Ceterius Paribus, Equal Pay Day Falls in January

Today is Equal Pay Day, the date that is supposed to symbolize how far into 2010 the average woman would have to work to earn the same income that the average man earned in 2009—see Christina Sommers’s excellent article in The American, “The Equal Pay Day Reality Check.” Here's the Presidential Proclamation, and here's the statement from Secretary of Labor Hilda Solis, and here's an editorial from Diana Furchgott-Roth.

According to the Bureau of Labor Statistics’s (BLS) most recent annual report, “Highlights of Women’s Earnings in 2008,” women who worked full-time in 2008 had median earnings of $638 per week, or about 80 percent of the $798 median weekly earnings for men working full-time.

But for single workers who have never been married, the BLS reports that women made 94.2 percent as much money as their male counterparts in 2008. Equal Pay Day would fall on January 22 for these single females, almost three months earlier than the official, unadjusted Equal Pay Day of April 20 for all women. For a separate BLS category of single workers, those with “no children under 18 years old and whose marital status includes never married, divorced, separated and widowed,” women earned 95.6 percent as much as their male counterparts in 2008. Equal Pay Day for that group of single female workers would fall even earlier, on January 19, only a few weeks into the year.

While the Equal Pay Day advocates emphasize gender discrimination as the most important source of wage differentials, the reality is that most of the wage gap can be explained by life choices that involve family considerations, work hours, and career choices. The BLS data highlighted above show that simply controlling for marriage and children explains more than 70 percent of the unadjusted wage gap. Other factors could easily account for the rest.

Some other issues to consider on Equal Pay Day:

1. On average, men work 5.6 more hours per week than women—the equivalent of seven additional weeks of full-time work per year (see chart above). That would put “Equal Work Day” at the end of February, symbolizing how far the average women would have to work into 2010 to equal the same number of hours that the average man worked in 2009.

2. The unemployment rate for men has been greater than the jobless rate for women for the last 40 months, and job losses during the depth of the last recession were four times greater for men.

3. There were 1,277 male occupational fatalities in 2008 for every 100 female work-related deaths, a ratio of almost 13:1.

An important question then for women on Equal Pay Day: Would perfect labor market equality really be worth it if it meant working 280 more hours per year, having a much greater chance of being unemployed during recessions, and being significantly more exposed to work-related injury and death?

Cross-posted today on the Enterprise blog.

Economic Deja Vu?

I've featured this Time Magazine article before, but thought it might be worth a re-visit:

If America’s economic landscape seems suddenly alien and hostile to many citizens, there is good reason: they have never seen anything like it. Nothing in memory has prepared consumers for such turbulent, epochal change, the sort of upheaval that happens once in 50 years. Even the economists do not have a name for the present condition, though one has described it as "suspended animation" and "never-never land."

The outward sign of the change is an economy that stubbornly refuses to recover from the recession. In a normal rebound, Americans would be witnessing a flurry of hiring, new investment and lending, and buoyant growth. But the U.S. economy remains almost comatose a full year and a half after the recession officially ended. Unemployment is still high; real wages are declining. At a TIME economic forum last week, forecasters predicted that U.S. growth would amount to only 1.8% this year and 2.6% for 1993, about half the speed of a normal recovery. The current slump already ranks as the longest period of sustained weakness since the Great Depression.

That was the last time the economy staggered under as many "structural" burdens, as opposed to the familiar "cyclical" problems that create temporary recessions once or twice a decade. The structural faults, many of them legacies of the 1980s, represent once-in-a-lifetime dislocations that will take years to work out. Among them: the job drought, the debt hangover, the defense-industry contraction, the savings and loan collapse, the real estate depression, the health-care cost explosion and the runaway federal deficit. "This is a sick economy that won't respond to traditional remedies," said Norman Robertson, chief economist at Pittsburgh's Mellon Bank. "There's going to be a lot of trauma before it's over."

MP: Sound familiar? It could easily have been written to describe the current situation, but it was actually written at the end of September 1992, a full 18 months after the 1990-1991 recession had ended in March 1991. More importantly, it was written in the early stages of the longest (120 month) and strongest economic expansion in the history of the U.S. economy that lasted until March 2001. Maybe media "gloom and doom" is a good leading indicator of future economic expansion. Hopefully it's "déjà vu" all over again.

You are here--updated

I have seen a few requests for an update to the 'you are here' graph. Well, here it is. Data are from Royal Lepage here.

Here are all the caveats. All prices are adjusted for inflation, using Q1 2010 prices. The graph looks pretty much the same with a log scale or if you put the y-axis to zero. This is for Vancouver West condos--not because they are representative of the broader market but because this is ground zero for the bubble.


How far down to you expect this to go? How long? Why?

Leading Economic Index Rises 12th Straight Month

LA Times -- The index of U.S. leading indicators rose in March by the most in 10 months, a sign the economy will keep growing into the second half of the year. The 1.4 percent increase in the New York-based Conference Board's measure of the outlook for three to six months was more than anticipated and followed a revised 0.4 percent gain in February.

Manufacturers are ratcheting up production and factory workers are putting in longer hours as companies rebuild inventories and ship more goods overseas. Further improvement in the job market will help sustain the economy's recovery from the worst recession since the 1930s.

"The economy really seems to be gaining momentum, with better-than-expected data coming from a wider variety of sources," said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit. "The sectors that were doing well appear to be doing even better and those that were struggling appear to be seeing signs of renewed activity."

MP: The Leading Economic Index has now increased in each month since last April, which is the first 12-consecutive month increase since mid-2004, almost six years ago. The unadjusted 1.5 point increase in the index from 108.1 in February to 109.6 in March was the largest monthly increase in the history of the index back to 1970, and on a percentage basis, the 1.4% increase was the highest in six years, since March of 2004.

America's Comeback Story: Welcome to the Economic Expansion; U.S. Destined to Stay on Top

Daniel Gross in Newsweek on how America pulled itself back from the brink—and why it's destined to stay on top:

"The long-term decline of the U.S. economy has been greatly exaggerated. America is coming back stronger, better, and faster than nearly anyone expected—and faster than most of its international rivals.

The Dow Jones industrial average, hovering near 11,000, is up 70 percent in the past 13 months, and auto sales in the first quarter were up 16 percent from 2009. The economy added 162,000 jobs in March, including 17,000 in manufacturing. The dollar has gained strength, and the U.S. is back to its familiar position of lapping Europe and Japan in growth. Among large economies, only China, India, and Brazil are growing more rapidly than the U.S.—and they're doing so off a much smaller base. If the U.S. economy grows at a 3.6 percent rate this year, as Macroeconomic Advisers projects, it'll create $513 billion in new economic activity—equal to the GDP of Indonesia.

The last two expansions have been 120 months and 92 months, respectively. If the U.S. continues to adapt as it has, and if it produces a few more game changers like Google and Apple, there's no reason that the expansion that started in July 2009, against all the odds and predictions, can't last just as long."

Med School Grads Haven't Increased Since 1980; Nurses Can Help, But the AMA Protects Its Turf

Physicians in the U.S. made an average of about $200,000 in 1996, which was between 2 and 5 times as much as doctors made in European countries and Japan (see chart above). The median physician salary in the U.S. is now closer to $275,000 (data here). How do we explain the significantly higher physician salaries in the U.S. compared to other countries? Here's one possible explanation:

The supply of medical school graduates has remained basically flat for the last 30 years (data here). At the same time, the demand for physicians' services has increased over time because of a population that is both increasing and aging. So we've now got more people with more serious end-of-life medical problems demanding more medical care from a limited supply of physicians - and that's a sure prescription for rising MD salaries.

Why hasn't the supply of physicians increased to meet the rising demand for medical services, the way the supply of web designers or software programmers has increased to meet the rising demand for those professions? As Dennis Cauchon wrote in USA Today in 2005 about the doctor shortage:

"The marketplace doesn't determine how many doctors the nation has, as it does for engineers, pilots and other professions. The number of doctors is a political decision, heavily influenced by doctors themselves. Congress controls the supply of physicians by how much federal funding it provides for medical residencies — the graduate training required of all doctors."

And we're now going to provide health care to an additional 20-30 million Americans under health care reform when the number of new physicians this year is about the same as the graduating class of 1980? Just wondering, did Congress ever consider the reality reflected in the graph above that there has been no increase in the supply of physicians for the last 30 years when they passed health care reform to extend coverage to millions of uninsured?

Here's one solution from Steve Chapman, who suggests that we can "Nurse Our Way Out of the Doctor Shortage":

"Thanks to health care reform, millions of previously uninsured Americans will have policies enabling them to go to the doctor when necessary without financial fear. But it's a bit like giving everyone a plane ticket to fly tomorrow. If the planes are all full, you won't be going anywhere.

There are not a lot of doctors sitting in their offices like the Maytag repairman, playing solitaire and wishing a patient would drop by. Most of them manage to stay plenty busy. Nor is there a tidal wave of young physicians about to roll in to quench this new thirst for medical care.

Regardless, there seems to be no doubt that it will get harder to find someone to treat you, it may cost more and you'll spend two hours in the waiting room instead of one.

Or maybe not. What people with medical problems need is medical care, but you don't always need a physician to get treatment. You might also see a different sort of trained professional — say, a nurse practitioner, physician's assistant, nurse or physical therapist."

MP: Unfortunately, the medical cartel is not keen on competition from nurses, and according to this news report:

"The medical establishment is fighting to protect turf. The American Medical Association, which supported the national health care overhaul, says a doctor shortage is no reason to put nurses in charge and endanger patients."

Markets In Everything: $5,000 Taxi Ride

British actor John Cleese of Monty Python fame opted for a daylong cab ride halfway across Europe after the dust plume from an Icelandic volcano left him stranded. Cleese paid $5,100 for a Mercedes taxi Friday from the Norwegian capital, Oslo, to Brussels (see map above, thanks to pkd).