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Tag Archives: productivity

Do cities need more “big data?” NYC’s sewer story provides an answer.

NYC had a clogged sewer problem. To solve it, officials had to find the restaurants that were pouring grease down their drains. Because the city’s Office of Policy and Strategic Planning collects huge quantities of statistics ranging from the number of pedestrians on a certain street between 4 and 7 pm to the zip code with the most 311 calls (the “whine district”), they had a solution. Just identify the eating establishments that had reported compliance with the city’s grease carting mandate. Because non-complying firms were more likely to be pouring used cooking oil down their drains, the city could target the suspects. “Big data” let them replace the old method of catching a busboy dumping oil down the drain with a more effective technological detective. Less money could be spent on the sewage system and on regulatory compliance.

Our bottom line? Cities will certainly need the technological innovation that will make municipal finance more efficient. Advocated by Brookings researchers, governments at all levels need to implement technological collaboration and innovation.

Should we be concerned, though, that cities  like New York have considerable fiscal potential while others like Detroit are struggling? With more affluent municipalities investing in technological innovation, will we have a larger gap between have and have not municipalities? And finally, don’t we also have the opportunity cost of privacy?

Sources and Resources: Describing NYC’s Big Data, this NY Times article had some good stories and lots of detail. Much more scholarly, this Brookings Institute report complemented it as did this Business Insider article.

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University of Chicago economist Casey Mulligan believes that the US unemployment rate has remained high because of many separate public policy changes. Big and small, each one influenced workers, businesses and consumers by creating new incentives.

For workers, Dr, Mulligan described a bigger safety net:

  • People could collect unemployment insurance (UI) for 99 weeks instead of 26.
  • Food stamp programs became more inclusive with less stringent qualifications.
  • The food stamp benefit grew by 40% in 2 separate stages.
  • A $25 “bonus” was added to the usual unemployment benefit.
  • The duration of work history was decreased as a qualification for UI.
  • Mortgage help increased for longer unemployment.
  • The unemployed could receive 65% of their health insurance expense.

 

He also explained why, for businesses, the incentive to fire workers increased:

  • Concerned employers knew that fired workers would get relatively high benefits.
  • Obamacare taxes and tax hikes are making employees more expensive.
  • It became increasingly attractive to replace workers with less expensive capital.
  • Employees had to be fired (rather than quitting) to qualify for unemployment benefits.

 

In addition, certain consumers had less to spend.

  • Increased taxation involves taking more money from one group than it gives to the other group.

 

As a result, several million lower income workers had more when unemployed than with a job while the majority had the equivalent of 85% to 90% of their previous income. Yes, of course, depending on the individual, the new incentives have a varied impact. Still though, Dr. Mulligan asks all of us first to recognize that our lawmakers have implemented changes that he believes have increased the unemployment rate substantially.

Then we have to decide whether we support the tradeoff: More support for the unemployed or more efficiencies that lead to fewer unemployed?

7.9% during January, the civilian unemployment rate touched 10% during October, 2009.

7.9% during January, the civilian unemployment rate touched 10% during October, 2009.

Sources and Resources: An hour long, every minute of the econtalk podcast in which Casey Mulligan described his research and new book to Russ Roberts was captivating. It perfectly conveyed the tradeoff that we all need to know, whatever our preferences. Then, for recession data, here is the BLS website.

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The Washing Machine Empowered Women.

A few thoughts about the washing machine…

To do a wash, the typical late 19th century woman had to boil the water, use her scrub board, wring out the water, hang up the clothes, and carry out the dirty water. For 4 children, she would have washed 40,000 diapers. During one week, doing the family wash would have occupied 7 hours.

In 1920, only 8% of all US families had washing machines. By the mid-1980s, the number had risen to 75%. Now, (see below) 90% of all homes built since the 1990s have washing machines.

Wonderfully conveyed by Swedish Professor Hans Rosling in a 9 minute TED talk, the washing machine is really a growth machine. By empowering women, the washing machine diminishes world poverty and facilitates the spread of childhood education.

Thinking of the GDP, the washing machine vastly increases a woman’s productivity and frees her to generate more human capital.

From The US Census Bureau:

(Dates indicate the year a home was built.)

Housing Differences By Year Built in the US

Monday Gender Issues Posts


Sources and Resources: Definitely, I recommend the Hans Rosling TED talk. It is excellent. Also, for a fascinating read about the 20th Century US Consumer (and the source of my washing machine facts), Stanley Lebergott’s Pursuing Happiness is excellent and the ideal source of evidence that 20th century consumerism did indeed improve lives. And, for good stats on home technology, you might want to look at the US Census paper (and source of the above table) on household “amenities.”

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I just discovered a surprising statistic.

In the euro zone, judged by hours per week, the Germans are not nearly the hardest workers. Instead Greece, with an average of 42.1 hours is close to the top of the list. By contrast, for 2011, the average German devotes 35.5 hours to a job and the Netherlands, with the lowest time, is 30.5.

Greece????

The reasons that Greeks work long hours relate to where and who. More Greeks are in agriculture where longer hours prevail. Also, in Greece, people tend to work full time or not at all while in Germany there are more part-time opportunities. Finally, more women work in euro zone countries and women tend to work less.

This takes us to a predictable conclusion. Although Germans work less, they are much more productive. A Greek worker generates €20.3 per hour while Germans produce more than double at €42.3. In 2011, at €51.8 an hour, the Irish topped the productivity list and their low corporate tax seemed to be the reason. Attracting multinational firms, they became a magnet for the world’s best technology, technology that boosted Irish productivity to relatively stratospheric levels.

A definition: When we look at productivity, we are comparing  factor inputs-land, labor and capital– to the value of the goods and services they create. More output from less input means a more productive economy. It also means resources are then freed to do other work and produce still more.

Sources and Resources: Many thanks to the Brussels WSJ blog where I first saw the Greek German worker hours/productivity comparison. For up-to-date information and analysis on worker hours and productivity, Eurostats has easily accessible data.

Euro Zone Labor Productivity Per Hour Worked

Legend (euro per hour worked):

  • Lighter yellow: 4.8-10.8
  • Darker yellow: 10.8-20.2
  • Lighter green: 20.2-39.2
  • Dark green: 39.2-46.2
  • Darkest green: 46.2-68.7
  • Gray: No data

Productivity per Hours Worked in the Eurozone

 

 

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Obama/Biden and Romney/Ryan Issues

If you lined up everyone in the United States by age, the middle person would be close to 37.1 years old. In 1850, the median age was 19, for 2000 close to 35 and by 2050, we expect that middle individual will be 41. Accelerated by baby boomers who started passing 65 last year, our population is aging.

How old we are makes a huge difference. Past a certain age, most of us are less creative, less productive and less healthy. In baseball, the average age of most MVPs has been just before age 30 and almost no one after 35. The “best” work from Nobel Prize winners tends to peak in their late 30s. For more typical occupations like office workers, managers,  salesmen and saleswomen, one study indicated that productivity slips during people’s mid-40s.

What does it mean, then, for our society if the average age is climbing? One result is that 13% all government spending ( a huge proportion) is going to Medicare. Created in 1965, Medicare is medical insurance for everyone over 65, for disabled Americans and for end-stage kidney failure treatment. A healthcare network ranging from physicians to hospital bed rental companies is paid with Medicare money. On the other end, workers pay for most of Medicare with 2.9% of their paychecks (split 1.45/1.45 with employers). Additional funds come from income taxes, the Medicare trust fund and enrollee premiums.

According to the Trustees of the Medicare trust fund, the system is heading toward disaster. Depleted by 2024, the Medicare trust fund (created with surplus Medicare money when it existed) will no longer supplement any funding shortfall. Meanwhile, with so many baby boomers, there will be an insufficient revenue stream from Medicare payroll taxes. A second rarely mentioned consideration is that Medicare recipients have a very good deal. Estimated at a 3 to 1 ratio, the amount people receive from the system vastly exceeds what they paid during a lifetime.

Predictably, the Medicare challenge takes us to very different responses. President Obama refers to the projected cost savings of the Affordable Care Act (2010). By contrast, the Romney-Ryan team looks to vouchers that let program participants “spend” on care as they wish. Since both policies can easily be criticized, again it comes down to the approach you prefer…more or less government?

This post used facts and ideas from the Trustees Report on Medicare, a superb Teaching Company lecture (#13, Modern Economic Issues) from economist Robert Whaples and some of my median age data came from the CIA factbook. In addition, I do recommend playing with this interactive graph of median age changes from 1950 to 2050 and this excellent interactive graphic that displays medical spending categories and “who pays.”

And finally, one interesting fact– Demographers expect Japan to have a median age close to 55 in 2050. What would it mean to have half your population above 50?!

Election Economics Topics:

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