Wednesday, July 29, 2009

New Study on the Impact of 9-11 on the Employment and Earnings of U.S. Muslims

Former graduate student Faisal Rabby and I have completed a study that examines the impact that the 9-11 attacks had on the employment and earnings of U.S. Muslims.

Here is a summary:

Using a difference-in-differences framework and micro data from the Current Population Survey-Merged Outgoing Rotation Group Files (1999 to 2004), we estimate the impact that the 9-11 terrorists attacks had on the U.S. labor market outcomes of individuals with nativity profiles similar to the terrorists.

We find that 9-11 and the anti-terrorism measures were associated with a relative decrease in employment and hours worked of immigrants from Muslim-majority countries. The largest decreases were among the youngest immigrant men (ages 16 to 25) from the Middle East (excluding Israel), Iran and Afghanistan, whose demographic profiles are the closest to the terrorists. Most significant is the finding that even for the youngest men, the adverse impacts appear to be short lived. Many of the estimated losses dissipate by the end of 2004. The employment-population ratios and hours worked of older Muslim men experienced little deterioration.

Contact me if you want the full study.

Tuesday, July 28, 2009

Friday, July 17, 2009

Current Views on the Labor Market

Although I have not written for awhile, I have been very busy commenting on the labor market: recent segments include CNBC "Squawk Box", NBC Nightly News, CNN (TV and radio), Fox Business News and NBC's Meet the Press. Below is a summary of the themes developed and expressed over the past few months.

During the months prior to the July Jobs report (Numbers for June), many were beginning to discuss economic policy for the 4th quarter of this year and early in 2010. Why? Payroll numbers were improving. Job loss was still occuring, but the contractions were getting smaller. In fact, for July, the temporary help services sector was poised to show an increase. As a result, the policy conversation shifted to whether the $787 billion stimulus was going to ignite inflation.

Alas, the three months of improvement did not last. The July numbers threw everyone for a loop. Large and widespread job losses returned. In fact, a chorus for a new stimulus package emerged.

Their rationale, which is quite compelling is as follows:
1. 30% of the unemployed have been jobless for at least 27 weeks, breaking the record set several months after the 1981-82 recession.
2. Today, 49% of the unemployed have exhausted their regular benefits, a record too.
3. By September of this year, approximately 650,000 Americans will begin to exhuast their extended Unemployment Insurance Benefits.
4. The number of Americans utilizing food stamps is at a record high.
5. These trends will only worsen as unemployment is expected to rise during the balance of this year and into next year.

Budget hawks are countering the chorus for a new stimulus package. They cite safety net expenditures of $2 trillion for 2009, up 209 billion dollars from last year. Social conservatives raise the concern that if safety nets are made more "generous" (The average weekly UI Benefit is several hundred dollars), they will foster laziness.

We should always be concerned about costs and the unintended consequences of public policy, but let's have that conversation with a full understanding of how we got here today and the benefits of these programs.

The increased expenditures have the following origins:
1. One half of the 2009 increase is due to worthy increases that occurred during the Bush Administration.
2. Only 0ne-quarter of the expenditure growth is attributed to the recession.
3. The increases can be traced to the fact that Americans entered this recession in extremely vulnerable positions: high debt levels, employment rates that were little different than in 2001, and very low savings rates.
4. Over time, safety nets became more porous.

With respect to benefits, in the absence of these expenditures, poverty would rise and the middle class would further erode, having both short and long-term consequences for American families, and the stability of the nation.

One of the many lessons from today's recession is the importance of investing in Americans and providing much strong safety nets. As the auto tech in the PHRAM oil filter commercial said, "You can pay me now, or pay me later."

Joined Twitter

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