Month: September 2021

Missing Workers

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September 26, 2021

by Steve Stofka

As I am out and about I’ve noticed the Help Wanted signs posted in storefront windows. $15 per hour reads the sign at the gas station near me. Why were there so many of these signs, I wondered? The latest Job Openings report reported a 50% increase in job openings, accounting for about 2.5 million jobs. I dusted off my Sherlock Holmes hat, found my magnifying glass and set out to look for the missing workers.

In the latest employment report from the Bureau of Labor Statistics (BLS) there are 6.3 million fewer people working today than in February 2020, just before the first alarming reports of Covid hospitalizations and deaths in New York City. Digging through many series of labor data, the missing workers are spread throughout the population. What was most surprising to me were those segments of the population where workers are not missing.

After the Great Financial Crisis, employment among workers older than 65 surged, almost doubling to 11 million strong by 2020, when the pandemic struck. 1 out of every 12 workers was over 65. For the past decade, economists have identified several reasons for the surge – people lost homes or had their savings significantly lowered. The Boomers didn’t save enough during their working years. Active Boomers did not want to retire. Employers preferred older workers with more reliable work habits than younger workers.

Before the pandemic, 1 out of 4 older people were working. The number of people in this age group has grown by 2 million during the pandemic. If that employment trend had continued, we would expect that 1/2 million workers continued to work. Instead, the number of older workers fell by 600,000. Many older workers who staffed jobs at retail establishments decided to forgo the risk of getting sick. Almost a million workers near retirement, those aged 55 and above, have taken early retirement or simply not returned to work out of fear of getting sick. So far that has accounted for more than two million workers, leaving 4 million unaccounted for.  

The next place I went to look was younger workers who would no doubt be playing video games and enjoying the sweet life. According to recent BLS and Census Bureau surveys, however, the number of workers aged 16-24 is about the same now as it was before the pandemic. Workers aged 16-19 have actually increased by 200,000.

That left only the core work force aged 25-54. Before the pandemic, 4 out of 5 people in this age group were working. In April 2020, it fell to 70% but has recovered to 78%, the same as in October 2016, on the eve of the 2016 election. I don’t remember seeing a lot of Help Wanted signs then. Because the core work force makes up 2/3rds of the 150 million employed, a few percentage points adds up to a lot of workers. Before the pandemic there were about 101 million workers in this age group. Today that number is 98 million, a decline of 3 million workers.

Adding in some known reporting errors and seasonal adjustments account for the bulk of the missing workers but there are some curious anomalies. The number of people who report that they are working part-time because they couldn’t find full-time work is about the same level as it was before the pandemic. Yet many fast food establishments have Help Wanted signs for full and part-time workers. I am guessing that many applicants would prefer not to have jobs in customer service where they are constantly exposed to people on a face-to-face basis.

I sometimes hear that young people don’t want jobs, that they are sitting at home playing video games and collecting extended unemployment benefits. Misinformation and unsubstantiated opinion never take a day off.

Life Choices

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September 19, 2021

by Steve Stofka

Economics is built on the principle of the rational person capable of making a choice between two options. In casual conversation we use the word “rational” to mean making sense but in economics it means making a choice. The choices presented may have constraints that make the word “choice” seem inappropriate. Does an addict have a choice? Yes. Sometimes we steer our lives with a critical choice of more or no more, having to choose between an unbearable more and a no more that contains an equally unbearable number of unknowns.

We might leave a job with only the hope that we can find another one soon. We may cast a no more vote, rejecting an incumbent for an unknown candidate. People living in the path of a hurricane or forest fire must make the difficult choice of evacuating the area or staying in their home and hoping they will be safe. Making a no more choice with family relationships can twist a person’s mind and soul in knots. A battered women may endure more until they reach the point of no more and leave their situation.  

As the Delta variant of Covid-19 sweeps through the population, many people are making difficult life choices about their jobs. In March 2020, the number of job openings plunged more than a third from 7 million to 4.6 million. In January this year, openings regained their pre-Covid levels and have risen quickly since then. The July report indicated almost 11 million openings, a series record.

After adjusting to online work, some workers have made that a critical preference. They have said no more to long commutes. Some have moved from dense urban areas to less populated states like Montana where rents or house prices will not consume half a paycheck. They have said no more. The sudden job loss last year caused some workers to rethink their priorities and career choice. The lack of affordable childcare has been a deciding factor for some workers.  

In economics, utility theory explores a choice between quantities of two goods. For example, will I have more pizza or more ice cream? These simple unrealistic examples help a student practice the concepts but are not suitable for no more life choices. Because these decisions act like switches, their calculations are hard to model. We may be able to bargain with our company who wants workers back in the office. Many times, we have to make a hard choice, one that can’t be undone.

We may revisit difficult choices, trying to understand and refine our decision making process. Many younger workers will look back and see this as a defining moment in their life. Some will wonder what if, replaying their choice. In a period of five years, our grandparents and great-grandparents endured rationing during WW1, followed by the Spanish flu that killed thousands, then the severe recession of 1921. Life narrowed their choices and they endured. By the time a person reaches their 80s, they have decided on more about 30,000 days. We remember the no more decisions more than we remember the many decisions of more. Each day is a crossroad.

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Photo by Einar Storsul on Unsplash

The Tools of Peace and Power

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September 12, 2021

by Steve Stofka

The recent exit from Afghanistan after a twenty year war (2001-2021) reminds me of the twenty year war we fought in Vietnam (1955-1975). Neither war achieved our ends, demonstrating again that war is a series of miscalculations of the gains and costs. Our overwhelming fighting force can dominate short-term conflict like the Gulf War but it is not a winning strategy against poorly funded insurgent groups.  To those who study the practice of war, this dichotomy prompts many pages of speculation as to the causes.

An answer that fits the facts is that a dominant force like the U.S. does not go to war to win, so it achieves its goal by not winning. The traditional end of war – a win – is to capture territory or access to resources within a region. In Vietnam and in Afghanistan, the U.S. had no such designs. Its goal was remove an existing regime and to prevent its return to power. The first is a military goal. The second is a political end. In both countries, we achieved the military goal of removal. In both countries, we learned that armed troops cannot achieve a long term political goal. Why didn’t we learn our lesson after Vietnam?

An answer that fits the facts is that our goal is to demonstrate our military power, not to learn lessons. In 1795, shortly after the final ratification of the U.S. Constitution, the philosopher Immanuel Kant wrote Perpetual Peace, an essay arguing that a republican government, one with a separation of legislative and executive powers like the U.S., was the only hope of perpetual peace. Without a central authority over all the nations, the only constraint on leaders must come from within each nation.

Only those under a republican form of government understood the true costs of war. The citizens had to fight it, fund it and repair the country after the war was over. 200 years later, the development of technology has allowed most Americans to vote for war without fighting it. The U.S. spends over $536,000 per person in the armed forces, more than five times what China spends per active duty person (GFP, 2021). Because we are able to borrow from the rest of the world, we don’t have to fund our wars with our own taxes. Lastly, the wars are fought in another country so that we don’t have to repair the damages of war. The horrific attack on the World Trade Center twenty years ago was a visceral, deeply wounding reminder of the cost of war fought on the homeland.

Kant wrote that a treaty of peace could not solve the tendency of nations to find a justification for war because a treaty ended only one war. Since peace was not a natural feature of human societies, countries should try to construct a peace that ended all wars. He suggested a League of Peace and stressed that it be a federation of nations, not a nation of nations. The League of Nations formed after WW1 constructed only a treaty, not a peace. Intent on punishing Germany for the war, the Treaty of Versailles ensured the next war twenty years later. The United Nations and NATO were two attempts to form international organizations aimed at resolving issues without war. We have not had another world war since the mid-20th century but we have not constructed a durable peace either.

America has overcome Kant’s three safeguards against perpetual war. Writing at the end of the 18th century when nations fought to take something from someone else, Kant could not imagine our present circumstances. We fight wars to give something to other peoples, a chance for freedom and hope. That is our justification for the damage we do. But the end of war is to take what we want, not to give. We have built the most formidable fighting machine that has ever existed, but it is a tool of power, not peace. In memory of those who died that day 20 years ago, let’s invest in the tools of peace.

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Notes:

Photo by Stephen Johnson on Unsplash

GFP. 2021. “2021 Military Strength Ranking.” Global Firepower – World Military Strength. https://www.globalfirepower.com/countries-listing.php (September 11, 2021). Note: dividing total military cost by active personnel: US $536K per person, Russia – $48K, China – $108K, India – $44K, Japan – $198K, S. Korea – $76K.

Kant, Immanuel. 1983. Perpetual Peace, and Other Essays: On Politics, History, and Morals. Indianapolis, IN: Hackett.

National Constitution Center (NCC). 2021. “On This Day: Congress Officially Creates the U.S. Army.” National Constitution Center – constitutioncenter.org. https://constitutioncenter.org/blog/on-this-day-congress-officially-creates-the-u-s-army (September 11, 2021).

A Call for Free Market Justice

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September 5, 2021

by Stephen Stofka

In a 5-4 decision this week, the Supreme Court decided to let stay the Texas law against abortion that went into effect this week. The court is a democracy whose majority opinion, no matter how slim the majority, becomes the winning opinion. Despite the black robes and pretense of objectivity, the court “elects” its opinions. In 1776, America declared independence from the tyranny of one person rule yet we often stand here today subject to the rule of one person on the court. Should we change our procedure so that the court operates more like a free market?

Writing in the independent court commentary Scotusblog, Amy Howe (2021) summarized the history of the case, the unsigned majority decision and the signed objections of the four dissenting justices including the Chief Justice, John Roberts. Under the law, anyone assisting a woman terminating a pregnancy after 6 weeks can be sued by a third party in Texas civil court. Most women do not know they are pregnant until at least six weeks so this is an effective ban on most abortions. The law effectively deputizes private citizens as vigilante enforcement, paying them up to $10,000 for each successful case and absolving the state of legal responsibility.

The court’s majority opinion was largely founded on procedural grounds that there was no way to know if the person named in the suit would bring a case against an abortion provider under the new law. U.S. and Japanese courts have concrete judicial review as opposed to the abstract review of the European system. Under concrete review, courts act only on cases brought before them. The crafting of this law was designed to take advantage of that aspect of our court system.

The Federalist Society was founded in 1982 to push a libertarian ideology as a counteracting force to the perceived dominance of a liberal interpretation of the Constitution. The Society’s champions a judicial interpretation of the law “founded on the principles that the state exists to preserve freedom [and] that the separation of governmental powers is central to our Constitution” (Federalist Society, 2021). Without clear jurisdiction granted to the federal government by the Constitution, state law should be given deference. Six of the nine members of the Supreme Court are members of the Society and lean toward that libertarian interpretation of the Constitution.

Libertarians champion the dynamics of the free market because it is not a democracy ruled by a majority. There are multiple brands competing for our loyalty. In metropolitan areas, local governments do compete with each other for residents but governments generally act like the water and electric utilities they regulate as public monopolies. A government provides a public monopoly on force and on rule-making. In our Federalist system, 50 states have 50 different sets of laws, 50 separate court systems and 50 interpretations of the Federal constitution and federal law.

We already have a free market in our judicial system. Why should we let a slim majority vote in the Supreme Court contaminate that free market? The justices base their decisions on what they consider sound jurisprudence consistent with past historical principle. Legal briefs present competing opinions that are a distillation of many opinions, a winnowing process that is characteristic of a free market. In choosing between those few dominant legal interpretations, the justices try to establish a positive reasoning to a normative opinion of what is the “best” interpretation. The free market is at work until that final moment when free market principles are upended by a majority vote of one opinion to rule them all.

Let the last step in the process be one that preserves free market principles. If there is a close vote, let each justice vote on the two most dominant opinions whether they agree with those opinions or not. From those votes, let two choices emerge and each choice be assigned a 1 or 0. A roll of nine dice will decide the winning choice. Each six-sided dice will have 1 spot on three faces and no spot on three faces.  The majority rule of the dice, not human beings, would decide the final choice of the winning opinion.

This method will preserve historical precedent, an important feature of the common law foundation of American jurisprudence. In current practice, contesting and concerned parties submit merit and amicus curiae briefs that cite both past majority and dissenting opinions. Adopting this suggested method would continue to support that practice. We would place our most cherished jurisprudence before the whims of fortune, not the tyranny of one person’s vote. Let Lady Justice be truly blindfolded as each opinion is put on the scale.

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Notes:

Photo by Tingey Injury Law Firm on Unsplash

Federalist Society. (2021). About us. Retrieved September 04, 2021, from https://fedsoc.org/about-us

Howe, A. (2021, September 02). Supreme court Leaves Texas abortion ban in place. Retrieved September 04, 2021, from https://www.scotusblog.com/2021/09/supreme-court-leaves-texas-abortion-ban-in-place/