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Tag Archives: Labor market

North Dakota Economy Reset

A new school year is starting at UND and it seems an appropriate time to engage in a reset of what we know about the state economy. The fact is these situations are subject to change very quickly and for reasons well beyond the control of economic actors in the ND economy. With commodities comprising a significant share of ND economic activity it is a global price that really impacts profitability. What can we say that is going on at this point? Labor Markets Labor constraints...

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Shoddy Executive Order Bears Fingerprints of Navarro and Krugman

An immigration Executive Order was issued two days ago.  I read it yesterday and gathered my thoughts and relevant memories over the subsequent 24 hours. The EO contains immigration regulations and purported economic justifications for the regulations. The EO’s economic justification is essentially that it is good to suppress labor supply during a recession.  I disagreed with such a conclusion when it was offered years ago by Krugman, Eggertson, and others.  The conclusion is just...

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Interpreting the unemployment numbers

The Bureau of Labor Statistics announced Friday that 2.5 million more Americans were working in May than in April. That’s the biggest monthly increase since 1946, both in terms of the number of workers and as a percentage of the workforce. The unemployment rate dropped from 14.7% in April to 13.3% in May, the biggest monthly drop since 1950. All this is very good news. But there are also indications that we are in a deeper hole than the headline numbers suggest. Here I explain why I believe...

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Labor Market Recovery Begins when States Begin to Open

The first chart below is an estimate of weekly US employment per adult.  It suggests that the bottom was the week ending May 7, and that a recovery may have begun. The estimated recovery may not look large on the scale of the current depression, but it is about 7.5 million employees above May 7 and 3 million employees above late April.  Note that the entire recovery from the 2008-9 recession was "only" 7 million employees above population growth and took ten years rather than a week or...

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Measuring Employment between Monthly Surveys

The Employment Situation Report by the Bureau of Labor Statistics comes only monthly.  It measures only the seven-day week (or, with the establishment survey, pay period) including the 12th of the prior month, which means that this month four very interesting weeks will be skipped and that the report on that April week will not be released until May 8. Three data sources provide employment information on at least one of the missing four weeks, with the results shown in the chart below. ...

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30+ million out of a job

A one-size-fits-all policy, even at the state level, has been a mistake from the beginning.  Instead policy should be favoring decentralized mechanisms over direct control and ensuring that the chosen regulations deliver more net benefits than less stringent alternatives.  It is too bad that governments are causing so much harm at this critical moment by ignoring these longstanding principles of government regulation. Expressed at an annual rate, the...

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Shutdown reduces the flow of GDP by 28 percent

New data from Alexander Bick and Adam Blandin suggest that the flow of real GDP is 28 percent less than it would be under normal circumstances.  Using two entirely different methods, I previously forecasted 25 percent and 26 percent.  Below are the details of my calculations from Bick and Blandin. Bick and Blandin (2020) find that working hours per working age adult circa April 1 declined 27 percent from February.  Moreover, among those working in February 2020, between 59 and 61 percent...

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Notes on 2020 CARES Act, in reading order

Note that this law is just one of multiple new COVID-19 relief laws.  These are my notes on the labor market provisions in the law, which are all of Titles I and II, and parts of Title III. Title I KEEPING AMERICAN WORKERS PAID AND EMPLOYED ACT A.k.a., 7(a) loans "Loans" to small businesses that maintain their payrolls Payroll does not include any payments to employees making $100K+ annually The loan amount is capped by the prorated amount of payroll for the prior year The loans can be...

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An example of 7(a) perversion

Let's say that you have 700 employees in the prior year, earning an average of $50K. If you continue that between now and the end of Q2, Title I of the 2020 CARES Act will give you nothing. BUT if you fire at last 201 of those employees, and THEN apply for a $10 million 7(a) loan, the entire $10 million will be forgiven at the end of Q2 as long as you keep enough of the 499 employees that remain.  Moreover, you pay no business tax on the forgiven amount. You are eligible for the...

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Notes on Families First Coronavirus Response Act, in reading order

Note that this law is just one of multiple new COVID-19 relief laws. Division A Section 1101.  Schools are incentivized to remain closed more days. Titles II-IV, VI.  Small amounts given to agencies to be spent at the Cabinet member's discretion. Title V.  $1 billion for HHS to pay COVID-19 expenses for the uninsured. Division B Titles I and II.  School lunch money is now available when school is closed "due to COVID-19." This incentivizes to schools remain closed more days,...

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