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Liberty Street Economics
58 posts on "Wages"October 16, 2020
How Do Consumers Believe the Pandemic Will Affect the Economy and Their Households?
In this post we analyze consumer beliefs about the duration of the economic impact of the pandemic and present new evidence on their expected spending, income, debt delinquency, and employment outcomes, conditional on different scenarios for the future path of the pandemic. We find that between June and August respondents to the New York Fed Survey of Consumer Expectations (SCE) have grown less optimistic about the pandemic’s economic consequences ending in the near future and also about the likelihood of feeling comfortable in crowded places within the next three months. Although labor market expectations of respondents differ considerably across fairly extreme scenarios for the evolution of the COVID pandemic, the difference in other economic outcomes across scenarios appear relatively moderate on average. There is, however, substantial heterogeneity in these economic outcomes and some vulnerable groups (for example, lower income, non-white) appear considerably more exposed to the evolution of the pandemic.
Posted by Blog Author at 11:00 AM in Credit, Employment, Expectations, Household, Household Finance, Housing, Pandemic, Unemployment, Wages | Permalink | Comments (0)July 13, 2020
Delaying College During the Pandemic Can Be Costly
Many students are reconsidering their decision to go to college in the fall due to the coronavirus pandemic. Indeed, college enrollment is expected to be down sharply as a growing number of would-be college students consider taking a gap year. In part, this pullback reflects concerns about health and safety if colleges resume in-person classes, or missing out on the “college experience” if classes are held online. In addition, poor labor market prospects due to staggeringly high unemployment may be leading some to conclude that college is no longer worth it in this economic environment. In this post, we provide an economic perspective on going to college during the pandemic. Perhaps surprisingly, we find that the return to college actually increases, largely because the opportunity cost of attending school has declined. Furthermore, we show there are sizeable hidden costs to delaying college that erode the value of a college degree, even in the current economic environment. In fact, we estimate that taking a gap year reduces the return to college by a quarter and can cost tens of thousands of dollars in lost lifetime earnings.
Continue reading "Delaying College During the Pandemic Can Be Costly" »
Posted by Blog Author at 7:00 AM in Education, Employment, Human Capital, Labor Economics, Labor Market, Pandemic, Student Loans, Unemployment, Wages | Permalink | Comments (0)May 27, 2020
Job Training Mismatch and the COVID-19 Recovery: A Cautionary Note from the Great Recession
Displaced workers have been shown to endure persistent losses years beyond their initial job separation events. These losses are especially amplified during recessions. (1) One explanation for greater persistence in downturns relative to booms, is that firms and industries on the margin of structural change permanently shift the types of tasks and occupations demanded after a large negative shock (Aghion et al. (2005)), but these new occupations do not match the stock of human capital held by those currently displaced. In response to COVID-19, firms with products and services that complement social-distancing (like Amazon distribution centers) may continue hiring during and beyond the recovery, while workers displaced from higher risk industries with more stagnant demand (for example, airport personnel, local retail clerks) are left to adjust to less familiar job opportunities. As some industries reopen gradually while others remain stunted, what role might workforce development programs have in bridging the skill gap such that displaced workers are best prepared for this new reality of work?
Posted by Blog Author at 7:00 AM in Employment, Great Recession, Human Capital, Labor Economics, Labor Market, Pandemic, Unemployment, Wages | Permalink | Comments (0)March 04, 2020
Searching for Higher Job Satisfaction
Job-to-job transitions—those job moves that occur without an intervening spell of unemployment—have been discussed in the literature as a driver of wage growth. Economists typically describe the labor market as a “job ladder” that workers climb by moving to jobs with higher pay, stronger wage growth, and better benefits. It is important, however, that these transitions not be interspersed with periods of unemployment, both because such downtime could lead to a loss in accumulated human capital and because “on-the-job search” is more effective than searching while unemployed. Yet little is known about what leads workers to search for jobs while employed. This post aims to shed light on one such possible mechanism—namely, how current job satisfaction is related to job search behavior.
Posted by Blog Author at 7:30 AM in Expectations, Labor Economics, Labor Market, Wages | Permalink | Comments (0)Is the Tide Lifting All Boats? A Closer Look at the Earnings Growth Experiences of U.S. Workers
The growth rate of hourly earnings is a widely used indicator to assess the economic progress of U.S. workers, as well as the health of the labor market. It is also a measure of wage pressures that could potentially spill over into inflationary pressures in a tightening labor market. Hourly earnings growth, on average, has gradually risen over the course of the current expansion, under way since the end of the Great Recession. But how have different groups of workers fared in this regard? Have hourly earnings risen uniformly at all points of the wage distribution, or have some segments of the workforce been left behind? In this post, we take a close look at earnings growth over the past two decades at different points of the wage distribution and for various demographic groups. Our goal is to examine whether there are any significant patterns in the evolution of the distribution of earnings, as opposed to just looking at the behavior of aggregate earnings growth. We focus primarily on hourly earnings growth, although our findings apply to total earnings as well.
Posted by Blog Author at 7:15 AM in Inequality, Labor Market, Unemployment, Wages | Permalink | Comments (0)March 03, 2020
Introduction to Heterogeneity Series II: Labor Market Outcomes
While average outcomes serve as important yardsticks for how the economy is doing, understanding heterogeneity—how outcomes vary across a population—is key to understanding both the whole picture and the implications of any given policy. Following our six-part look at heterogeneity in October 2019, we now turn our focus to heterogeneity in the labor market—the subject of four posts set for release tomorrow morning. Average labor market statistics mask a lot of underlying variability—disparities that factor into labor market dynamics. While we have written about labor market heterogeneity before, this series is an attempt to pull together in a cohesive way new insights on the labor market and highlight details that are not immediately obvious when we study aggregate labor market statistics.
Continue reading "Introduction to Heterogeneity Series II: Labor Market Outcomes" »
Posted by Blog Author at 7:00 AM in Human Capital, Inequality, Labor Economics, Regional Analysis, Unemployment, Wages | Permalink | Comments (2)October 17, 2019
Just Released: Introducing the SCE Public Policy Survey
Today, we are releasing new data on individuals’ expectations for future changes in a wide range of public policies. These data have been collected every four months since November 2015 as part of our Survey of Consumer Expectations (SCE). The goal of this post is to introduce the SCE Public Policy Survey and highlight some of its features.
Continue reading "Just Released: Introducing the SCE Public Policy Survey" »
Posted by Blog Author at 10:59 AM in Expectations, Household Finance, Wages | Permalink | Comments (0)October 02, 2019
U.S. Virgin Islands Struggle While Puerto Rico Rebounds
Two years after hurricanes Irma and Maria wreaked havoc on Puerto Rico and the U.S. Virgin Islands, the two territories’ economies have moved in very different directions. When the hurricanes struck, both were already in long economic slumps and had significant fiscal problems. As of the summer of 2019, however, Puerto Rico’s economy was showing considerable signs of improvement since the hurricanes, while the Virgin Islands’ economy remained mired in a deep slump through the end of 2018, though signs of a nascent recovery have emerged in 2019. In this post, we assess the contrasting trends of these two economies since the hurricanes and attempt to explain the forces driving these trends.
Continue reading "U.S. Virgin Islands Struggle While Puerto Rico Rebounds" »
Posted by Blog Author at 7:00 AM in Employment, Labor Economics, Labor Market, Puerto Rico, Regional Analysis, Wages | Permalink | Comments (2)September 23, 2019
Just Released: Transitions to Unemployment Tick Up in Latest SCE Labor Market Survey
The Federal Reserve Bank of New York’s July 2019 SCE Labor Market Survey shows a year-over-year rise in employer-to-employer transitions as well as an increase in transitions into unemployment. Satisfaction with promotion opportunities and wage compensation was largely unchanged, while satisfaction with non-wage benefits retreated. Regarding expectations, the average expected wage offer (conditional on receiving one) and the average reservation wage—the lowest wage at which respondents would be willing to accept a new job—both increased. Expectations regarding job transitions were largely stable.
Posted by Blog Author at 11:00 AM in Labor Economics, Labor Market, Unemployment, Wages | Permalink | Comments (0)July 10, 2019
Did the Value of a College Degree Decline during the Great Recession?
In an earlier post, we studied how educational attainment affects labor market outcomes and earnings inequality. In this post, we investigate whether these labor market effects were preserved across the last business cycle: Did students with certain types of educational attainment weather the recession better?
Continue reading "Did the Value of a College Degree Decline during the Great Recession?" »
Posted by Blog Author at 7:00 AM in Education, Employment, Great Recession, Human Capital, Inequality, Labor Economics, Labor Market, Recession, Wages | Permalink | Comments (5)About the BlogLiberty Street Economics features insight and analysis from New York Fed economists working at the intersection of research and policy. Launched in 2011, the blog takes its name from the Bank’s headquarters at 33 Liberty Street in Manhattan’s Financial District.
The editors are Michael Fleming, Andrew Haughwout, Thomas Klitgaard, and Asani Sarkar, all economists in the Bank’s Research Group.
Liberty Street Economics does not publish new posts during the blackout periods surrounding Federal Open Market Committee meetings.
The views expressed are those of the authors, and do not necessarily reflect the position of the New York Fed or the Federal Reserve System.
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