Sunday, December 31, 2017

Scientists refute the scaremongering about GMOs

Washington Post editorial.
"THE NATIONAL Academies of Sciences, Engineering and Medicine already examined genetically engineered (GE) crops once, concluding six years ago that the facts do not justify the fears about “Frankenfoods.” Overblown worries nevertheless continue to proliferate, prompting a movement to stigmatize genetically engineered crops by requiring labels on food packaging. Meanwhile, the technology also has advanced: New tools will allow scientists to more precisely cut and paste genetic code. So the National Academies have again tried to sort things out, releasing another authoritative report Tuesday that refutes the counterproductive scaremongering from the anti-genetically-engineered side. It also points to a bright future in which these crops help solve a range of problems — if governments get the policy right.

The National Academies experts reviewed the relevant studies and solicited huge amounts of feedback. The upshot? “No differences have been found that implicate a higher risk to human health safety from these GE foods than from their non-GE counterparts,” they concluded. They based their findings partially on a comparison of European countries, where genetically engineered crops generally are not used, and the United States, where they are plentiful. They could find no significant differences attributable to genetically engineered crops, across a range of diseases and disorders. Moreover, the experts concluded, “the committee found no conclusive evidence of cause-and-effect relationships between GE crops and environmental problems.” Among other things, the scientists found concerns that the crops are degrading plant and animal biodiversity to be insubstantial.

The major problem with insect- and herbicide-resistant genetically engineered plant varieties appears to be that, particularly if used irresponsibly, they can lead to resistant bugs and weeds, which would require more gene editing and new herbicides. The experts also found that, while small and large farms seem to be benefiting from the crops, there is mixed evidence — at best — that planting them has increased yields, which is a major goal of the research.

Rather than be discouraged by these findings, the experts argued that research and investment in genetically engineered technologies should increase. Crops could be modified to show “improved tolerance to abiotic stresses, such as drought and thermal extremes; increased efficiency in plant biological processes, such as photosynthesis and nitrogen use; and improved nutrient content,” the report noted. The experts concluded: “If deployed appropriately, those traits will almost certainly increase harvestable yields and decrease the probability of losing crop plantings to major insect or disease outbreaks.” Though not a silver bullet, genetic engineering could help feed a growing world population.

World governments must balance needed regulation with innovation. The report’s authors recommend that regulators spend less time worrying about how new crops are made and instead focus on how different they are from earlier ones. Strong rules should ensure that new crop varieties do not lead to unsustainable farming and environmental degradation on marginal lands. It will also be important to train farmers in how to prevent resistance among the bugs and weeds at which genetically engineered crops are targeted.

By contrast, giving in to extravagant and unfounded fears, as the Europeans have, would shut down fruitful research that could help feed many people, especially in poorer parts of the world."

In the early 1990s, Indonesia more than doubled the real value of its minimum wage and Indonesian employment fell by at least 12% and as much as 36%

See Student Activists Hurt the Workers They Try to Help by Chelsea Follett of
"Protesting so-called “sweatshops” in poor countries is a perennial pastime on college campuses across the United States.

Yet experts across the political spectrum—including Nobel Prize–winning economist Paul Krugman, Pulitzer Prize–winning journalist Nicholas Kristof, and Columbia University professor Jeffrey Sachs—have argued that opposition to “sweatshops” in poor countries hurts the very workers that activists seek to help. Student activists would do well to read Benjamin Powell’s concise and persuasive defense of such factory work, “Out of Poverty: Sweatshops in the Global Economy,” published by Cambridge University Press in 2014. The book focuses solely on the well-being of factory workers—not what would be best for factory owners or economic efficiency.

Factory workers routinely garner more publicity than the world’s poorest people, who are overwhelmingly rural and live lives of destitution precisely because they are largely untouched by global capitalism. Powell devotes his second chapter to showing that anti-factory activism receives generous funding from labor unions in the United States and Europe. These unions pay lip service to “solidarity” with workers in poor countries but are primarily focused on keeping manufacturing jobs away from poor countries. Powell suggests that unions manipulate idealistic student activists to push for high labor standards that only rich countries can meet, including “sweat-free” labeling for clothing made under those standards.

Powell presents two main arguments for why activists should change their approach: (1) taking away the option of factory work harms factory workers, and (2) factories can serve as a step in the process of economic development that ultimately cures poverty.

If someone chooses to work in a factory, she must see that as her best option. Taking away her best option without offering anything better makes her worse off. As Powell shows, prematurely raising of labor standards and wages by governments results in worse options for factory workers. In the early 1990s, Indonesia more than doubled the real value of its minimum wage in response to U.S. threats of trade restrictions—a policy pushed by U.S. student activists. This led to the closure of many manufacturing plants, and Indonesian employment fell by at least 12 and as much as 36 percent. Similarly, when Nike and Adidas limited working hours at Chinese supplier factories to ease the consciences of U.S. activists, “many workers quit, complaining that the overtime pay was no longer enough.” In South Africa, when government officials tried to shut down rural garment factories for failing to comply with minimum wage laws in 2010, “desperate clothing workers threatened to assault officials and burn their vehicles rather than lose their jobs.”

As Paul Krugman has eloquently put it, “Bad jobs at bad wages are better than no jobs at all.” (Or, as in the Chinese example, jobs at bad wages are better than jobs at even worse wages.) Yet the campaign against factories in poor countries routinely ignores the wishes of the workers themselves, limiting workers’ options.

Factory work is not only a stepping-stone out of extreme poverty for workers, but can help grow an entire economy and eradicate extreme poverty altogether. Remember, today’s wealthy countries once had their own factories with conditions often worse than those in poor countries today. In the United Kingdom, the first country to industrialize, “the process of development involving sweatshops lasted from 130 to 160 years. In the United States, the process was faster, taking around 100 years.” Powell notes that legal labor standards and the introduction of a minimum wage in those countries largely mirrored what factories were already doing—essentially codifying preexisting norms instead of prompting a change in industry practices.

The development process has gotten faster. In South Korea, Taiwan, Hong Kong, and Singapore, the process of moving from industrialization to First World living standards took less than two generations, as opposed to a century in the United States. Factories helped workers in those countries escape poverty and their children achieve postindustrial prosperity. As Powell says, “Sweatshops themselves are part of the very process of development that will lead to their own elimination.”

Instead of opposing factories, activists might consider campaigns to buy goods manufactured in impoverished parts of the world, such as sub-Saharan Africa, in the name of ending poverty. “My concern is not that there are too many sweatshops but that there are too few,” Jeffrey Sachs has stated. “Those are precisely the jobs that were the steppingstone for Singapore and Hong Kong, and those are the jobs that have to come to Africa to get them out of their backbreaking rural poverty.” Foreign aid has never lifted a single country out of poverty, and in Africa aid may actually discourage needed reforms by propping up dictators. “If Africa’s economies are to take off, Africans will have to start making a lot more things,” The Economist declared three years ago. “Few countries … have escaped poverty without putting a lot of workers through factory gates.” Unfortunately, despite its growing population and need for jobs, Africa has been deindustrializing. The continent’s poor business environment and faulty institutions are partially to blame for reducing Africa’s competitiveness relative to the rest of the world.

Activists who want to help the poor should refocus their efforts on ending forced labor (slavery), corruption, and economic restrictions that stifle growth and perpetuate poverty. Governments in many poor countries score poorly in economic freedom and may violate their citizens’ property rights. Africa, the world’s poorest continent, also has the worst record on economic freedom and business environment.

People in developing nations deserve the chance to industrialize and achieve the same prosperity the West gained through its own Industrial Revolution. Infringements upon economic freedom hinder the process of development and prevent people from lifting themselves out of poverty. That is an injustice worth protesting."

Saturday, December 30, 2017

Income categories are paying almost exactly the same share of federal taxes as before due to the tax bill

See JCT distribution tables by John H. Cochrane.

"Courtesy Greg Mankiw, the Joint Committee on Taxation distributional analysis of the new tax law.
Bottom line: No change. Income categories are paying almost exactly the same share of federal taxes as before. Millionaires actually pay a tiny bit larger share in the new bill.
Given the distributional hue and cry, frankly, it is a surprise to me just how tiny -- far below measurement errors -- the changes are.
One can argue whether this is the "right" measure of progressivity or redistribution, whether a tax cut should include a change in which income categories pay what share. But it summarizes the facts, which are stubborn things. Shares of federal taxes paid by income groups do not change. Millionaires get bigger dollar tax cuts exactly to the extent that they pay higher taxes. Period.
Note to those outside the beltway: The Joint Committee on Taxation is the committee set up by Congress to evaluate tax policy. Most criticism I've seen of its calculations lately come from the right."

Is The Trump Tax Cut Like The Kennedy Tax Cut?

See What John F. Kennedy and Donald Trump have in common by Stephen Moore of The Heritage Foundation.
"Last week during an address at the White House President Trump likened his tax plan to “the tax cut that John F. Kennedy proposed 55 years ago.” This elicited some howls of protest from Mr. Trump’s liberal critics who say it’s historically inaccurate to compare the Trump plan to JFK’s.

Is it? In 1963 Kennedy proposed a tax cut that slashed business and individual tax rates by about 30 percent. It’s true that tax rates were a lot higher then (90 percent in some cases) than now. But the philosophy was the same: lower taxes will get businesses, investors and consumers going again and jump start a lackluster economy.

There are other similarities between Mr. Trump and JFK on taxes. Democrats complain that the Trump tax cut will increase the deficit, just as Republicans made this same fatuous claim against the Kennedy tax cuts. President Kennedy declared at the New York Economic Club that it is a “paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now.”

He reminded Congress that America’s biggest problem was not the budget deficit but a “growth deficit.”

That sounds almost identical to what Donald Trump is saying today on taxes and what Charles Schumer and Nancy Pelosi are arguing against.

It was JFK who, posthumously was proven exactly right and the tax cut critics were refuted by actual events. After the tax cuts were enacted in 1964, America experienced one of the greatest periods of prosperity in our history.

The U.S. had three straight years of 6 percent growth — the last time that has happened.
Larry Kudlow’s 2016 book “JFK and The Reagan Revolution” documented the post-JFK tax cut growth spurt: “The tax payments by the wealthiest filers nearly doubled. We had many quarters of six percent growth back then.”

That same effect was duplicated when Ronald Reagan chopped the income tax rates from 70 to 28 percent and the corporate rate from 50 to 35 percent. The share of taxes paid by the richest 1 percent rose from 19 percent in 1980 to above 25 percent by 1990, according to IRS tax return data. Total tax revenues surged from $500 billion in 1980 to just over $1 trillion by 1990.

In 1986 when President Reagan’s tax reform chopped tax rates to 28 percent, that bill passed the U.S. Senate — are you sitting down? — by a vote of 97-3. This included the votes of such prominent Democrats as Bill Bradley, Ted Kennedy, Howard Metzenbaum, and Sam Nunn. Where are the pro-growth Democrats today? Are there any?

In 1998 Bill Clinton — who admittedly raised taxes in 1993 — reversed course and signed into law one of the biggest bipartisan tax cuts in history, including a slashing of the capital gains tax. The growth and employment boom was so great that the budget reached a budget surplus.

Democrats say they wish Mr. Trump had put forward a bipartisan tax plan, but where is the Democratic alternative? The only alternative I’ve seen is Bernie Sanders’ proposal to raise tax rates to 50, 60 or even 70 percent. Can anyone with a straight face argue that this would help the economy?
Sadly, the modern Democratic Party today has repudiated JFK economics. Now they are infuriated that Donald Trump has picked up that mantle. Readers can go to the Committee to Unleash Prosperity website and listen to and see video of JFK’s wisdom on taxes. Here’s one more excerpt from a Kennedy 1963 radio address: “Every dollar that is released from taxation and is spent or invested will create a new job and new salaries. And these new jobs will create more jobs and salaries.”

There is one last similarity between JFK and Ronald Reagan and Donald Trump. Economic optimism. They shared a belief that the sky is the limit to American potential. That there are no limits to our economy or our greatness. Mr. Trump says we can grow at 3 or 4 percent. Liberal pessimists dismiss this as a wild-eyed happy talk. They are selling America short. The good news is that most Americans are with Mr. Trump, Mr. Reagan and JFK on America’s untapped potential."

Friday, December 29, 2017

New York Subways cost seven times the average elsewhere in the world because public officials have stood by as a small group of politically connected labor unions, construction companies and consulting firms have amassed large profits

See The Most Expensive Mile of Subway Track on Earth by Alex Tabarrok.
"Blogger Alon Levy first drew attention to the fact that building a subway costs far more in New York City than elsewhere in the United States or the world. In a superb investigation the NYTimes updates that finding and investigates why:
The estimated cost of the Long Island Rail Road project, known as “East Side Access,” has ballooned to $12 billion, or nearly $3.5 billion for each new mile of track — seven times the average elsewhere in the world. The recently completed Second Avenue subway on Manhattan’s Upper East Side and the 2015 extension of the No. 7 line to Hudson Yards also cost far above average, at $2.5 billion and $1.5 billion per mile, respectively.
So why are costs so high? The NYTimes concludes:
For years, The Times found, public officials have stood by as a small group of politically connected labor unions, construction companies and consulting firms have amassed large profits.
Trade unions, which have closely aligned themselves with Gov. Andrew M. Cuomo and other politicians, have secured deals requiring underground construction work to be staffed by as many as four times more laborers than elsewhere in the world, documents show.
Construction companies, which have given millions of dollars in campaign donations in recent years, have increased their projected costs by up to 50 percent when bidding for work from the M.T.A., contractors say.
Consulting firms, which have hired away scores of M.T.A. employees, have persuaded the authority to spend an unusual amount on design and management, statistics indicate.
Where the Times piece goes well beyond what has been discussed before is the detail by which it supports these conclusions and the careful comparison with similar but much cheaper projects elsewhere in the world such as Paris.

It will not escape notice that New York buys subway construction the way all of America buys health care."

More evidence that technology and increased worker productivity, not trade, were behind US factory job losses

From Mark Perry.
"Here’s the abstract from the NBER research paper “Recent Manufacturing Employment Growth: The Exception That Proves the Rule” by Robert Z. Lawrence of Harvard’s JFK School of Government:
This paper challenges two widely held views: first that trade performance has been the primary reason for the declining share of manufacturing employment in the United States and other industrial economies, and second that recent productivity growth in manufacturing has actually been quite rapid but is not accurately measured. The paper shows that for many decades, relatively faster productivity growth interacting with unresponsive demand has been the dominant force behind the declining share of employment in manufacturing in the United States and other industrial economies. It also shows that since 2010, however, the relationship has been reversed and slower productivity growth in manufacturing has been associated with more robust performance in manufacturing employment. These contrasting experiences suggest a tradeoff between the ability of the manufacturing sector to contribute to productivity growth and its ability to provide employment opportunities.
While some blame measurement errors for the recently recorded slowdown in manufacturing productivity growth, spending patterns in the United States and elsewhere suggest that the productivity slowdown is real and that thus far fears about robots and other technological advances in manufacturing displacing large numbers of jobs appear misplaced.

The chart above displays one of Professor Lawrence’s most interesting findings (to me), which is described below:

The chart above displays one of Professor Lawrence’s most interesting findings (to me), which is described below:
The rate at which the US manufacturing employment share has fallen over the past three decades as the economy globalized further—about 0.4 percentage points per year—is remarkably similar to the rate at which it fell in the 1960s and 1970s. This similarity suggests that the forces that operated in the early years continue to dominate. As shown in the chart above, when a trend line fitted to manufacturing employment data from 1960 to 1980 is projected out to 30 years, it precisely predicts the share of manufacturing employment in 2010. Without knowing about China’s rise, the North American Free Trade Agreement (NAFTA), or the formation of the World Trade Organization (WTO), a forecaster in 1980 would have been able to accurately predict the number of workers employed in manufacturing in 2010 without almost any error!
Donald Trump has blamed “offshoring and trade” for declines in manufacturing employment, singling out what he considers are flawed trade agreements as the major driver of these developments. While there is evidence that the US trade deficit has contributed to some of the losses of manufacturing jobs since 2000, far more powerful even during this period has been the impact of faster productivity growth interacting with unresponsive demand for goods. For example, 985,000 US manufacturing jobs estimated to have been lost due to Chinese imports between 1999 and 2011 (Acemoglu et al. 2016) represent less than a fifth of the total loss of more than 5 million US manufacturing jobs over the same period.
And what about the significant break in the trend starting in about 2010 for factory jobs as a share of total employment? Has the US become more internationally competitive due to lower energy prices, higher wages in China, technological innovations like 3-D printing and/or a rebound from the Great Recession? None of those reasons are convincing, according to Professor Lawrence:
As can be seen in the chart above, since about 2010, the long-run trend line no longer fits the data. While still declining, manufacturing’s share in US employment since 2010 has fallen much less than its long-run trend. Indeed, the small drop in the share of just 0.29 percentage points over the six-year period between 2010 and 2016 is less than the 0.40 percentage point annual average that was typical over the prior five decades. Recent manufacturing employment behavior has also been radically different than it was in the early 2000s. In the economic recovery after the 2001 recession, manufacturing employment did not increase at all, but, after reaching a trough in 2010, it had increased by 1.6 million jobs by 2016.
Instead, slow productivity growth appears to be the source of the relative strength in manufacturing employment growth over the post-2010 period. Since 2010 the rapid productivity growth in manufacturing has ground to a halt: Between 2010 and 2016, output per full-time employee in  manufacturing declined by 2.2 percent. This pace is far below the manufacturing labor productivity growth of 4.3 percent achieved annually between 2000 and 2010.
MP: Regardless of the reason for the recent departure in the long-term trend since 2010 of factory jobs as a share of total employment, it’s important to note the consistent and gradual downward trend in manufacturing employment that took place during the entire 50 year period between 1960 and 2010. As Professor Lawrence demonstrates, the claim by Trump and his fellow protectionists/scarcityists/mercantilists/nationalists that China, offshoring, and international trade are to blame for the loss of more than 7 million US factory jobs since the peak in 1975 is largely incorrect and exaggerated. Rather, the real “culprit” behind the loss of manufacturing employment in America, at least until recently, has been the same force that has eliminated millions of US agricultural jobs: technology, innovation, and increased worker productivity."

Thursday, December 28, 2017

Scott Sumner On Why Neoliberalism Is Not To Blame For The Great Recession And Rising Inequality

See I wish you a very neoliberal Christmas.
"The world is full of problems, and always will be. Thus there are almost an infinite number of causes that I might advocate. I've decided that my time is most effectively used if I focus on two goals, promoting market monetarism and advocating neoliberalism.

Over the past decade it has become intellectually trendy to argue that neoliberalism is passé, and that this policy regime was pushed too far. As far as I can tell, the backlash against neoliberalism is driven by two factors:

1. The Great Recession was blamed on the excesses of unfettered capitalism.
2. Since the late 1970s the world has moved in a neoliberal direction. During this period, some economic problems have gotten worse, such as economic inequality.

The first point is easy to dismiss, as we've seen that movie before. Recall that the Great Depression was initially seen as being caused by laissez-faire economic policies. There is little doubt in my mind that economists will eventually come to realize that the real problem in 2008 was tight money, just as the causes of the Great Depression were re-evaluated after the publication of the Monetary History.

The second complaint is more interesting. The basic error here is to focus on time series evidence rather than cross sectional evidence. Yes, the world has become more neoliberal, and at the same time certain problems have gotten worse. But that's only one observation. It's also true that the world is better off in many ways than was the case back in 1978. In contrast, cross sectional evidence provides over 100 observations. Here's a recent headline and subhead from the Financial Times:
Argentina takes steps to boost stature on world stage Macri government is re-engaging with globalisation as others question its benefits

Voters in the US and the UK can dabble with socialists like Sanders and Corbyn because so little is at stake. The economic system is so firmly entrenched that no election is likely to move policy dramatically in one direction or another. 
 Developing countries do not have that luxury. Argentina was a mess when Macri took power. All he had to do is look around to understand that neoliberalism (i.e. Chile) offered a better option than socialism (i.e. Venezuela.)

One counterargument is that while a certain amount of neoliberalism is clearly appropriate, we went too far during the neoliberal era. Once again, however, there's no real evidence to support that claim. If that were true, then the countries at the top of the Economic Freedom rankings would be doing worse than the countries further down the list. But that's not the case. Which Western Hemisphere economies are doing better than Canada, the US and Chile? Which Asia/Pacific economies are doing better that Hong Kong, Singapore, Australia and New Zealand? Which European economies are doing better than Switzerland and Denmark? If neoliberalism is being overdone, then please tell me where I can find the cross sectional evidence for that claim? Who are the overdoers?

It seems plausible that neoliberalism could be overdone, but we are still quite far from reaching the point of diminishing returns. Neoliberalism is a policy mix that remains well worth advocating.

PS. I define neoliberalism as a combination of relatively open markets and borders, deregulation, sensible environmental policies (such as pollution taxes), and sensible (non-punitive) policies of redistribution. The details may vary from one country to another. Notably un-neoliberal countries include Greece, Russia, Venezuela, North Korea, and much of the developing world.

PPS. If neoliberalism caused the Great Recession, then why did the most neoliberal (developed) economies suffer the least, and the least neoliberal (i.e. Greece) suffer the most?
PPPS. Here is the top 15 in the Cato rankings:"
Screen Shot 2017-12-24 at 3.34.50 PM.png


The latest empirical research further underscores the harm of minimum wage laws

See BY RYAN BOURNE of Cato. Excerpts:
"David Card and Alan Krueger in 1994 seemed to find such a result. Using a telephone survey to analyze the response of fast-food restaurants in New Jersey to an increase in the state’s minimum wage relative to nearby Pennsylvania, Card and Krueger concluded that the higher minimum wage actually increased employment in New Jersey. However, David Neumark and William Wascher in 2004 reexamined the New Jersey increase using actual payroll data from the two neighboring states.

They found that a combination of measurement error in the Card and Krueger telephone survey and the fact that the wages of many of the workers were already above both the new and old minimum wage accounted for Card and Krueger’s findings, rather than a monopsony effect."

"Given sectors that include the overwhelming majority of workers earning at or below the minimum wage (e.g., food preparation and serving, sales, administrative support, transportation, and material moving) look fairly competitive, economists such as Alan Manning developed models that argued instead that all employment situ- ations have an element of monopsony. Imperfect information and the costs to an employee of switching jobs are thought to give the current employer some market power over workers. As a result, these economists argue, raising the minimum wage can raise employment."

In 2006, Neumark and Wascher undertook an exhaustive analysis of the minimum wage literature since Card and Kreuger. They argued that two-thirds of the papers they reviewed supported the traditional understanding. They concluded that minimum wages had very negative employment effects for minority teenagers, who were often replaced by older, lower-skilled women.

But two papers in 2010 and 2011, using alternative research designs and controls, found no employment effects from minimum wage increases, highlighting the back-and-forth nature of this debate. The 2010 paper, by Arindrajit Dube, William Lester, and Michael Reich, examined restau- rant and other low-wage employment in counties that bordered each other across state lines with different minimum wage laws. They found no effects on employment in counties in states that had increased their minimum wage. The 2011 paper, by Sylvia Allegretto, Dube, and Reich, examined all (not just low-wage) employment in states, but included state employment trends as a control variable. The authors again found no effect of the minimum wage increase on employment after con- trolling for the existing employment trends.

Neumark and Wascher responded in 2013 that the inclusion of the linear state-employment time trends would be appropriate if the early 1990s recession and the Great Recession had similar effects within states. But, for example, teenage employment was much higher than predicted by linear trends in California during the 1990s recession and much lower during the Great Recession. They found that the inclusion of nonlinear state time trends eliminated the systematic prediction errors over time and resulted in negative effects of minimum wages on teen employment—the same basic result found in their 2006 paper.

In a provocative 2016 paper, Johnathan Meer and Jeremy West argued that the inclusion of state employment trends is methodologically problematic for another reason. They argued that increased minimum wages do not prompt employers to reduce their employment levels in the short run, but rather reduce their hiring rates at the margin, resulting in lower employment in the long run. And states that enact minimum wage increases tend to have higher rates of employment growth than other states, which means that controlling for trend growth, as the 2010 and 2011 papers did, obscures the negative employment effect of a minimum wage increase. That is because the higher growth before the wage increase and lower growth after the increase averages out to a seemingly steady growth rate similar to what’s seen in the control state. Meer and West concluded that a real minimum wage increase of 10% reduced job growth by 0.3 percentage points annually—a hefty 15% of the baseline level."

"But states that are growing faster are more inclined to increase their minimum wage relative to states that are not growing as robustly, so there are likely important economic differences between them, and those differences distort statistical analysis of the effects of one state changing its minimum wage.

A 2014 study by Jeffrey Clemens and Michael Wither attempts to overcome this problem. Instead of examining a state-level change in the minimum wage, the two examine the effects of the federal minimum wage increase from $5.15 to $7.25 in the late 2000s. The nationwide change meant the researchers couldn’t look for differences by comparing workers in different states, so they instead compared groups of workers within each of the affected states. The treat- ment group included those who were paid the very lowest wage before the increase. The control group included workers earn- ing slightly above the new minimum. The researchers found that the number of workers in the treatment group declined relative to the control group once the new mini- mum wage took effect. They estimated that the new federal mini- mum eliminated about 800,000 jobs in the lowest paid group."

"A recent comprehensive literature review by Hristos Doucouliagos and T.D. Stanley of 1,424 estimates of elasticities from minimum wage studies found small disemployment effects overall, but that finding was heavily caveated, with the authors claiming that it probably stems from “publication bias” in favor of the traditional negative results."

"the majority of published papers found small but statistically significant disemployment effects from modest minimum wage increases, while most of the rest of the studies found neither positive nor negative employment effects."

"papers that used methodologies comparing areas experiencing wage hikes with close geographic control areas tended to find smaller disemployment effects, whereas those controlling for other state-specific shocks and using longer time periods or more advanced estimation methods tended to find larger negative effects."

"certain demographic groups, particularly the low-skilled and teenagers, absorbed the worst of the employment losses when minimum wages increased."

"[Seattle city council] voted to increase Seattle’s minimum wage in a series of steps, set to reach $15 per hour by 2022, with larger employers and employers not offering health benefits reaching that level earlier."

"Unlike previous studies, which examined sectors or groups known for low-wage work—such as restaurants, or retail, or teenagers—this study examined the effect of the minimum wage increases on all employees earning under $19 per hour in single-location employers in the state.

The study used synthetic rather than actual controls. That is, the control group is a weighted-average of census regions in Washington. This approach minimizes the differences in trends between Seattle and the other regions prior to the minimum wage ordinance, making the findings of the study more reliable. Differences in hours and employment after the ordinance passed in Seattle are then assumed to be the result of the policy change.

The University of Washington results are striking. The researchers found the first minimum wage increase from $9.47 to $11 in 2015 resulted in statistically insignificant reductions in hours worked and jobs. But the second increase to $13 had dramatic effects. Hours worked fell by between 8.7% and 10.6%, and the total number of low-wage jobs decreased by between 5.1% and 6.3%. Employers in Seattle cut back on both the number of low- wage employees and the hours that retained employees worked relative to the synthetic control of weighted counties in the rest of Washington. The result is that the average person affected by the law was $125 per month worse off because of the policy change."

"here were large negative effects when only low-wage restaurant employment was examined. In other words, Seattle’s minimum wage increase shifted income from lower-wage to higher-wage restaurant workers."

"there may be nonlinear employment effects from mini- mum wage increases, meaning that employment losses grow progressively worse as the minimum wage rises."

"multi-site employer exclusion by conducting survey work that suggests that multi-site businesses are in fact more likely to have laid off workers following the wage increase than single-site businesses."

"strong growth in Seattle relative to the synthetic control trend would suggest that the minimum wage had an even bigger negative effect. For the results to overstate the disemployment effects, the control group performance in the treatment period would have had to improve relative to the city of Seattle."

Wednesday, December 27, 2017

Businesses eliminated hundreds of thousands of full-time jobs to avoid Obamacare mandate

The Affordable Care Act requires businesses with more than 50 full-time employees to provide health insurance

By Jacob Passy of Market Watch. Excerpts:
"Up to 250,000 positions may have been eliminated by small businesses seeking to avoid Obamacare’s employer mandate, according to estimates in a new working paper distributed by the National Bureau of Economic Research. Altogether between 28,000 and 50,000 businesses appear to have reduced their number of full-time employees from 2014 to 2016 because of the mandate.

“The size distortion is closely linked with whether a business offers employer-sponsored health insurance (ESI) to its employees,” said Casey Mulligan, the study’s author and a professor at the University of Chicago. “Even by comparison with businesses employing fewer than 30 full-time workers, the propensity to offer ESI is low among employers with 30-49 full-time employees.”"

"For some time now, researchers have suggested that Obamacare might result in employment losses, not just at small businesses, as companies look to avoid the added costs associated with providing health insurance.

Meanwhile, a June 2016 study determined that 500,000 workers in the retail, hospitality and food service sectors were forced involuntarily into part-time employment as companies sought to circumvent the employer mandate. A separate Goldman Sachs study found that a few hundred thousand people found themselves in this position." 

Snowcover Increasing Since 1950s

By Kenneth Richard.
"Christmas Day has arrived.
With the advent of this cheery holiday comes a somber warning from Newsweekpurveyor of climate doom.

“[A]s global temperatures rise due to climate change, snow on Christmas Day could increasingly become a rarity—even a distant memory.”

Contrary to Newsweek‘s claims, however, snow cover across the Northern Hemisphere (NH) has been increasing in recent decades.
Image Source: NOAA
In the Southern Hemisphere, snow and ice have been expanding in the Antarctic region for centuries (Thomas et al., 2017), and Antarctica is projected to continue gaining ice mass in the decades to come (Lenaerts et al., 2016).
Apparently the journalists penning climate alarm scenarios that warn readers white Christmases are on the way out in the NH haven’t been keeping up with the latest scientific publications.

Heavy 30-day snowfall amounts were evaluated to identify spatial and temporal characteristics east of the Rockies in the United States during the period 1900-2016. An extensive data assessment identified 507 stations for use in this long-term climate study. The top 30-day heavy snowfall amount and the average of the top five 30-day heavy snowfall amounts were examined. … The northern Great Plains, Great Lakes, Midwest, and Northeast experienced more top five periods [more snow] in the second half of the 117-year period [1958-2016], where most of the southern states experienced top five periods throughout the study period. Examining extremes at periods beyond the daily event and less than the season contributes to our knowledge of climate and provides useful information to snow-sensitive sectors.

Long-term observations of increasing snow cover in the western Cairngorms [Scotland] … For 13 consecutive winters between 2002 and 2015, the date for the onset of continuous winter snow cover, and subsequent melt, was recorded on slopes of north and north-easterly aspect at altitudes between 450m and 1111m amsl. Results show that the period of time during which snow is continuously present in the catchment has increased significantly by 81 (±21.01) days over the 13-year period, and that this is largely driven by a significantly later melt date, rather than earlier onset of winter snow cover.

Data revealed 713 blizzards over the 55 years, with a mean of 13 events per season. Seasonal blizzard frequency ranged from one blizzard in 1980/81 to 32 blizzards in 2007/08Federal disaster declarations resulting from blizzards totaled 57, with more than one-half of them occurring in the twenty-first century. Storm Data attributed 711 fatalities during the 55-yr study period, with an average of one individual per event; 2044 injuries were reported, with a mean of nearly three per blizzard. Property damage totaled approximately $9.11 billion in unadjusted dollars, with an approximate mean of $12.6 million per storm. Seasonal blizzard frequencies displayed a distinct upward trend, with a more substantial rise over the past two decades. … The modeled increase in blizzard activity showed a nearly fourfold upsurge between the start [1960] and end [2014]of the study period at 5.9 and 21.6 blizzards, respectively. On the basis of current model trends, the expected blizzard total for a season is 32 blizzards by 2050; uncertainty s on whether the linear trend will continue or stabilize in the near future.

No evidence of widespread decline of snow cover on the Tibetan Plateau over 2000–2015 … Our results show no widespread decline in snow cover over the past fifteen years and the trends of snow cover phenology over the TP has high spatial heterogeneity.

Ice Stable, Thickening, Growing In Recent Years

Ice rises are a useful resource to investigate evolution and past climate of the DML coastal region. We investigate Blåskimen Island ice rise, one of the larger isle-type ice rises at the calving front of the intersection of Fimbul and Jelbart Ice Shelves, using geophysical methods. … Using the Input-Output method for a range of parameters and column setups, we conclude that Blåskimen Island has been thickening over the past nine years [2005-2014]. Thickening rates cannot be determined precisely, but ensemble results show that thickening rate averaged over the ice rise varies between 0.07 m a−1 and 0.35 m a−1 [per year]. On longer timescales, we speculate that  the summit of Blåskimen Island has been stable within several kilometers at least in the past ∼600 years but no longer than several millennia.

However, a recent analysis (Turner et al., 2016) has shown that the regionally stacked temperature record for the last three decades has shifted from a warming trend of 0.32 °C/decade during 1979–1997 to a cooling trend of − 0.47 °C/decade during 1999–2014. … This recent cooling has already impacted the cryosphere in the northern AP [Antarctic Peninsula], including slow-down of glacier recession, a shift to surface mass gains of the peripheral glacier and layer of permafrost in northern AP islands.

“Pamir–Karakoram–Western-Kunlun-Mountain (northwestern Tibetan Plateau) Glacier Anomaly” has been a topic of debate due to the balanced, or even slightly positive glacier mass budgets in the early 21st century. Here we focus on the evolution of glaciers on the western Kunlun Mountain and its comparison with those from other regions of the Tibetan Plateau. The possible driver for the glacier evolution is also discussed. Western Kunlun Mountain glaciers reduce in area by 0.12 % yr−1 from 1970s to 2007–2011. However, there is no significant area change after 1999. Averaged glacier thickness loss is 0.08 ± 0.09 m yr−1 from 1970s to 2000, which is in accordance with elevation change during the period 2003–2008 estimated by the ICESat laser altimetry measurements. These further confirm the anomaly of glaciers in this region. Slight glacier reduction over the northwestern Tibetan Plateau may result from more accumulation from increased precipitation in winter which to great extent protects it from mass reductions under climate warming during 1961–2000. Warming slowdown since 2000 happening at this region may further mitigate glacier mass reduction, especially for the early 21st century.

Our results indicated that the glacier area of MAKT [Muztag Ata and Kongur Tagh] decreased from 1018.3 ± 12.99 km2 in 1971/ 76 to 999.2 ± 31.22 km2 in 2014 (–1.9 ± 0.2%). Weak area shrinkage of glaciers by 2.5 ± 0.5 km2 (0.2 ± 0.1%) happened after 2000 and the period 2009–2014 even saw a slight expansion by 0.5 ± 0.1 km2 (0.1 ± 0.0%). The glaciers in this region have experienced an overall loss of –6.99 ± 0.80 km3 in ice volume or –0.15 ± 0.12 m water equivalent (w.e.) a–1 from 1971/76 to 2013/14. The mass budget of MAKT was –0.19 ± 0.19 m w.e. a−1 for the period ~1971/76–1999 and –0.14 ± 0.24 m w.e. a−1 during 1999–2013/2014. Similar to previous studies, there has been little mass change in the Pamir over recent decades despite such uncertainties. Glacier mass change showed spatial and temporal heterogeneity, with strong mass loss on debris-covered glaciers with an average of –0.32 ± 0.12 m w.e. a−1 from the 1970s to 2013/14.

This study investigated the surge dynamics of Aavatsmarkbreen, a glacier in Svalbard and its geomorphological impact based on remote sensing data and field observations. The main objective was to analyse and classify subglacial and supraglacial landforms in the context of glacial deformation and basal sliding over a thin layer of thawed, water-saturated deposits. The study also focused on the geomorphological evidence of surge-related sub- and supraglacial crevassing and glacier front fracturing. From 2006 to 2013, the average recession of Aavatsmarkbreen was 363 m (52 m a−1). A subsequent surge during 2013–2015 resulted in a substantial advance of the glacier front of over 1 km and an increase in its surface area of more than 2 km2

Antarctica Ice Sheet Will Continue Gaining Mass

We present climate and surface mass balance (SMB) of the Antarctic ice sheet (AIS) as simulated by the global, coupled ocean–atmosphere–land Community Earth System Model (CESM) with a horizontal resolution of ∼1∘ in the past, present and future (1850–2100). CESM correctly simulates present-day Antarctic sea ice extent, large-scale atmospheric circulation and near-surface climate, but fails to simulate the recent expansion of Antarctic sea ice. The present-day Antarctic ice sheet SMB equals 2280±131 Gtyear−1, which concurs with existing independent estimates of AIS SMB. When forced by two CMIP5 climate change scenarios (high mitigation scenario RCP2.6 and high-emission scenario RCP8.5), CESM projects an increase of Antarctic ice sheet SMB [surface mass balance] of about +70 Gt year−1 per degree warming. This increase is driven by enhanced snowfall, which is partially counteracted by more surface melt and runoff along the ice sheet’s edges. This intensifying hydrological cycle is predominantly driven by atmospheric warming, which increases (1) the moisture-carrying capacity of the atmosphere, (2) oceanic source region evaporation, and (3) summer AIS cloud liquid water content.

Our results show that SMB [surface mass balance] for the total Antarctic Ice Sheet (including ice shelves) has increased at a rate of 7 ± 0.13 Gt decade−1 since 1800 AD representing a net reduction in sea level of  0.02 mm decade−1 since 1800 and 0.04 mm decade−1 since 1900 AD.  The largest contribution is from the Antarctic Peninsula (∼ 75 %) where the annual average SMB during the most recent decade (2001–2010) is 123 ± 44 Gt yr−1 higher than the annual average during the first decade of the 19th century.

We suggest the Lambert-Amery [Antarctica] glacial system will remain stable, or gain ice mass and mitigate a portion of potential future sea level rise over the next 500 years, with a range of +3.6 to -117.5 mm GMSL-equivalent."