Labor Economics at Hope

There is a proposed bill being brought forward to the California State Senate that would require companies to report salary data to the state by race and sex.  The purpose of the bill is to help achieve more equal pay for people from different groups.  Some businesses are not too excited about the bill, suggesting it is difficult to make accurate comparisons between people if one is unable to hold constant for all of the different factors that might affect compensation.  You can find the report from CBS News here.

An article at the website Quartz suggests that working at home can save you thousands of dollars a year.  How?  There is money saved on food, coffee, commuting, etc.  This may suggest that compensating wage differentials could arise for jobs that allow a person to work at home.  A question yet to be answered: are people as productive when they are working at home?

Unemployment rates for older workers are lower than those of the general population, and older people are working more than they twenty years ago.  Why?  First, the job market is tight and companies are looking for all of the good workers they can get.  Second, many older workers don’t have enough savings for retirement, so they need to work.  Check out all the details at cnbc.com.

The jobs report from last Friday was quite a surprise.  There were 313,000 net new jobs added; the unemployment rate stayed at 4.1 percent.  Question: Why did the unemployment rate stay steady with so many new jobs?   Answer: The labor force participation rate went up.  You can see CNBC’s take on the jobs report here.

Bloomberg.com reports on a new trend happening at American businesses.  Since the unemployment rate is so low and many firms are having a difficult time finding workers, less companies are drug testing their potential workers.  There is also the factor of the legalization of marijuana in some states.  In Colorado, for example, the share of employees tested for marijuana fell from 77 percent to 66 percent in one year.

“Pure” substitution effects are relatively unusual occurrences with regards to labor supply issues.  In order for one to take place, wages have to change, while income is held constant.  The revenue-neutral carbon tax enacted by the Canadian province of British Columbia is one possible example.  Tax rates on wages decreased while increased taxes were placed on carbon-based fuels.  The result was higher after-tax wages while overall income was held relatively constant.  This is the definition of a substitution effect.  You can read about the program here.

Some people in the media are suggesting that the government is actually taking in more revenue from the carbon tax than the tax cuts they are giving back in income tax reductions, so this policy is not without controversy.

The BLS released the January Employment report yesterday morning.  The net new jobs figure was plus 200,000, and the unemployment rate remained at 4.1%.  Another piece of important news from report was that wage growth in USA has started to pick up.  Wages went up 2.9 percent in the last year, the best pace since 2009.  However, the possibility of inflation in the economy spooked the stock market, with the Dow going down over 650 points on Friday.

USA Today has an article about a very important case impacting the future of public sector (government worker) labor unions.  If the court rules against the labor unions (and this is a real possibility), these labor unions will lose many of their workers and the union dues they pay.  This also could turn out to be a pretty big deal politically as these unions will not have as much money to put into campaigns.

According to an article in theweek.com, there are many people in their seventies and beyond still working.  The article says that some of this is due to the change in how pensions have been structured in the USA.  This story seems anecdotal, but is still interesting.

Wal-Mart is just one of many businesses that are providing higher wages in response to the tax reform passed by Congress and signed by the President this past December.  A Bloomberg.com article suggests that companies are doing this to stay competitive in a tightening labor market.  Wal-Mart is the largest private employer in the USA.