There are nutters in every line of work

Adjusted gender wage gap now trivial in USA

When the adjusted gender wage gap is less than 5% across all job titles, it rounds down to zero. It is not rational to expect statistical analysis to explain all 100% of the gender wage but it does for single people. The gender pay gap, what is left of it, is the cost of having children to careers.

Source: There really is no gender pay gap « Adam Smith Institute

This was before helicopter parents

Source: When Kids Played With Alligators in Los Angeles | Smart News | Smithsonian.

How in-work family tax credits help

@CloserTogether @FairnessNZ nail case for neoliberalism @chrishipkins @Maori_Party

The Council of Trade Unions and Closer Together Whakatata Mai charted similar statistics to show that everything has gone to hell in a hand basket since neoliberalism seized power in New Zealand in 1984 and in particular after the passing of the Employment Contracts Act in 1991.

image

Source: Income Gap | New Zealand Council of Trade Unions – Te Kauae Kaimahi.

The passage of the Employment Contracts Act greatly reduced union power and union membership and with it wages growth in New Zealand, according to what is left of the New Zealand union movement.

image

Source: Income Gap | New Zealand Council of Trade Unions – Te Kauae Kaimahi.

Unfortunately, both charts of the same statistics show the exact opposite to what was intended by The Council of Trade Unions and Closer Together Whakatata Mai.

Even the most casual inspection of the data charted above and reproduced below with some annotations shows that real wages growth returned to New Zealand in the early 1990s after 20 years of real wage stagnation.

image

Source: Income Gap | New Zealand Council of Trade Unions – Te Kauae Kaimahi.

The reforms of the 1980s stopped what was a long-term decline in average real wages. The reforms of the early 1990s including the passing of the Employment Contracts Act was followed by the resumption of sustained growth in average real wages with little interruption since.

Closer Together Whakatata Mai has even stumbled onto the great improvements in household incomes across all ethnicities since the early 1990s.

The increase in percentage terms of Maori and Pasifika real household income is much larger than for Pakeha. As Bryan Perry (2015, p. 67) explains when commenting on the very table D6 sourced by Closer Together Whakatata Mai:

From a longer-term perspective, all groups showed a strong rise from the low point in the mid 1990s through to 2010. In real terms, overall median household income rose 47% from 1994 to 2010: for Maori, the rise was even stronger at 68%, and for Pacific, 77%. These findings for longer- term trends are robust, even though some year on year changes may be less certain. For 2004 to 2010, the respective growth figures were 21%, 31% and 14%.

image

Source: Bryan Perry, Household Incomes in New Zealand: trends in indicators of inequality and hardship 1982 to 2014 – Ministry of Social Development, Wellington (August 2015), Table D6.

As Closer Together Whakatata Mai  documented, incomes increased in real terms by 14% for the bottom and 19% for the middle.

Perry noted that in the lowest decile had too many implausible incomes including many on zero income so he was wary of relying on it. I have therefore charted the second, median and top decile before and after housing costs below. All three deciles charted showed substantial improvements  in incomes both before  and after housing costs.

image

Source: Bryan Perry, Household Incomes in New Zealand: trends in indicators of inequality and hardship 1982 to 2014 – Ministry of Social Development, Wellington (August 2015).

Naturally, measuring changes in living standards over long periods of time is fraught with under-estimation. There are new goods to be accounted for and product upgrades too.

The diffusion rates of household appliances in the 20th century

End the separate and unequal New York public school system

Creative destruction in sector shares in jobs

Image

Most of the gender pay gap explained by age, marriage, hours worked

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Source: New BLS report on women’s earnings: Most of the 17.9% gender pay gap in 2013 is explained by age, marriage, hours worked – AEI | Carpe Diem Blog » AEIdeas.

HT: Lorenzo Michael Warby.

The demise of the Green Book and the decline of racism in America

The Green Book was an indispensable survival guide to black Americans traveling in America in the Jim Crow Era if they wish to “sidestep humiliation (or worse) on the journeys”. As Richard Epstein noted when reflecting on the 50th anniversary of the 1964 Civil Rights Bill:

Title II was passed when memories were still fresh of the many indignities that had been inflicted on African American citizens on a routine basis. It took little imagination to understand that something was deeply wrong with a nation in which it was difficult, if not impossible, for African American citizens to secure food, transportation, and lodging when traveling from place to place in large sections of the country. In some instances, no such facilities were available, and in other cases they were only available on limited and unequal terms.

The Green Guide lists the types of businesses by name and address in the southern states that were known to welcome black patrons.

The Green Book spoke in code about how to avoid “embarrassing situations”. This was code for “the violence and discrimination inflicted by bigots”. The diffusion of the car into the black middle class was a godsend to escape racism.

The founding publisher was a US postal worker who with typical entrepreneurial flair initially published the Green Book from his apartment in Virginia starting in the late 1930s. To find businesses that welcomed black patrons, Victor Green tapped into his network of fellow mailmen. His book covered the entire 50 states, parts of Canada and even extended to Europe in later editions.

The Green Book stopped publishing a mere two years after the passage of a major civil rights bill in 1964 and the voting rights bill of 1965. These two bills strengthened voter rights and outlawed discrimination by businesses and employers.


By 1966, just two years after the passage of the civil rights bill, the market collapsed for information on businesses that welcomed black patrons in America. This was because so many businesses now welcome black patronage in every part of the southern states and elsewhere in America that a special booklet no longer had buyers. At the height of its popularity, the Green Book sold 15,000 copies per year.


Yes, there were law reforms but the closing of the Green Book is a sign of surprisingly rapid social change given the dogged resistance of the Democratic Party led southern states to all previous attempts at racial integration.

As an example of this tenacious resistance to civil rights legislation, Texas divided itself into 252 counties and delegated considerable responsibility to them. Local sheriffs in southern states would campaign on slogans such as “the man who can take care of situations that may arise”.

Control of the police and local courts was central to the enforcement of racial segregation in the southern states of America. This was backed up by the monopoly that the Democratic Party had over local and state offices.

To register to vote in Texas, for example, a black voter had to register with the local voter registration board in one of the 252 counties. Assuming you could find a member – they came in late, took long lunches and went home early – they would fail the applicant on the literacy test or some other criteria.

The aggrieved black would be voter would then have to take is local voter registration board all the way to the Supreme Court to overturn that decision. The members of the local voter registration board would refuse to follow the orders of the US District Court orders. The criminal contempt citation would be appealed all the way to the Supreme Court.

Once the criminal contempt citation is upheld by the Supreme Court, the voter registration board resigned so the litigation would have to start all over again against the new board members. This was because the state of Texas could not be named as a co-defendant under the 1957 civil rights law – the first past 100 years by Congress.

Such was the hostile legal environment, the lawlessness, the FBI had an eight part go to strategy in case a local sheriff arrested FBI agents in southern states when they are enforcing civil rights law. Black civil rights leaders in the USA were keen gun owners and owned a lot of them for home defence and they used them.

Plenty of school busing orders by courts were appealed for years and years and were resisted at every turn in both northern and southern states. One or two states closed their entire school systems and threatened to transfer the assets to private hands to prevent racial integration.

James Heckman was one of the first economist to note the rapid social change in the southern states of America over the course of the 60s. Heckman spent two years as a teenager in the late 1950s in racist Southern States of America and returned in 1963 and in 1970. His parents were received a delegation of neighbours upon their arrival to explain Southern ways.

There was organised segregation in 1963 when Heckman visited again as a college student. His 1963 visit with a college roommate from Nigeria was monitored by the local sheriff. In Birmingham, they stayed at the black YMCA. The people at the YMCA were frightened to death because Heckman and his Nigerian friend were breaking the local Jim Crow laws. Shops closed in New Orleans to avoid serving them.

In 1970, Heckman re-visited New Orleans as an academic, going back to the same places as in 1963. They were completely integrated, totally changed. This rapid social change fascinated him.

The Civil Rights Act of 1964 broke the control of segregationists over their political and legal institutions. The racial segregation collapsed because it could no longer rely on Jim Crow laws and the private violence and boycotts through the White Citizens Councils which police turned a blind eye too when they were not actively involved.

Unlike the Ku Klux Klan, the White Citizens’ Councils met openly and was seen as “pursuing the agenda of the Klan with the demeanour of the Rotary Club” by “unleashing a wave of economic reprisals against anyone, Black or white, seen as a threat to the status quo”. In Mississippi, the State Sovereignty Commission funded the Citizens’ Councils.

The 1957 and, particular, the 1964 civil rights laws overthrew racial segregation because more Black Americans could vote in the Southern States in state and local elections. Politicians soon courted those votes and there was a political realignment and a social revolution. The lawlessness that back-up most of segregation quickly came to an end because its victims could now vote. Richard Epstein explains:

With Jim Crow in the South this set of insidious practices was not accomplished by explicit laws mandating racial segregation. Rather, those inflexible social and economic patterns were supported by four interlocking strategies. First, illicit control of the electoral franchise, which in turn translated into control of the police and the courts. Second, corrupt use over the infrastructure translated into an ability to deny water and electrical hook-ups to firms that did not toe the segregationist line. Third, private violence to which southern police forces turned a blind eye when they did not actively support it. Fourth, social ostracism to those who spoke up against the system. Sensible people either left, stayed away or remained silent.

LBJ was behind the first civil rights bill of the 20th century. This was the 1957 civil rights bill. LBJ’s astute understanding of public choice processes was central to how he crafted the 1957 bill.

Then Senator Johnson could see that his fellow Southern Democrats would not live with racial integration at the social level. But he knew from his dealings with the Southern Democrats that in their heart of hearts that they could not ultimately deny that people have a right to vote. LBJ knew that if Black Americans in the Southern States could secure the right to vote, all the other rights they sought would soon follow and would be protected by law. He was right.

The Voting Right Act had a huge impact on many southern states. For example, black voter registration rates in Mississippi increased from a mere 6.7 percent in 1965 to 59.8 percent in 1967, according to the US Commission for Civil Rights. For a state that’s historically around 40 percent black, this represented a massive shift in politics — a change that much of the predominantly white leadership at the time feared but would have to accept due to the Voting Rights Act.

Timur Kuran in “Sparks and Prairie Fires: A Theory of Unanticipated Political Revolutions,” suggested that political revolutions and large shifts in political and social opinion will catch us by surprise again and again because of people’s readiness to conceal their true political preferences proclivities under perceived social pressure.

Kuran begins with a simple, even mundane point: social pressures can make people say that they want and believe something that they really don’t want or believe…  The result of social pressures is to produce what Kuran calls “preference falsification,” a phenomenon that occurs when you make an inaccurate public statement about your actual preferences (or beliefs). Falsified preferences might be described more simply, of course, as lies; but they are a distinctive, and distinctly interesting, kind of lies, with particular social implications…  People joined organizations they abhorred, followed orders they considered nonsensical, cheered speakers they despised and ostracized dissidents they greatly admired.

Those ready to oppose racism or who were lukewarm about it, kept their opposition private until a coincidence of factors gave them the courage to bring their views into the open. In switching sides, they encouraged other hidden opponents to switch. Fear changes sides. Genuine supporters of the old older falsify their publically professed preferences, pretending that they support the new order. These are late-switchers. Do not trust them. These opportunists will just as easily switch back.

Plenty of people have had personal experiences of this in the 1980s and the 1990s when there was rapid change in social and political attitudes about racism, sexism and gay rights. A few people had to stand up for what was right and a surprisingly large number quickly joined their side.

Once Blacks in the southern states started voting for the local sheriff and judges and for state-wide officials, the local legal infrastructure helped the market work rather than frustrated it. As Richard Epstein noted when writing a freedom of association but his remarks equally apply to the market process:

The practice of freedom of association cannot survive in a society that has corrupt electoral institutions, corrupt provision of public services, corrupt use of public force, and unrestrained use of private violence. The hard question in these settings is to ask exactly what legal changes should be made. In one sense, the thought that some non-discrimination principle could gain hold through legislation seems laughable. Indeed, it was only because federal legislation could work, with much huffing and puffing, to override state legislation that the local monopoly was broken… The competitive market works well when supported by well-ordered public institutions.

The rapid demise of the Green Book is a testament to the shallowness of racism in America apart from a hard-core full of hatred of whatever comes along. Certainly, the collapse in the market for a specialised information on businesses willing to accept black patch and suggests that many southern businesses opened their doors to black customers once it was physically safe to do so. The Civil Rights Bill of 1964 bought an end to lawlessness in the South principally because black people could now vote. Epstein again:

At its best, and in its original form, the Civil Rights Act of 1964 sought to break the control of the local segregationist forces over their political institutions. First on the list was Title I, which attacked exclusion from voting.

Swedish and Danish top incomes & union decline @FlipChartRick @EconomicPolicy @PoliticalSift

The Danish top 1% and top 10% is even lazier than their transnational co-conspirators. No success at all at either grinding the Danish unions down or extracting more labour surplus from the long-suffering Danish proletariat.

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Source: OECD StatExtract and Top Incomes Database.

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Source: OECD StatExtract and Top Incomes Database.

The Swedish top 10% and top 1%  have done a bit better since the economic liberalisation in that country from the early 1990s. But none of that additional labour surplus has anything to do with grinding the unions down because Swedish union membership has not declined.

image

Source: OECD StatExtract and Top Incomes Database.

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Source: OECD StatExtract and Top Incomes Database.

Chinese birth and death rates and the Chinese population since 1950

https://twitter.com/MaxCRoser/status/660030711278227456

Is the living wage a form of indirect sex discrimination?

The living wage will certainly be to the profit of incumbent workers at the time of the wage increase but that is provided that their employer stays in business. The introduction of a living wage will result in indirect sex discrimination because of the higher job turnover rates of women. Women also have shorter average job tenures than men in any particular job.

Source: Worker turnover rate in New Zealand by sex – Figure.NZ.

Any benefit premised on not quitting jobs discriminates against women because of their higher job quit rates. More women than men will have to quit living wage jobs because of motherhood and other changes in their personal circumstances. Isn’t that discrimination?

One in six workers change their jobs every year. That job turnover rate is higher among the workers with less human capital simply because both sides of the job match have less reasons to continue. A job quit or job layoff for a less skilled worker does not result as much of a loss of job specific and firm specific human capital than would be the case if the worker was more skilled with more firm-specific human capital.

One of the iconic empirical facts of the labour market is job turnover rates are higher and job layoff rates are higher for less skilled workers. As workers acquire more job specific human capital, they are more reluctant to quit and their employer hesitate before laying them off. This is because of the firm specific human capital which both invested would have to be written off.

Women quit jobs more often than men, work part-time or switch between part-time and full-time work more often than men and enter and re-enter to the workforce because of motherhood and maternity leave. Women also tend to invest in more generalised, more mobile human capital. Women anticipate a more intermittent labour force participation and more spells of part-time work. As such, women have less reasons to invest in specific human capital if they anticipate leaving because of motherhood and either changing jobs more often are working part-time. If you are changing jobs more often, such as women do, investing in more general human capital and less in specific capital increases options when searching for vacancies.

Any benefit of the living wage will erode faster for women because they quit jobs at a higher rate than men. Is this indirect sex discrimination? This higher job turnover rate is driven by human capital investment strategies and career plans. The living wage, which privileges the incumbent workers at the time the living wage increases implemented, discriminates against female workers because they change jobs more often or are likely to quit sooner after the living wage was initially implemented.

The particular form of indirect sex discrimination at hand arises from the Golden Handcuffs effect of the living wage. Closer Together Whakatata Mai – reducing inequalities explain the Golden Handcuffs effect this way:

You may have noticed in the article it is actually the SAME people being paid the living wage (“all of them have stayed on as staff”). This is how labour markets can work if employers make different choices. If you look at the Living Wage employers – they haven’t hired a whole new set of people – they have invested in the people they already have. The world has not ended and many more people are happy and businesses and organisations are doing just fine.

Even the proponents of the living wage admit that a living wage increase will segment the labour market and create insiders and outsiders with the insiders paid more than what used to be called the reserve army in the unemployed by the same crowd of activists. A reduction in job turnover will increase unemployment durations because there are fewer vacancies posted every period.

Hopefully all the existing employees of the living wage employer are capable of the requisite up skilling they need to match their new productivity targets. Not everyone did well at school. One of the reasons workers on low wages are on those low wages because they perhaps didn’t do as well at school as activists who appointed themselves to speak for them. A harsh reality of life is 50% of the population have below-average IQs.

This up skilling answer to the cost to employers of a living wage increase is a variation of the standard policy response in a labour market crisis. That standard labour market policy response in crisis is send them on a course. Sending them on a course as a response to a crisis makes you look like you care and by the time they graduate the problem will probably have fixed itself. Most problems do. I found this bureaucratic response to labour market crises to repeat itself over and over again while working in the bureaucracy.

The reason was sending them on a course was so popular with geeks as yourself sitting at your desk as a policy analysis, minister or political activist all did well at university. You assume others will do well through further education and training including those who have neither the ability or aptitude to succeed in education. People don’t go on from high school to higher education for a range of reasons that include a lack of motivation to study or a simple lack of ability no matter how hard they try.

The living wage hypothesis about reduced turnover, up-skilling and greater motivation is a small example of the American company that decided to pay a minimum wage of $70,000 a year. Those workers who cannot earn as much of this elsewhere would never quit. Some of his better employers quit because they resented being paid the same as less productive employees. Hopefully, the minority shareholder suing his brother who is the CEO for offering that above market wage doesn’t end up bankrupting the company. As such, the incumbent workers’ fortunes are unusually closely tied to their existing employer if they are paying above the going rate in their industry and occupation.

I suppose you could hold on like grim death but women tend to have more reasons to move on than men if only because of pregnancy and motherhood. These golden handcuffs are of less value to them than to men. Younger workers are also less advantaged because many young New Zealanders take a overseas working holiday of several years, if not more. If they have a living wage job now that have to give up that advantage.

Workers who lack the labour productivity to earn a wage equivalent of the living wage elsewhere will never quit a living wage job, and will have a much reduced incentive to up-skill or seek promotion. There will be less internal reward for undertaking additional training or job responsibilities among low skilled is because the living wage will mean they will not get a wage rise. That wage rise is gobbled up by the living wage increase if you’re already a low-paid worker.

Naturally, as vacancies arise, recruits will be drawn from a much higher quality recruitment attracted by the higher wage at the living wage employer. The less skilled workers who don’t currently work for the living wage employer will miss out completely.

Child poverty by British Prime Minister since 1961

When I pointed out yesterday that the only periods of sustained real household income growth in recent British history was under those neoliberal lapdogs Thatcher and Blair, the Twitter Left on Reddit decided rather prematurely I might say that:

The prime minister rarely influences broad economic realities — like commodity prices or interest rates, or double digit economic growth in china. Elections frequently change the party in power AFTER the economy turns downwards. As though that party had anything to do with the down turn.

I’m sure that the morally centred Twitter Left will be equally forgiving of the sustained rise in child poverty due to many more workless households shown in the chart below under Thatchernomics. The only sustained fall in child poverty rates in recent British history was under Tony Blair. The British Left and current British Labour Party leadership dismiss him as a continuation of Thatchernomics.

Source: Incomes in the UK – Institute For Fiscal Studies – IFS.

https://twitter.com/zitate_xxl/status/654142170115379200

Top incomes and the decline of unions in Canada, France and Italy

The French ruling class is as lazy as their transnational co-conspirators down under. French union membership is in serious decline albeit from a low base. An opportunity lost for the French ruling class. It has not lifted a finger to extract additional labour surplus from the downtrodden French proletariat now stripped of their only line of collective defence against capitalist exploitation.

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Source: OECD Stat and Top Incomes Database.

The top 10% and top 1% in France are no better off than two generations ago despite the decline of French unions. The French Left must be most disappointed. No kicking in the rotten door of the permanent revolution anytime soon after the immiserised French proletariat rises up because it has nothing to lose but its chains. The 21st century version of the Marxist call to the barricades would be a proletariat stirred to revolution with nothing to lose but their suburban home, motorcar, IPad and air points

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Source: OECD Stat and Top Incomes Database.

The Italian ruling class has had little success in bringing Italian unions down. The top 10% in Italy is earning no more now than back when the Red Brigades were gunning for them.

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Source: OECD Stat and Top Incomes Database.

The top 1% in Italy is doing a little bit better than when the Red Brigade was gunning for them, but not much more. Unions don’t figure in explaining that small rise in Italian top 1% incomes over the last 40 years. Italian unions are pretty much a strong as they were 40 years ago in membership. Italian employment protection laws are pretty much as strong as they used to be too.

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Source: OECD Stat and Top Incomes Database.

The Canadian ruling classes even more incompetent than their transnational co-conspirators over in Italy. There appears to have been next to no decline in union membership in Canada. The Canadian top 10% is not earning any more than back in the 60s.

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Source: OECD Stat and Top Incomes Database.

The Canadian top 1% is doing a little bit better than 25 years ago also but not off the back of unions which are almost as strong as in the past. The Canadian Left will have to look for a different hypothesis than the ravages of the top 1%.

image

Source: OECD Stat and Top Incomes Database.

All in all, the Economic Policy Institute simply got lucky with a spurious correlation between top incomes and union membership in the USA.

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