Undoubtedly everyone has seen stories in the media about how we need to expand high-skilled immigration because we have a shortage of workers with degrees in science, technology, engineering, and math (STEM). Claims of a shortage of STEM workers have been disconcerting to those of us who believe in economics since shortages are supposed to result in rising prices, or in this case, higher wages. We don’t seem to be seeing rapidly rising wages in most areas, which makes the claims of shortages dubious.
It turns out that at least one major tech firm has figured out how markets work. Netflix apparently doesn’t have any problem hiring STEM workers. It offers higher wages. According to Businessweek:
“Netflix can now hire just about any engineer it wants. That’s a function of the computer science the company does and its reputation as the highest payer in Silicon Valley. Managers routinely survey salary trends in Silicon Valley and pay their employees 10 percent to 20 percent more than the going rate for a given skill.”
If Netflix can figure this out perhaps it would be possible for companies like Facebook, Microsoft, and other tech giants to get this down as well. It is always good for a company to get lower cost labor, just like they want to pay less for all of their inputs. But if these companies really need workers, the trick is to offer higher pay. Maybe remedial courses for top management would do the trick.
Undoubtedly everyone has seen stories in the media about how we need to expand high-skilled immigration because we have a shortage of workers with degrees in science, technology, engineering, and math (STEM). Claims of a shortage of STEM workers have been disconcerting to those of us who believe in economics since shortages are supposed to result in rising prices, or in this case, higher wages. We don’t seem to be seeing rapidly rising wages in most areas, which makes the claims of shortages dubious.
It turns out that at least one major tech firm has figured out how markets work. Netflix apparently doesn’t have any problem hiring STEM workers. It offers higher wages. According to Businessweek:
“Netflix can now hire just about any engineer it wants. That’s a function of the computer science the company does and its reputation as the highest payer in Silicon Valley. Managers routinely survey salary trends in Silicon Valley and pay their employees 10 percent to 20 percent more than the going rate for a given skill.”
If Netflix can figure this out perhaps it would be possible for companies like Facebook, Microsoft, and other tech giants to get this down as well. It is always good for a company to get lower cost labor, just like they want to pay less for all of their inputs. But if these companies really need workers, the trick is to offer higher pay. Maybe remedial courses for top management would do the trick.
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The NYT had a piece on changes to French labor market regulation that will make it easier for employers to cut wages. The piece implies that France has a seriously dysfunctional labor market:
“There is wide agreement that the country has to bring down its relatively high labor costs if it is to compete with lower-wage destinations overseas and even with Germany, which underwent its own painful labor-market restructuring over the last decade and currently has a jobless rate of just 5.4 percent.
“It is the kind of structural overhaul that European Union leaders are urging to increase employment and growth in France, which is being given two more years to get its budget deficit down to the European Union-mandated 3 percent of the gross domestic product. But even the government acknowledges that more must be done, including further changes to pensions.
“France is in the midst of an unemployment crisis, with nearly 11 percent of the work force unemployed in a period of near recession. Among people under 24, the problem is even worse, with more than 26 percent jobless.”
France’s economy is clearly depressed, but the more obvious culprit would seem to be the fallout from the collapse of housing bubbles across Europe and the austerity policies being imposed by the European Central Bank and the European Union. While France’s unemployment picture does look bad, its employment to population ratio tells a different story. According to the OECD, the employment to population ratio (EPOP) in France, for people ages 16-64, was 63.9 percent in 2012, down only slightly from its 64.2 percent rate in 2007.
By comparison, the EPOP in the United States has fallen 4.8 percentage points over this period, from 71.9 percent in 2007 to 67.1 percentage points in 2012. The reason that the United States has not seen a comparable rise in its unemployment rate is that a large portion of those without jobs have given up looking for work. Most economists would probably not consider this evidence of a well-functioning labor market.
The NYT had a piece on changes to French labor market regulation that will make it easier for employers to cut wages. The piece implies that France has a seriously dysfunctional labor market:
“There is wide agreement that the country has to bring down its relatively high labor costs if it is to compete with lower-wage destinations overseas and even with Germany, which underwent its own painful labor-market restructuring over the last decade and currently has a jobless rate of just 5.4 percent.
“It is the kind of structural overhaul that European Union leaders are urging to increase employment and growth in France, which is being given two more years to get its budget deficit down to the European Union-mandated 3 percent of the gross domestic product. But even the government acknowledges that more must be done, including further changes to pensions.
“France is in the midst of an unemployment crisis, with nearly 11 percent of the work force unemployed in a period of near recession. Among people under 24, the problem is even worse, with more than 26 percent jobless.”
France’s economy is clearly depressed, but the more obvious culprit would seem to be the fallout from the collapse of housing bubbles across Europe and the austerity policies being imposed by the European Central Bank and the European Union. While France’s unemployment picture does look bad, its employment to population ratio tells a different story. According to the OECD, the employment to population ratio (EPOP) in France, for people ages 16-64, was 63.9 percent in 2012, down only slightly from its 64.2 percent rate in 2007.
By comparison, the EPOP in the United States has fallen 4.8 percentage points over this period, from 71.9 percent in 2007 to 67.1 percentage points in 2012. The reason that the United States has not seen a comparable rise in its unemployment rate is that a large portion of those without jobs have given up looking for work. Most economists would probably not consider this evidence of a well-functioning labor market.
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Steven Pearlstein is upset that the austerity pushers, like the Post’s editors, are looking rather foolish these days. After all, it seems they not only have problems with basic economic logic, they also have trouble with Excel spreadsheets. He notes the serious structural problems in Greece and some of the other crisis countries, then tells readers:
“Unfortunately, this is not how the anti-austerity crusaders talk about Greece or Italy or Portugal. They offer no reasonable alternative other than the rest of the world should line up to pour more money into a uncompetitive economies and profligate governments, under the theory that they can grow their way out of the hole they’ve dug. They can’t.”
Hmmm, I wish I knew some of the “anti-austerity crusaders” that Pearlstein is talking about. Folks I know have been talking about the need for adjustments in relative wages that can best be brought about by having wages in Germany and other surplus countries rise more rapidly so that the southern countries can regain competitiveness.
There are of course other problems in the crisis countries, in Greece most importantly the problem that people don’t like to pay taxes. This anti-austerity crusader has recommended a tax amnesty which would be coupled with serious penalties for people who don’t comply. (How do you spell “life in prison.”) My guess is that if millionaire and billionaire tax evaders got the impression that they would never get to see their families or money, they might be a bit more conscientious about adhering to the tax codes.
I have also suggested a vacant property tax to lower both residential and commercial rents, thereby raising real wages and providing a boost to business. I’d be happy to see many other reforms that would eliminate corruption that has developed over the years in these countries, as I suspect is the case with most anti-austerity crusaders. My argument, and I suspect that of my fellow crusaders, is that we have to keep our eyes on the ball.
These countries are suffering today from the fallout from collapsed asset bubbles, not their internal structural problems. The fault for these bubbles sits squarely with all the wise people at the ECB and EU who are now pushing austerity. Somehow they thought everything was fine in the years of the “Great Moderation” even though all the danger signs were flashing bright red.
Making the people in these countries suffer does not in any obvious way fix their structural problems. It just ruins lives. Yeah, me and my fellow crusaders don’t think that’s cute. Better to ruin the lives of the elites who caused this crisis.
Steven Pearlstein is upset that the austerity pushers, like the Post’s editors, are looking rather foolish these days. After all, it seems they not only have problems with basic economic logic, they also have trouble with Excel spreadsheets. He notes the serious structural problems in Greece and some of the other crisis countries, then tells readers:
“Unfortunately, this is not how the anti-austerity crusaders talk about Greece or Italy or Portugal. They offer no reasonable alternative other than the rest of the world should line up to pour more money into a uncompetitive economies and profligate governments, under the theory that they can grow their way out of the hole they’ve dug. They can’t.”
Hmmm, I wish I knew some of the “anti-austerity crusaders” that Pearlstein is talking about. Folks I know have been talking about the need for adjustments in relative wages that can best be brought about by having wages in Germany and other surplus countries rise more rapidly so that the southern countries can regain competitiveness.
There are of course other problems in the crisis countries, in Greece most importantly the problem that people don’t like to pay taxes. This anti-austerity crusader has recommended a tax amnesty which would be coupled with serious penalties for people who don’t comply. (How do you spell “life in prison.”) My guess is that if millionaire and billionaire tax evaders got the impression that they would never get to see their families or money, they might be a bit more conscientious about adhering to the tax codes.
I have also suggested a vacant property tax to lower both residential and commercial rents, thereby raising real wages and providing a boost to business. I’d be happy to see many other reforms that would eliminate corruption that has developed over the years in these countries, as I suspect is the case with most anti-austerity crusaders. My argument, and I suspect that of my fellow crusaders, is that we have to keep our eyes on the ball.
These countries are suffering today from the fallout from collapsed asset bubbles, not their internal structural problems. The fault for these bubbles sits squarely with all the wise people at the ECB and EU who are now pushing austerity. Somehow they thought everything was fine in the years of the “Great Moderation” even though all the danger signs were flashing bright red.
Making the people in these countries suffer does not in any obvious way fix their structural problems. It just ruins lives. Yeah, me and my fellow crusaders don’t think that’s cute. Better to ruin the lives of the elites who caused this crisis.
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We know this because they are spouting utterly absurd lines which Paul Sullivan unfortunately felt he had to repeat in his NYT column. Sullivan discusses the number of people who could be hit by President Obama’s proposal to cap tax sheltered savings at $3.4 million.
The discussion is ridiculous throughout. It makes a point of saying that under optimistic assumptions we could get 10-20 million people rubbing up against the proposed limits. (Yes, 10 percent of the population will have millions of dollars in financial assets.) However even more ridiculous is that there is no reason any serious person should give a damn.
If a person has $3.4 million in a tax sheltered account is there some national tragedy that the additional $50,000 they want to save will be subject to normal tax rules. If this ever rises to the point of meriting serious policy consideration then the world is way better off that I thought.
But here’s the best part:
“Any discussion of retirement savings that suggests ‘taking away tax-advantaged investing and capping investment amounts is detrimental to the system and society as a whole,’ said Robert L. Reynolds, president and chief executive of Putnam Investments and one of the people considered responsible for popularizing the 401(k) plan.
“‘Right now elderly poverty is at an all-time high,’ Mr. Reynolds said. ‘If that tells government anything, it’s we should do more to encourage saving for retirement.'”
Actually elderly poverty is nowhere close to being at an all-time high, but more importantly, what does Mr. Reynolds think he is talking about? The elderly who are in poverty are not worried about brushing up against the $3.4 million tax-exempt limit being proposed by President Obama. He is spouting non-sequiturs.
Apparently that is the state of the debate on this issue. And, the NYT’s retirement columnist presented this nonsense as a serious argument.
We know this because they are spouting utterly absurd lines which Paul Sullivan unfortunately felt he had to repeat in his NYT column. Sullivan discusses the number of people who could be hit by President Obama’s proposal to cap tax sheltered savings at $3.4 million.
The discussion is ridiculous throughout. It makes a point of saying that under optimistic assumptions we could get 10-20 million people rubbing up against the proposed limits. (Yes, 10 percent of the population will have millions of dollars in financial assets.) However even more ridiculous is that there is no reason any serious person should give a damn.
If a person has $3.4 million in a tax sheltered account is there some national tragedy that the additional $50,000 they want to save will be subject to normal tax rules. If this ever rises to the point of meriting serious policy consideration then the world is way better off that I thought.
But here’s the best part:
“Any discussion of retirement savings that suggests ‘taking away tax-advantaged investing and capping investment amounts is detrimental to the system and society as a whole,’ said Robert L. Reynolds, president and chief executive of Putnam Investments and one of the people considered responsible for popularizing the 401(k) plan.
“‘Right now elderly poverty is at an all-time high,’ Mr. Reynolds said. ‘If that tells government anything, it’s we should do more to encourage saving for retirement.'”
Actually elderly poverty is nowhere close to being at an all-time high, but more importantly, what does Mr. Reynolds think he is talking about? The elderly who are in poverty are not worried about brushing up against the $3.4 million tax-exempt limit being proposed by President Obama. He is spouting non-sequiturs.
Apparently that is the state of the debate on this issue. And, the NYT’s retirement columnist presented this nonsense as a serious argument.
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In the wake of the release of the new CBO numbers projecting that the debt-to-GDP ratio is actually projected to fall over the next decade, the Washington Post decided to give us one of its classic deficit/debt fear-mongering stories. The piece could not avoid noting the obvious fact that there is nothing that could remotely pass as a deficit crisis in the immediate future, but it did tell us:
“Policymakers have capped spending on agency budgets, permitted across-the-board spending cuts known as the sequester to take effect, let a temporary cut in the payroll tax expire and raised taxes on the nation’s wealthiest households. They have done nothing, however, to tackle the long-term affordability of Social Security and Medicare, which are projected to be the biggest drivers of future borrowing as the population ages.”
Of course one of the highlights of this and other recent reports has been the sharply lower projected rate of growth of health care spending which was driving the projections of bloated deficits in future years. One factor in the slower projected growth is the Affordable Care Act, so this assertion from the Post is simply untrue.
However the real gem is this line:
“the improvement in the short-term forecast has removed the air of crisis that has hovered around the budget deficit since President Obama took office.”
Wow, an “air of crisis.” And where did this “air of crisis” come from? It surely did not come from financial markets, where investors have shown a willingness to lend the United States government trillions of dollars at very low interest rates in the years since President Obama took office. It certainly did not come from competent economists who were able to recognize that the large deficits were a direct result of the economic collapse in 2008. It also did not come from the millions of people who lost their jobs due to the downturn and looked to government stimulus as the only possible source of demand that could re-employ them.
A more accurate statement might be that:
“the improvement in the short-term forecast has removed the air of crisis around the budget deficit that the Washington Post and its allies have sought to promote since President Obama took office.”
Let’s be serious here, the crisis was invented by people in Washington who have an agenda for cutting Social Security and Medicare. That is as clear as day. The deficit crisis does not actually exist in the world. In the world we have a crisis of a grossly under-performing economy that the Post and its allies have attempted to perpetuate.
In the wake of the release of the new CBO numbers projecting that the debt-to-GDP ratio is actually projected to fall over the next decade, the Washington Post decided to give us one of its classic deficit/debt fear-mongering stories. The piece could not avoid noting the obvious fact that there is nothing that could remotely pass as a deficit crisis in the immediate future, but it did tell us:
“Policymakers have capped spending on agency budgets, permitted across-the-board spending cuts known as the sequester to take effect, let a temporary cut in the payroll tax expire and raised taxes on the nation’s wealthiest households. They have done nothing, however, to tackle the long-term affordability of Social Security and Medicare, which are projected to be the biggest drivers of future borrowing as the population ages.”
Of course one of the highlights of this and other recent reports has been the sharply lower projected rate of growth of health care spending which was driving the projections of bloated deficits in future years. One factor in the slower projected growth is the Affordable Care Act, so this assertion from the Post is simply untrue.
However the real gem is this line:
“the improvement in the short-term forecast has removed the air of crisis that has hovered around the budget deficit since President Obama took office.”
Wow, an “air of crisis.” And where did this “air of crisis” come from? It surely did not come from financial markets, where investors have shown a willingness to lend the United States government trillions of dollars at very low interest rates in the years since President Obama took office. It certainly did not come from competent economists who were able to recognize that the large deficits were a direct result of the economic collapse in 2008. It also did not come from the millions of people who lost their jobs due to the downturn and looked to government stimulus as the only possible source of demand that could re-employ them.
A more accurate statement might be that:
“the improvement in the short-term forecast has removed the air of crisis around the budget deficit that the Washington Post and its allies have sought to promote since President Obama took office.”
Let’s be serious here, the crisis was invented by people in Washington who have an agenda for cutting Social Security and Medicare. That is as clear as day. The deficit crisis does not actually exist in the world. In the world we have a crisis of a grossly under-performing economy that the Post and its allies have attempted to perpetuate.
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The median pay for a member of the board of a Fortune 500 company is almost $240,000 a year. This typically involves 4-8 meetings a year. One of the top priorities of the board is supposed to be ensuring that top management doesn’t rip off the company. They have not been doing a very good job as Gretchen Morgenson points out in her column today.
That raises the question of what exactly they get all this money for? Director Watch will be coming soon to a website near you.
The median pay for a member of the board of a Fortune 500 company is almost $240,000 a year. This typically involves 4-8 meetings a year. One of the top priorities of the board is supposed to be ensuring that top management doesn’t rip off the company. They have not been doing a very good job as Gretchen Morgenson points out in her column today.
That raises the question of what exactly they get all this money for? Director Watch will be coming soon to a website near you.
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Floyd Norris has a good piece today comparing trends in unemployment rates across countries in the downturn. He notes that Germany alone has seen a drop in its unemployment rate since the downturn began. While he notes that Germany has pursued work sharing policies that have encouraged employers to keep workers on the job working shorter hours, readers may not appreciate the full importance of this policy.
Growth in Germany and the United States have been virtually identical since the beginning of the downturn. While Germany has a large balance of trade surplus, in contrast to the deficit in the United States, its consumption growth has been weaker.
Source: International Monetary Fund.
Germany is helped in this story by the fact that it has a slower rate of labor force growth, but clearly the difference in growth rates does not explain the fact Germany’s unemployment rate has fallen by 2.5 percentage points while unemployment in the United States has risen by 3.0 percentage points.
Note: correction made –thanks ltr.
Floyd Norris has a good piece today comparing trends in unemployment rates across countries in the downturn. He notes that Germany alone has seen a drop in its unemployment rate since the downturn began. While he notes that Germany has pursued work sharing policies that have encouraged employers to keep workers on the job working shorter hours, readers may not appreciate the full importance of this policy.
Growth in Germany and the United States have been virtually identical since the beginning of the downturn. While Germany has a large balance of trade surplus, in contrast to the deficit in the United States, its consumption growth has been weaker.
Source: International Monetary Fund.
Germany is helped in this story by the fact that it has a slower rate of labor force growth, but clearly the difference in growth rates does not explain the fact Germany’s unemployment rate has fallen by 2.5 percentage points while unemployment in the United States has risen by 3.0 percentage points.
Note: correction made –thanks ltr.
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