Tag: labor

France at the Brink (Again)?

This Sunday, French voters will return to the polls to decide the country’s next president. Last month’s first-round vote reduced the field to two unconventional candidates: Emmanuel Macron, formerly a top official of the left-wing Parti Socialiste and now leader of the fledgling En Marche! party; and Marine Le Pen, until recently the leader of the nationalist-right Front National.

Both candidates are unconventional not just because their parties have never held political power, but because the candidates have fashioned themselves as populist/outsider champions of downtrodden workers. Granted, sans-cullottes appeals are standard fare in French politics, but they have renewed force in this election, following a half-decade of French unemployment hovering around 10% and with youth unemployment (under age 25) well above 20%.

French employment and the country’s overall economy have sagged before, of course. U.S. observers often attribute those downturns in part to France’s labor laws, which they say (with irony) protect current workers by discouraging employers from creating new jobs. But French employment and the country’s economy have also surged before; typically France is Europe’s 2nd largest economy, after Germany. The past several decades have heard many predictions that France has reached “the end of the road” (to borrow from Ronald Reagan in 1964) unless it reforms its labor, entitlements, and other domestic policies, but neither economic doom nor dramatic reform has occurred.

Université du Québec en Outaouais economist Pierre Lemieux explored this in last fall’s cover story for Regulation magazine. It’s a great read if you want to learn more about what has led to France’s current conditions and what may lie ahead.

Women’s Attitudes on the Gender Pay Gap May Surprise You

Today is Equal Pay Day, the day that marks how far into the next year women on average have to work to bring home the same income men earned in the previous year. In light of Equal Pay Day I published an op-ed in the Washington Examiner that looks at women’s opinions about the gender pay gap. What I found might surprise you:

Pew Research Center survey found that 62 percent of women believe that women “generally” get paid less than men for doing the same work. However, when asked about their own companies, far fewer — just 14 percent total — believe women are getting paid less than men where they work, and 17 percent say women have fewer opportunities for promotions where they work.

These are nearly 50-point shifts in perception from what women believe is generally happening in society at-large, and what they collectively report is happening based on their experiences in their own jobs.

This in no way discounts the negative experiences women have had, and we should not shy from denouncing inequitable treatment. Yet these data also reveal that although most women believe they are being treated fairly, they also believe that most other women aren’t.

These data indicate that women have come to believe the myth that women are getting paid less than men for doing the same work. However, academic studies show that gender discrimination is not largely influencing wages, as I explain in the op-ed:

Although Census data show that women make less money on average than men, this fails to consider any information about how women and men choose to pursue a work/life balance, whether they enter a career that requires 80-hour work weeks or 40-hour work weeks, whether they take time out of the workforce to raise children, how much education they attain, whether they go into careers like investment banking or education, surgery or nursing, etc.

Studies that take these other factors into account find that the gender pay gap narrows to about 95 cents on the dollar. The remaining 5 cent difference might be due to discrimination, or it might be due to differences in salary negotiations, or other reasons. Harvard economist Claudia Goldin writes, “The gender gap in pay would be considerably reduced and might even vanish if firms did not have an incentive to disproportionately reward individuals who worked long hours and who worked particular hours.”

The Pew Survey found several disconnects between what women believe is causing the gender pay gap and the empirical research. First, Pew found that 54% of women believe that gender discrimination is a “major reason” for the pay gap. Although gender discrimination in pay can occur and should be sharply rebuked, research finds it is not significantly impacting wages.

Second, although differences in the number of hours men and women work (and when those hours are worked) is a significant driver of the wage gap, most women don’t find this believable. Only 28% thought this was a “major reason” that women on average earn less than men. Perhaps it sounds like one is accusing women of being lazy. Just because men on average work more hours in an office setting doesn’t mean women aren’t working the same or more hours when you combine hours worked in the office and taking care of family and home responsibilities.

Women responded better to the idea that men and women on average make different choices about how to balance work and family responsibilities and that might explain differences in pay. In fact, this was the most likely reason selected with 60% of women saying it was a major reason men and women earn different incomes.

As we talk about Equal Pay Day and the gender pay gap, it’s important to keep in mind both the empirical facts and where people are coming from. Some women have experienced discrimination in their jobs and such treatment should be condemned. We also need to be mindful about how we explain the sources of the gender pay gap, and avoid suggesting women aren’t working as hard as men.

Furthermore, in light of Equal Pay Day, we should point out the potential harms caused to women by perpetuating the idea that there is widespread injustice set against them. If women believe the deck is stacked against them regardless of their choices, this risks undermining risk-taking, accountability, and initiative. 

You can read the whole op-ed at the Washington Examiner here.

“The China Shock” Implicates Domestic Policies, Not Trade

A National Bureau of Economic Research working paper by David Autor, David Dorn and Gordon Hanson, titled “The China Shock: Learning from Labor Market Adjustment to Large Changes in Trade,” has created Piketty-like buzz in U.S. trade policy circles this year.  Among the paper’s findings is that the growth of imports from China between 1999 and 2011 caused a U.S. employment decline of 2.4 million workers, and that wages and employment prospects for those who lost jobs remained depressed for many years after the initial effect. 

While commentators on the left have trumpeted these findings as some long-awaited refutation of Adam Smith and David Ricardo, the authors have distanced themselves from those conclusions, portraying their analysis as an indictment of a previously prevailing economic consensus that the costs of labor market adjustment to increased trade would be relatively subdued (although I’m skeptical that such a consensus ever existed). But in a year when trade has been scapegoated for nearly everything perceived to be wrong in society, the release of this paper no doubt reinforced fears – and fueled demagogic rants – about trade and globalization being scourges to contain, and even eradicate.

Last week, Alan Reynolds explained why we should take Autor, et. al.’s job-loss figures with a pinch of salt, but there is an even more fundamental point to make here. That is: Trade has one role to perform – to grow the economic pie. Trade fulfills that role by allowing us to specialize. By expanding the size of markets to enable more refined specialization and economies of scale, trade enables us to produce and, thus, consume more.  Nothing more is required of trade. Nothing!

Still, politicians, media, and other commentators blame trade for an allegedly unfair distribution of that pie and for the persistence of frictions in domestic labor markets. But reducing those frictions and managing distribution of the larger economic pie are not matters for trade policy.  They are matters for domestic policy. Trade does its job. Policymakers must do their jobs, too.

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Another Lesson from Bastiat: So-Called Employment Protection Legislation Is Bad News for Workers

Frederic Bastiat, the great French economist (yes, such creatures used to exist) from the 1800s, famously observed that a good economist always considers both the “seen” and “unseen” consequences of any action.

A sloppy economist looks at the recipients of government programs and declares that the economy will be stimulated by this additional money that is easily seen, whereas a good economist recognizes that the government can’t redistribute money without doing unseen damage by first taxing or borrowing it from the private sector.

A sloppy economist looks at bailouts and declares that the economy will be stronger because the inefficient firms that stay in business are easily seen, whereas a good economist recognizes that such policies imposes considerable unseen damage by promoting moral hazard and undermining the efficient allocation of labor and capital.

We now have another example to add to our list. Many European nations have “social protection” laws that are designed to shield people from the supposed harshness of capitalism. And part of this approach is so-called Employment Protection Legislation, which ostensibly protects workers by, for instance, making layoffs very difficult.

Should Low-Skill Workers Eat Cake?

Yesterday, the governors of California and New York signed legislation to raise their states’ minimum wage over the next few years to $15 an hour throughout California and much of New York. Similar proposals are percolating in other state and local governments, and Democratic presidential candidate Bernie Sanders has called for a national minimum wage of $15/hour.

Predictably, critics of raising the minimum wage are arguing that the higher wage floor will hurt employment for low-skill workers, the very people the wage floor is intended to help. A worker will be employed only if the value of his output is greater than the cost of employing him—a cost that includes wages, employer payroll taxes (e.g., Social Security, Medicare, unemployment insurance), training and outfitting costs, the new health care mandate and other benefits, etc. According to these opponents, the higher wage floor will reduce employment for low-skill workers and encourage employers to find non-labor ways to accomplish low-skill tasks (e.g., ATM machines, self-serve gas pumps, vending machines, automated phone answering systems).

Wage-increase supporters dismiss this concern, claiming there’s no proof that a higher wage floor hurts employment. A very large body of empirical research indicates otherwise, however, with the negative effects falling mainly on workers below age 25 (which isn’t surprising, as 77% of workers earning the federal minimum wage are below age 25, and they have few demonstrated work skills). Wage-increase supporters can argue the research isn’t unanimous, but given the one-sidedness of the extensive empirical evidence, that argument sounds a bit like climate change denial—if not creation science.

More thoughtful wage-increase supporters have begun offering a different argument: Yes, they concede, raising the minimum wage can hurt low-skill employment. But that harm is a worthwhile tradeoff for better wages for the remaining low-skill work: some workers may lose their jobs or some work hours, but others will get a raise.

This argument is important and interesting—in a Marie Antoinette* sort of way.

Senator Sanders and the Average Workweek

Senator Bernie Sanders recently tweeted the following.

Fortunately, the gruelingly long workweek described by Sanders is not the norm. In fact, leisure time has been on the rise. In 1950, an average U.S. worker worked 1,984 hours a year, or about 38 hours a week. In 2015, an average American worker worked 1,767 hours, or about 34 hours a week.

That means that the average U.S. worker had 217 more hours for leisure or other pursuits in 2015 than in 1950. That is about 9 days of extra time.

The 50-hour workweek described by Sanders is more common in China, where the average worker worked 2,432 hours in 2015, or around 47 hours a week. Compare other countries using HumanProgress.org’s interactive dataset.

Air Hostesses Then and Now

In the mid-1960s, being an air hostess was considered to be a glamorous job. Back then, however, air stewardesses were paid less than half of what they make today. They also had to endure much longer flights, since 1960s airplanes carried relatively little fuel and had to stop for refueling. That also meant that flight attendants had to serve more meals and, consequently, worked harder during the flight. Most importantly, the likelihood of dying on the job declined substantially. In 1965, there were 1,142 airplane fatalities per 250 million passengers carried worldwide. Only 761 people died out of over 3 billion people who flew in 2014.

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