Tag: labor market

The Fed: ObamaCare “Leading to Layoffs”

The Hill has the story:

The Federal Reserve on Wednesday released an edition of its so-called “beige book,” that said the 2010 healthcare law is being cited as a reason for layoffs and a slowdown in hiring.

“Employers in several Districts cited the unknown effects of the Affordable Care Act as reasons for planned layoffs and reluctance to hire more staff,” said the March 6 beige book, which examines economic conditions across various Federal Reserve districts across the country.

Or in other words, yes, ObamaCare will eliminate some 800,000 jobs.

America Does Not Have a ‘Genius Glut’

On Friday, Ross Eisenbrey of the Economic Policy Institute wrote an op-ed in the New York Times titled “America’s Genius Glut,” in which he argued that highly-skilled immigrants make highly skilled Americans poorer. 

A common way for highly-skilled immigrants to enter the United States is on the H-1B temporary worker visa. 58 percent of workers who received their H-1B in 2011 had either a masters, professional, or doctorate degree. The unemployment rate for all workers in America with a college degree or greater in January 2013 is 3.7 percent, lower than the 4 percent average unemployment rate for that educational cohort in 2012. That unemployment rate is also the lowest of all the educational cohorts recorded. 

Just over half of all H-1B workers are employed in the computer industry. There is a 3.9 percent unemployment rate for computer and mathematical occupations in January 2013, and an unemployment rate of 3.8 percent for all professional and related occupations. For selected computer-related occupations from the Bureau of Labor Statistics’ “Quarterly Census of Employment and Wages,” real wage growth from 2001 to 2011 has been fairly steady:   

 

 11 percent of H-1B visas go to engineers and architects but wage growth in those occupations has been fairly steady too:

 

Mr. Eisenbrey concludes that those rising incomes would rise faster if there were fewer highly-skilled immigrants. 

The unemployment rates for engineers and computer professionals are low but not as low as they used to be. There are a whole host of factors explaining that, but highly-skilled immigration is not likely to be one.  

Bad Signs from Mexico’s Incoming President

Last week I attended the annual meeting of the Economic Freedom Network organized by the Fraser Institute in Mexico City. But I was also on a mission: to find out what the deal is with Enrique Peña Nieto, the country’s incoming president.

After his election in July, many people asked me what to expect from Peña Nieto.  Is he committed to reforms? How’s he going to tackle drug violence? Is he an old dinosaur from the long-ruling and corrupt Institutional Revolutionary Party (PRI) with a fresh face and a good looking wife? I couldn’t come up with good answers even though I watched the presidential debates, followed the campaign closely, and read several good analyses on Peña Nieto and his team. Fortunately, I realized I wasn’t actually dropping the ball with my work. In Mexico, I could see first hand that nobody really knows what Peña Nieto is all about.

However, we might be getting some hints during this long five-month transition period. And it doesn’t look good. Reforma, a leading newspaper, reported yesterday that Peña Nieto and his team are studying the creation of six new cabinet departments for the following areas: telecommunications, women’s issues, fishing, science, and government affairs. This would be part of the first legislative initiatives that Peña Nieto would submit to Congress. Many people hoped that the new president would prioritize reforms to make Mexico’s economy more competitive. But it looks like swelling the Mexican bureaucracy will be top of the order for the incoming administration.

Perhaps the biggest test to Peña Nieto’s reformist mantle is the labor law reform introduced by outgoing president Felipe Calderón, from the conservative National Action Party (PAN). The reform aimed to loosen the country’s stringent labor laws to make it easier for employers to hire and fire workers. The law also introduced more transparency and accountability to Mexico’s powerful unions (a historic constituency of the PRI). A good analysis from the Economist Intelligence Unit can be found here.

If Peña Nieto were truly committed to reform, he would rally his PRI caucus in Congress to support the bill. Unfortunately, the PRI scrapped the parts of the bill that limited the power of the unions and watered down those that introduced more flexibility to the labor market. The bill, which passed the Chamber of Deputies and now will be discussed in the Senate, is still a step in the right direction, but it could’ve been much better. And the PRI could still make it worse in the upper house.

Mexico badly needs reforms to make its economy more competitive. The country had the second lowest per capita growth rate in Latin America in the previous decade, less than one percent per year. The economy is now picking up, but it’s still far from its potential. Mexico will not be joining the BRICs any time soon.

The main obstacle to Mexico’s economic potential is the lack of competition in key sectors: telecommunications, transportation, cement, energy, among others. According to The Economist, “opening up oil [to foreign investment] and reforming labour markets and competition law could raise the rate of growth by up to 2.5 percentage points.”

Unfortunately, Peña Nieto’s first signs as president don’t look promising. He seems committed not to reform, but to the status quo.

One-third of College Degrees Wasted?

The most recent, comprehensive Pew higher education survey has gotten a lot of coverage for its findings on how important the public thinks college is, its financial payoff for grads, etc. For some reason, though, by far the most interesting statistic in the report has gotten roughly zero play, either from Pew itself or media coverage of the report: “Among all college graduates, 33% say they are in a job that does not require a college degree.”

Wait. One-third of all college graduates are in jobs that don’t call for a college education? So one-third of all college degrees are quite possibly total economic wastes? (To be fair, no doubt some of those grads are looking for jobs requiring a degree, mitigating this somewhat. On the flip side, many jobs probably require a degree without actually requiring college-level skills, counterbalancing that.)

In light of this, can someone please tell me why President Obama wants the United States to lead the world in the precentage of its population with a college degree by 2020? And please, explain why Washington furnished over $113 billion in student aid in the 2009-10 academic year? I’d really like to know.