On the demographics of American aspirations and declining work

by Ryan Streeter on December 16, 2014. Follow Ryan on Twitter.

For most unemployed men, life without work is not easy…They are unhappy to be out of work and eager to find new jobs. They are struggling both with the loss of income and a loss of dignity. Their mental and physical health is suffering. Yet 44 percent of men in the survey said there were jobs in their area they could get but were not willing to take…

Men today may feel less pressure to find jobs because they are less likely than previous generations to be providing for others. Only 28 percent of men without jobs — compared with 58 percent of women — said a child under 18 lived with them…

There is also evidence that working has become more expensive. A recent analysis by the Brookings Institution found that prices since 1990 had climbed most quickly for labor-intensive services like child care, health care and education, increasing what might be described as the cost of working: getting a degree, staying healthy, hiring someone to watch the children.

These are three out of many interesting observations in this NYT Upshot piece on the phenomenon of declining work among men.

It’s part of an equally interesting series on demographics and work that The Upshot is doing. Other good reads are herehere, here, and here.

And here’s a thoughtful Ross Douthat column that springboards off this series.

Surveying the American Dream

by Ryan Streeter on December 16, 2014. Follow Ryan on Twitter.

Americans’ individual judgments about the [American] dream still remain largely positive. But the story doesn’t end here. It is the public’s collective judgment about the American Dream that has undergone worrying changes. We put more weight on what people say about their own experiences, but what people think about the average American’s experiences drives our political conversation. And here, as a result of the 2008 financial crash and its aftermath, pessimism about the present and the future is palpable.

That’s from a useful overview of various surveys about the American Dream by AEI’s Karlyn Bowman, Jennifer Marsico, and Heather Sims.

For instance, “twenty years ago, 63 percent of those surveyed by the National Opinion Research Center said their standard of living was better than that of their parents at the same age. In 2012, 61 percent gave that response.”

On the other hand, “in a 2013 Gallup poll, 43 percent said the average person doesn’t have much chance to really get ahead. Only 8 percent gave that response in 1952.”

The following chart puts a bit of a dent in the authors’ second claim, though. The 2000s negatively affected people’s predictions about their own future, not merely that of the average American’s, a drop that started before the crisis but which was obviously accelerated by it:

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Happiness, work and aging

by Ryan Streeter on December 8, 2014. Follow Ryan on Twitter.

We all want to be happy, don’t we? Well, if you’re dissatisfied, frustrated or downright miserable, cheer up. There’s apparently a cure for you. Even better, it will materialize automatically. Just sit and wait; the very anticipation of its arrival might improve your spirits. The remedy: getting older.

Robert Samuelson writes in the Post today about the universal life cycle: we’re happier when younger, unhappiest in middle age, and then get happy again as we get older despite the fact that aging should – one would think – make you unhappy.

Carol Graham at Brookings was always very good on this topic when I got to know her while working on the Prosperity Index at Legatum Institute, and Samuelson cites her work showing that a majority of countries demonstrate this U-shaped “happiness curve.

This will be an interesting body of research to track over the coming generation as the population skews older like this:

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Will a greater proportion of “happy elders” matter for societies? I suppose that depends on what types of economic and social goods happy people produce.

Carol has some recent work on this in fact here.

USA has 2nd largest social welfare state after France

by Ryan Streeter on November 27, 2014. Follow Ryan on Twitter.

When you combine direct welfare payments to individuals with indirect government subsidies provided through businesses, you find that:

France remains at the top, but the United States vaults into second position with roughly 30 percent of its GDP spent on social services, including health care. We have a hybrid welfare state, partly run by the government and partly outsourced to private markets.

These conclusions come from a recent OECD report on social welfare spending.

Robert Samuelson comments:

The OECD report brims with insights about welfare systems. Did you know, for example, that China — heir to a communist social system — has a puny welfare state compared with most wealthy nations? In 2009, its social spending equaled 7 percent of GDP. Or did you realize that, despite all the talk of “austerity,” government social spending has hardly been reduced in most countries. The OECD reports cuts in a few nations (Greece, Germany and Canada, among them) but also finds that “in most countries social spending remains at historically high levels.”

The main message that Americans can take from this report is that we need a higher level of candor. The very complexity of our hybrid system seems intended to disguise the reality that we have a welfare state. We have created a new vocabulary to validate our denial. From our “safety net,” we distribute “entitlements” that are not “handouts” and don’t qualify as “welfare” payments. We pretend (or some of us do) that our Social Security taxes have been “saved” to provide for our retiree payments, when today’s Social Security checks are mainly financed by the payroll taxes of today’s workers, just as yesterday’s checks were financed by the taxes of yesterday’s workers.

David vs. Goliath: Craft brew version

by Ryan Streeter on November 27, 2014. Follow Ryan on Twitter.

The chart below, from this WSJ article, has a lot of commentary embedded in it. I’ll save that for later. For now, suffice it to say that it’s a great example of how the little guy can still shake up the big guy’s world.

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Bill Frey on demography and future elections

by Ryan Streeter on November 19, 2014. Follow Ryan on Twitter.

Bill Frey is always interesting. This new Politico article has some important and interesting maps on America’s changing racial demography.

This graph provides a nice summary of the trend that the subsequent maps illustrate:

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Sanandaji on Piketty’s missing entrepreneurs

by Ryan Streeter on November 19, 2014. Follow Ryan on Twitter.

I always enjoy reading Tino Sanandaji. This NRO piece offers an interesting analysis of Piketty’s omission of self-employed business owners and entrepreneurs in his conclusions about earnings and wealth in America. Main takeaways:

  • An influential study by Cagetti and De Nardi used Federal Reserve data in 1989 to estimate the wealth share of self-employed business owners. Self-employed business owners constituted 8 percent of the population, but owned one-third of national wealth and more than half the wealth of the top 1 percent.
  • In 2010, self-employed business owners account for an astonishing 70 percent of the wealth of the top 0.1 percent. If we look at top earnings rather than top wealth, self-employed business owners accounted for around 50 percent of the total earnings of the top 0.1 percent. These facts are never mentioned in Piketty’s book.
  • Last year, the 500 CEOs of the Fortune 500 collectively earned $5 billion. By comparison, the best-performing hedge-fund manager alone earned $4 billion. The total earnings of the 0.1 percent are somewhere around $800 billion per year.

Are Indianapolis, Cleveland, and Providence forming the next generation of innovation centers?

by Ryan Streeter on October 23, 2014. Follow Ryan on Twitter.

There is a notable economic restructuring occurring in Indianapolis, Cleveland, and Providence that is perhaps forming a next generation of innovation nodes.

That’s from an interesting new report by the Center for Population Dynamics at Cleveland State University at NewGeography.com.

The authors are looking at an important, if not incomplete, measure of regional economic success: the share of advanced degrees in a metro area.

And the growth rates since 2005 – not to mention absolute figures – offer some surprises. For instance, the top 25:

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And then the authors show which cities have experienced the most growth relative to others since 2005:

What’s driving America’s drop in entrepreneurial activity?

by Ryan Streeter on October 21, 2014. Follow Ryan on Twitter.

I’ve written about this trend before:

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This interview by Jim Pethokoukis with Ian Hathaway on this trend is interesting.

Young firms are declining as a share of the total number of firms. We’ve covered this before and previously linked to Hathaway’s recent article with Bob Litan on this.

One thing to draw attention to, though, are Hathaway’s non-policy speculations about why this is so (he also suggests that regulatory and education policy are important factors in all this). He says:

One explanation, which isn’t very exciting, is just that we experienced high growth, population growth in certain regions, businesses needed to be formed to meet that local demand and after that growth slowed down, the firm entry rates maybe came down with it.

Another explanation has to deal with business consolidation. So economic theory would say that the more consolidated an industry is, the higher the barriers are to firm entry.  There may be a connection there; others have talked about this.  It’s something that we’ve seen in a number of sectors.  I have some more research coming out in the coming weeks and months that will address that issue as well.

Whatever the case, the numbers don’t lie. Here are some charts to a recent Haltiwanger et. al. paper that Pethokoukis also links to:

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A lot of this trend appears to be driven by loss of startup activity in retail and services:

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College bubble update: More students – especially among affluent families – take on debt

by Ryan Streeter on October 9, 2014. Follow Ryan on Twitter.

This Pew study is interesting. It shows that even in the wake of the college bubble, college debt continues to increase. The problem has grown especially fast among the wealthier student population.

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