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Posts from the ‘Work’ Category

Bridging the Gap Between Academia and the Workplace

aier-in-the-winter

Education literature suggests that the nature of a student’s participation in workplace activities has a major impact on the knowledge that student acquires.

At AIER, we believe the classroom walls should be both transparent and permeable to the rigors and requirements of the workplace. Therefore, classroom learning needs to support an internship experience and vice versa, facilitating the integration of new college graduates into the labor force.

Two years ago, we held a pilot program for our applied economic research internship program. This past fall, we continued this program in conjunction with two academic institutions, the University of Sioux Falls and Missouri University of Science and Technology. We brought economists from AIER into the classroom, and brought the university professors and their students into the workplace. This exchange of staff occurred figuratively, of course. The course was “remote” and our interaction occurred across several meetings over WebEx and frequent communication using e-mail.

During the semester, 20 students worked in four teams on a project about employment trends in various industries, and the relationship of those trends to the business cycles. Students were supervised by research fellow Patrick Coate and me.

During the January 2017 intersession, 12 out of 20 students will be coming to AIER’s campus in western Massachusetts to continue their immersion in economic research. These students are from the University of Sioux Falls.

This kind of collaborative arrangement between academic institutions and practitioners represents an innovative approach to bridge the gap between undergraduate economic education and the professional world. It engages students in topical economic research and walks them through the research process, substantiating the theoretical base they had established in prior courses. This exposure helps undergraduates broaden their knowledge, and gain marketable skills and practical experience. This helps them become more successful participants in the global workforce.

This program supports AIER’s mission, raises our national profile as an innovator, and cultivates the connections for future collaborative engagements. If you want your class to be a part of this program next year, please contact me.

Picture: AIER in winter. Photo by Bruce Gore.

AIER Issue Brief: H-1B Visas Have no Impact on Average Wages

How H-1B visa holders impact American wages is hotly debated. Many argue that H-1B workers, the foreign-born, highly skilled, temporary workers that companies can hire for three to six years, drive down American wages. Others argue that H-1B workers actually help increase wages for Americans.

But what if H-1B visa status has less impact on wages than we think?

Read more

Why Allowing H1B Spouses to Work May Only Increase the Tech Gender Divide

Ironically, allowing H1B spouses to work in the U.S. might only exacerbate the gender divide in the U.S. computer technology industry. The White House recently released a statement that proposed giving work visas to spouses of H1B visa recipients.

As it stands now, the H1B visa program, or the program that allows high-skilled temporary workers entrance to the U.S., does not provide a work visa for recipients’ spouses. Spouses currently can get a student visa, but unless they are on their own work visa, they legally cannot work.

We have heard that this will make the already highly demanded visa even more desirable, especially for computer technology workers. AIER’s latest Research Brief, H1B Jobs: Filling the Skill Gap, showed that computer technology requests make up the lion’s share (70%) of H1B petitions.

Marital Status

Source: AIER Analysis of Ruggles, Alexander, Genadek, Goeken, Schroeder, and Sobek. Integrated Public Use Microdata Series: Version 5.0 [Machine-readable database]. Minneapolis: University of Minnesota, 2010.

What will this mean for H1B visa holders? AIER’s analysis from 2010-2012 Census data shows that in the computer technology industry, there are larger shares of H1B men that report being unmarried compared to U.S. citizen men: 74% of H1B men are unmarried, compared to only 6% of U.S. citizen men.

But many H1B females in computer technology are married. 76% of H1B females are married, compared to 58% of U.S. citizen females in that field.

Right now, H1B women have the highest rates of educational attainment in the U.S. computer technology industry (94% have a college degree or higher), but they make up the smallest share of H1B holders in the industry (22%).

It is safe to assume that allowing spouses of H1B visa holders to work will increase the numbers of married applicants. But since the majority of H1B women are already married, this policy might only further exacerbate the gender disparity among H1B visa holders as more men than women apply.

[Photo: DailyTech.com]

People and Businesses in Recessions

The stubbornly high unemployment following the last recession, coupled with corporate profits reaching record levels, can create a picture in the minds of people that businesses are having it easy at the expense of workers. This picture may be misleading. Recessions are also tough on businesses and business owners, but the data that reflect this are not nearly as prominent as the unemployment statistics.

The way we measure unemployment is fundamentally different from the way we measure businesses. Businesses can appear and disappear in response to economic conditions, but people tend to stick around no matter what.

There is no equivalent of a long-term unemployed worker in data on businesses. People can remain unemployed for months or years, and we will have data about these numbers. Businesses usually cannot remain without customer orders for many months and survive. Such businesses close their doors and disappear from data – data about sales, data about business profits, and other data.

Read more

Marketplace of Ideas

Cars and houses are key to the American Dream. In this week’s Marketplace of Ideas, we catch you up on some of the recent economic news related to both.

GM

  • Next week, GM CEO Mary Barra will testify in Congress over the recent recall of 1.6 million vehicles for a faulty ignition switch that GM’s engineers knew about perhaps as long as a decade ago. Why did the company wait so long to issue the recall? A New York Times article suggests it may have had something to do with the fact that the problem was confirmed two months before GM declared bankruptcy, in July 2009. Now the federal government is investigating GM for bankruptcy fraud for failing to disclose the defect. Under its current bankruptcy agreement, GM is shielded from liability for incidents that occurred prior to July 2009. The New York Times says that since that date there have been 26 fatalities from crashes involving recalled models, but Automotive News reports that only one was definitely related to the faulty switch. In the Times, Floyd Norris compares the corporate culture that may have led GM to conceal, rather than address, this fatal flaw to “the apparent lack of respect for law, regulation, and the public trust” within financial institutions that he says contributed to the financial crisis. Financially speaking, the tally for GM is still relatively low: It is taking a $300 million charge for the recall, but any criminal settlements would likely raise that total substantially. Toyota just settled a similar suit with the U.S. justice department, over a faulty accelerator, for $1.2 billion.
  • GM has also gotten a bad rap in some circles for promoting America’s workaholic culture with a television commercial for its luxury brand Cadillac. The TV spot lauds Americans as “crazy, driven, hard-working believers” who gladly toil longer hours in exchange for more “stuff.” An article in The Atlantic this week says many Americans are “stressed out, overwhelmed, [and] totally exhausted” because they find themselves in “workplaces where face time, extreme hours, and 24/7 total work devotion are prized.” According to a feature in Marketplace’s Work in America Today series, millions of Americans are overworked because they must rely on a piecemeal approach to income through multiple part-time jobs and freelance work. Such “DIY careers” are largely a consequence of a weaker labor market and a “temp economy,” says Marketplace. Perhaps those dim prospects explain Millennials’ lackluster reputation in the workplace: Many recent college graduates are finding the “career ladder” elusive, to say nothing of the prospects for fulfilling work. Ford taps into that zeitgeist with a commercial spoofing the “rich guy” Cadillac ad mentioned above. It features a real-life entrepreneur from Detroit whose composting business demonstrates that through hard work you can “make the world better, not just to acquire more “stuff.”
  • Washington Post’s Wonkblog says this week that tax incentives may be contributing to housing inflation—that is, bigger houses, not necessarily higher prices. Basically, the claim is that mortgage-interest deductions encourage people to buy bigger homes, but there’s little evidence that they actually increase home ownership among renters, which is their intended effect. The Wonkblog post is based on a report in National Affairs that examines the impacts of various federal, state, and local housing-related tax benefits. The authors argue that such benefits are expensive for taxpayers but have largely “escaped careful scrutiny and criticism.” In April, AIER will focus on housing in its research reports and in its online community discussion forum, AIERwave. Previewing his Business Cycle Conditions (BCC) report, AIER’s Senior Research Fellow Bob Hughes noted in a post here earlier this week that the housing market is often considered a good barometer of the economy, and the story right now is mixed: The overall signs point to a continued recovery, but the surge in multi-family housing construction corresponds to a market where more people are renting instead of buying. Stay tuned for the full BCC update.

Marketplace of Ideas

Marketplace of IdeasCheck out our take on the January employment report here.  For a look at some of the other big stories this week, read on:

  • The Congressional Budget Office’s (CBO) latest analysis on the Affordable Care Act (ACA) caused an uproar this week. Some say the findings are good news, while others say the news is actually quite bad. The answer tends to vary based on where the author stands on the political spectrum. What does the actual report tell us? The CBO says that certain provisions of the ACA will cause the number of “full-time-equivalent workers” to drop by about 2.5 million by 2024. You may be asking, “What’s a full-time equivalent worker”? The CBO estimates a 1.5-to-2.0% decline in total hours worked in the economy due to certain ACA provisions. It then calculates how many full-time workers would be necessary to cover all those hours. If you and several of you friends decide to work fewer hours each week, together you might constitute one fewer “full-time equivalent” worker. Keep in mind that the study does not say that employers will eliminate jobs. Rather, the expected decline in employment will come from a reduction in the supply of labor: The CBO estimates that some people will choose to work less, and some people will choose not to work at all. Why? Increased accessibility and lower costs for health insurance will play a role, according to the CBO, as will subsidies for coverage offered by the government. Business Insider’s Josh Barro argues that a reduction in hours worked would have both desirable and undesirable consequences. As usual, the economic facts aren’t easily shoehorned into any one political position. And as the Economist points out, even the CBO says its analysis is subject to “substantial uncertainty.” In other words, you might want to just ignore the firestorm in the media.
  • Pew Research Center reported this week that there were more new marriages in 2012 than in 2011, the first increase in three years. What does that have to do with the economy? That’s exactly what researchers are trying to determine. Economist Justin Wolfers has argued that marriage and divorce rates are not really influenced by the business cycle. But marriage patterns could correspond to longer-term trends in the economy. According to Pew, the upturn in new marriages in 2012 was concentrated among the college educated. A separate study finds that people with more education tend to have higher incomes, and they tend to marry others who have more education and higher incomes. This has contributed to a widening income gap between couples with higher levels of education and those with lower. The data also suggest that people are putting off marriage until later in life. Perhaps the impact of the Great Recession has taken a greater toll on the so-called Millennial Generation: It has been harder for people under 35 to find and hold jobs, so while they may cohabit more frequently to share living expenses, insecurity might make them less likely to commit to marriage. Some have argued that marriage is a barrier to poverty, but others are skeptical.
  • While the debate over income inequality rages on, businesses are already responding to changes in the consumer market: If recent reports are accurate, they are increasingly focusing on lower- and higher-income consumers, because the market in the middle is drying up. The news is littered with reports of record profits for luxury brands such as Mercedes, Ferragamo, and Burberry. Meanwhile, middle-of-the-road retailers such as JC Penny and Sears are struggling. Radio Shack reported this week that it plans to close 500 stores. Of course, part of the problem may be bad management. Looking at the impact on employment, one reporter points out that people who worked at discount retailer Loehmann’s, which has declared bankruptcy, are unlikely to get a job at high-end retailer Barney’s, which will be opening a store at Loehmann’s previous location in Manhattan. Luxury retailers tend to be highly selective in their hiring choices.

[Photo: Flickr/Jurischk]

The Marketplace of Ideas

Here’s what’s going on in the online world of economics.

  • babiesRichard V. Reeves and Kimberly Howard have written a paper on the “Parenting Gap“–the idea that the quality of a child’s parenting effects social mobility.  They found that, across the board, the children of stronger parents have more success, from pre-school through adulthood.  So what makes a strong parent?  Emotional support, quality time, and conversation are a few of the illusive qualities of strong parenting.  Read the full report here. [Brookings]
  • Emmanuel Saez has updated his paper “Striking it Richer: The Evolution of Top Incomes in the United States” with preliminary 2012 data.  [UC Berkley]
  • If you haven’t yet jumped on the smartphone bandwagon, you might be be smarter than your outdated phone: The Pew Research Center has found a 16% decline in the average cost of a smartphone over the past two years.  According to the report, much of this steady and marked decline comes from the increase of smartphones being sold and used in emerging markets.  So while “The devices tend to be quite prevalent at the upper end of the income distribution,” their prevalence amongst all age groups and income levels will likely start to become more ubiquitous.  [Pew]
  • Where do we stand with the nominations for a new Fed Chairman?  This week, a group of more than 300 economists, including such big names as Joseph E. Stiglitz and Alan S. Blinder, signed a letter to President Obama urging the appointment of Janet Yellen.  Read the Wall Street Journal’s reaction here.  [Institute for Women’s Policy Research]
  • There is a lot of talk about the correlation between majors and future earnings, and a lot of talk about women and their career choices.  Anthony Carnevale, an economist at Georgetown University, is studying the cross section: women in lucrative majors who go into non-lucrative fields [NPR]

The Marketplace of Ideas

Here’s what’s going on in the online world of economics.

  • According to Sallie Mae’s 2013 report, How America Pays for College, parents’ average annual out-of-pocket spending on college has declined from $8752 in 2010 to $5727 in 2013.  See the Full Report here [Sallie Mae]
  • Can Detroit Rise Again?  A photography series from Philip Jarmain documents Detroit’s better days, a stark contrast to its current state.  [Wired]
  • Is home ownership really relevant to economic stability? An Op-Ed in the Financial Times is questioning its value.  Adam S. Posen of the Peterson Institute for International Economics writes “[We] incentivize middle-class households to leverage the bulk of their savings into a highly volatile, difficult to price asset, which is subject to disaster risk both idiosyncratic (fire, tree falling on the roof) and general (flood, local industry closure), and which—based on the economic fundamentals—should return at best the average rate of local wage and population growth.” [Financial Times]
  • In visiting Brazil, Pope Francis calls for greater inclusiveness to counteract the negative impact of youth unemployment. “The world crisis is not treating young people well … We are running the risk of having a generation that does not work. From work … comes a person’s dignity.” [The Guardian]
  • The Brookings Institute weighs in on recent discussion about China’s infrastructure growth, sharing concerns about the long term viability of country to city mobility as a solution to rural poverty.  [Brookings]

The Odds of Upward Mobility

Americans’ abilities to increase their incomes over time vary according to a number of factors. Your professional field, level of education, and family background all make a difference. According to a study reported in the New York Times this week, where you live matters too.

Lower-income people living in Southeastern and Midwestern cities like Atlanta, Cincinatti, Raleigh, and Indianapolis had markedly lower chances of moving into the middle class than their peers in cities like New York, Boston, Seattle, Salt Lake City, and Pittsburgh. Researchers believe that the cities with little chance for upward mobility tend to lack economic diversity. Low-income neighborhoods are far from middle-class neighborhoods, leaving people without much money with poorer schools and fewer job opportunities in their areas. Cities with less racial diversity also offer diminished opportunities for children from low-income backgrounds.

The complete study by authors Raj Chetty, Nathaniel Hendren, Patrick Kline, and Emmanuel Saez is here. To find out how your own city ranks, check out the Times’ interactive graphics.

 

 

 

 

 

 

Economist Paul Osterman on America’s Jobs Crisis

Paul Osterman is a professor of Human Resources and Management at the M.I.T. Sloan School of Management and a member of the Department of Urban Planning at M.I.T. His research focuses on labor market policy, economic development, urban poverty, and job training programs. Osterman’s most recent book, Good Jobs America: Making Work Better for Everyone, argues that the U.S. can transform its employment landscape with policies that improve job quality without slowing economic growth. This week, we spoke about the roots of America’s jobs crisis and the solutions that Osterman says could revitalize the country’s future.

In your book Good Jobs America, you write that the U.S. faces two major employment problems. First, there aren’t enough jobs to go around. Second, many of the jobs that do exist fall below the standards of decent work—pay is low, and they offer no health insurance or opportunity for upward mobility. What are some of the causes of our jobs crisis?

Our current lack of jobs is largely the result of fallout from the 2007-2008 financial crisis. There’s an ongoing debate about the extent to which current unemployment is due to a lack of aggregate demand or a structural mismatch between available jobs and people looking for work. My view is that the issue is lack of demand. The number of open job vacancies relative to job-seekers is very low. Moreover, while it’s true that people with higher levels of education are much more likely to be employed, in the aftermath of the crisis we’ve seen an increase in unemployment across every education level. The unemployment rate for educated workers has gone up in proportion to that of lower-skill workers, which points to a lack of aggregate demand.

As to the quality of jobs, that’s a more long-term problem of a large, low-wage labor market in the U.S. One reason for that is that we have a far higher level of earnings inequality than other countries, which tends to lead to more low-quality jobs. Another reason is that we have much weaker labor standards: a relatively low minimum wage, unequal wages, issues with enforcing labor standards. We also have a history of racial discrimination in the labor market, which further contributes to the low-wage issue.

So what would you recommend that we do? Let’s start with the problem of high unemployment.

In terms of quantity of jobs, the irony is that we know what we have to do. We should stimulate aggregate demand, not simply through the Federal Reserve and the money supply, but with fiscal policy. But it’s been very difficult for the President to do that, because Congress simply hasn’t been cooperative with fiscal policy. A variety of policies would help: more government spending on infrastructure, more support for state and local governments, and increased public service employment.

What would you say to those who argue that the government has too much debt to take on those kinds of programs?

The issue of government debt is something you worry about once the economy gets to full employment. Then you can think about addressing the debt issue. And in fact, as we got closer to full employment, the debt issue would automatically start to be addressed, since tax revenues would go up as people’s incomes rose. Read more