Archive for January, 2021

Health effects of Confusing Absolute w/ Relative?

Dr. William Darity, in charge of many things at Duke University, has been steadily advancing his theory of stratification economics, arguing that the ability of one’s parents to contribute to one’s resources is a bigger determinant of economic outcomes than education & hard work. He refers to the fact that blacks who have completed college have only two-thirds the net worth of whites who never finished high school as “one of the most dramatic statistics we’ve discovered.” That dramatic statistic, of course, has long roots.

However, in 2019 Darity, along with epidemiologists Arjumand Siddiqi, and Odmaa Sod-Erdene of the University of Toronto, and others, dug up a worrisome misperception in their report, Growing sense of social status threat and concomitant deaths of despair among whites. Revisiting Anne Case and Angus Deaton’s white “deaths of despair,” they add a third hypothesis to the two already out there, which include either the long-term or the contemporaneous decline in economic conditions driving the alarming trend in mortality.

Darity et al. find that the rise is not restricted to the lowest education groups, but is penetrating “deeper into the education distribution,” although with the most damage occurring among those with lowest educational attainment, and argue that economics alone cannot explain the increase in mortality among whites. If that were the case, the death rate among blacks, who are experiencing “parallel trends, and at more adverse levels,” would also be rising, but it was not pre-Covid. Instead, they point out that demographic groups tend to evaluate their positions relative to other demographic groups, not their peers, and that a rising misperception among whites that their social status is being undermined is a better explanation. Racial and economic anxieties are entangled.

“For perhaps the first time, we are suggesting that a major population health phenomenon – a widespread one – cannot be explained by actual social or economic status disadvantage but instead is driven by perceived threat to status.”

They call their findings stunning and startling, and we’ll add hard to wrap your head around. But if you have the stomach to read some of the racist and anti-Semitic claims being thrown around these days, their hypothesis is definitely worth some thought.

by admin· · 0 comments · Employment & Productivity

A Metaphor Unlikely to Deliver: Betting on H20

Michael Hiltzik has a piece buried in this morning’s Los Angeles Times, with the catchy title, “Wall Street Can Now Bet on the Price of California Water: Watch Out,” but more staid content.

Amid questions about how such an index would work “anywhere outside California,” he mentions that people who have tried to make money from California water rates have often lost their shirts. In one such plot, Texas’s Bass brothers fell far short of their goal of $92 million in revenue in the first year when they bought farmland in California’s Imperial Valley, which entitled them to buy water at a federally subsidized $12.50 an acre-foot. The plan was to let the land lie fallow and sell the water to thirsty San Diego at $400.00 an acre-foot. Not so said the Metro Water District amid public uproar, and the Bass brothers sold off the land, making a profit, but.

Those who put together the index claim it’s “doing good,” and Hiltzik says they are correct on the locking in of prices for farmers, “as far as it goes.”

To him, the problem is not the speculation, it’s that an index can’t address the underlying causes of water scarcity, including climate change and wasteful agricultural practices, which are expected to deteriorate further.

Another problem we’re underscoring—it probably won’t make headlines—is a potential hit to our beleaguered, bottom-line essential agricultural workers. Hiltzik suggests that using markets to try to manage things like water shortages excludes certain affected players who can’t participate, in this case, the environment, and farmworkers. If farmers are in the position where they are better leaving their fields fallow and selling their water, the farmworker is “out of luck.” And a job.

Ellen Hanak, water expert at the Public Policy Institute of California who pointed out the missing shirts above, also cautioned that water is a “heavy commodity with a lot of restrictions on how it can be moved… People talk about water as the new gold, but that’s just a metaphor.”

Cormorants on Malibu Lagoon

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Racial & Ethnic Disparities in EPOP Recoveries

Employment-population ratios have been recovering: the overall EPOP had regained 54.1% of its February-April loss by September, and 62.2% through December. However, in the last two months only half the major demographic groups retained traction, so November and December overall were flat.

That’s graphed below, and here are some highlights: Men overall have gained 5.2 points of their loss, about half women’s 10-point recovery. White & Hispanic women have turned in stronger performances than men, contradicting a popular meme that played off women’s weakness in December.

Women’s EPOP fell by 10 points between February and April, and has regained 6.4%. Men lost 9.6 points and regained 5.7. But since women started with a lower EPOP than men, these translate to larger percentages. However, in December the EPOP for women was 83% of that of men, close to February’s share, after having fallen to 80% at the April low.

Racial and ethnic disparities are far greater than those of gender. Black and Latino EPOPs fell harder than whites’ and have recovered less, with black women showing the weakest recovery of any of the demographic groups shown. One thing dragging down the recovery among black workers is almost certainly the continuing decline in government employment, where they’re heavily overrepresented, with many jobs earning good pay.

by admin· · 0 comments · Employment & Productivity

Manufacturing, Women & Labor Pain

It was encouraging to see solid gains in manufacturing & construction in the most recent payroll numbers, occupations listed as more stable, and therefore safer. Back in spring the idea was to get such work rolling again, while skipping the stop at a bar on the way home. We’re hitting the reset button on that.

That may help get the pandemic under control, but it is going to hurt minority workers, as shown in Friday’s jobs report. The Household survey is jumpy, but the number of employed men rose, while the number of employed women fell. Within that both White and Black men gained jobs, as did White women, but Black women lost jobs, as did both sets of Latinx workers, and Asians, not broken out by sex. Gains were large enough to lift employment-population ratios for White women and Black men, while losses were enough to cause declines for Black women, Asians, and for Latinx men and women.

In 2019 women held 29% of manufacturing jobs and, within that, 39% of medical manufacturing and animal processing, 46% of sporting goods & toy manufacturing, and a little over half of textile manufacturing. Asian workers had a 7% share, but 29% of computer equipment; Blacks, 10%, and close to 20% of auto and pulp manufacturing; and Latinx, 17%, including 40% of fruit and vegetable preservation. Both Black and Latinx workers have close to 20% share in tire manufacturing, and 22% and 35% shares in animal processing plants.

Manufacturing employment is still down 4% over the year, less than overall employment’s -6%. We sometimes include a graph of the three-month average of manufacturing withholding in a classic Midwestern state. Here’s what that looks like these days:

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Consumer Credit: Demand & Availability Take a Hit

Consumer credit demand and availability took a sharp hit in recent months, according to the New York Fed’s latest Credit Access Survey. The hit was sharpest in credit cards, followed by auto loans. Mortgage refinancing, especially for creditworthy borrowers, was an exception to the trend.

In the four months ending in October, just 35% of surveyed consumers applied for one or more types of credit, down from 39% in the four months ending in June, and the 46% average for 2018–2019. The pullback was broad-based across age and credit score groups. Despite the decline in applications, the rejection rate for at least one type of credit rose from 15% to 18%, though that 18% is little different from the 19% average of 2018–2019. (See first graph below.) Rejections were highest for applicants with credit scores below 680. As the New York Fed points out in its write-up of the findings, these results are consistent with the Fed’s latest loan officer survey, which showed a tightening of lending standards on consumer credit.

The pullback in applications and rise in rejections was sharpest in credit cards, both for new applications and raising of existing limits. (Second and third graphs below.) Just 16% of respondents applied for a new credit card, down from 19% in the previous period, and the lowest since the series began in 2013. Application for higher credit lines fell from 10% to 7%, a series low, and just over half the series average of 12%. A substantial 37% of the applications were rejected, down from the previous period’s 38%, the series high. Applications for mortgages were steady at 5%, tying the low for the series—though rejections were also at a low.. Just 12% of respondents applied for an auto loan, tying the series low, and 9% were rejected, at the high end of the series’ historical range.

Not graphed, to avoid visual overcrowding: applications for mortgage refinancing. Those rose to 16% of households in October, its highest level in seven years. The 6-point rise from February was driven by consumers with credit scores above 760.

Consumers mostly expect credit card availability to remain tight, especially among those with low credit scores. Expectations of availability for other kinds of credit are within historical norms, however.

Households are concerned about meeting unexpected expenses. Just two-thirds, 66%, of households thought they could come up with $2,000 in a pinch, a series low, and down from 70% in 2019.

Tight credit card conditions will probably be a drag on spending in the coming months, especially if the job market recovery continues to cool. But housing finance looks secure for now, especially for high-end borrowers.

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