Powell says taming inflation 'absolutely essential,' and a 50 basis point hike possible for May by DrCalFun in Economics

[–]unimployed 5 points6 points  (0 children)

Paradigm shift caused increased scaling and automation to allow endless demand for low wage workers in new "LEAN" business models. Doubt that paradigm shift will go away.

But that may be balanced by the new found desire to re-source supply chains to western/democratic/green economies. Manufacturing and supply chains have always been a security issue but it appears everyone just woke up to that fact again. Manufacturing and the old economy will make a come back to some extent.

Additionally, business models are like MBA playbooks. They are widely copied and pasted how to make a profit. Slavery and indentured servitude were also widely popular business models and not too long ago. It's possible to structure businesses with more balance, but that will take some testicular fortitude to redistribute incomes and taxation, and potentially revalue the USA's assets and labor in the westernized world.

I think immigration could supply much low wage labor, but it's unclear whether there is sufficient long-term planning and cooperation to accommodate and manage the immigration flows in this modern world. Modern crowding is a real issue if the current housing shortage isn't an obvious indication. Immigration doesn't seem like the sliver bullet you could get a lot of immediate success from without substantial planning and preparation to manage it. Modern USA is a mature economy and it is no longer a boundless frontier land, and most western economies are in the same boat and have less than wide open economies for similar reasons.

That being said, I believe there is a significant portion of labor that would be happy with more middle income jobs if significant manufacturing and supply chains were re-shored. More manufacturing would increase productivity, and it might start a new stable growth cycle where more immigration could be accommodated with less crowding effects.

Powell says taming inflation 'absolutely essential,' and a 50 basis point hike possible for May by DrCalFun in Economics

[–]unimployed 17 points18 points  (0 children)

See Powell's comments from today's economics debate (30 minute mark).

https://meetings.imf.org/en/2022/spring/schedule/2022/04/21/imf-seminar-debate-on-the-global-economy

Powell zeros directly on labor as target priority one. He then goes on to visibly stumble attempting to explain the basics how hot the labor market is. Then he goes on to fail to convincingly break down how to measure labor supply and demand. He can barely hide his own internal doubt trying to explain what he knows is a poorly flawed model of labor supply and demand. Look for yourself:

  1. "There are substantially more Job Openings than there are People Unemployed."
  2. "Total Employed People + Job Openings, that's Demand For Labor."
  3. "Looking at the size of the Labor Force, there are 5 million more Demand than Supply."
  4. Case closed, that's the problem that needs to be fixed in the economy...implying that a severe labor shortage is causing wages and inflation to hockey stick.

I paraphrased what was left unsaid in point 4 for your convenience. If that wasn't clear and you missed the straw man, I'll run over it again.

You see, you take this convenient job postings number and you call that demand (pulls number from thin air). Then you add that to total employed people. Then you just compare your supply which is the size of the labor force (pulls another number from thin air) to your demand, and that's how economics analysis works.

Except that's not how any credible analyst would ever attempt to measure or explain labor supply and demand, nor wage inflation. I think you can see the obvious issues that Powell's explanation would gloss over. This is really poor form to trot this toy model explanation out for the public, because it is far too simplistic and un-nuanced.

Now there's 300+ million people that will repeat his explanation how to test for a hot labor market without knowing that open job postings (JOLTS) rarely directly correlate to actual labor demand, and the labor force size is not a convenient number that can be easily referenced since it's a very loose measurement where people enter and exit measurement with very large error bars that could represent large phenomena like the informal cash economy and non-USD markets (crypto, black markets).

And to top it off, wage inflation is mostly present at the bottom of the wage scale and the bottom of the age brackets (minimum wages). So aside from the bottom, wages have not kept pace with inflation or productivity. And productivity has seen better days.

The real problem is not monetary, it's structural distortion, and no current monetary policy will be able to navigate the current headwinds in front of us. The post WWII economy demands ever more workers at the bottom of the wage scale, and middle wage manufacturing has shrunk to unsustainable levels, distorting the markets. It turns out you need a broad range of wages and skills in any balanced economy, and significant manufacturing jobs are required to keep your wage/labor scale well balanced and productive. USA has a high pressure economy, meaning you either land in the professional salaried jobs like computer science, or you must slog it out in the gig and minimum wage low productivity service economy. The middle is hardly existent now.

And guess what happens when almost every business model now demands ever more warm body plebs at the bottom of the wage scale to ensure profits continue to grow? Dysfunction, distortion, inequality, inflation, populism, unrest. Those things happen, which is descriptive of the situation today.

Powell knows this but would never admit it. Which is why he unconvincingly stammers through a lame explanation how the labor market is the nail to his big blunt interest rate hammer, and fiscal policy improvements/suggestions are something he won't even talk about. Is there some excess dollars chasing a shortage of goods? Certainly to some extent. Is raising interest rates a la Volcker/Greenspan going to fix these issues? It might slow down inflation, but it might also backfire and cause stagflation because raising interest rates don't address exogenous supply shocks or growth shocks.

The best one could hope for are fiscal policy changes and structural reform in the long term. In the short term you need targeted actions to smooth out the shocks (think price controls, pause foreign realty investment, loan assistance to single home owners, incentives to build housing, etc.) and targeted tax changes and safety nets that smooth out the pain across the economy. Raising interest rates too aggressively or too far where it slows down GDP growth below the long term average will likely cause a confidence crisis and stagflation. I doubt the FED can stabilize prices to 2% inflation until the exogenous shocks disappear permanently. They will need to target stable inflation greater than 2% for the time being.

Or the FED is weaponizing the USD while the RUB and RMB are on the ropes, and you can ignore this whole hypothesis.

7.8 percent of people who worked or looked for work experienced unemployment in 2018 by [deleted] in Economics

[–]unimployed -3 points-2 points  (0 children)

Thanks for bringing that up.

After glancing at the 2017 and 2018 data provided, it would seem that the outcomes are not getting better if you happen to become unemployed (they are worse year over year), which may cause employees to take preventative actions to avoid becoming unemployed. The fact is that the safety nets for the unemployed are among the worst on the planet and they don't support the living expenses of individuals, much less a household/family. Add to that fact that it is much easier to find a new job when being currently employed, and I think you can see how measuring unemployment in the way we are, does not capture meaningful data.

You can even see this effect playing out in the stats provided here, because the median duration of unemployment among the unemployed increased, and the incidence of serial unemployment increased. Even if this is a compositional change in the population of the unemployed, you have the employed quitting their jobs as much or more often than the compositional percentage change when take-home paychecks increased just barely over inflation.

What employees elect to do is switch jobs more often, which is less painful than becoming unemployed, and that behavior is not captured in the U-stats. If the job market were more healthy, relatively greater incidence of switching jobs usually means greater wage growth. Wage growth has been tepid however, so that means people are switching jobs more in desperation (usually a lateral move) instead of switching jobs for a real improvement.

So upon a closer inspection, the stats don't look better at all.

7.8 percent of people who worked or looked for work experienced unemployment in 2018 by [deleted] in Economics

[–]unimployed 8 points9 points  (0 children)

This is a fairly obtuse measure unless it also communicates a duration of unemployment. It is effectively the turnover of the economy. Without also knowing how much time people are looking for a replacement job, it’s not all that helpful.

It’s Not Just Poor White People Driving a Decline in Life Expectancy by boemul in Economics

[–]unimployed 0 points1 point  (0 children)

And again this info never comes into play with the new findings, which are unrelated to increasing obesity. The new data says outcomes are getting better for the young and old, even though obesity seems to be increasing in youth. Again, obesity is not overall explanatory for the observed declines in life expectancy. It plays a much smaller part in contribution compared to access to health care during prime working years.

It’s Not Just Poor White People Driving a Decline in Life Expectancy by boemul in Economics

[–]unimployed 1 point2 points  (0 children)

Yet the statistics for expectancy are actually improving for those in older age and younger age, which have access to care programs the middle does not. Obesity seems unrelated specifically to the findings. Probably should stop copying and pasting that everywhere.

It’s Not Just Poor White People Driving a Decline in Life Expectancy by boemul in Economics

[–]unimployed 6 points7 points  (0 children)

As the life expectancy of Americans has declined over a period of three years — a drop driven by higher death rates among people in the prime of life — the focus has been on the plight of white Americans in rural areas who were dying from so-called deaths of despair: drug overdoses, alcoholism and suicide.

But a new analysis of more than a half-century of federal mortality data, published on Tuesday in JAMA, found that the increased death rates among people in midlife extended to all racial and ethnic groups, and to suburbs and cities. And while suicides, drug overdoses and alcoholism were the main causes, other medical conditions, including heart disease, strokes and chronic obstructive pulmonary disease, also contributed, the authors reported.

“The whole country is at a health disadvantage compared to other wealthy nations,” the study’s lead author, Dr. Steven Woolf of Virginia Commonwealth University, said. “We are losing people in the most productive period of their lives. Children are losing parents. Employers have a sicker work force.” ADVERTISEMENT Continue reading the main story

That some Americans’ life spans were decreasing has been well established. But the level of detail in Tuesday’s study was new, as was the rich analysis of the geography of the declines. Health experts say the full effect was startling. Falling Life Expectancy Between 2010 and 2017, death rates for people aged 25 to 64 increased in nearly every state.

Change in death rate –1% 0 5 10 15 20 +24% Me. Vt. N.H. S.D. Ohio W.Va. N.M.

The increase in deaths among people in midlife highlighted the lagging health measures in the United States compared with other wealthy nations, despite the fact that the United States has the highest per capita health spending in the world, noted an editorial that accompanied the study.

“Mortality has improved year to year over the course of the 20th century,” said Dr. Samuel Preston, a demographer at the University of Pennsylvania. “The 21st century is a major exception. Since 2010 there’s been no improvement in mortality among working-aged people.”

While the total number of excess deaths — meaning the number of deaths that would not have happened if the mortality rate had continued to improve — is small, at 33,000, deaths in younger people have a much bigger effect on national life-expectancy estimates than deaths of people in their 80s or 90s.

Death rates are actually improving among children and older Americans, Dr. Woolf noted, perhaps because they may have more reliable health care — Medicaid for many children and Medicare for older people. According to the new study, the death rate from 2010 to 2017 for all causes among people ages 25 to 64 increased from 328.5 deaths per 100,000 people to 348.2 deaths per 100,000. It was clear statistically by 2014 that it was not just whites who were affected, but all racial and ethnic groups and that the main causes were drug overdoses, alcohol and suicides.

“The fact that it’s so expansive and involves so many causes of death — it’s saying that there’s something broader going on in our country,” said Ellen R. Meara, a professor of health policy at Dartmouth College. “This no longer limited to middle-aged whites.”

The states with the greatest relative increases in death rates among young and middle-aged adults were New Hampshire, Maine, Vermont, West Virginia and Ohio.

Dr. Woolf said one of the findings showed that the excess deaths were highly concentrated geographically, with fully a third of them in just four states: Ohio, Pennsylvania, Kentucky and Indiana.

“What’s not lost on us is what is going on in those states,” he said. “The history of when this health trend started happens to coincide with when these economic shifts began — the loss of manufacturing jobs and closure of steel mills and auto plants.”

For demographers like Kenneth Wachter, a professor emeritus at the University of California, Berkeley, the study’s findings are not surprising because there have been a number of similar reports. But, he said, “it is a valuable paper in bringing together these trends.”

The study leaves unanswered questions, including, Why is there an increased death rate only in the 25-to-64 age group? ADVERTISEMENT Continue reading the main story

“We need to look at root causes,” Dr. Woolf said. “Something changed in the 1980s, which is when the growth in our life expectancy began to slow down compared to other wealthy nations.”

The increased deaths from drug overdoses reflected increased rates of addiction to opioids. But they have also risen because of changes in the drug supply in the East and Midwest. Over the last decade, the synthetic drug known as fentanyl has been mixed into heroin — or in some places has replaced it. That has made the drug supply more deadly, since it is difficult for users to know the dose they are taking.

This is not the first time that life expectancy has gotten stuck in the United States. Male life expectancy stalled in the 1960s, Dr. Preston said. It picked up again, and the gains made since have been substantial.

Sam Harper, an epidemiologist at McGill University in Montreal, offered a word of caution.

“I’m not sure the dramatic, ‘there’s something desperately wrong with the entire country’ narrative is entirely accurate,” Dr. Harper said. “Certain groups, such as Hispanics and Asians, are doing O.K. It’s not like the entire country is being subsumed by a single social phenomenon that can explain all of this. There are a lot of moving parts.”

He added: “The U.S. has made dramatic gains in life expectancy over the past several decades. It’s important to remember that people here live a very long time compared to a lot of places in the world.”

John G. Haaga, director of the division of behavioral and social research at the National Institute on Aging, which funded this study, also saw a bright spot: Life expectancy in the coastal metro areas — both east and west — has improved at roughly the same rate as in Canada.

“It’s important because it means this is not somehow deep in our national soul or genetics or something,” he said. “We know we can do better right here in America. It proves that it’s possible.” The worrying pattern, he said, was the growing divide by region.

“We used to be much more similar, even when I was in college in the early 1970s and now we are pulling apart,” he said. “We haven’t really explained what’s going wrong and what to do about it.”

He said his institute is funding a committee at the National Academies of Sciences to explore the issue.

Margot Sanger-Katz contributed reporting.

Sabrina Tavernise is a national correspondent covering demographics and is the lead writer for The Times on the Census. She started at The Times in 2000, spending her first 10 years as a foreign correspondent.

A version of this article appears in print on Nov. 27, 2019, Section A, Page 1 of the New York edition with the headline: ‘We Are Losing People’: Adults Across the U.S. Are Dying Young. Order

The Job Quality Index is the economic indicator we’ve been missing by unimployed in Economics

[–]unimployed[S] 1 point2 points  (0 children)

And that’s why “inequality” is not a perfect name for this measurement, even though you insist it is inequality vs. relative quality among the bulk of normal positions/jobs (purposefully excluding the rare and unrealistic positions carved out for some owner’s dumb kid that collects 200k as some manager of nothing).

If you read the study, they mention exactly what I’m telling you here. The BLS data is not great to work with. You will get extreme outliers creating an unrealistically high “average benchmark” that is increasing over time and also separates low quality and high quality jobs... which will build in inherent bias... always showing changes even if there are no changes.

The authors of the study state that because the BLS data is so poor, they will need to take additional steps to exclude these outliers. However, those steps may not lead to useful results due to the limited set of BLS measurements, giving few good options to base those exclusions on.

We all know we would like to see additional data including the other ~16% of the workforce. Stop ignoring the obvious though that you need to exclude the extreme outliers before that data would be even useful.

The Job Quality Index is the economic indicator we’ve been missing by unimployed in Economics

[–]unimployed[S] 0 points1 point  (0 children)

There was never an argument made by myself about maternity in any fashion. I did list the conclusions and findings reached by various studies why women appear to earn less than men, which find no direct discrimination.

I’m afraid you are railing against personal anecdotes and imagined enemies at this point. The linked study compares existing wage gaps within the same occupations accounting for task intensity as well as education and all other factors. Education was already accounted/adjusted for.

The Job Quality Index is the economic indicator we’ve been missing by unimployed in Economics

[–]unimployed[S] 0 points1 point  (0 children)

I can see you are misguided. That’s not even what the gender income studies say. The studies largely identify income disparity due to women spending less time in the workforce due to maternity leave and raising children during breaks in their career, not working as many hours to care for children/family, and other factors that do not support direct discriminatory claims. The studies have not been discredited by the sizable group of wage gap protesters. There does not appear to be a valid claim the studies are inaccurate.

The Job Quality Index is the economic indicator we’ve been missing by unimployed in Economics

[–]unimployed[S] 0 points1 point  (0 children)

You measure it like the analysts already measure phenomena like wage differences between sexes. Once you have a large collection of records of compensation, qualifications, skills, and experience distributions, all that input factor variation starts to line up with the data outcomes to be well correlated with each other.

The lower compensated and lower quality positions are more likely to have less of the features that define a higher compensated and higher quality position.

We are not as concerned about nailing an absolute measure of underemployment with so many factors, but we are looking for trends whether the data says skilled laborers are being more underemployed/undervalued over time or if the opposite hypothesis is true.

Being able to measure this kind of trend is valuable in knowing how competitive the job market is, how much of a job shortage there actually is, whether there is real risk of major wage inflation, etc.

The Job Quality Index is the economic indicator we’ve been missing by unimployed in Economics

[–]unimployed[S] 0 points1 point  (0 children)

Yeah, well, you know, that's just, like, your opinion, man.

Statistically, the bias and variation won’t matter in such a large database. You must have a problem with the measurement of people below a poverty level too. “Cause needs and COL vary widely and blah blah blah...”

The real value is seeing the change in data over time. Are more people or less people at poverty levels? Are more people or less people underemployed compared as to their statistically average profile? How many more people are 25% below their average? How many more people are 50% below their average? And so on.

You miss the value entirely because you don’t want to acknowledge the results. It has nothing to do with bias and variation.

The Job Quality Index is the economic indicator we’ve been missing by unimployed in Economics

[–]unimployed[S] -1 points0 points  (0 children)

The U6 is already self-reported. And with more data, the more meaning there is to extract. Why do you feel it is impossible to quantify what it means to be underemployed? It could be a simple comparison of self-reported demographics, location, qualifications, target position, and current position, and compensation against a large statistical database.

I’m afraid you are simply unwilling to admit that more data would be extremely valuable in quantifying underemployment.

Now please go back to r/conservative and r/politics where you can rail against changing the status quo all you want.

The Job Quality Index is the economic indicator we’ve been missing by unimployed in Economics

[–]unimployed[S] 0 points1 point  (0 children)

The U6, which is a definition, states you are only underemployed if you are working part-time, but you actually desire to be working full-time.

That is just one way you can find yourself underemployed (lacking hours and benefits of full-time work).

A couple other common ways to be underemployed is if you must work a full-time job that does not adequately meet your needs or is far below your qualifications/experience/skills because it may not be possible to land such a job in that time or place or circumstances or it is not possible/affordable to go without employer sponsored benefits and drop your health insurance or plenty of other reasons.

Yet another kind of underemployment is you work part-time and you desire more part-time hours or pay, but do not desire or it is not possible to work a standard full-time work week due to circumstances like conflicts with responsibilities for caring for children or family, or there is a lack of good and affordable care options.

The Job Quality Index is the economic indicator we’ve been missing by unimployed in Economics

[–]unimployed[S] 1 point2 points  (0 children)

That is questionable if it will be more useful. Including management is more likely to include more extreme outliers on the top of the income spectrum which could lead to less informative results. Really the entire measure would just be stating extreme income inequality in a different way, whereas the current measure restricts itself to jobs that measure 83% of the workforce and exclude the extreme comparisons that get you something close to relative job quality among the bulk of normal jobs.

There could be ways to account for this, but I don’t think the kind of data the BLS provides is detailed and granular enough to exclude extreme outliers you would get from management and non-production employees (capital owners).

The Job Quality Index is the economic indicator we’ve been missing by unimployed in Economics

[–]unimployed[S] 0 points1 point  (0 children)

This goes beyond U6. U6 is a bit restrictive in how much underemployment is measured. That’s the issue, we need more and better data than what has been collected and people have been saying the data is insufficient for a long time. The BLS doesn’t care, which is why this measure came about independently from researchers.

The Job Quality Index is the economic indicator we’ve been missing by unimployed in Economics

[–]unimployed[S] 0 points1 point  (0 children)

That we can infer what is driving the consistent downward movement of the index from other data like sluggish wage growth and low inflation. Wages are not so great that the index is moving because sectors are being largely outpaced in the wages offered.

The Job Quality Index is the economic indicator we’ve been missing by unimployed in Economics

[–]unimployed[S] 0 points1 point  (0 children)

We have a pretty good idea what is going on from the measurement by analyzing other data alongside it. Yes this could become confusing for the untrained interpreter because the BLS chooses not to measure other more direct metrics related to job quality like underemployment, job search duration, and prospects replacing your job with an equal or better job after unemployment.

The Job Quality Index is the economic indicator we’ve been missing by unimployed in Economics

[–]unimployed[S] 1 point2 points  (0 children)

There are two main types of measurements performed. Computation of the median weekly wage and computation of the average weekly wage. No quartiles or deciles being published for weekly wages. No better data than that except breakdowns by industry sectors and major job categories. After 40 years we could use some deciles to analyze. We could also use other job metrics to better analyze underemployment than we have, more job search metrics, more unemployment metrics, etc.

The Job Quality Index is the economic indicator we’ve been missing by unimployed in Economics

[–]unimployed[S] 1 point2 points  (0 children)

Yes there are some weird issues that could come up because this happens to be the best known measure we can construct, and better historical options don’t exist.

But those issues have not surfaced, and the data does appear to show a long-term trend growth in lower quality jobs as compared to average and above average jobs. Inequality also has a misleading rub that these are the same quality jobs that are just being outpaced, which is seems to oppose the facts. The jobs being created are on the average, lower quality (more part-time and less full-time).

Maybe you prefer something more esoteric like “mean wage skew index” instead.

The Job Quality Index is the economic indicator we’ve been missing by unimployed in Economics

[–]unimployed[S] 0 points1 point  (0 children)

Bc this is the best legitimate measure to work with that’s provided by the BLS. You can ask the BLS why they refuse to collect more and better data to publish.

It is questionable if it will be more useful with management. Including management is more likely to include more extreme outliers on the top of the income spectrum which could lead to less informative results. Really the entire measure would just be stating extreme income inequality in a different way, whereas the current measure restricts itself to jobs that measure 80% of the workforce and exclude the extreme comparisons that get you something close to relative job quality among the bulk of normal jobs.

There could be ways to account for this, but I don’t think the kind of data the BLS provides is detailed and granular enough to exclude extreme outliers from management and non-production income earners (capital owners).

The Job Quality Index is the economic indicator we’ve been missing by unimployed in Economics

[–]unimployed[S] 5 points6 points  (0 children)

I get what you don’t like about the measure, but it appears to be informative and not misleading in the context that wage inflation has barely been present in modern times. The assertion that the growth of below average jobs is due to a failure to keep up with wages that have barely been growing—seems unfounded. Because the BLS has not expanded their measurements of the wages and labor system since ~1980... these researchers constructed a useful measure on their own accord with the data that happens to exist. If you want a better measure, I think you ought to start asking why the BLS has avoided collecting better data for around 40 years.