Celebrating humanity's flourishing through the spread of capitalism and the rule of law
12 Feb 2016 Leave a comment
in applied price theory, Austrian economics, business cycles, economic growth, F.A. Hayek, fiscal policy, job search and matching, labour economics, labour supply, macroeconomics, unemployment, unions Tags: job search, mismatch unemployment, search unemployment, union power, union wage premium, waiting unemployment
31 Jan 2016 Leave a comment
in applied price theory, applied welfare economics, economic history, labour economics, labour supply, unions Tags: 40 hour week, hours worked, living standards, union power, union wage premium, working hours, working week
15 Dec 2015 Leave a comment
in economic history, labour economics, unions Tags: British economy, union membership, union power, union wage premium
British union membership is very much a public sector phenomena. Outside of the public sector, union membership is low but stable for 20 years now.
Source: Office of National Statistics, Trade Union Membership 2014
14 Dec 2015 Leave a comment
in economic history, economics of bureaucracy, labour economics, politics - USA, Public Choice, rentseeking, unions Tags: union membership, union power, union wage premium
Public and private sector union membership took completely different paths in the USA over the last 40 years. Public sector union memberships held its own. There is been a steady decline in union membership in the private sector. The exception is construction unions which held their own in membership for the last 10 years.
Source: unionstats.com.
04 Dec 2015 2 Comments
in labour economics, politics - Australia, politics - New Zealand, politics - USA, unions Tags: union membership, union power
Union membership was in a long-term decline in New Zealand before the passage of the hated Employment Contracts Act in 1991. If anything, union membership stopped falling after the passage of that law.
Source: OECD Stat.
As for the other countries, steady decline in membership has been the trend since 1980. The already low level of union membership in the USA has been in a steady decline since at least 1960.
18 Nov 2015 Leave a comment
in applied price theory, Austrian economics, entrepreneurship, human capital, industrial organisation, labour economics, labour supply, Milton Friedman, minimum wage, occupational choice, poverty and inequality, survivor principle, unions Tags: market process, The meaning of competition
12 Nov 2015 2 Comments
in labour economics, labour supply, managerial economics, occupational choice, organisational economics, personnel economics, politics - New Zealand, unions Tags: compensating differentials, part-time work, zero hour contracts
My submission to the Transport and Industrial Relations Committee today on the Employment Standards Bill is there should be no regulation of zero hours contracts:
Always knowing your working hours in advance is known only to about 30% of shift workers; and
Workers command a wage premium when they sign zero hours contracts.
The obvious question is why do jobseekers sign a zero hours contract if it is not in their interests? Most of all, why would a worker who already has a job quit to work on a zero hours contract unless it is to their advantage?
If zero hours contracts are oppressive, the only workers hired on them would be the unemployed. Anyone who has a job would refuse such offers. Those unemployed that do sign a zero hours contract would quit as soon as a better offer comes along. 50% of job offers to British welfare beneficiaries to work on a zero hours contract are turned down.
This frequent refusal of zero hours contracts not only suggests there are options for jobseekers including the unemployed but there are costs to employers. The most likely employer response to reduce these costs of rejection is a offer to pay more to sign a zero hours contract. Everyone in this room knows contractors who work in much more than those in regular employment.
Unless labour markets are highly uncompetitive with employers having massive power over employees, employers should have to pay a wage premium if zero-hour contracts are a hassle for workers. It is standard for unusual, irregular or casual work to come with a wage premium. If you want regular hours, fixed hours, that comes at a price – a lower wage per hour.
Zero hours contracts is creative destruction in the labour market. Plenty of new ways of working have emerged in recent years: the proliferation of part-time work, temporary workers, leased workers, working from home, teleworking and contracting. Employment laws rest on the now decaying assumption that workers have long, stable relationships with single employers.
At least a quarter of a million New Zealanders already work shifts often with little notice of changes. Work schedules are always known in advance only to 31% of temporary, seasonal and casual employees. Another quarter of these have about two weeks or more notice of shifts. Hundreds of thousands of New Zealand workers freely sign on for variable hours.
Source: Survey of Working Life December Quarter 2012, Statistics New Zealand, Table 13.
Something new and innovative such a zero hours contract should not be regulated because it is not well understood. Zero hours contracts don’t come cheap for employers because of the risk of job offer rejection. There must be offsetting advantages that allow this practice to survive in competition with other ways of hiring a cost competitive labour force.
The fixed costs of recruitment and training are such that one 40-hour worker is cheaper than hiring and training two 20-hour workers. Zero hour contracts would be most likely in jobs with low recruitment costs, few specialised training needs and highly variable customer flows.
This business variability can be borne by the employer with the worker on regular hours but paid less. The alternative is the employee shares this risk with a wage premium for their troubles.
Workers with low fixed costs of working at different times profit from a move onto zero-hours contracts. Those with higher fixed costs of changing their working hours will stay on lower hourly rates but more certain working times
To summarise my points today:
Advance notice of working hours is not as common as people think for shift workers; and
Irregular and unusual working arrangements usually command a wage premium.
Employers must pay a wage premium to induce in workers to sign zero hours contracts. This Bill undermines the right of workers to seek those higher wages. Thanks for your time and attention.
10 Nov 2015 Leave a comment
in applied price theory, applied welfare economics, economic history, entrepreneurship, health and safety, human capital, industrial organisation, labour economics, labour supply, Marxist economics, minimum wage, politics - Australia, politics - New Zealand, politics - USA, poverty and inequality, unions Tags: The Great Enrichment, union power, union wage premium
09 Nov 2015 Leave a comment
in applied price theory, applied welfare economics, labour economics, labour supply, Milton Friedman, unemployment, unions Tags: union membership, union power, union wage premium
06 Nov 2015 Leave a comment
in econometerics, economic history, labour economics, labour supply, minimum wage, politics - USA, unions Tags: conspiracy theories, conspiracy theorists, Leftover Left, living standards, Maori economic development, neoliberalism, top 1%, Twitter left, union power, union wage premium
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.
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.
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.
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%.
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.
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 apps in your smartphone cost $900,000 thirty years ago —@datarade https://t.co/pjw7q4QGDp—
Vala Afshar (@ValaAfshar) October 29, 2015
05 Nov 2015 Leave a comment
in economics of education, entrepreneurship, politics - New Zealand, politics - USA, unions
04 Nov 2015 Leave a comment
in applied price theory, applied welfare economics, econometerics, entrepreneurship, labour economics, Public Choice, rentseeking, unions Tags: Denmark, labour surplus, Sweden, top 1%, union power, union wage premium
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.
Source: OECD StatExtract and Top Incomes Database.
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.
Source: OECD StatExtract and Top Incomes Database.
Source: OECD StatExtract and Top Incomes Database.
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
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