Source: Sean Gregory, Time, May 18, 2017
…. If Trump’s Carrier deal was a reminder of how the bully pulpit could be used to make the private sector bend, Rexnord’s closure shows its limits–and offers a lesson in the challenges of reversing a global economic trend decades in the making. …. Some 19.5 million Americans held manufacturing jobs in 1979, an all-time high. By 1983, the figure was already down to about 16.7 million. By 2024, according to projections from the Bureau of Labor Statistics, just 7.1% of Americans will work in manufacturing.
The reasons are many, but the prime culprits are globalization and automation. In 1991, China accounted for 2.3% of the world’s manufacturing exports. In 2001, the country joined the World Trade Organization, and by 2013, China’s share of global exports was 18.8%, according to a 2016 study in the Annual Review of Economics. Countries such as Mexico and the Philippines have also increased their exports. Labor in these markets tends to be substantially cheaper than in the U.S., and trade deals like NAFTA make it easy for American companies to produce goods in far-flung locales. To economists, however, America’s shrinking manufacturing jobs have less to do with free trade than with robots. ….
Source: Eleanor Krause and Isabel V. Sawhill, Brookings Institution, May 2017
From the summary:
For decades, the portion of prime-age men (ages 25 to 54) in the labor force has been in decline. More recently, the labor force participation rate of prime-age women has stagnated and also declined. This paper addresses the consequences of, and reasons for, these declines, especially among men. A subsequent effort will address appropriate policy responses.
Women’s increasing workforce participation through the late 1990s largely masked the precipitous decline in male participation rates. Men’s rates have fallen about 8 percentage points over the past 60 years. On both fronts, the U.S. is also falling behind other advanced economies. U.S. prime-age female participation fell from 6th to 17th of 22 OECD member countries between 1990 and 2010. Over the same period, the decline in the prime-age male participation rate was the second most severe of the OECD countries, and is now the third lowest among the 34 member countries. The U.S. trends are particularly pronounced for non-Hispanic black men and less-skilled adults. There is now an 11 percentage point gap in participation rates between men with a college degree and those with a high school degree or less—whereas 50 years ago, the two rates were very similar.
Explanations for these trends tend to focus either on the demand for workers or the supply of labor. Trade and technology have reduced the demand for certain types of work, particularly less-skilled labor in fields like manufacturing. Of the two, most economists believe that automation has played the larger role. Manufacturing’s share of GDP has remained relatively stable but, thanks in part to productivity improvements, the sector now employs only two-thirds as many people as it did 30 years ago. Technological change has widened the wage gap between skill levels. While a man with a high school degree earned about three-quarters of the wages of his college-educated counterpart in 1980, he now earns about half as much. At the same time that technology has made certain jobs obsolete, new jobs are being created in other areas (both high-wage managerial and technical jobs and low-wage service sector jobs), but these new jobs often require different skills or pay lower wages…..
Source: Josh Bivens and Hunter Blair, Economic Policy Institute, May 9, 2017
From the summary:
Cutting corporate tax rates will not create jobs or boost incomes for the vast majority of American families.
What proponents of corporate tax cuts argue: A central argument proponents of corporate tax cuts make is that U.S. corporations face higher tax rates than those of our peer countries; they claim that this differential hurts U.S. “competitiveness” (a word they rarely define) and discourages companies from investing in the U.S. Consequently, they further claim that cutting corporate tax rates would increase American companies’ “competitiveness,” which they imply (but rarely argue directly) would redound to the benefit of most American families.
What this report finds: We find their central argument—that U.S. corporations face high corporate taxes—to be empirically false. While U.S. statutory tax rates are higher, the effective tax rate paid by corporations is in fact roughly equivalent to the effective tax rates of our peer countries, due to loopholes in the U.S. tax code. Further, we find that even if the effective corporate tax rate were higher (if loopholes were closed), economic theory and data do not support the idea that cutting these rates would encourage further investment in the U.S. or benefit Americans in general; we find that such cuts would primarily benefit a small number of high-income capital owners while increasing the regressivity of the tax system overall.
Recommendations: If we wish to reform corporate tax policy to benefit the vast majority of Americans—and not just a wealthy few—we should not be talking about lowering corporate tax rates or offering other tax breaks to corporations; we should instead be focusing on closing loopholes in the system that have eroded the corporate income tax base, to ensure the corporate sector is paying its appropriate share of taxes…..
Source: Mike Maciag, Governing, April 24, 2017
Contrary to popular belief, most federal employees actually work outside of the D.C. metro area. See where and how vulnerable regional economies might be to reductions.
Source: National Academies of Sciences, Engineering, and Medicine, 2017
From the summary:
Recent years have yielded significant advances in computing and communication technologies, with profound impacts on society. Technology is transforming the way we work, play, and interact with others. From these technological capabilities, new industries, organizational forms, and business models are emerging.
Technological advances can create enormous economic and other benefits, but can also lead to significant changes for workers. IT and automation can change the way work is conducted, by augmenting or replacing workers in specific tasks. This can shift the demand for some types of human labor, eliminating some jobs and creating new ones. Information Technology and the U.S. Workforce explores the interactions between technological, economic, and societal trends and identifies possible near-term developments for work. This report emphasizes the need to understand and track these trends and develop strategies to inform, prepare for, and respond to changes in the labor market. It offers evaluations of what is known, notes open questions to be addressed, and identifies promising research pathways moving forward.
Source: Philip Calvert, Public Library Quarterly, Latest Articles, Published online: 04 Apr 2017
From the abstract:
Robots are becoming more commonly used in libraries. A robot that does shelf reading and reports the results to human staff is one example of a practical use of robotics in a library. Others have been used to retrieve large items such as boxes, but identifying and picking up small and varied objects such as books is still on the edge of what can be done. Devices using artificial intelligence can act as guides, or in some cases, as personal assistants for library customers. Some are answering questions and learning as they go. If robots can perform library work effectively and more cheaply than humans it is inevitable they will be more widely used.
Source: Martin Olsson, Joacim Tåg, Journal of Labor Economics, Ahead of Print, March 29, 2017
From the abstract:
Private equity firms are often criticized for laying off workers, but the evidence on who loses their jobs and why is scarce. This paper argues that explanations for job polarization also explain layoffs after private equity buyouts. Buyouts reduce agency problems, which triggers automation and offshoring. Using rich employer-employee data, we show that buyouts generally do not affect unemployment incidence. However, unemployment incidence doubles for workers in less productive firms who perform routine or offshorable job tasks. Job polarization is also much more marked among workers affected by buyouts than for the economy at large.
Source: Daron Acemoglu, Pascual Restrepo, National Bureau of Economic Research, NBER Working Paper No. 23285, March 2017
From the abstract:
As robots and other computer-assisted technologies take over tasks previously performed by labor, there is increasing concern about the future of jobs and wages. We analyze the effect of the increase in industrial robot usage between 1990 and 2007 on US local labor markets. Using a model in which robots compete against human labor in the production of different tasks, we show that robots may reduce employment and wages, and that the local labor market effects of robots can be estimated by regressing the change in employment and wages on the exposure to robots in each local labor market—defined from the national penetration of robots into each industry and the local distribution of employment across industries. Using this approach, we estimate large and robust negative effects of robots on employment and wages across commuting zones. We bolster this evidence by showing that the commuting zones most exposed to robots in the post-1990 era do not exhibit any differential trends before 1990. The impact of robots is distinct from the impact of imports from China and Mexico, the decline of routine jobs, offshoring, other types of IT capital, and the total capital stock (in fact, exposure to robots is only weakly correlated with these other variables). According to our estimates, one more robot per thousand workers reduces the employment to population ratio by about 0.18-0.34 percentage points and wages by 0.25-0.5 percent.
Source: Rebecca Roiphe, Georgetown Journal of Legal Ethics, Vol. 29, 2016
From the abstract:
Traditionally, professionalism conceived of the professions as central to democratic society. Because professionals gained their status through reputation not wealth, they were in the best position to suppress their own self-interest in order to ascertain and pursue the public good. This Article argues that this traditional understanding of the professions was lost as a market ideology took hold in the 1970s. Professionalism gradually became synonymous with the delivery of services. This Article draws on this intellectual history to argue that aspects of the traditional concept of professionalism can and should be revived today.
Source: Lucy Dadayan, Donald J. Boyd, Rockefeller Institute of Government, By The Numbers, March 2017
• Nationally, state and local government employment is 1.5 percent below its prior peak, while private sector employment is 6.4 percent above its prior peak.
• State government employment nationally is 2.5 percent below its peak level and local government employment is 1.3 percent below its peak level.
• State government non-education employment, for services such as corrections, hospitals and other health care, public welfare, and highways, has fared the worst among the government subsectors —- currently, 5.5 percent below its peak even though the population has grown 6.9 percent over the same period.
• Local government education and non-education employment are 2.0 percent and 0.8 percent below their respective prior peaks, while elementary and secondary enrollment has risen by more than 2.0 percent during the same period.
• The only subsector that has grown is state government education employment for universities, colleges, and similar services; here employment is up 1.2 percent above the prior peak, but still far weaker than in previous economic recoveries.
• Although state and local government employment did not decline as much during the Great Recession as private sector employment, it has been recovering far more slowly and has regained the jobs lost to the Great Recession.