Archives: Reg Murphy Pubs

Two Popular Explanations of Inflation are Wrong

Written by Don Mathews on . Posted in Don Mathews, Reg Murphy.

The two most popular explanations of the current inflation are: “Corporate greed is to blame for inflation” and “Joe Biden is to blame for inflation.” Each explanation is simple, clear and bogus.

Consider first the corporate greed theory of inflation. The country’s first bout of inflation occurred right out of the chute, during the Revolutionary War. Economic historians estimate that from 1776 to 1780, the average annual rate of inflation in the new nation was 12 percent, including 22 percent in 1777 and 30 percent in 1778.

That’s a problem for the corporate greed theory of inflation. There were no corporations in the U.S. until after the Revolutionary War.

The giant corporation of the modern sort did not make the American scene until the 1870s, and its economy-transforming proliferation took place roughly between 1890 and 1910. Those were the years of the “robber barons,” the “gilded age.”

What was inflation like during the gilded age? It wasn’t. Price indexes constructed by economic historians indicate that prices in 1910 were 26 percent lower than they were in 1870. If inflation is caused by corporate greed, then by logic deflation is caused by corporate generosity, which would make the robber barons saints of selflessness.

Inflation ran low from 1952 to 1967, perked up a bit from 1968 to 1972, surged from 1973 to 1982, ran low from 1983 through the first half of 2021, at which time the current bout kicked in.

It thus follows from the logic of the corporate greed theory of inflation that corporations were not very greedy from 1952 to 1967, moderately greedy from 1968 to 1972, quite greedy from 1973 to 1982, not very greedy from 1983 through the first half of 2020, and quite greedy after that.

For the theory to hold, corporate greed would have to be a sporadic mood swing. Seems a bit far-fetched.

Moving on, readers of Dr. Skip Mounts’ columns in this newspaper know that the “Joe Biden did it” theory of inflation has less hunt than a headless dog. Dr. Mounts, who never shies from an uphill battle, has painstakingly explained in numerous columns that modern inflation has only one source, a country’s central bank. Our central bank is the Federal Reserve, or “Fed,” for short.

A president does not decide federal tax and spending policies. Congress does. A president can certainly influence debate over taxes and spending, but Congress calls the shots.

More to the point, government spending does not “pump money into the economy.” Government spending is paid for out of tax revenues or financed with borrowed money – proceeds from the sale of Treasury bonds. The borrowed money is not new money. It came from the investors and institutions who bought the Treasury bonds.  

Only the Federal Reserve can “pump money into the economy.” Which means only the Fed can cause inflation.

What’s missing from much of the current criticism of the Fed is context. The current inflation is the consequence of the Fed’s response to the economic collapse in the first months of the COVID pandemic. The unemployment rate went from 3.5 percent to 14.7 percent in two months, while real GDP dropped by 35 percent in three. That’s depression-size contraction. Sheer panic in money and financial markets threatened to make the situation worse.

To prevent economic calamity during the pandemic, the Fed, along with central banks across the planet, opened every money floodgate they could find. Turns out they opened a few too many.

At any rate, there is an important lesson here. Don’t fall for bogus explanations of inflation. Don’t peddle them, either.

Material Hardship Worse for Low-Income Families

Written by Roscoe Scarborough on . Posted in Reg Murphy, Roscoe Scarborough.

Many Americans are struggling to make ends meet. Housing, gas, utilities, food, transportation, and most goods and services are more expensive than they were a year ago. Inflation in the U.S. reached 9.1% in June, the highest rate in over forty years. However, the impact of inflation is more pronounced on low-income households. These financial challenges set the stage for mental health problems and conflicts in the home.

Inflation erodes the value of real wages and savings, but these effects are not felt equally. With substantial disposable incomes, higher-income households are better equipped to absorb the rising cost of necessities. Conversely, there is little room in the already tight budgets of low-income households to cover the higher costs of essentials. Rising prices force low-income families to decide whether to buy groceries, pay the utility bill, refill a prescription, or purchase clothes for a child.

An empty checking account can cause family problems. A 2022 study published by Dr. Joyce Y. Lee and collaborators in Family Relations tested how economic insecurity contributes to mothers’ and fathers’ mental health and relationship conflicts. Specifically, this research focused on material hardship—everyday challenges related to making ends meet, including difficulties paying for housing, utilities, food, or medical care.

Lee and her research team found that it was material hardship, not low income itself, that set the stage for parental mental health problems that result in family conflicts. Material hardship impacted fathers’ mental health more than mothers’ mental health. Depressive symptoms noted among fathers included sadness, sleep problems, loneliness, and difficulty concentrating. Conflicts included putting down a partner’s feelings or opinions, blaming the partner for things that go wrong, and fights with accusations and name-calling. This sort of verbal aggression is damaging to relationships and harmful to young children who witness this behavior.

It should not be surprising that material hardship impacts families by hurting fathers’ mental health more than mothers’ mental health. Traditional gender roles pressure fathers to fulfill the breadwinner role. When fathers feel that they cannot alleviate economic stressors in their families, the outcomes are mental health problems and conflicts in the home.

During the COVID-19 pandemic, low-income households experienced high levels of unemployment, economic insecurity, and mental health problems. Now, inflation is bringing material hardship to more American households. A looming economic recession would further harm low-income families.

Access to mental health services for mothers and fathers is critical to support healthy family functioning. Tragically, health care has become a luxury. Low-income families often prioritize other essentials, including rent and food.

A range of solutions are warranted. Culturally, the U.S. must destigmatize mental illness. Additionally, all Americans need to be able to access mental health services. Health systems must be incentivized to provide mental health services in low-income rural and urban communities. Expanding telemedicine promises to increase access for folks in rural areas and those without transportation.

Expansion of Medicaid could increase access to mental health care for low-income households. At present, Georgia ranks among the bottom three states in rates of health insurance coverage. Full expansion of Medicaid offered under the Affordable Care Act would extend Medicaid eligibility to nearly all low-income individuals earning below 138% of the poverty line. This would provide insurance coverage to almost half a million more Georgians.

It is essential to pair expanded access to mental health services with institutional reforms that reduce rates of poverty and increase household income. Policies that ensure equitable access to quality public education and economic opportunities for low-income Americans are a good start.

 

Roscoe Scarborough, Ph.D. is interim chair of the Department of Social Sciences and associate professor of sociology at College of Coastal Georgia. He is an associate scholar at the Reg Murphy Center for Economic and Policy Studies. He can be reached by email at rscarborough@ccga.edu.

  • Reg Murphy
  • Reg Murphy Center

Can raising wages increase employer profit?

Written by Melissa Trussell on . Posted in Melissa Trussell, Reg Murphy.

When I teach labor economics, students and I discuss economic theory and empirical evidence on both sides of the minimum wage debate. Several weeks ago, I enjoyed watching some of my former students discover for themselves one of the reasons many economists believe increasing the minimum wage is feasible without causing the widespread unemployment other economists fear.

Several weeks ago, I had the pleasure of observing the senior capstone presentations for our graduating Business students. Each semester, seniors in this course work in teams to manage a multi-million – sometimes billion– dollar international business using the Glo-Bus online business simulation platform. They make decisions about R&D, production, marketing, business image, and responsibilities to shareholders. The simulation draws on actual market data to give feedback on students’ performance and profits.

Coastal business students do really well in the simulation, often ranking among the top firms globally on the platform that hosts almost 30,000 students from over 200 colleges and universities in 23 different countries. And for their professors who get to see their presentations, it is a really rewarding opportunity to see our senior students showcase their professionalism while describing the successes, failures, and lessons learned from running their own business.

One theme that came up in several presentations this Spring piqued my interest. Each group talked about raising wages or employee benefits as a strategy for increasing productivity in their firms. When I asked the students about this decision and its results, each group was able to demonstrate using their firms’ realistic productivity and profit data that investing more money in employee salaries and benefits led to improved productivity and increased profits for their firms.

This was interesting to me because it is not what should happen according to economic theory. Theory says that in a competitive labor market wages are set according to the equilibrium of labor supply and labor demand, and then firms hire workers until the market wage is equal to the value of the last worker hired. This value is the product of the worker’s productivity and the price the firm receives from selling whatever the worker produced.

Key to this theory is the assumption that workers are all the same and they are all working at maximum efficiency. If this were true, increasing wages would cause a firm’s profits to decrease, since they would be paying a worker more than that worker is contributing to the firm’s revenue.

What our senior students observed in their simulation is not surprising to most students of human behavior and is one of the major arguments used in favor of increasing the minimum wage. Most of us do not work at 100% efficiency 100% of the time. The assumption that we do is fundamental to the argument that an increase in wages will cause unemployment.

What if, instead, a wage increase is a mood-lifter or an incentive that causes employees to increase productivity? Or what if employee benefits are increased to improve wellness or encourage professional development? Then, increases in employee compensation could translate to increases in employer profits rather than decreases in employment.

A 2018 article in the Harvard Business Review about Amazon’s increasing their minimum wage predicted that this would cause an increase in competition for jobs at Amazon, which would necessitate an increase in productivity among employees wishing to keep their jobs.

It had been shown in a lab experiment published a couple years earlier that an unexpected wage increase induced a sense of reciprocity among workers, which caused them to work harder for their employer.

And here at the Murphy Center, we have heard real-world anecdotes of local businesses that raised wages to attract workers during the pandemic and were rewarded with increases in employee motivation and productivity.

I think our senior Business students are onto something. Increasing wages is a tried and true strategy for increasing employee productivity and employer profit.

I am proud of the insight our students display, and I am excited to watch how Coastal Georgia graduates continue to contribute to growing our local economy.

————-

Dr. Melissa Trussell is a professor in the School of Business and Public Management at College of Coastal Georgia who works with the college’s Reg Murphy Center for Economic and Policy Studies. Contact her at mtrussell@ccga.edu.

Is the Sinking U.S. Birth Rate a Problem?

Written by Don Mathews on . Posted in Don Mathews, Reg Murphy.

The sinking U.S. birth rate has a lot of people worried.

To refresh your memory, the U.S. birth rate – measured as the number of births per 1,000 women aged 15 years to 44 years – has been sinking without interruption since 2007. The most recent birth rate measure of 56.0 in 2020 is a 19.4 percent drop from the 2007 birth rate of 69.5.

The birth rate decline has been widespread across demographic groups. Percentage decreases in birth rates from 2007 to 2020 by demographic group are: 64 percent for women age 15 to 19 years, 41 percent for women age 20 to 24 years, 23 percent for women age 25 to 29 years, 5 percent for women age 30 to 34 years, 38 percent for Hispanic women, 17 percent for non-Hispanic Black women, 11.5 percent for non-Hispanic White women, 18 percent for women without a high school diploma and 18 percent for college-educated women.

The consequence of a persistently low birth rate becomes clearer with the help of another demographic measure, the total fertility rate. Adding the birth rate at each age from 15 to 44 years yields the number of births per 1,000 women through their reproductive years. Dividing that figure by 1,000 yields the total fertility rate: an estimate of the average number of children a woman will have in her lifetime.

The total fertility rate necessary for a population to replace itself from one generation to the next – that is, the total fertility rate that generates zero population growth (ignoring immigration and emigration) — is called the replacement rate. The replacement rate for wealthy countries such as the U.S. is a total fertility rate of 2.1.

In 2007, the U.S. total fertility rate was 2.1. By 2020, the U.S. total fertility rate had dropped to 1.64.

The upshot: if current birth rates persist, the U.S. population will age and ultimately shrink.  Immigration could change the picture, but that would require ditching the restrictive immigration policies put in place several years ago.

What has people worried is today’s children are tomorrow’s workers and taxpayers. Fewer worker-taxpayers constrains both economic growth and the ability of federal, state and local governments to provide public services. Especially at risk: Social Security and Medicare.

Is the worry warranted?

No. After 44 years of wallowing in economics like a hog in slop, I’ve come to regard predictions of economic crisis as the sasquatch sightings of the college-educated. It takes more brain power to concoct a tale of capitalism’s next imminent crisis than to blow out a yarn about the hairy thing you saw for certain roaming the woods last night. As for reliability, tough call.  Sasquatch sightings might have a slight edge.

Oddly enough, sustained low birth rates are more likely to increase the labor force in the future than reduce it.

Consider the 64 percent decrease in the teen birth rate. The surest route to years spent out of the labor force and in poverty is becoming a single mother as a teenager. If the current low teen birth rate persists, it will bring a sizeable drop in the poverty rate and a sizable increase in labor force participation for years to come.

Lower birth rates translate to greater labor force participation for women in their 20s and 30s, as well.

Further, labor force participation rates for people age 65 years and older having been on the rise since the late 1980s. Today, one-third of 65 to 69 year olds and one-fifth of 70 to 74 year olds are in the labor force.

Low birth rate?  Not a problem.

  • Reg Murphy
  • Reg Murphy Center

U.S. Birth Rate Has Been Sinking since 2007

Written by Don Mathews on . Posted in Don Mathews, Reg Murphy.

The U.S. birth rate has been sinking sharply since 2007 for no clear reasons.

A country’s birth rate is measured as the number of births per 1,000 women aged 15 years to 44 years.  Between 1980 and 2007, the U.S. birth rate fluctuated between 65 to 70.  In 2007, it was 69.5.

The U.S. birth rate has fallen every year since. The most recent measure of the U.S. birth rate, for 2020, is 56.0. That’s a 19.4 percent drop in 13 years.

The U.S. birth rate decline is widespread across women of different ages.

The teen birth rate – the number of births per 1,000 women age 15 to 19 years – had been falling before 2007: after peaking at 61.8 in 1991, it steadily fell to 42.5 by 2007. It has since plunged to 15.3 in 2020.

U.S. birth rates have also fallen for women in their 20s and early 30s. The birth rate for women age 20 to 24 years fell from 106.3 in 2007 to 63.0 in 2020. The birth rate for women age 25 to 29 years fell from 117.5 to 90.2. For women age 30 to 34 years, the birth rate decreased from 99.9 to 94.9.

Birth rates have increased modestly since 2007 for women age 35 to 44 years. For women age 35 to 39 years, the birth rate increased from 47.5 to 51.8; for women age 40 to 44 years, the rate increased from 9.5 to 11.8.

Those figures show two changes since 2007, one small, one big. The small change is: women are waiting longer to have children. The big change is: women are having fewer children.

U.S. birth rates have also decreased across race and ethnicity since 2007. The birth rate for Hispanic women fell from 102.2 in 2007 to 63.1 in 2020. The birth rate for non-Hispanic Black women fell from 71.6 to 59.2. The birth rate for non-Hispanic White women fell from 60.1 to 53.2.

The birth rate has also decreased across education level. The birth rate for women without a high school diploma decreased from 119.0 to 97.5. For college-educated women, the birth rate fell from 72.5 to 59.4.

What’s driving the sinking U.S. birth rate?

Potential explanations come quickly to mind. The recession of 2007-09. Better employment opportunities for women. Rising costs of raising children, including child care and housing costs. Increased use of contraceptives. College debt burdens. 

Economists have been investigating the causes of the sinking U.S. birth rate with great intensity in recent years. Their findings, to date, are clear. None of those potential explanations, nor any combination of them, explain the sinking U.S. birth rate.

Birth rates in the past fluctuated with the state of the economy, rising with expansions, falling in recessions. Thus, the 2007-09 recession might explain the first years of the sinking birth rate.  But while the economy grew without interruption from mid-2009 through February 2020, the U.S. birth rate continued to sink.

Changes in employment opportunities, child care costs, housing costs, contraceptive use and college debt burdens vary, sometimes considerably, from state to state. State-by-state comparisons show no relationship between changes those variables and changes in birth rates.

So, where does that leave us?

In a recent study, economists Melissa Kearney, Phillip Levine and Luke Pardue conjecture that changes in women’s priorities could be driving the sinking birth rate. The authors acknowledge that their “shifting priorities” explanation is speculative and probably impossible to empirically support. They offer the conjecture because economic factors fail to explain the sinking birth rate.

We’ll explore the consequences of the sinking U.S. birth rate in my next column.

  • Reg Murphy
  • Reg Murphy Center

How Firearms Became the Leading Cause of Death for Children, Teens

Written by Roscoe Scarborough on . Posted in Reg Murphy, Roscoe Scarborough.

The nation is still reeling from the school shooting in Uvalde, Texas. Mass shootings in schools are tragic. According to a recent CDC report, firearm-related injuries are the leading cause of death in the U.S. for children and teens—an all-time high. School shootings receive a lot of media coverage, but mass shootings in schools account for less than 1% of child gun deaths. This column will discuss insufficient access to mental healthcare, the availability of firearms, a spike in violent crime, and numerous other factors as causes of the recent spike in gun deaths among our youth.

Let’s overview the facts. More than 4,300 children and teens died from firearm-related injuries in 2020, surpassing motor vehicle crashes as the leading cause of death, according to the CDC. Gun deaths among children and teens rose by 29% in one year, largely due to a 33.4% increase in homicides of teens and children between 2019 and 2020. Among the entire U.S. population of all age groups, suicide constituted the majority of the 45,222 firearm-related deaths in 2020. However, among children and teens, homicides made up the majority of firearm deaths.

Mass shootings in schools are horrific, but uncommon. The overwhelming majority of firearm incidents on school property, including K-12 schools and colleges, are accidental discharges, suicides, or acts of violence targeting a single victim, according to the comprehensive list of incidents complied by the nonprofit Everytown for Gun Safety. Fortifying buildings and expanding law enforcement presence in schools may limit deaths from mass shooting events at schools, but these are outlier events. It’s important for policies to address the institutional conditions that result in the most firearm deaths among children and teens.

Many Americans assert that mass shootings are the result of untreated mental illness. Mental health declined precipitously among our youth over the course of the pandemic, in part because of the shuttering of schools and restrictions on face-to-face gatherings. We have a mental health crisis in our nation. Ensuring access to mental healthcare for children and teens plays a part in preventing gun deaths among our youth.

Gun sales have doubled in the U.S. over the past decade from 5.4 million in 2010 to 11.1 million in 2020. The availability of firearms in our nation is a central reason why the U.S. has more gun deaths than other developed nations. Reducing young people’s access to firearms is essential to reducing gun deaths among children and teens.

Attributing child gun deaths to mental illness or firearm availability alone ignores other institutional causes. A 33.4% increase in homicides of children and teens in one year is significant. Changes in law enforcement practices can reduce the number of young people who die from homicides.

Other factors contribute to child gun deaths, including the sale of firearms to persons under 21, unsecured firearms in homes, the proliferation of ghost guns, a lack of firearm safety training, the absence of red flag laws, gang violence, and violence in the home. Additional institutional conditions increase child gun deaths, including bullying, a lack of suicide prevention training, social problems associated with poverty, disengaged parents, mass and social media sensationalizing violence, and alienation among the youth.

A range of institutional reforms are warranted, but these changes cannot just focus on school security as less than 1% of child gun deaths occur in schools. It is important that our solutions address the various institutional conditions that have made firearm injuries the leading cause of death for children and teens in the U.S. Every child’s death is a tragedy, especially since these deaths are preventable.

Roscoe Scarborough, Ph.D. is an assistant professor of sociology at College of Coastal Georgia and an associate scholar at the Reg Murphy Center. He can be reached by email at rscarborough@ccga.edu.

The lost economic opportunity of abortion

Written by Melissa Trussell on . Posted in Melissa Trussell, Reg Murphy.

By now, we all are aware of the leaked Supreme Court decision that, should it stand, will reverse Roe vs Wade and allow states to restrict or outlaw abortion. When asked about the forthcoming decision, Treasury Secretary Janet Yellen replied that abortion is an economic issue. I could not agree more with that statement. Yellen went on to cite research showing improved education and labor market outcomes among women, especially minority women, who have access to abortion services.

Though I have great respect for Secretary Yellen as one of my professional heroes, I believe her conclusion that legalized abortion is a necessary part of a strong economy is based in a literature that is one-sided in its approach to the economics of abortion.

After reading Yellen’s remarks, I did some digging of my own. My primary goal was better to understand the economic costs and benefits of abortion, and I specifically was concerned with social, not individual, costs and benefits. Unsurprisingly, with a topic as complex as abortion, there is not clear consensus in the literature on the precise economic impact of abortion.

A couple of themes emerge pretty strongly. 1) As Secretary Yellen asserted, availability of unrestricted abortion reduces fertility and increases educational attainment and labor market participation of women. 2) The financial benefits to taxpayers of funding safe abortions far outweigh the costs of post-abortion care when safe abortion is not accessible.

Indeed, authors of a 2021 peer-reviewed publication found, “On average, the cost of meeting a woman’s unmet need for modern contraceptive supplies and services for one year would amount to just 3 to 12 percent of the average cost of treating a patient who requires post-abortion care.”

What I find missing from most of the literature and from Dr. Yellen’s assessment of the economics of abortion is a whole other side of the story here—the value to the economy of the lives lost when women choose abortion over birth. Most aborted pregnancies could otherwise have ended with a birth. And, given a couple of decades, most births translate into societal contributors and labor force participants.

A 2009 study found that a birth reduces a woman’s labor supply by almost 2 years, but the same study showed that removing abortion restrictions significantly reduces fertility. Productivity lost to abortion in the last half century in the US is non-trivial, especially in light of the Murphy Center’s recent series of columns on our aging labor force.

Surveys administered by the Guttmacher Institute and data from the State of Florida, where a reason is recorded for every abortion, indicate that less than 10% of abortions are performed due to health problems of the fetus or the mother. If we assume, then, that 90% of the 225,075 abortions performed in Georgia from 1990 through 1995 could have instead resulted in a birth, and if we assume the current labor force participation rate of 62.7%, these abortions could have translated to over 127,000 labor force participants between the ages of 27 and 32 today. Those folks would be consumers and tax payers, too!

To reach a conclusion on whether or not abortion restrictions are good economic policy would require far more study than is feasible in this format, but I suspect the scales would tip in favor of growing our future labor force through restricted access to abortion. This is especially true if the economic hardship women avoid through abortion were made less severe through sensible, family-friendly workplace and public policies, especially those specifically targeted to empower minority and low-income women, who are more likely than others to seek abortions.

Of course, when offering abortion policy analysis, there are many complexities to consider from many angles. But, an economic analysis that does not consider the opportunity cost of abortion is an incomplete analysis. It is irresponsible for any academic to advise on policy without having considered both benefits and costs of their recommendations. In particular, one of the primary contributions of economists to any conversation is opportunity cost analysis. In the abortion debate, my profession is getting wrapped up in political opinions and failing to do what we do best. I’m disappointed.

————-

Dr. Melissa Trussell is a professor in the School of Business and Public Management at College of Coastal Georgia who works with the college’s Reg Murphy Center for Economic and Policy Studies. Contact her at mtrussell@ccga.edu.

  • Reg Murphy
  • Reg Murphy Center

Another Reason Workers Are Hard to Find

Written by Don Mathews on . Posted in Don Mathews, Reg Murphy.

Talk to people in the leisure and hospitality industry, and they’ll tell you the shrinking population of young people is not the only reason for the on-going worker shortages. An abrupt decrease in immigration is another.

People in the leisure and hospitality industry should know. In no other industry is the worker shortage as acute.

The leisure and hospitality industry is a massive collection of industries. It consists of two subsectors, one being arts, entertainment and recreation; the other, accommodation and food service. Arts, entertainment and recreation includes performing arts, spectator sports, museums, zoos, fitness centers and golf courses. Accommodation and food service includes hotels, restaurants, bars and a plethora of the like.

Prior to the pandemic, leisure and hospitality ranked third among the nation’s leading private sector employers (behind professional and business services, and education and health services). It employed 17 million people, 10.7 percent of employed U.S. workers. Accommodation and food services employed 14.5 million; arts, entertainment and recreation, 2.5 million.

In Glynn, leisure and hospitality is a monster industry, far and away the county’s leading employer. Just before the pandemic, leisure and hospitality employed about 8,500 Glynn workers, 22 percent of the county’s employed workers. Accommodation and food services employed about 7,350; arts, entertainment and recreation employed about 1,150.

The pandemic hit leisure and hospitality harder than any other industry. Nationally, the industry’s recovery from the pandemic has been impressive, but not complete. U.S. leisure and hospitality employment currently stands at 15.5 million, 1.5 million below its pre-pandemic level.

In Glynn, leisure and hospitality’s recovery has been impressive and probably complete. The most recent industry employment figure for Glynn is 8,243 for the third quarter of 2021. But tourism here has been roaring for months. A current employment figure below 8,500 would be surprising.

Lurking beneath those numbers is a detail that explains why the worker shortage in leisure and hospitality is so acute. Leisure and hospitality relies heavily on two sets of workers: young workers and immigrants.

The median age of a worker in the U.S. is 42.2 years. The median age of a leisure and hospitality worker in the U.S. is 31.7 years. In the U.S., 12 percent of employed workers are age 16 to 24 years. In leisure and hospitality, 35 percent of employed workers are age 16 to 24 years.

The problem? Between 2010 and 2019, the population of 16 to 24 years olds in the U.S. shrunk by 843,029. The population under age 16 shrunk by 876,772.

In the U.S., 17 percent of employed workers are immigrants. In leisure and hospitality, the figure is 20 percent. In accommodation, it’s 32 percent.

The problem? Between 2000 and 2017, the U.S. foreign-born population increased by an average of 743,000 per year. Between 2017 and 2019, the average increase fell to 203,000 per year. With the pandemic, the U.S. foreign-born population appears to have decreased (though official figures for 2020 and 2021 are not yet available).

To the point, the abrupt shift in immigration in 2018 and 2019 from the 2000-2017 trend cost the U.S. about 1.1 million workers, half of whom would have been college educated.

Would an additional 1.1 million workers solve our current worker shortage problem? No. But it would take a nice chunk out of it.

The new trend in immigration is old news to people in the leisure and hospitality industry, especially hoteliers. The industry has been lobbying hard for immigration reform since 2018.

How’s that for a predicament? The population of young workers can’t be unshrunk. And immigration reform requires serious people in politics.

Look for leisure and hospitality to become the leading employer of robotics engineers.

Opportunities for Mothers in the Labor Force

Written by Roscoe Scarborough on . Posted in Reg Murphy, Roscoe Scarborough.

A full-time, nine-to-five schedule is often incompatible with parenting responsibilities. In the absence of robust government support for families, mothers of young children have much lower rates of labor force participation than fathers. Organizational practices and laws can be adapted to increase labor force participation rates among parents, especially mothers of young children.

Several recent columns from the Reg Murphy Center for Economic and Policy Studies have examined the current labor market. Dr. Don Mathews showed that the labor market is experiencing a demographic crisis; we have an aging population and a declining birth rate, resulting in a smaller proportion of working-age people. My other Murphy Center associates identified some solutions. Dr. Melissa Trussell advocated for policies that promote fertility and immigration. Dr. Heather Farley proposed that organizations work to retain existing employees, especially aging employees who must choose between full-time work and retirement. My column contributes to this conversation by advocating for policies that allow parents to work.

Being a parent is a full-time job, but it doesn’t pay. Giving birth and the associated recovery time forces mothers to take time away from paid work. Until a child is school-aged, parents must provide childcare. Families provide childcare in a range of ways: center-based childcare, care from a relative, hiring a nanny or babysitter, or parent care. Even after kids start school, parents’ nine-to-five work schedules do not align with school hours and extracurricular activities.

Center-based childcare is expensive. In many parts of the country, childcare tops housing as the greatest household expense. It can be more expensive to send a toddler to daycare than to send a teen to college. For many lower-income households, opting out of the workforce or shifting to part-time work are the only viable options for providing childcare.

Based on the gendered division of paid and unpaid labor in the U.S., the caregiving burden falls on women disproportionately. Mothers are more likely than fathers to opt out of the workforce or shift from full-time to part-time work. In 2020, fathers of children under three had a labor force participation rate of 93.5%, while mothers of children under three had a rate of 63.3%, according to the U.S. Bureau of Labor Statistics. This time out of the workforce impacts women’s regular weekly income, career advancement, and lifetime earnings.

Employers would be wise to adopt parent-friendly policies. Adapting existing positions to be fully remote would allow more parents to work. As appropriate for the job duties, schedule flexibility can allow parents to complete work around childcare responsibilities. Similarly, many part-time positions would be more attractive to parents if the position guaranteed a fixed schedule and reliable income.

Expanding opportunities for professional part-time work will allow more parents to work. Organizations could create positions with attractive compensation packages and flexible schedules to recruit skilled part-time workers who are alienated from the labor market.

Federal and state legislation could strengthen worker protections and enhance benefits for part-time workers. Additionally, laws that expand parental leave and add job protections for parents would keep more mothers in the workforce.

These changes are a win for all. Labor market participation is good for the economy. Income and employer-sponsored benefits support families. And, elevated labor force participation reduces reliance on the social safety net.

What does the future hold? The impending overturn of Roe v. Wade will increase the birth rate, especially among lower-income women in states restricting access to reproductive healthcare. More families will have to choose between paid work or providing childcare. I will end with some good news. The pandemic normalized working from home. Many jobs that were once bound to brick-and-mortar offices are now permitting remote work, reducing the need for center-based childcare. In addition, recent infrastructure investments are increasing the number of households that have access to broadband internet. These developments promise to increase the opportunities for employment among parents of young children.

 

Roscoe Scarborough, Ph.D. is an assistant professor of sociology at College of Coastal Georgia and an associate scholar at the Reg Murphy Center. He can be reached by email at rscarborough@ccga.edu.

  • Reg Murphy
  • Reg Murphy Center

What do we do about the aging workforce?

Written by Melissa Trussell on . Posted in Melissa Trussell, Reg Murphy.

Last week in this space, Dr. Mathews wrote that labor force changes we are tempted to blame on the pandemic or on pandemic relief policies are more accurately considered part of a demographics story than a pandemic story. Our labor force has shrunk because our population has aged.

It is good news that the labor force was less impacted by the pandemic than it may seem on the surface. It is not especially convenient, though, that we cannot just blame our gaps on the pandemic and wait for time to heal all wounds. An aging, retiring workforce is a problem that will only be exacerbated by time if we are not intentional about addressing it.

There are a couple of policy approaches to alleviating the economic stress brought on by our aging workforce. One is to encourage workers to work longer and/or more productive careers. My colleague Dr. Heather Farley will take a look at this policy challenge in her column next week.

The second policy approach, which could be taken simultaneously with the work longer approach, is to expand the working age population. The annual rate of population growth in Europe and North America has been declining since the early 2000’s, and the UN predicts that by 2075, the death rate will outpace the birth rate in the US.

This is not good news for our labor force, but we can do something about it. There’s a ton of literature showing that our policy choices and priorities have a direct impact on fertility choices.

In 2021, Norwegian sociologists Bergvik, Fauske, and Hart published a review of 35 other studies on the relationships between family policy and fertility in Europe, the US, Canada, and Australia. They found that childcare availability, cash transfers to parents, expanded parental leave, and subsidizing assisted reproductive treatments all, to varying degrees, encourage increased fertility.

Increasing the fertility rate is not the only way to expand our workforce. If you want more people in your house but don’t want to have a baby, invite someone over! Immigration!

While our native born population is aging, immigrants are a major source of younger, working-age adults in the U.S.

In the US, only 61.5% of native born residents are between ages 18 and 64. Among foreign-born US residents, that statistic is 78.1%.

In Georgia, the difference is more pronounced, with 62.3% of native born Georgians and 82.8% of foreign-born Georgians between 18 and 64.

Immigrants are not only more likely to be younger than native born Americans; they also are more likely to go to work.

Native born Americans have a 62.8% labor force participation rate and a 58.9% employment rate. Foreign born American residents have a 66.5% participation rate and a 63.2% employment rate.

In Georgia, the native born participation and employment rates are 63.3% and 59.2%, respectively. The foreign born rates are 70.2% and 67.5%.

These numbers include both documented and undocumented workers.

Immigrants to the US are younger and more likely to work than native-born Americans, and, as I have written before for this column, several studies in the economics literature find that foreign-born workers, including undocumented immigrants, do not push native-born workers out of the labor force. On the contrary, the presence of foreign-born workers often opens doors for creation of new jobs for native-born workers.

Our workforce is aging, and the resulting strain on our economy is palpable. If we are going to effectively relieve the pressure and continue a growth trajectory for the US economy, our policy response should be both pro-family and pro-immigrant.

————-

Dr. Melissa Trussell is a professor in the School of Business and Public Management at College of Coastal Georgia who works with the college’s Reg Murphy Center for Economic and Policy Studies. Contact her at mtrussell@ccga.edu.

  • Reg Murphy
  • Reg Murphy Center