What were reading on July 24th, 2019

Black men have a 1 in 1000 chance of being killed by the police

Black men between 20 and 35 years old have a one in 1000 chance of being killed by the police. The research comes from a report in the Proceedings of the National Academy of Sciences.  The researchers used news reports and other publicly available sources to collect the information.  The FBI, state and local police do not record police killings by race.

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Black women start business in record numbers

We just found a report from the KC fed on Black women in business. The report is here.  The report has no date but was based on focus groups conducted in 2017 in Kansas City, MO.

The survey found that the number of Black women owned businesses increased by 179% during the period from 2002 to 2012.  Business owned by Black women were concentrated in service, healthcare and social assistance and administrative support. Many businesses were small, employed few people and were community or passion related. The business owners reported trouble securing financing.

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Economist report manufacturing job losses 20 year late

In the "Closing the barn door after the horse has bolted" category, three economists report that multi-national corporations (MNC) were responsible for most of the manufacturing job losses in the US after China joined the WTO in 2001.

The Center for Economic and Policy Research has the story.

The story is sad on a lot of levels:

1) It's the year 2019 and they are coming out with the paper now.  Not 20 or 30 years ago when it would have been useful to prevent the huge loss of good paying jobs in the US..  So there is a huge speed problem in academia related to useful policy research.

2) Second, the researchers themselves could not even get the data. They had to develop their own data set. In other words, corporations didn't want the data collected and the government went along with them. We all looked the other way. This is another instance of the Senators and US représentatives directly hurting our economy by using their power to block data collection.

3) Third, the loss of good jobs played a direct role in electing president Trump. The large amount of the loss which was not replaced was in the US midwest. Coastal cities replaced much of their manufacturing with real estate, finance and technology.

4) Fourth, We all kind of knew what was happening.  This writer was laid of twice during this same time period. It's just surprising how little was done to stop this devastating process.

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Tax cut in 2017 causes huge increase in deficit

The C ongressional Research Service has reviewed the 2017 tax cut. The tax act of 2017 added $1.5 trillion to the deficit over the long term, with only a short bump up in GDP from it's long term trend of 2.1%.  A large amount of money was repatriated to the US and then used for dividends.

Congressional Research Service preliminary report on Tax Act of 2017

Consensus view of economists is that deficits don't matter

However, most economist have moved to the position that deficits, below a certain level of GDP, don't matter.  They believe the US is below that level.  Instead the deficits were and are used a political weapon again government spending and entitlement programs.

Deficits don't matter #1: Bloomberg
Deficits don't matter #1: Quartz 
Deficits don't matter #2: The Conversation

A little annoyed that articles always run a picture of the photogenic AOC
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Let's beat up Labor

The Trump administration is one of the most anti-labor presidencies of all time -- LA Times. I just can't figure out how they get away with it.

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Tipping's Racist Past -- Article

Rev. Dr. William Barber writes about tipping as racist in Politico. His goal is to abolish the tipped wage.  Herman Cain, Trumps favorite Black person, gets a mention in the story so you know it's good.

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Amazon hates cashiers

Amazon is spending on  store without cashiers. According to the BLS, as of May 2018, there were about 3.6 million cashiers.

https://www.bloomberg.com/news/features/2019-07-18/amazon-s-most-ambitious-research-project-is-a-convenience-store

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Looking at Black women's economic status

Black women's equal pay day is August 22, 2019. In other words, they have to work until August of the following year (2019) to earn what White men earned in 2018.

https://www.washingtonpost.com/news/post-nation/wp/2017/06/08/report-black-women-are-working-hard-but-our-country-is-not-working-for-them/?noredirect=on


Black / White wage gap may be due to Whites not sharing knowledge on the job with Blacks.  The study notes how difficult it is for Blacks in a predominately White environment.

Again on CEPR Vox. 


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Other stuff

This one is a must read

New York Times 1619 Project on the impact of slavery

We also had to go back to Raj Chetty's article on inter generational wealth.

Depressing as always.

Mr. Chetty also promotes a big data website on economic inequality called

Equality of Opportunity

A nice safe name to be sure. I guess "Reparation Now" or "Welfare for the Undeserving" were taken.

Congress votes to raise minimum wage in steps to $15 per hour by 2025

The US House of Representatives passed HR 582 on Thursday, July 18th, 2019 to increase the federal minimum wage to $15 dollar per hours by 2025. The vote was 231 to 199. It also abolishes the "tipped" wage.  The bill, called "The raise the wage act" would raise the wage in steps over a six year period to $15.00, tie future wage increases to median wage growth and repeal the "tipped" and "training" wages for all workers.

https://www.cnbc.com/2019/07/18/house-passes-raise-the-wage-act-15-per-hour-minimum-wage-bill.html

The Congressional Budget Office predicted 17 million people would be directly affected by the measure.  Ten million more are expected to be a bump up if they are near $15 dollars already.

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In related news, The Congressional Budget Office release a report on July 8th, 2019, examine the effects of the "Raise the Wage Act." They determined that the bill would increase the wages of about 17 million people directly and 10 million more indirectly.  It would lift 1.3 million people out of poverty.  The report estimates that 1.3 million people would lose their jobs. The economy creates about 2 million new jobs each year.

Report said the wages would come from decreased business profits and higher prices.


Interestingly, a couple states have no minimum wage: South Carolina, Mississippi, Alabama, Tennessee and Louisiana.

While Texas, Oklahoma, Iowa, Indiana, Georgia, Pennsylvania, Virginia, Utah, Wyoming, Idaho, New Hampshire, North Dakota and Wisconsin pay the federal minimum wage of $7.25.

Heidi Shierholz has been working on this issue for years.  She was chief economist in the department of labor under the Obama administration. She is currently a senior economist at the Economic Policy Institute. Michael Farren is at the Mercator center.

https://www.c-span.org/video/?462584-4/washington-journal-heidi-shierholz-michael-farren-discuss-efforts-raise-federal-minimum-wage

They argue about the studies on minimum wages for a little bit. Both debate the quality of the studies used by the CBO for the estimate.

Darren argues that economic supply and demand will set wages based on a workers value to the firm. Shierholz discusses that employers are suppressing wages, so we can raise the minimum wages without increasing unemployment.

Both economists agreed that raise the wage would also push up other wages. Sheirholz noted it would increase demand as well.

Sheirholz stated she was not afraid of automation while Farren worried about the effect of the wage.

A caller mentioned that raising the minimum wage would lessen the dependency on federal and state programs..

Top computer stories we are following July 2019

Here are some interesting computer and software finds...

Skippable Introduction

Federal Reserve Chairman Powell recently testified that the Phillips Curve has broken down and has not worked in 30 years. Rep. Ocasio-Cortez ask powell about the Phillips Curve.

Many people suspect the breakdown is due to changes in the global economy supported by information technology. (For more, read about Solow's productivity paradox.)

If your an Information Technology(IT) or ERP (Enterprise Resource Planning) junkie, like me, you know whats' been going on for the past 20 years. Some of the system I implemented led to hundreds of layoffs including my own. But they also led to huge increases in productivity especially white collar, indirect-cost type of productivity that does not show up in statistics.

I still keep one eye on some of the latest offerings in the HR, scheduling and ERP market because of the large effect they have had on reshaping the economy.

A secondary reason to look at some of the IT products is because of the knowledge and business best practices built into the software.  You can learn new things from other peoples software programs.



Software Finds

The latest find is something called Pubmatic. It's an on-line advertising management tool. The tool lets on-line ad buyer pick their spots then serves up the ads. It really gives you a window into how sophisticated on-line advertising has become. Check it out here at https://pubmatic.com/.

Unfortunately, it does not look like a good place to work for minorities.  I could zero visible minorities (Black and Hispanic) in their US photos. I saw two people over 40 years of age.  Lot's of young people with beards or blonde hair.  I did see one Asian woman featured prominently but she could be a model. But I digress...

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On the smaller end, we also spotted ShiftPixy, a restaurant human resource scheduling app to manage a contingent workforce.  It let's employers fill shifts with freelance employees. It also handles Human Resource compliance issues.

and finally

Test Driven Development

The nice feature is that you are no longer afraid of making an update.

Test Drive Development

We are reading Eric Elliott's great column in Medium. I wish I had done some of this when I first started programming.  I try to write unit test stub modules but I am so lazy.

Top Education Stories for July 2019

Learn how how on-line advertising works

Google offers an on-line marketing training over the internet called Google Academy for Ads

They also have an on-line Google Marketing Challenge where they give away $10,000 in ads to academic teams.  The teams produce on-line advertising for non-profits.  Google then gets free publicity and marketing content.

Link is here.

Another on-line advertising training site

A google advertising rival, Wordstream pay per click, has free training materials on web advertising. Link is here.

The Gig Economy under pressure after California court ruling: Court applies ABC Test from April, 2018

Even though the story is from April, 2018, we thought the story was so important we are bringing it up again.

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The Gig Economy under pressure after California court ruling from San Francisco Chronicle. Link is here.

The California's supreme court ruled that many contractors should be classified as employees.  The state also presumes a person is an employee and puts the burden of proof on the employer justify the classification as a contractor.  The state should use the ABC test to determine if a contract is actually and employee.

A) The worker is free from the "direction and control" of the employer in accomplishing tasks.

B) The work is outside the "usual course of business": i.e., a non-core activity. So a FedEx delivery driver performs a "core" function while a plumber fixing a leak at a FedEx warehouse does not.

C) The worker is "customarily engaged" in an independent profession. Again plumbing not picking in an amazon warehouse.

If the employer cannot  prove all three then the worker is an employee.

The court also "threw out" the current contractor determination language that businesses use to evade Fair Labor Standards Act (FLSA) rules and classify employees as contractors.

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The corporate perspective is mostly about how to comply with the law or avoid issues.

Here is a typical corporate legal web site from "Epstein, Becker and Green" which runs the "Wage and hour defense blog".  There law firms usually work for large, low ware employers and help HR departments comply with the wage regulations.

California Supreme Court adopts ABC test for Independent Contractors

What we are reading July 13th, 2019

Article round up for July 13th, 2019


Michigan is one of the worst states for Black student enrollment and success the Detroit News reports here. The article compares the Black rate of public college enrollment to the Black general population.

The article on Michigan's under performance references a report by The Education Trust called "Broken Mirrors:Black Student Representation at Public State Colleges and Universities"

Here's the Link

It looks like the only states with large Black populations and Black public college enrollments are Massachusetts, New York and North Carolina.

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Pennsylvania's Great Working-Class Colleges

Pennsylvania is struggling with college affordability. The link is here.

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An old Study from 2006 in the Journal of Black in Higher Education found on 13 Black economists in Major Universities. Here's the link. We have to look for an update.


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California proposes legislation to classify contractors as employees

Salon has the story here.

An here is the court case that started the whole thing.

Gig Economy under pressure after California court ruling from San Francisco Chronicle. Link is here.

From April, 2018. The California's supreme court ruled that many contractors should be classified as employees.

Where has the Evil Black Economist been ??

Working.  The Evil Black Economist had to take a break in March.  I have been teaching high school math and business classes. 

I have also spent time developing a business simulation game as a teaching tool for business class.  The game is based on running a food truck.

However, we are off for the summer, so we are going to start posting again.

Thanks for your patience

EBE Staff

January employment report shows 304,000 increase in jobs. Rate rises to 4%. Wages flat.

This month we check in with the labor market economy.  The Evil Black Economist has stopped following the monthly unemployment release closely since about 2015 because US has fully recovered the number of lost jobs since the recession. Since then, little has changed in the labor market and the problems faced by the US are larger than the unemployment rate.

Non farm payroll increased by 304,000 jobs in January 2019 as reported on the business survey. The unemployment rate moved up slightly to 4.0%.  Average hourly earnings rose 3 cents (about 1/10 of one percent).

The long-term trends have not changed. Wage growth has split in two between the well educated professionals (with high wage growth) and everyone else (little wage growth). Inequality is growing.  Millennials cannot find good jobs and have huge student loan debt.  The top 10% has captured most of the GDP growth. Large corporations dominate the business world.

The recovery from the 2007 recession has provided incredibly stable growth. Stable growth provides a great chance to tackle difficult long term problem without worrying about recession. We have also learned the absolute amount of debt is not as important as the debt to GDP ratio. Deficit hawks were simply trying to make Obama look bad at the expense of the country.

These two trends: stable growth and "deficits don't matter as much" have given the country a great opportunity to improve it's social programs.

The big story: Wage Growth(or the lack of)

Why do the financial analysts and economists follow the wage growth number rather than the unemployment number?

Investors and the financial community are looking for signs of the next recession. They have bet real money on the economy.  Wage inflation could signal higher employer costs and lower profits, which might signal a slowdown.   The 2018 Christmas stock market crash revealed how jittery the market is. And no one wants to be the last investor to leave the stock market.

Economists are looking for the health of the labor market. Most economists are concerned about inequality, decent wages, and living standards.  So they track the most important determination of individual happiness: wages.

The unemployment rate has changed little since October 2015, when it dropped below 4.5%.  The US economy has grown for nine and half years and the number of new jobs created has exceeded those lost during the recession.

However, during the past 40 years, the pay and quality of jobs for the average American have deteriorated. Wages have grown slightly since 1980 on average, while the bottom 10% have lower wages during the same time period.

So most financial analysts and economist follow the wage number. Wage were up 3 cents (one tenth of one percent) which is basically zero. So both the stock market rally and economic anxiety will continue. 

Unemployment Report 

The unemployment report was stronger than usually with businesses reporting they added 304K workers. The unemployment rate rose to 4.0% because of an 241K jump in the number of people reported as unemployed. The participation rate was up 0.15% to 62.3%, a pretty big jump. Wages did not grow in the month (+0.1% or 3 cents).





Employment grew in the low wage industries of leisure and hospitality by 74,000 employees. Healthcare added 42,000 and Construction a huge 52,000. Transportation added 27K jobs and Retail Trade hired an additional 21,000 people.



Among the major ethnic groups in the US, the White unemployment rate was reported at 3.4%, the Black rate at 6.8%, the Hispanic rate at 4.9% and the Asian rate at 3.1 percent. The long term unemployed comprised 19.3% of the total unemployed and were counted at 1.3 million.



A Closer Look at the Black Unemployment Rate

The chart above shows the Black unemployment rate and the LFP rate. 

The Black unemployment rate rose to 6.8% from 6.6% in December. The Black participation rate increased to 62.8 in January as Black employment increase by 113,000. The unemployment rate for Black men, 20 and order, was 7.1% while Black women in the same age group were unemployed at a rate of 5.5%.  Black men participate in the labor market at a rate of 68% while the participation rate for Black women is 63%. Black teenage unemployment was calculated at 21%.

As is our tradition, we calculate the "real" Black unemployment rate which is 10.9% in January. Both the Black unemployment rate and the US U-6 rate increased during the period.   U-6 is the broadest measure of unemployment. U-6 is includes who wants to work and has looked for a job in the past 12 months plus part time people who want full time work.

Wages

Hourly wages for all employees increased by by $0.03 cent in January to $27.56.  Hourly wages are up about 2.5% (1.2% when adjusted for inflation) in the past year. Hourly wages for non-supervisory employees rose by 3 Cents. Over the past year wages have risen by 3.2%.

The average growth in wages has been below 1% after inflation between 2006 to 2019.

Job Openings and Labor Turnover Survey

Job openings, hires and quits have all rebound since the 2007 recession.  

November NFP jobs were revised up from 176K to 196K (+20K). December was revised downward from 312,000 to 222,000 (-90,000).

ADP reported 213,000 non farm private jobs were created.  The jobs were split among small businesses (+63K), medium sized businesses (+84K) and large businesses (+66K).  According to ADP goods producing business increased jobs by +68K while services hired 145K workers. 

Paychex small business jobs index was down at 98.92; It's down -1.0% for the year. Paychex also report that hourly wages grew 2.5% in the preceding 12 month period.

We are doomed!!! Three key studies raise concerns over automation and job losses.

Here are the references to the Oxford study, the Robot Study and the McKinsey study.

Over the past two years, the press has widely reported how robots and automation will reduce wages and increase unemployment. Three major studies confirm this process.  The studies, from Oxford University, NBER and McKinsey, are the most widely quoted in the press.

Now's your chance to read them for yourself. This is some scary stuff.

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The Future of Employment by Carl Benedikt Frey & Michael Osborne, Oxford University, Oxford Martin School

Oxford Study on the Future of Work

Best quote from summary: "According to their estimates, about 47 per cent of total US employment is at risk. They further provide evidence that wages and educational attainment exhibit a strong negative relationship with an occupation’s probability of computerisation."

Oxford Martin School Program on Future Technology

MIT Technology Review Discuss the study

MIT Technology Review also has an older discussion from June 2013


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Robots and Jobs: Evidence from US Labor Markets, June 2018
Daron Acemoglu, Pascual Restrepo

Best quote from summary: "According to our estimates, one more robot per thousand workers reduces the employment to population ratio by about 0.2 percentage points and wages by 0.37 percent."

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Harnessing automation for a future that works
Mckinsey Global Institute, January 2017

Best quote from summary: "In the United States, these activities make up 51 percent of activities in the economy accounting for almost $2.7 trillion in wages."

What we're reading on Dec. 12th, 2018

Just a quick round of stories for December 12th, 2018.

Bank Rate Monitor has the original story on missing wage growth

Pew Research has a story from August, 2018 pointing out that wages for the average american have not increased for 40 Years. The actual point is some where in 1979 but liberal economist famously use the inauguration of Ronald Reagan in 1981 as the point wages stop growing because it's easy to remember.

Pew Research on Stagnant Wages

A lot of people like(or don't like) the Atlanta Fed's Wage Growth Tracker.  It lets you slice and dice wage data. But it's still flat

Atlanta Federal Reserve Bank's Wage Growth Tracker



Peter Navarro, who is trade adviser to President Trump, has a editorial in Real Clear Politics called

"Why economic security is national security"