WEBVTT - Labor Market Is Strong, Kevin Hassett Says 0:00:00.080 --> 0:00:13.040 Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 0:00:13.480 --> 0:00:17.560 Jai Ley. We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:34.080 Bloomberg dot Com, and of course on the Bloomberg. Joining 0:00:34.120 --> 0:00:36.080 us in the studio, I'm really pleased to say here 0:00:36.120 --> 0:00:38.360 in New York it is Conrad de Quadros, r Q 0:00:38.520 --> 0:00:41.880 Economic Senior Economist and founding partner as well. Conrad, great 0:00:41.880 --> 0:00:43.040 to have you with us around the table on this 0:00:43.080 --> 0:00:45.479 play roads Friday. Let's go with the trade story. Just 0:00:45.520 --> 0:00:48.080 to begin with, we've talked about markets with Mixer, Let's 0:00:48.080 --> 0:00:50.400 talk about the economy in the United States. What's the 0:00:50.440 --> 0:00:53.520 methodology for calculating what this trade story right now means 0:00:53.840 --> 0:00:56.200 for the US economy. Well, I actually think the bigger 0:00:56.240 --> 0:01:00.000 difficulty is is not the standard methodologies where we're looking 0:01:00.120 --> 0:01:02.680 yet shares the economy and elasticities and all of that. 0:01:02.840 --> 0:01:05.479 I think the bigger question is is the supply chain 0:01:05.640 --> 0:01:07.520 and the impact on the supply chain and how that 0:01:07.600 --> 0:01:09.760 sort of feeds its way through the economy, and that 0:01:09.800 --> 0:01:12.320 could be a lot more problematic for me. The big 0:01:12.400 --> 0:01:16.360 question is what is the president's objective here? Does he 0:01:16.400 --> 0:01:19.200 want to address some of the intellectual property issues with 0:01:19.240 --> 0:01:21.600 American companies in China or does he just want to 0:01:21.600 --> 0:01:24.760 get the deficit get to a smaller deficit with China. 0:01:24.840 --> 0:01:26.440 If that is the objective, then I think we have 0:01:26.480 --> 0:01:30.200 a problem because, Um, if it's a smaller deficit with China, 0:01:30.240 --> 0:01:32.280 then it's going to be larger deficits elsewhere. And then 0:01:32.280 --> 0:01:35.640 do the targets then change other countries? Um, So the 0:01:36.120 --> 0:01:39.040 presence objectives I think have to be clearer and then 0:01:39.080 --> 0:01:40.800 we can have an idea where it's going. I would 0:01:40.840 --> 0:01:43.920 be shocked if, having seen China respond to this first 0:01:44.000 --> 0:01:46.600 round of tariffs, if we now don't see an upsizing 0:01:46.600 --> 0:01:48.560 and U S tariffs two d billion, I think that 0:01:48.560 --> 0:01:51.880 that's coming um and so then UM, that's just not 0:01:51.920 --> 0:01:54.320 the way the president responds to back down. What is 0:01:54.360 --> 0:01:58.200 the two billion number? Besides the amount of minutes nemars 0:01:58.320 --> 0:02:02.160 laying on the field, what is two under billion the 0:02:02.200 --> 0:02:05.680 amount of traders that the actual tariff No, No, that's that. 0:02:05.800 --> 0:02:09.320 I think that's the amount of Chinese products that will 0:02:09.360 --> 0:02:12.040 that the tariff will be will be placed on. UM. 0:02:12.080 --> 0:02:14.200 And so once we get that second round, which I 0:02:14.560 --> 0:02:17.560 think is coming. Since China did respond, um. You know, 0:02:17.600 --> 0:02:19.959 we did have the dollar for dollar response in the 0:02:20.000 --> 0:02:23.000 first round of tariffs. UM, then the response from China 0:02:23.080 --> 0:02:25.040 to that is going to be interesting because we, as 0:02:25.040 --> 0:02:27.880 your prior guests said, the China doesn't have the ability 0:02:27.919 --> 0:02:31.280 to put tariffs on that amount of US imports because 0:02:31.400 --> 0:02:33.560 China doesn't import that that much from the US. You're 0:02:33.560 --> 0:02:34.960 gonna have to forgive me for this, but it's kind 0:02:34.960 --> 0:02:38.040 of like a high level schoolyard fight where you go 0:02:38.120 --> 0:02:39.880 to the teacher at the end and you say, he 0:02:40.040 --> 0:02:42.520 hit me first. Because a lot of people will write 0:02:42.600 --> 0:02:44.840 up this story today and they'll say that China retaliates it. 0:02:45.160 --> 0:02:48.400 China retaliates it. But in the administration's mind and in 0:02:48.440 --> 0:02:51.440 some people's minds, quite justifiably so, it is the United 0:02:51.480 --> 0:02:56.120 States reciprocating. And until we sort this out who is 0:02:56.120 --> 0:02:58.360 reciprocating and who is retaliating, this is going to go 0:02:58.400 --> 0:03:00.560 on and on, isn't it. I think that's a very 0:03:00.560 --> 0:03:02.360 good point, and I think you're absolutely correct. It is 0:03:02.440 --> 0:03:06.160 it is the US that's responding, um to what it perceives. 0:03:06.160 --> 0:03:08.480 And I think that there's some validity to that that 0:03:08.480 --> 0:03:13.000 that the way the trade is, the US policies towards 0:03:13.120 --> 0:03:15.399 US trade are are are unfair, and they're looking to 0:03:15.560 --> 0:03:19.240 level the playing field. Um, now you know the the 0:03:19.560 --> 0:03:21.840 I think that the differences if we look, for example, 0:03:21.840 --> 0:03:24.840 that the W two does an estimate of trade weighted 0:03:25.240 --> 0:03:29.000 aggregate tariffs, and the differences between the tariffs that the 0:03:29.440 --> 0:03:31.480 US products face and the rest of the world is 0:03:31.520 --> 0:03:33.640 not that great. And I think that that's probably the 0:03:33.680 --> 0:03:36.480 reason why most economists don't think that this is going 0:03:36.560 --> 0:03:39.240 to become a full blown trade war, because you don't 0:03:39.440 --> 0:03:43.040 blow up the world economy because of small differences in 0:03:43.040 --> 0:03:46.040 in aggregate tariffs. About four weeks ago, John Ferrell, justin 0:03:46.080 --> 0:03:50.720 Wolfers in Michigan put this out and it's shocking how 0:03:50.880 --> 0:03:55.800 tight and how set low the tariffs are after forty 0:03:55.920 --> 0:04:00.160 years of negotiations. I mean, the President completely miss is 0:04:00.200 --> 0:04:03.160 that within his discourse, we do have low single to 0:04:03.720 --> 0:04:06.800 mid single digit tariffs in the United States and elsewhere 0:04:06.800 --> 0:04:10.240 in Europe as well. But this goes beyond tariff barriers. 0:04:10.240 --> 0:04:12.960 It's non tariff barriers to entry. And you strike a 0:04:12.960 --> 0:04:15.760 really important point on the intellectual property rights. This is 0:04:15.800 --> 0:04:18.320 something that comments Secretary Wilbur Ross has really been pushing 0:04:18.400 --> 0:04:21.520 quite aggressively. Can anything be done that, Conrad? I think so, 0:04:21.600 --> 0:04:24.880 because that's I mean that that's China just changing, changing 0:04:24.880 --> 0:04:26.920 its policies. And actually I actually think that that's how 0:04:26.920 --> 0:04:29.320 this plays out, and that that's where China has the 0:04:29.320 --> 0:04:31.520 ability to give a bit and and where it's likely 0:04:31.560 --> 0:04:33.600 to will see some give from China. Men, if China 0:04:33.680 --> 0:04:37.320 wants to be this move from the developing economy into 0:04:37.400 --> 0:04:39.520 a more developed economy, those are the kind of change 0:04:39.560 --> 0:04:42.680 of structural changes that they have to make. Kntcros with 0:04:42.760 --> 0:04:47.120 this with final thoughts on this jofter, he's already que economics. 0:04:47.560 --> 0:04:50.719 One of the things we know, Kinrad, is when unemployment 0:04:51.320 --> 0:04:54.880 improvement rate improves, we go from ten percent to five 0:04:54.920 --> 0:04:58.240 percent to four percent whatever. It's usually linear, and it 0:04:58.320 --> 0:05:01.680 happens a lot faster than things. It gets better faster 0:05:01.800 --> 0:05:04.760 than we usually perceive. You told us an hour ago 0:05:04.880 --> 0:05:09.800 we could drive under three percent. You're suggested to me 0:05:09.960 --> 0:05:15.240 that seven or eight point two percent of America would 0:05:15.240 --> 0:05:19.640 be employed. Yes, and that if we are not looking 0:05:19.680 --> 0:05:21.400 at and I don't know whether it is the case, 0:05:21.440 --> 0:05:23.719 but if we are not looking at a recession in 0:05:25.120 --> 0:05:28.040 then I think we are are probably going to see 0:05:28.040 --> 0:05:30.919 an unemployment rate that that moves below below three percent. 0:05:30.960 --> 0:05:32.880 And the reason is so we're sitting here at three 0:05:33.120 --> 0:05:35.919 three and a three percent right now. Um, if we 0:05:35.960 --> 0:05:38.120 look at the pace of job growth, which has been 0:05:38.120 --> 0:05:40.039 stronger than I thought it would be this year, and 0:05:40.040 --> 0:05:42.920 it would been averaging close to two labor force growth 0:05:42.920 --> 0:05:45.240 has also been stronger. But on the labor force side, 0:05:45.279 --> 0:05:49.280 we have the influence of demographics and those are going 0:05:49.320 --> 0:05:54.039 to continue to drive lower rates of labor force participation UM. 0:05:54.160 --> 0:05:56.400 And with the kind of job creation that we're seeing, 0:05:56.880 --> 0:05:59.200 I think that leads to an uneplumber rate that hits 0:05:59.200 --> 0:06:00.960 three and a half percent by the end of this year, 0:06:01.560 --> 0:06:04.440 three percent by the end of next year. And if 0:06:04.440 --> 0:06:07.640 the economy continues to grow, UM, we're we'll probably see 0:06:07.640 --> 0:06:10.200 a beat breach three once we get into mean, the 0:06:10.240 --> 0:06:12.400 thing to watch on the unemployment rate is when it 0:06:12.440 --> 0:06:14.400 moves in the other direction. And so you know if 0:06:14.440 --> 0:06:17.240 I'm wrong in the unemployment rate does not continue to decline. 0:06:17.600 --> 0:06:19.839 Once we see about a half a percentage point rise 0:06:19.839 --> 0:06:23.680 in the unemployment rate, that has been a true and 0:06:23.800 --> 0:06:27.960 tested signal that the economy has gone into recession. When 0:06:27.960 --> 0:06:30.360 you when you hear me talk about vector change, That's 0:06:30.400 --> 0:06:33.920 precisely what it means when Kind describes a vector flipping. 0:06:34.120 --> 0:06:36.680 So let me ask you a big question for this administration, 0:06:36.680 --> 0:06:38.800 who have been tremendous with the federal reserve. Then a 0:06:38.880 --> 0:06:41.840 crack a pit last week when Larry Kind, of the 0:06:41.880 --> 0:06:45.400 Economic Advisor to the President, suggested that the Federal Reserve 0:06:45.480 --> 0:06:48.960 should be perhaps conscious that good payrolls growth and a 0:06:49.000 --> 0:06:52.279 strong economy doesn't necessarily mean that inflation is going to 0:06:52.360 --> 0:06:54.920 run away. What do you think that message was all about. Well, 0:06:54.960 --> 0:06:57.599 I mean, I think on the on the comment, I 0:06:57.600 --> 0:07:00.200 think we just need to remember that this administration just 0:07:00.240 --> 0:07:04.240 does things differently. And um, you know, we when we 0:07:04.279 --> 0:07:06.640 look at that, that's not a message that the FED 0:07:06.760 --> 0:07:08.640 is not getting from elsewhere also, right, So, I mean 0:07:08.720 --> 0:07:10.640 it's on both sides of the aisle. I think there 0:07:10.720 --> 0:07:13.560 there's there is a level of concern that the Fed 0:07:14.160 --> 0:07:18.320 um is is tightening or might eventually tighten too much. 0:07:18.480 --> 0:07:21.520 I'm not concerned about that at all. And that, um, 0:07:21.560 --> 0:07:23.440 if we look at and it was very interesting common 0:07:23.440 --> 0:07:25.800 in the minutes yesterday that when they were talking about 0:07:25.840 --> 0:07:27.480 the yield curve, that they need to look at broader 0:07:27.520 --> 0:07:30.320 measures of financial conditions. And if we look at broader 0:07:30.320 --> 0:07:32.360 measures of financial conditions, and the one that I focused 0:07:32.360 --> 0:07:34.520 on is the one that the Chicago Fed puts together 0:07:34.680 --> 0:07:37.440 because I think that's what the FED looks at most closely. Um, 0:07:37.640 --> 0:07:40.160 that's not showing any tightening and financial conditions when we 0:07:40.200 --> 0:07:44.800 include um, not just the yield curve, but um levels 0:07:44.800 --> 0:07:49.560 of yield survey data on through the year. Yeah, that's 0:07:49.600 --> 0:07:51.520 an example of that. I mean, I think that's a 0:07:51.600 --> 0:07:53.880 that's a pretty strong signal that the Fed is is 0:07:53.960 --> 0:07:58.320 not materially tightening monetary policy. I would I would imagine 0:07:58.320 --> 0:08:01.360 that if monetary policy was getting tighter, financial conditions would 0:08:01.360 --> 0:08:03.400 also get tighter. And that's not happening. So I'm not 0:08:03.440 --> 0:08:05.960 concerned about the FED overdoing it here. The tightening we 0:08:06.040 --> 0:08:08.480 asking though, is maybe not the United States, it's in 0:08:08.520 --> 0:08:11.360 global financial conditions. Is that something they need to think 0:08:11.360 --> 0:08:13.480 about a little bit more. And the potential feedback loop 0:08:13.520 --> 0:08:16.200 that comes into the United States, well, and that's I 0:08:16.200 --> 0:08:19.239 think a function of primarily of what's happening with the dollar. 0:08:19.440 --> 0:08:22.040 And and you know, the FED is it kind of 0:08:22.080 --> 0:08:25.080 has its hands tied here because there I think they 0:08:25.080 --> 0:08:27.960 are going to be focused on feedback loops, feedback loops, 0:08:28.040 --> 0:08:30.560 I think that the right now, the feeling is that 0:08:30.600 --> 0:08:33.959 those feed feedback loops are not particularly large and are 0:08:34.000 --> 0:08:36.160 not going to change the track that the economy is on. 0:08:36.600 --> 0:08:39.280 But the FED needs to focus on its primary and 0:08:39.320 --> 0:08:42.000 congressionally mandated goals, which is the labor market and inflation, 0:08:42.040 --> 0:08:44.320 and those are arguing for continued moves higher in the 0:08:44.320 --> 0:08:47.200 FED funds. Right, are you going to watch the World 0:08:47.240 --> 0:08:53.040 Cup today? You ask him, absolutely, I'll watch. I'll watch 0:08:53.040 --> 0:08:55.960 the rock up today? Is how many times will flop? 0:08:57.600 --> 0:09:00.000 I mean, you know, it's a big source of study. 0:09:00.080 --> 0:09:02.480 I mean John Andrew beating over at the Wall Street journals. 0:09:04.080 --> 0:09:08.240 I mean Brazil winning, he flopped twenty four minutes, ten seconds, 0:09:08.679 --> 0:09:11.800 Brazil tied. It goes out to thirty four minutes with 0:09:11.840 --> 0:09:14.319 no falls, no falls. I mean, come on, this is 0:09:14.360 --> 0:09:17.440 tied into what brazils. It's not that he's hurt. It 0:09:17.480 --> 0:09:21.880 has to do with delaying or he has found a law. 0:09:22.400 --> 0:09:25.360 He's found a law. A lot of people kick name 0:09:25.400 --> 0:09:27.240 out all the time. I mean, I don't. I don't 0:09:27.240 --> 0:09:30.680 think the rolling around is justified. Colin rapid, he's also 0:09:30.960 --> 0:09:32.959 he's also a little guy. He's five foot, takes a 0:09:33.000 --> 0:09:34.800 hundred and forty pounds, and you know you get hit 0:09:34.840 --> 0:09:36.480 by a big mustard going to go down because I've 0:09:36.480 --> 0:09:39.120 seen they go right after him, big time, big time. 0:09:39.200 --> 0:09:42.000 They really do. Please, you're gonna watch it though it's France. 0:09:42.360 --> 0:09:46.160 Have any predictions, Mr Quadras, I that's not my as 0:09:46.200 --> 0:09:48.920 sophisticated as I know. I mean, if you look, if 0:09:48.920 --> 0:09:50.800 you look at my pool on Bloomberg and you see 0:09:50.800 --> 0:09:54.400 how badly I'm doing, that's why. Oh no, no, I 0:09:54.480 --> 0:09:57.360 have the trophy. I've done. I've done really well. The 0:09:57.440 --> 0:10:14.360 last two days they haven't played with us down. You know, 0:10:14.480 --> 0:10:17.360 John's got a zillion questions for Alan Krueger about the 0:10:17.400 --> 0:10:20.920 state of our labor labor economy. Professor Krueger is at 0:10:20.920 --> 0:10:24.480 Princeton University of former chairman of the President's Council of 0:10:24.520 --> 0:10:28.640 Economic Advisors, is public service to President Obama in the nation, 0:10:28.720 --> 0:10:31.839 but far more than that, one of our most interesting 0:10:31.920 --> 0:10:37.120 and acute labor economists. The number one feedback now I 0:10:37.200 --> 0:10:40.960 get Alan Krueger is not on Brazil, Belgium, not in 0:10:41.000 --> 0:10:44.760 the Red Sox. It's on guys are saying on this show, 0:10:44.760 --> 0:10:48.400 men and women that were fully employed, and not one 0:10:48.840 --> 0:10:55.720 single listener agrees. Are we fully employed by the traditional 0:10:55.800 --> 0:10:58.640 measure that economists would use. I would say we're at 0:10:58.640 --> 0:11:01.760 full employment, but as I've said on your show before, Tom, 0:11:01.880 --> 0:11:04.719 full employment does not mean perfection, and we are far 0:11:04.760 --> 0:11:07.079 away from perfection when it comes to the labor market. 0:11:07.440 --> 0:11:09.120 John Farrell that I don't know what it's like in 0:11:09.120 --> 0:11:12.840 the United Kingdom. It's visceral here. People get really upset 0:11:13.480 --> 0:11:16.280 when the year suits and tice a full employment. Of 0:11:16.320 --> 0:11:18.360 course they do, and that's the kind of campaign the 0:11:18.360 --> 0:11:21.120 President brand a couple of years back. Alan. It's also 0:11:21.200 --> 0:11:24.079 hard to reconcile with the payrolls growth that we're seeing. 0:11:24.160 --> 0:11:27.680 We're looking for another rest similar a hundred ninety thousand today. 0:11:27.720 --> 0:11:31.560 How is that possible if we're at full employment. Well, 0:11:31.800 --> 0:11:35.280 the unemployment rate has been heading down. You know, we 0:11:35.360 --> 0:11:38.360 haven't seen any recovery in labor force participation. In fact, 0:11:38.440 --> 0:11:41.680 the labor force participation rate has continued to decline since 0:11:42.000 --> 0:11:45.200 President Trump took office. He hasn't talked about that very much. 0:11:45.720 --> 0:11:49.000 Um So, the growth has been coming in employment from 0:11:49.040 --> 0:11:51.640 a decline and unemployment. People are staying in the labor 0:11:51.640 --> 0:11:54.040 force longer but they haven't been coming back, and we 0:11:54.080 --> 0:11:56.679 started to see that the labor market slank. The paper 0:11:56.720 --> 0:12:02.080 once thought was structural, it's actually perhaps cyclical. Uh. You know, 0:12:02.160 --> 0:12:05.760 I think we really are confronting structural problems now we 0:12:05.760 --> 0:12:09.240 we have uh and and and the business cycle, the 0:12:09.280 --> 0:12:12.240 deep recession made the structural problems worse that the laid 0:12:12.240 --> 0:12:15.439 our response to them. So the tremendous rise and inequality 0:12:15.440 --> 0:12:19.320 that we've seen since the nineteen eighties, the polarization that 0:12:19.400 --> 0:12:25.000 we have in terms of employer demand, the very heterogeneous 0:12:25.120 --> 0:12:28.000 quality of education of the skills of the workforce. I 0:12:28.000 --> 0:12:30.760 think those are all structural problems, and the business cycle 0:12:30.760 --> 0:12:32.520 has made them worse. So a lot of people will 0:12:32.520 --> 0:12:34.800 be asking where is the white growth if we're a 0:12:34.840 --> 0:12:37.400 full employment where is it allan Well, some of the 0:12:37.400 --> 0:12:40.200 wage growth is in bonuses, and we're seeing bonuses now 0:12:40.280 --> 0:12:43.839 that might not stick um after we we hit the 0:12:43.880 --> 0:12:46.880 peak of this recovery. Uh. And the wage growth has 0:12:46.880 --> 0:12:49.320 been more sluggish than one would predict from the historical 0:12:49.400 --> 0:12:52.520 relationship between how tight the labor market is in wage growth. 0:12:53.000 --> 0:12:55.080 And that's been a trend, to be honest. If you 0:12:55.200 --> 0:12:58.280 look at the nineties and the first decade of the 0:12:58.320 --> 0:13:01.839 two thousand's, the love all of unemployment that's consistent with 0:13:01.960 --> 0:13:04.920 real weage growth has been moving down, meaning that it 0:13:04.960 --> 0:13:07.440 takes an even tighter labor market to generate more real 0:13:07.480 --> 0:13:09.559 wage growth. A lot of people have argued over the 0:13:09.640 --> 0:13:12.000 last couple of years that the cost of employing someone 0:13:12.040 --> 0:13:14.199 has gone up by quite a lot. You have to 0:13:14.240 --> 0:13:16.960 pay for the healthcare and other adulans as well. Do 0:13:17.000 --> 0:13:18.800 you think that some of the story is just not 0:13:18.920 --> 0:13:22.360 being captured by base salary, that the cost to hire 0:13:22.480 --> 0:13:25.280 is actually incrementally a lot more expensive than it was 0:13:25.559 --> 0:13:28.800 ten years ago. Well, a couple of things that are first, 0:13:28.880 --> 0:13:31.960 employment costs index picks up, the full cost of hiring 0:13:32.000 --> 0:13:34.440 someone picks up, not only the health insurance costs but 0:13:34.520 --> 0:13:38.840 also vacation time. And the employment cost index is up 0:13:38.840 --> 0:13:41.520 but not three percent yet, still just below three percent. 0:13:41.720 --> 0:13:44.120 So that's part of the story. But we're also seeing 0:13:44.120 --> 0:13:47.040 a slowdown in the growth and healthcare costs has begun 0:13:47.080 --> 0:13:49.880 to pick up over the last year. But part of 0:13:49.880 --> 0:13:52.040 the story was we should have seen even stronger wage 0:13:52.080 --> 0:13:55.120 growth because health insurance costs were growing more slowly. I 0:13:55.200 --> 0:13:59.679 just put on Twitter with your Alan Krueger uh, monikers. Well, 0:14:01.040 --> 0:14:02.880 maybe it's not the article of the year, but it's 0:14:02.920 --> 0:14:05.200 the reporting of the year and the gig economy where 0:14:05.200 --> 0:14:08.800 you've done a lot of work. Elena Samuel's Alona Samuel 0:14:08.880 --> 0:14:12.640 Samuels rather at the Atlantic magazine and she actually went 0:14:12.640 --> 0:14:15.560 out and got a job with Amazon Flex and the 0:14:15.800 --> 0:14:21.800 article is devastating about the new American gig economy that 0:14:21.960 --> 0:14:26.960 basically it's a fraud. It's people working at near minimum wage, 0:14:27.120 --> 0:14:31.720 at minimum wage, net net net clean below minimum wage. 0:14:32.160 --> 0:14:35.200 What is your research? Does it agree with the reporting 0:14:35.280 --> 0:14:39.000 of of Alana Samuels. I think what we see in 0:14:39.040 --> 0:14:42.280 the gig economy by and large is very elastic supply, 0:14:42.960 --> 0:14:45.720 meaning this is a place where people can find work. 0:14:45.960 --> 0:14:50.840 She describes that they float into that sector and initially 0:14:51.520 --> 0:14:54.440 wages may have been higher than someone could earn as 0:14:54.440 --> 0:14:57.800 a taxi driver or other parts of the economy. But 0:14:57.920 --> 0:15:00.760 because of the elastic supply, I think we're seeing an 0:15:00.760 --> 0:15:04.400 equilibrium where the wages pushed pretty low, the wages pushed 0:15:04.400 --> 0:15:07.000 pretty low. Within the microeconomics, is an income in a 0:15:07.040 --> 0:15:11.680 substitute effect? Or is it the new atomization of unions. 0:15:11.720 --> 0:15:14.560 We started out with the guilds in Europe a million 0:15:14.640 --> 0:15:16.800 years ago. John Fair, I don't know if you know this. 0:15:16.960 --> 0:15:19.760 Alan Kruger does like a ten week trip every year 0:15:20.120 --> 0:15:24.200 doing research on the guilds of cafes in Venice. Spent 0:15:24.280 --> 0:15:30.040 a lot of time Italy. But whether it's your researching 0:15:30.120 --> 0:15:32.720 the guilds of Italy or it's the death of unions 0:15:32.760 --> 0:15:36.200 in America, my key question today is is the gig 0:15:36.240 --> 0:15:40.760 economy the new death of unions? Well, I think unions 0:15:41.400 --> 0:15:44.520 were already on their deathbed, and I think the recent 0:15:44.560 --> 0:15:46.760 Supreme Court decision in the Jana's case is going to 0:15:46.840 --> 0:15:48.840 make it even harder. For the one area where unions 0:15:48.880 --> 0:15:51.440 had some strength. We're gonna see a lot more free 0:15:51.520 --> 0:15:54.080 riding where workers get the benefits of what's left of 0:15:54.160 --> 0:15:58.280 unions and they're not paying for those services. I've supported 0:15:58.280 --> 0:16:01.840 for a long time new structures of unions which will 0:16:02.040 --> 0:16:05.040 enable gig workers to organize, to negotiate, to try to 0:16:05.080 --> 0:16:07.800 improve their terms and conditions. Forget about Detroit unions where 0:16:07.840 --> 0:16:09.640 you made a hundred and twenty eight thousand. You never 0:16:09.680 --> 0:16:12.440 thought you'd make that before. The fact is we've gone 0:16:12.480 --> 0:16:15.640 from sixty thousand a year union. You know, I'm just 0:16:15.720 --> 0:16:19.880 using old numbers down to twenty eight thousand non union, 0:16:20.320 --> 0:16:22.760 and now we're going to gig economy, which is somewhere 0:16:22.760 --> 0:16:26.200 below that twenty eight thousand. Is it is Mr Bezos 0:16:26.240 --> 0:16:31.120 and others taking advantage of this new wave of atomization 0:16:31.240 --> 0:16:34.880 of your American labor economy. Yeah. I think worker bargaining 0:16:34.920 --> 0:16:37.280 power has been declining for lots of reasons. Part of 0:16:37.320 --> 0:16:39.680 it's the decline in unions. Part of it is practices 0:16:39.760 --> 0:16:43.480 companies use. Amazon has non compete classes where you can't 0:16:43.520 --> 0:16:47.080 go work for another warehouse in some cases. UH fast 0:16:47.080 --> 0:16:49.800 food restaurants have no poaching agreements where they won't hire 0:16:49.840 --> 0:16:52.720 workers away from other restaurants in their chain. I think 0:16:52.760 --> 0:16:55.960 all of these practices have weakened reduced competition for work. 0:16:56.280 --> 0:16:58.160 I think it's a good too. I don't mean to interrupt, John, 0:16:58.160 --> 0:17:00.360 but I know you're over there calculating how much Namer 0:17:00.400 --> 0:17:02.760 has been on the field rolling around. No. I was 0:17:02.800 --> 0:17:05.520 looking at Juventus over the last five days. What are 0:17:05.520 --> 0:17:10.040 they doing with the stock? The stock is up. Is 0:17:10.040 --> 0:17:12.560 there any news not not at the moment, but they've 0:17:12.560 --> 0:17:15.320 added two and eighty something million euros to the market. 0:17:15.480 --> 0:17:17.800 We had to medicate Pharaoh yesterday. I don't know if 0:17:17.800 --> 0:17:21.720 you know this, Ellen, but he's a c Melanish act. 0:17:24.800 --> 0:17:27.000 But that we had to medicate John about eleven am. 0:17:27.160 --> 0:17:29.160 And it's got something to say about your tennis too. 0:17:29.920 --> 0:17:32.199 I think Allen's going to give you some lessons. Come on, 0:17:32.400 --> 0:17:34.560 I mean, you can't get a hotel room in London. 0:17:34.640 --> 0:17:36.840 I think Wimbledon needs its fair share of time on 0:17:36.880 --> 0:17:40.119 this show. Frances Teo follows into the third round, first 0:17:40.119 --> 0:17:43.560 time in a major. There you go, keep going on, stop, 0:17:43.840 --> 0:17:48.199 please keep going. Is Federer getting too old? It doesn't 0:17:48.240 --> 0:17:51.480 look like it on the court. You seriously, there's such 0:17:51.520 --> 0:17:54.240 a beautiful game. Okay. Now the new game at Wimbledon, 0:17:54.320 --> 0:17:56.280 where it's grass in the old days, is the grass 0:17:56.280 --> 0:17:58.280 today the same as you old grass where the ball 0:17:58.400 --> 0:18:02.200 slid like eight ft uh it stays awfully low. I 0:18:02.240 --> 0:18:03.920 don't know if it's the same, but it still stays. 0:18:04.200 --> 0:18:07.040 Does Nadal do it Wimbledon? Nadal is a clay guy 0:18:07.080 --> 0:18:10.719 who loves ruling garrows in France. Can he play at 0:18:10.720 --> 0:18:13.280 Wimbledon and win? Or is it just such a different 0:18:13.280 --> 0:18:16.439 game it's a harder game for him. I certainly wouldn't 0:18:16.520 --> 0:18:18.440 rule it out. I'll tell you one thing that amazes 0:18:18.480 --> 0:18:20.600 me about Nadal at the French Open and at the 0:18:20.680 --> 0:18:24.160 US Open. His speed is extraordinary, Billy to get around 0:18:24.160 --> 0:18:27.760 the court, that the way the birst he takes, it's unbelievable. 0:18:27.920 --> 0:18:30.240 This is a created credit important. This goes like the 0:18:30.280 --> 0:18:34.760 neighbor for amateurs and tennis. Read me, shade to our forehead? 0:18:35.880 --> 0:18:38.719 Which side? Did those guys shade to? Their back hands 0:18:38.760 --> 0:18:41.760 are so good they almost shade to go to the 0:18:41.800 --> 0:18:44.639 back end, don't they. Well, Nadal's backhand is really a 0:18:44.680 --> 0:18:47.960 two handed forehand, but you'll see you'll see them run 0:18:48.000 --> 0:18:50.119 around their back end. You know, they'll hit it inside 0:18:50.119 --> 0:18:53.240 out forehand by running around their back hand. And also 0:18:53.440 --> 0:18:55.359 look how fast they are to run around their back end. 0:18:55.440 --> 0:18:58.760 That's the best tennis player you ever saw. It has 0:18:58.800 --> 0:19:02.320 to be Federer, right. So Rosie Cassal's warm up at 0:19:02.359 --> 0:19:04.960 Forest Till she was a giant, like four ft ten inches. 0:19:05.720 --> 0:19:08.879 She would practice her leap and she would get she 0:19:08.960 --> 0:19:11.679 was like an NBA player. She would get literally a 0:19:11.680 --> 0:19:14.480 foot half off the ground. That was amazing. But yeah, 0:19:14.520 --> 0:19:16.320 that's one thing I like about tennis. You could be 0:19:16.359 --> 0:19:19.880 any size there. There there are female players on tour 0:19:20.000 --> 0:19:22.960 five ft two ft three. I mean, this is great, John. 0:19:23.000 --> 0:19:24.879 I had no idea how it's waking up to redux 0:19:25.000 --> 0:19:27.359 my tennis life. I didn't realize you have a played. 0:19:27.560 --> 0:19:30.600 Oh I'd love to know how many I would love 0:19:30.640 --> 0:19:33.200 to see. Do you know how many women's Davis records 0:19:33.280 --> 0:19:36.119 I snapped? Can we give a charity tennis match if 0:19:36.320 --> 0:19:38.879 you want to write in on Twitter at Pharaoh TV, 0:19:39.400 --> 0:19:43.680 we can raise some money to get to play tennis. 0:19:55.800 --> 0:19:58.359 It is now a great pleasure to bring two year 0:19:58.440 --> 0:20:01.960 from the University of Michigan, Betsy Stevenson, who does some 0:20:02.119 --> 0:20:07.239 exceptionally creative research on the American labor economy. Bessie, I'm 0:20:07.240 --> 0:20:09.919 gonna ask you the question. It has been a theme today, 0:20:09.960 --> 0:20:12.679 which is a lot of fancy people in fancy suits 0:20:12.680 --> 0:20:16.200 and try ties and dresses tell us that America is 0:20:16.240 --> 0:20:22.680 fully employed and aggressively our listening audience doesn't agree. Which 0:20:22.760 --> 0:20:27.800 is it? Yeah, Um, well that's a great question, and 0:20:27.920 --> 0:20:30.600 I think is that what happens is we take a 0:20:30.640 --> 0:20:33.120 look at the data and we see that unemployment rates 0:20:33.160 --> 0:20:36.800 are really low. So the issue about getting more Americans 0:20:36.920 --> 0:20:40.560 employed really isn't about bringing the unemployment right down lower. 0:20:41.080 --> 0:20:43.800 It's about bringing more people into the labor markets. But 0:20:43.920 --> 0:20:47.320 I think the thing that you hear from your listeners, 0:20:47.359 --> 0:20:50.680 that the average person hears or believes is that they 0:20:50.680 --> 0:20:53.720 don't have the job they necessarily want, or they don't 0:20:53.720 --> 0:20:55.879 have the hours they want, or they're not able to 0:20:55.960 --> 0:21:00.680 use their skills appropriately. So economists or us looking at 0:21:00.760 --> 0:21:02.600 how many people are out there looking for work that 0:21:02.720 --> 0:21:06.920 don't have any But of course you're not unemployed if 0:21:06.960 --> 0:21:10.960 you have uh, if you have a full time job. 0:21:11.200 --> 0:21:13.960 But it's not that in the career you were hoping 0:21:14.000 --> 0:21:17.120 to have the career you trained for, um, if there's 0:21:17.119 --> 0:21:21.119 ability to move up, um, or even if you're part time. Right, 0:21:21.160 --> 0:21:23.320 And we've we've paid a lot of attention to those 0:21:23.600 --> 0:21:25.920 part time numbers. Now that's not going on. We've still 0:21:26.040 --> 0:21:28.719 we've seen the number of people employed part time has 0:21:28.760 --> 0:21:31.199 come way down as well. Um, we do have a 0:21:31.200 --> 0:21:34.880