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.
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….
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….
Being out of work seems to hurt health, but so do jobs that are stressful and unrewarding.
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…..
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…..
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.
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.
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.
Source: Henry S. Farber, Journal of Labor Economics 35, no. S1, July 2017
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.
Source: Michael Reich, Sylvia Allegretto, and Anna Godoey, University of California – Berkeley, Institute for Research on Labor and Employment, Center on Wage and Employment Dynamics (CWED), June 2017
From the abstract:
This brief on Seattle’s minimum wage experience represents the first in a series that CWED will be issuing on the effects of the current wave of minimum wage policies—those that range from $12 to $15. Upcoming CWED reports will present similar studies of Chicago, Oakland, San Francisco, San Jose and New York City, among others. The timing of these reports will depend in part upon when quality data become available. We focus here on Seattle because it was one of the early movers. …. Our results show that wages in food services did increase—indicating the policy achieved its goal—and our estimates of the wage increases are in line with the lion’s share of results in previous credible minimum wage studies. Wages increased much less among full-service restaurants, indicating that employers made use of the tip credit component of the law. Employment in food service, however, was not affected, even among the limited-service restaurants, many of them franchisees, for whom the policy was most binding. These findings extend our knowledge of minimum wage effects to policies as high as $13. …
Minimum Wage Increases, Wages, and Low-Wage Employment: Evidence from Seattle
Source: Ekaterina Jardim, Mark C. Long, Robert Plotnick, Emma van Inwegen, Jacob Vigdor, Hilary WethingNBER Working Paper No. 23532, June 2017
From the abstract:
This paper evaluates the wage, employment, and hours effects of the first and second phase-in of the Seattle Minimum Wage Ordinance, which raised the minimum wage from $9.47 to $11 per hour in 2015 and to $13 per hour in 2016. Using a variety of methods to analyze employment in all sectors paying below a specified real hourly rate, we conclude that the second wage increase to $13 reduced hours worked in low-wage jobs by around 9 percent, while hourly wages in such jobs increased by around 3 percent. Consequently, total payroll fell for such jobs, implying that the minimum wage ordinance lowered low-wage employees’ earnings by an average of $125 per month in 2016. Evidence attributes more modest effects to the first wage increase. We estimate an effect of zero when analyzing employment in the restaurant industry at all wage levels, comparable to many prior studies.
Five Flaws in a New Analysis of Seattle’s Minimum Wage
Source: Rachel West, Center for American Progress, June 28, 2017
A team of faculty and students at the University of Washington was tasked with assessing how Seattle’s 2014 minimum wage ordinance, which is gradually raising the city’s minimum wage to $15 per hour, is affecting low-wage workers. This week, the group released a working paper—without peer review—that looks at the ordinance’s first two phases, under which the minimum wage for most workers increased from $9.47 to $11 per hour in 2015 and then to $13 per hour in 2016.
Methodological flaws plague the group’s approach, causing them to draw conclusions wildly out of step with dozens of studies of similarly sized wage increases cited by both critics and proponents of higher minimum wages. The vast majority of rigorous, credible studies conclude that higher minimum wages have appreciably boosted workers’ earnings with little or no effects on employment. By contrast, the University of Washington researchers conclude that higher minimum wages not only reduced employment and hours worked in Seattle, but that the costs of the wage hike outweigh the benefits for the average low-wage worker—a finding at odds with the conclusions of even the most skeptical mainstream researchers. At the same time, the study’s results suggest—implausibly and largely inexplicably—that the wage hike to $13 per hour caused substantial growth in jobs paying more than $19 per hour in the restaurant industry. That’s just one of several questionable results that should give readers serious pause…..
Seattle and the (Methodology of the) Economics of Minimum Wage
Source: Benjamin Sachs, OnLabor blog, June 26, 2017
….Noam Scheiber also has a good story on the UW paper which lays out a critique worth mentioning here. In sum, the employment effects identified by the UW study might be due, not to Seattle’s minimum wage increase, but to a booming job market in which high-wage jobs are replacing low-wage jobs. On this theory, the employment “losses” in the low-wage sector that the UW study reports would actually just be people moving from low- to high-wage employment. …
How a Rising Minimum Wage Affects Jobs in Seattle
Source: Norm Scheiber, New York Times, June 26, 2017
Seattle and the Economics of Minimum Wage
Source: Benjamin Sachs, OnLabor blog, June 26, 2017
….There are, as always, caveats. First, the Washington paper has yet to be subject to peer review – it was released online as an NBER working paper. Second, another recent study – this one from Berkeley – found that the Seattle ordinance “raises pay without costing jobs.” As FiveThirtyEight also reports, the Berkeley study focused exclusively on the fast food industry, and the Washington study itself found no employment effects of the minimum wage hike on the restaurant industry. One possibility, then, is that the Washington study’s broader focus is picking up effects that are missed by the (more traditional) focus on the restaurant industry. Many economists, including Jared Bernstein, however, defend the methodological decision to focus a minimum wage study on restaurants. There are also, as always, additional methodological criticisms of the Washington study. (EPI has a press release and paper that identifies a number of these concerns.)
Then there is an important caveat in the other direction: Seattle might be a city in the best position to absorb minimum wage increases, which means – if the Washington study is right – that the employment effects could be even stronger elsewhere. ….
The “high road” Seattle labor market and the effects of the minimum wage increase – Data limitations and methodological problems bias new analysis of Seattle’s minimum wage increase
Source: Ben Zipperer and John Schmitt, Economic Policy Institute, June 26, 2017
From the summary:
A team of researchers at the University of Washington has released an analysis of the economic impacts of the 2015 and 2016 increases in the Seattle minimum wage. The study, Jardim et al. (2017), looks at the first two stages of a phased-in set of increases that will eventually take the minimum wage in the city to $15.00 per hour. The authors of the study argue that they find large job losses associated with these first two rounds of increases, in which the minimum wage for most workers rose from $9.47 per hour to $11.00 per hour in April 2015 and then to $13.00 per hour in January 2016.
The authors’ analysis, however, suffers from a number of data and methodological problems that bias the study in the direction of finding job loss, even where there may have been no job loss at all. One initial indicator of these problems is that the estimated employment losses in the Seattle study lie far outside even those generally suggested by mainstream critics of the minimum wage (see, for example, Neumark and Wascher )—as the authors themselves acknowledge.
In this report, we describe the most important shortcomings in the new analysis and make suggestions for how the researchers can attempt to correct for these problems in future iterations of their long-term study of the Seattle minimum wage.
See also: press release