by the program may have helped participants to conduct more effective job searches. Our findings provide evidence that reemployment programs that combine an eligibility review with mandatory participation in job‐search services can be effective during recessions.

Great Recession, great recovery? Trends from the Current Population Survey

Source: Evan Cunningham, Monthly Labor Review, April 2018

This article uses data from the Current Population Survey to examine the state of the U.S. labor market 10 years after the start of the Great Recession of 2007–09. By December 2017, unemployment rates had returned to prerecession lows for people of all ages, genders, major race and ethnicity groups, and levels of educational attainment. However, the long-term decline in labor force participation continued during this recovery, while long-term unemployment and involuntary part-time employment remained elevated.