August 6, 2008
The Job for Anybody?
Hey! Isn't this what we're supposed to say about the service economy?
American youth see manufacturing as a one-way career track toward poor wages....Keith McKee, the director of the Manufacturing Productivity Center at the Illinois Institute of Technology, offers another compelling reason: for a long time now, manufacturing has sold itself as the job for anybody, regardless of intelligence.
"This mystique has come about and it isn't a good thing," McKee says. "Manufacturers have done themselves a great disservice because for a long time, they kept saying they could hire almost anybody. Most of those people will never become skilled workers because they're dumb as rocks. If you take a rock and train it, it's still just a rock."
--"Old Myths, New Realities", Tooling & Production, August 2008, pp.56-60. [not yet online]
March 7, 2007
GITMO
I was reading this SI piece by John Ondrasik where I ran across this interesting tidbit:
One of DD's duties is to patrol the American/Cuban border fence here. The NE Gate which was a transit point for Americans and Cuban base workers pre-Castro. After the Cuban Missile Crisis, Castro forbade Cuban citizens to work at Gitmo with the exception of 300 who were already employed at the base. Today only three of the 300 are left, crossing through the NE gate dailyVia Instapundit
January 31, 2007
Some Interesting Comments
Glenn points to a U.S. News item which offers some economists predictions for the coming years labor market. Go check it out for yourself as I'm kind of lazy right now to quote any of it. I'll add that while I'm not a forecaster this outcome would follow a similar pattern to last decade. That is growth slowed following rate increases but then reaccelerated after they were absorbed. The good news is that I dont think we'll see a wave of currency crisis like we did in the late 90's. Asia has enough reserves and countries who don't aren't important enough in the world economy. It was the tech boom which overshadowed the poor performance in the rest of the economy during the late 90's.
My hope is that a tight labor market can enable some trade legislation to pass and also to ease restrictions on immigration(I have a great idea for an immigration model, but that will have to wait). The latter is possible under the current congress. The former will most likely have to wait until Republicans retake congress. Let's hope Bush pulls his head out of his ass and wins this damn war.
November 4, 2006
Danish Flexicurity Model
Latest IMF Survey summarizes the features of the Danish Flexicurity model of its labour market - a uniquely Danish blend of a flexible labour market, generous social security and an active labour-market policies;
• Labor market flexibility. Measured by how restrictive employment protection legislation is, the Danish labor market is more flexible than that in many other European countries. In practice, this means that Danish employers, both in the public and private sectors, can lay off workers rather easily. This is not a novel aspect of the Danish social system— protection against dismissal has historically been low, a feature that has been linked to the country’s openness and its many small and medium-sized enterprises.
• An extensive social safety net. Danes enjoy a high level of social protection, including generous unemployment benefits. The average net replacement rate (what people receive from the state when they lose their jobs, calculated as a percentage of their salary) is about 80 percent, among the highest in Europe.
• Active labor market policies. A large variety of labor market programs facilitate and encourage reintegration of the unemployed into the labor market. But these programs are expensive. As a result, Denmark is at the top in terms of its per capita spending on labor market programs.
Related;
Denmark's flexicurity model: ready for export?
Flexicurity - a working model for Europe?
Denmark's Overrated "Flexicurity"
Denmark: Selected Issues (IMF)
The most successful society the world has ever known
Danish for all? No thanks, says IMF
September 16, 2006
Discussing Doing Business
World Bank is running an online discussion of its recent report Doing Business 2007, via PSD Blog. The discussion questions are interesting particularly the second one. I’ve tried to link to various local news coverage of the report – among the media there seems to be some fundamental misunderstanding of the purpose of the report it seems. World Bank should be doing more for media to understand its publications.
-Of the 10 topics in the Doing Business report, where do you think reforms can most significantly improve the investment climate? -A country's ranking in the Doing Business report has become a well-known indicator. Are countries beginning to "game" the ranking by reforming only those areas of business regulation covered by the report’s methodology? -What are good reform strategies for administrations which have left the "reform window" of the first 15 months? -Have you read earlier Doing Business reports and how would you evaluate this one in comparison to the others? -The next report may address topics like the quality of business infrastructure and the cost of corruption. With this addition to the indicators, what research questions would you like to see in future Doing Business reports?
Some news coverage of the report;
Doing business is still very tough
"How free is India's economy after 15 years of liberalisation? Not very, say two reports released last week. Economic Freedom of the World 2006, published by the Fraser Institute and Cato Institute in North America, ranks India 53rd out of 130 countries in its Freedom of the World Index.
Not too bad. But Doing Business 2007, a World Bank report on how difficult it is to conduct business, ranks India 134th out of 175 countries, deep in the bottom half. The indicators used in the two reports are different."
Chasing the dragon
There is no point belabouring comparisons with China that attracts nine times more foreign direct investment (FDI) than India gets every year.
Time for step two
"Investment Minister Mahmoud Mohieddin was not a happy man. Speaking at the opening of this year's 11th annual Euromoney conference in Cairo, the minister directed his anger at the International Finance Corporation's (IFC) 2006 Doing Business report, which ranked Egypt at 165th worldwide in terms of countries that had improved business regulations and cut red tape. Mohieddin said the experts who put together the report did not appear to "have a full understanding of our economy". The 16 firms that the IFC -- the World Bank's private sector arm -- chose to examine for its report, he said, were not a very representative sample."
Business Scene-GEORGIAN AMBASSADOR Lasha Zhvania is happily circulating a World Bank and International Finance Corporation report that lists Georgia as the top reformer in the Commonwealth of Independent States (CIS). According to the report, Georgia also led the global top 10 reformer rankings on the ease of doing business in 2005-2006.
World Bank says: work 24/7 with no rights;"A new World Bank report calls for the wholesale elimination of workers' rights. The 2007 edition of the ‘Doing Business’ report has declared the Marshall Islands to be the world’s “Best Performer” for its almost total absence of labour regulation, displacing last year’s champion, Palau. According to the International Confederation of Free Trade Unions (ICFTU), both Marshall Islands and Palau have in common that they are tiny Pacific island nations that have no labour code and are not members of the International Labour Organisation. The World Bank’s online Doing Business database explains that it has given top ranking for labour market regulations to these countries because, among other exemplary features, both allow workers to be forced to work up to 24 hours per day and up to seven days per week and require no vacations or advance notice for dismissal."
India, top reformer in South Asia, says World Bank report
China is ranked top ten in reforming business practices
GHANA AMONG TOP TEN BUSINESS REFORMERS
World Bank praises Romanian reforms
Cameroon: Harsh Taxes Impede Business - World Bank
Consultant reiterates obstacles persist for doing business in Dominican Republic
World Bank rectifies report on Dominican business standing
Bettering business environment with ‘iron hands’
Tanzania and Rwanda Lead in Regional Economic Reforms
Hungary slips 6 places on World Bank's “Doing Business" ranking
World Bank's 2007 Doing Business Report ranks Saudi Arabia #1 in the MENA region
Africa is performing better than Latin America
World Bank: CR no. 52
"The CR dropped two spots year on year. Of the 10 indicators of the overall business environment tracked in the study, the Czech Republic had improved only in two categories: starting a business (74), the time period for which shortened to nine months, and the dealing with licenses (110) category, which relates to already-existing business operations. The country fared best in the getting credit category (21) and worst in closing a business (113), that is bankruptcy procedures — which can still take up to nine years, compared to the average 3.5 years in European and Central Asian regions. Creditors receive 18 hellers for each Kč 1 of debt, again less than half the regional average."
Morocco is top reformer in the Middle East and North Africa
World Bank hails Kenya’s success in tax reforms
"THE World Bank (WB) and the International Finance Corporation (IFC) have praised the Kenyan government for introducing the electronic data interface system in the Customs department. Consequently, Kenya is ranked among Africa’s top nations striving to create an enabling atmosphere to do business"
World Bank reports rank Tanzania among top reformers
Nigeria: World Bank Ranks Nigeria's Economic Climate Low
"We know Nigeria is making efforts to ease the process of doing business" but advised that "there is still room for improvement". She said reforms need to address the whole process, including business registration. She noted there still exists, some complex regulations as against other countries."
The World Bank said early this week that the impact of reforms instituted by the current administration led by President Olusegun Obasa-njo was rather slow.
Dominican Customs is Latin America's 2nd best;Argentina is better than Brazil and Mexico when it comes to customs procedures. And Haiti is generally among the worst in the region.
Cameroon: Harsh Taxes Impede Business - World Bank
Why reform has become a dirty word;“Reform” has been hijacked, even by the World Bank, which should know better, to mean reducing the “burden” on corporations. Te Bank’s index, which has become quite influential and is widely used by governments around the world to set their policies, specifically excludes things like infrastructure, institutions and security, i.e. these pesky things usually provided by good governments and paid by taxes and “forgotten” by businesses when they complain about governmental interference (but not when they choose where to invest, as attests France’s almost permanent presence in the top five favorite destinations for FDI alongside China and the USA). That such issues can be mindlessly excluded from public discourse on this topic via a 3 line disclaimer in their report is profoundly dishonest.
If the logic was to facilitate wealth creation by companies with a later focus on redistribution of that wealth, that might make a little bit of sense, but the goal seems only to be wealth capture by corporations per se, whether out of actual creation of wealth or, increasingly, from the shifting of costs from their P&L to the public purse. Where that wealth goes is obviously no longer a worry of the World Bank, something I find frankly disquieting. Even more, as taxes are seen as a negative thing, any redistributive policy is explicitly considered an obstacle to “reform”. Thus we end up in situations where economies appear to be growing strongly and yet median income (as opposed to average income) is stagnant or even declining, a sure sign of growing inequality rather than growing prosperity."
Malawi drops 14 steps on business ease index
Reforms in Charter to make RP business-friendly, says AdCom
The Philippines' dismal ranking in the latest World Bank (WB) economy rankings of countries worldwide should serve as a wake-up call that the local business environment is not too encouraging to foreign investors.
Pace of business reforms slows-"UGANDA has lagged behind Kenya on the pace of reforms to ease doing business, but a report notes that her effort to ease registration requirements made it easy for companies to operate in the formal sector. Uganda was ranked 107 compared to Kenya’s 83rd position, while Tanzania trailed at 142, a study on tracking reforms done by the World Bank and the International Finance Corporation (IFC) shows. However, Uganda was cited as one of the countries that undertook reforms that eased the burden of doing business in the country"
World Bank study laments red tape in the Philippines
African Countries Emerge as Regulation Reformers, Report Says; World Bank views a push by donor countries as a contributing factor
"China, Number 93 a year ago, moved up 15 places. Like Georgia, Mexico, Tanzania and Ghana, China is among the World Bank’s “top 10 reformers.” Its government has sped up the business-starting process, increased investor protections, reduced red tape in trade, and established a credit-information registry for consumer loans that provides credit histories of 340 million citizens, according to the report.
A separate report on foreign direct investment, released by Columbia University and The Economist publishing group, predicts that until 2010 China will be the top emerging market for business investment inflows, but Africa will not receive much investment any time soon.
Karl Sauvant, director of the Columbia Program on International Investment, which released the investment report, said China will attract $87 billion from U.S. businesses alone in 2006, while sub-Saharan Africa, with 10 percent of the world’s population, gets less than 1 percent of total foreign direct investment flows."
Fiji ranks 31 in World Bank report
"FIJI has dropped back two rankings to 31 on the 2007 World Bank's Doing Business report after being ranked 29 this year.
The drop in ranking comes amid concerns from the bank about some aspects of doing business in Fiji even though it has improved a lot from its previous ranking in previous years."
Bangladesh 3rd best business place in S Asia
"Bangladesh is the third easiest country in which to do business in South Asia, although as a whole is lagging behind other parts of the world when it comes to reforms that could enhance business activity, says a World Bank-IFC (International Finance Corporation) report. The top ranked countries in the region are the Maldives (53) and Pakistan (74), followed by Bangladesh (88), Sri Lanka (89) and Nepal (100). India comes in at 134, Bhutan at 138 and Afghanistan at 162."
Mozambique says to cut red tape in 2007
Mozambique will shake up its ineffective judiciary in a series of radical measures aimed at cutting red-tape and increasing business confidence in its resurgent economy
World Bank: Indonesia Losing Appeal As Invest Destination
Less Foreign Direct Investment forecasted for 2007;In a global context of weaker foreign direct investment, FDI, in emerging markets because of “structural weaknesses”, Latinamerica is also set to suffer, according to a report from the University of Columbia in New York and The Economist group. ..
However another report but from the International Finance Corporation, IFC, the private sector arm of the World Bank shows that doing business became easier worldwide in 2005/06. Two hundred and thirteen regulatory reforms—in 112 economies— reduced the time, cost, and hassle for businesses to comply with legal and administrative requirements.
Meeting with private sector to clarify delivery system..He said Malaysia’s 25th ranking in the recent World Bank’s report on Doing Business 2007 needed to be improved.
Taiwan climbs a spot to become 24th-freest economy; Taiwan is the world's 24th freest economy among 130 nations, one spot up from last year, according to a report released on Thursday by the Fraser Institute, an independent public policy organization in Canada
According to a recent report released by the World Bank and the International Finance Corp, Taiwan ranked No. 47 in ease of doing business, down from 43rd last year.
In what do we trust?The language of business is peppered with the word trust. Trust deed, deed of trust, unit trust, trust account, investment trust, trust fund are just a few of the plethora of trust terms in the commercial world.
That's no coincidence. Without trust, much business activity could not be carried out. There has to be an underlying belief that the other party to a transaction will fulfill his/her obligations. Two reports that came out recently give a seemingly contradictory view of the state of trust in contemporary China.
WB Increases Azerbaijan’s Rating on Favorable Business Environment
Israel 26th business-friendly country
Malaysia Is More Business Friendly Than That Rated By World Bank, Says MB
Caribbean Way Behind as Business Destination
Slovakia offers best business conditions of V4 states
Britain overtaken by Hong Kong in table of best places to do business
Zambian investment environment worsening
ARMENIA LEADER IN CIS AS A COUNTRY WITH TROUBLE-FREE CONDITIONS FOR RUNNING A BUSINESS
Sri Lanka lags reforming nations in South Asia
''The Easiest Place To Do Business In South Asia''-“The Maldives remains ‘the easiest place to do business’ in South Asia, but it is only the best of a bad bunch, according to an influential World Bank report….
The report found that the South Asia region ranks behind all others on the pace of reforms, with only a quarter of countries, making at least one reform that improved the Doing Business indicators.
However, the World Bank’s methodology is fiercely skewed towards liberalization and privatization regardless of context. It does not track variables such as market size, macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates.
The Maldives was therefore criticized in this year’s report for introducing some measure of labour protection. The World Bank condemned the new mandatory two-month notice period before workers can be dismissed, saying it was ‘a move that may especially discourage small business and the hiring of poor, low-skilled, and young workers’.
The Maldives’ high regional ranking reflects its exceptionally laissez-faire attitude to tax and employment protection. It ranked first out of all 175 countries on ‘paying taxes’ – businesses pay back an average of just 9.3% of profit to the state, in comparison to a regional average of 45.1% and a developed world average of 47.8%...”
Australia eighth in easy business survey
Australia has moved up one spot into eighth place in the World Bank's latest ranking of the easiest markets to do business, overtaking Norway.
NZ knocked from top business spot
"New Zealand has been knocked off its perch, at the top of world rankings for ease of doing business….Australia's significant reforms of the last year have helped it improve to 8th place"
How Nations Prosper: Economic Freedom and Doing Business in 2007- an event coming up at Cato later in the month.
Earliers posts- The Road Less Traveled of Business Regulatory Reform, Excessive Anti-Corruption Drive Hurting the Economy?
April 23, 2006
Stolper-Samuelson is Dead
NBER has a major new book coming up of which Sebastian Mallaby says;
“A formidable team of economists directed by Berkeley's Ann Harrison is about to come out with a volume titled "Globalization and Poverty"; a central message is that free trade works best for countries with labor mobility. For example, India's dramatic trade liberalization in the 1990s produced equally dramatic strides against poverty. But because Indian workers move surprisingly little between industries and regions, people in sectors that contracted as a result of the lifting of tariffs were trapped. Liberals who seek to "soften" trade deals by writing mobility-restricting labor regulations into them need to rethink their strategy.”
The main findings of the book are summarized below;
- The first conclusion of this essay is that such a simple interpretation of general equilibrium trade models is likely to be misleading.
- Second, the evidence suggests that the poor are more likely to share in the gains from globalization when there are complementary policies in place. Such complementary policies include investments in human capital and infrastructure, as well as policies to promote credit and technical assistance to farmers, and policies to promote macroeconomic stability.
- Third, trade and foreign investment reforms have produced benefits for the poor in exporting sectors and sectors that receive foreign investment.
- Fourth, financial crises are very costly to the poor.
- Finally, the collected evidence suggests that globalization produces both winners and losers among the poor. The fact that some poor individuals are made worse off by trade or financial integration underscores the need for carefully targeted safety nets.
The talk of a fairer globalization has become something of fad these days starting with the ILO report , “A fair globalization - Creating opportunities for all”. Stiglitz summarizes the report in this op-ed saying,
“The Commission highlights other issues that have received insufficient global attention - such as tax competition among developing countries, which shifts more of the tax burden from business to workers. In still other areas, the Commission's report argues for more "balanced" perspectives. On exchange rates, for example, it is more sympathetic towards mixed systems - in contrast to the traditional belief that countries must choose between the extremes of a completely flexible system and a hard peg (of the kind that contributed so importantly to Argentina's woes).As this example shows, bringing different voices to the table in discussions of globalization brings new perspectives. Until now, the main worry for most experts on globalization has been excessive government intervention in the economy. The Commission fears just the opposite. It argues that the state has a role to play in cushioning individuals and society from the impact of rapid economic change.”
Go and comment on the NBER book before it is published. I stole the title of the post from one of the chapters of the book.
Related Links:
- Rybczynski Theorem 50th Anniversary
- Heckscher-Ohlin: Flaws, fixes and future
- Glossary and Family Tree of Trade Economics
- Taming Global Capitalism Anew
- TRADE AND DEVELOPMENT REPORT 2005, UNCTAD
- Poverty, inequality & globalization; miscellaneous links
March 27, 2006
New Industrial Relations Laws
What is to some people the apocalypse, Australia is implementing new industrial relations laws today. In contrast to the very minor change in France, these changes seem to roll back a fair amount of regulation. Of course, the unions are doing their best to scare the bejeezus out of everybody:
But Qantas engineer Surace worries the union's industrial arsenal will be limited come Monday. Surace, an Australian Workers Union delegate from West Preston, is engaged to be married but now he does not know if he can afford a home. "Now I'm in another situation where I don't know if six months down the track I'm going to have a job or not. I can't plan my future. I have to wait six months before I can take a loan. How can I go out and buy a house today?"My favorite excerpt is this one from the SMH:
Interesting concept. Even more surprising is that Mr. Blake is the federal industrial officer with the Australian Nursing Federation.
Mr Blake says nurses are generally reluctant to strike, in any event."What they will do is leave. They'll go down the road and find someone who'll offer them more money," he says.
The Government has not only put a powerful new weapon in the hands of employers, but provided a commercial incentive for them to use it. If any employer wins a commercial advantage over its competition by cutting labour costs using the new laws, the competition will have to follow suit.
June 28, 2005
Labor Market Reforms
John Howard in Australia is, according to this article from Bloomberg, set to use his electoral victory to push through some labor market reforms:
The government has tried to make it easier for small businesses to fire workers and simplify working condition agreements since it was elected in 1996. Attempts have been rejected seven times, according to the main opposition Labor party's workplace spokeswoman Penny Wong in Canberra.The response from a union representative isn't surprising:The changes will ``make it easier for firms to negotiate with workers than it ever has been,'' said Mark Wooden, deputy director of the Melbourne Institute of Applied Economic and Social Research, founded in 1962 and funded by the University of Melbourne. Wooden calls the planned law changes the ``most significant'' since the Industrial Relations Commission was established in 1905.
The changes will make it easier for employers to arrange individual agreements with workers, allowing them to tune work arrangements to circumstances and avoid industrywide regulation.
Businesses with fewer than 100 staffers will also be able to dismiss workers without challenges from unions and tribunals. For businesses employing more than 100, the probation period during which new employees can be fired without explanation would be doubled to six from three months.
``The government has declared war on workers,'' said Doug Cameron, secretary of the 137,000-member Australian Manufacturing Workers Union in an interview from Melbourne.As this type of deregulation is very difficult to pass, Howard should be appluaded for pushing this agenda. The article also talks about productivity which such measures are also likely to boost.
Naturally, most of you are saying to yourself that Europe, specifically France and Germany, should follow suit. IMO, such deregulation will never pass until blood is in the streets and I don't think they are there yet.
June 9, 2005
Quote of the Day
Don't kid yourself into thinking that workers deserve a minimum wage. Nobody deserves to have their job destroyed.
-- Russell Nelson
December 14, 2004
Manpower Survey
Some people were disappointed with the latest employment growth numbers only coming in at 112,000. Well today, Manpower released its survey and at the very least the start of 2005 looks better than a year ago:
U.S. employers plan to ring in the new year with strong hiring activity, according to the seasonally adjusted results of the latest Manpower Employment Outlook Survey, conducted quarterly by Manpower Inc."What a difference a year makes. The job picture moving into 2005 is decidedly more upbeat than it was at the start of 2004. For the past three quarters, employers' hiring intentions have been steady and strong. The current survey results tell us that they are equally prepared to hire staff as they enter the new year," said Jeffrey A. Joerres, Chairman & CEO of Manpower Inc.
Of the 16,000 U.S. employers that were surveyed, 24% anticipate an increase in hiring activity for the first quarter of 2005, while 10% expect to decrease staff levels. Fifty-nine percent of employers surveyed foresee no change in job prospects, and 7% are unsure of their hiring plans. When seasonal variations are removed from the data, the outlook for the first three months of 2005 reveals that employer confidence is expected to inch upward from last quarter and improve greatly from a year ago.
Our unemployed/underemployed readers should look at Finance, Insurance and Real Estate for the strongest opportunities.
August 13, 2004
Mr. Ferguson's Data
Via AL Daily and Cafe Hayek, we find Niall Ferguson insisting that 1) the unemployment rate in the US has averaged 4.6% over the past 10 years, and that 2) higher religiosity causes Americans to work more than some Europeans.
The first claim:
There are, for example, many more Europeans out of work than Americans; over the last decade, U.S. unemployment has averaged 4.6%, compared with 9.2% for the European UnionLet's see. I don't know what series Mr. Ferguson was using, but the standard series--the CPS Unemployment rate for those 16 and older (LNS14000000)-- yields a mean monthly unemployment rate of 5.1% from August 1994 to July of 2004. Only 43 of the last 120 months had an unemployment rate equal to or below 4.6%. You get a similar number if you use the annual data. His claim still holds, but why not use familiar and common data?
The second claim:
In 1999, according to the Organization for Economic Cooperation and Development, the average American in employment worked just under 2,000 hours a year (1,976). The average German worked just 1,535 fully 22% less. According to a recent U.S. study, the average Frenchman works a staggering 32% less.Twenty-five years ago, this gap between U.S. and European working hours didn't exist. Between 1979 and 1999, the average American working year lengthened by 50 hours, or nearly 4%. But the average German working year shrank 12%. The same was true elsewhere in Europe....
[M]ore than twice as many North Americans as Europeans attend religious services once a week or more.
I do not say this is the sole explanation for the fact that London today is lethargic while New York toils away as usual.
First we inquire whether there actually has been a relative decrease in church attendance in Europe since 1979. Apparently so:
Church attendance has dwindled by more than 30% in Britain since 1980. Over the same period, the percentage of the population claiming membership in a religious denomination has dropped more than 20% in Belgium, 18% in the Netherlands and 16% in France. Christianity remains Europe's main religion, with about 550 million adherents. But the number of Europeans who identify as Catholic by far the biggest denomination on the Continent has fallen by more than a third since 1978.
Second, the time series data on church attendance in the US uses a different question starting in 1990, yielding inconsistent and hence inconclusive evidence... even though it strongly suggests that religiousity has been essentialy flat in the US. (This is one of the best examples of question bias I have ever seen--increasing the "never attend church" respondents by about some 20 points after 1990).
Third, Mr. Ferguson's claim that, "Between 1979 and 1999, the average American working year lengthened by 50 hours, or nearly 4%." really means that the time series is essentially flat also--meaning that the working hours of Americans are relatively unchanged since 1979 (see chart 6).
So we have European church attendance and working hours decreasing, while those in the US remain about the same (even though some studies show an increase in American working hours).
Beautiful national correlations, but no causation. In fact, I think that causation must work at the individual level, and should be seen at a more disaggregate level. Does this "religious effect" work within nations--at the state, local, and other levels? Shouldn't the religious be working harder everywhere, not just in countries where they represent the majority?
If so, the mean "annual hours" reported are not representative of the whole distribution (which should be bipolar in each geographical region), the "hard work" pole being far larger in the US than in Europe. If real, this should show up in the data someplace, and would make a fantastic chart. And if it were real, Mr. Ferguson would be making comparisons of states with high religiousity and hard work with those of low religiousity and little hard work.
Since neither of these has, to my knowledge, occured, I doubt the economic significance of church attendance as a causative factor in hours worked.
August 6, 2004
Union Busting
I was going to post the recent happenings north of border dealing with Wal-Mart's union troubles, but Kevin beat me to it. I searched for more info on unions in Canada and came across a rather disturbing case of employer intimidation:
Toronto, Ontario: The Ontario Labour Relations Board will begin a hearing tomorrow into unfair labour practices filed by the Ontario Public Service Employees Union against the Governing Council of the Salvation Army in Canada and Salvation Army Community Living, London, Ontario.The union has been on strike at Salvation Army Community Living since December 14, 1999.
The union is charging that the employer and a private security firm retained by the employer, have engaged in unlawful conduct by:
conducting surreptitious audio and video surveillance of the picketers;intercepting private communications between persons on the picket line;
intimidating and harassing picketers through verbal abuse and sexual harassment;
and physically striking picketers by running into them with their vehicles
If you see one of those guys ringing the bell hop into a car after you just blew him off, run!
June 4, 2004
Efficiency Wage
Here is some anecdotal evidence of the efficiency wage. This is, for those not familiar, when a company pays a higher than market clearing in return for a greater effort from its employees. From this article in LZ-NET.de:
One analyst at Deutsche Bank in the USA is quoted as having said that "it's better to be an employee at Costco, than a shareholder." But if one takes a closer look at the economic indicators for both companies it becomes clear that the analysts are actually wearing blinkers. Despite paying higher wage costs, Costco is much higher on productivity. Sam's Club turnover of USD 35 billion is achieved by 102,000 employees, whilst Costco's USD 34 billion is achieved by only a fraction of that number, 68,000 employees. Costco's productivity per square meter is 54 per cent higher than that of Sam's Club, its productivity per employee is 45 per cent higher, while its profits are almost 24 per cent higher.
Before you start saying "we're all Keynesians now", a couple of things need to be pointed out. First, Costco formerly went after a higher end clientele, not everybody could join. The result of this discrimantion is that the company has a substantial higher per check out ticket than its competitors. Second, Costco may pay a higher wage, but their workers may be higher skilled as well. In reality, each companies workers may be receiving the same pay rate for the amount of skill they have. This is different from saying that you could pay the the Sam's Club employee the same as Costco and get the same level of productivity. Costco, by paying more, attracts and retains better employees. The article tries to point this out:
Wages and fluctuation
Employees like Costco not only for its good wages but also for its generous healthcare benefits. They are not only highly motivated and productive, they are also loyal. The fluctuation rate is only 6 per cent, compared to Sam's 21 per cent. Even Wal-Mart knows that a change of staff costs 2,500 dollars per person, and this then adds up to USD 50 million each year.
The reaction of the Wall Street analysts to the figures published by Costco's were not primarily aimed at penalising a company for stepping outside of the ranks of wage cutters, it was all about the interests of the Costco shareholders.
Their numbers don't seem right. 21% turnover of 1.4 million workers at $2,500 per employee would mean that this costs them $735 million a year. If they had a 6% turnover, it would be $210 million a year for a savings of $525 million. As this PDF points out, Costco does achieve a higher level of profit per employee. For Wal-Mart to achieve the same level of profit, they would need to cut the number of employee and raise the remaining one's pruductivity. Is that possible with their current workforce? I don't know and it is beyond the scope of this post. However, as I write this, Bloomberg is flashing across the bottom of the screen that the company is planning to raise the starting wage.