Thursday, December 11, 2014

November job numbers: Let's party like its 1999!

I have always been cautious about making too much out of one jobs report, but the numbers reported last Friday merit serious attention.  We now have a string of consecutive months with strong increases in employment.  Unless the last 20 days of December turn out to be an unforeseen disaster, 2014 will be the best year for job growth since 1999.  

Two more reasons for optimism:
1) Wage growth is becoming more widespread.  More jobs is nice; more people making more money is even nicer.
2) The unemployment rate did not go down.  This is good news because it means that more people have entered the labor force looking for jobs.

Friday, December 5, 2014

Supply and demand for truckers

Spending the morning at the NC State Poole College of Management's semi-annual Supply Chain Resource Cooperative meeting.  Lots of great student projects for companies like CAT, Duke Energy, GSK, MetLife and others.

One topic that has come up repeatedly is the shortage of truckers and the increasing difficulty firms are having with this critical transportation mode.  At the same time, the percentage of young people who are participating in the labor force is at a 30 year low.

So what is stopping young people (or even not so young) from entering the profession?  (I have posted on this topic before.) Lots of theories were offered.  Part of the story is that training is expensive to obtain (but there are student loans); another part is that many potential job candidates cannot pass background checks and drug tests (maybe, but I would like to see some numbers).  One new theory offered by Jason Schenker (economist and regular SCRC speaker) -- Xbox addiction.

Friday, November 28, 2014

Labor market impact of immigration exec order

Legal analyses of the President's executive order on immigration are a dime a dozen; economic analyses  are much rarer (this WSJ piece is the only one I have seen).  The courts and voters will ultimately work out the legal end, so what are the economic takeaways?
1) Most illegal immigrants face skill and language barriers in the labor market and end up taking relatively unskilled jobs.  The increased supply of such labor leads to lower wages for natives who compete in the same markets.  Most economic estimates find the wage impact is modest (a 10% increase supply leads to a 2-4% cut in wages for natives), but tell that to someone who is having trouble making ends meet.  
2) Do not be surprised to see the rate of illegal immigration accelerate since the order could be reversed on Inauguration Day 2017.  But wait, those who cross borders after the order aren't covered, right?  True, but perception is everything.  Do you seriously believe that someone in a dirt poor village in Guatemala thinks the odds of being deported have gone up?  What matters is what potential immigrants believe, not what the order actually says.  
3) To the extent that employers have used fear of deportation to keep illegals from quitting to find a better job, the order should open up some mobility options.  Illegals who have learned valuable skills and who speak/write decent English will now start competing with more skilled natives.  
4) The most critical immigration issue is making it easier for highly educated STEM students to stay in the US.  The President punted on this one.  

Wednesday, November 12, 2014

Obama pushes for net neutrality

The FCC has been deliberating for some time about whether and how the internet should be regulated by the federal government.  President Obama made a pitch on Monday for heightened regulation, asking the FCC to regulate the internet as if it were an electrical utility or a phone company.

NYT blogger Eduardo Porter gives a somewhat balanced view of the pros and cons of net neutrality.  Net neut advocates worry that monopolistic ISPs will control through pricing what content becomes available.  Net neut opponents point out that one needs some mechanism to ration scarce capacity.  Since Netflix alone accounts for 30% or more of internet traffic at peak periods, they argue that Netflix directly (and its customers indirectly) should pay for the fast access needed to stream movies.
An even bigger concern is what a regulated internet do to incentives for investing in further capacity.

My take: this argument is another classic case of who do you trust more to act in customers interest -- a federal regulatory agency or a less than perfectly competitive market?  Today in Raleigh, Time Warner and AT&T only have to compete with each other for USP business.  But over time there will be more competition, especially if Google Fiber decides to play.  I think I will take my chances with the market!

Tuesday, November 11, 2014

NC State full-time MBA climbs to #54 in Businessweek rankings

More great news on the rankings front for NC State's Jenkins MBA program!  Bloomberg Businessweek's ranking of full-time programs just came out and we placed #54 in the US.  There were 85 schools ranked.  NC State was just behind Georgia, UC San Diego, Boston College, and George Washington and just ahead of Tennessee, Florida International, Boston University, and Babson.

This year's ranking represents a dramatic turnaround from two years ago.  Bloomberg Businessweek is very selective about which schools are deemed eligible to be ranked.  In 2012 we were pleased to be on the list for the first time (at #63); that was an important milestone for the program.  We were not as pleased with our position on the list (63 of the 80 invited schools had high enough response rates from student and employer surveys to be listed).

The 2014 ranking is based on a weighted average of three components: (1) student satisfaction with the program, (2) employer satisfaction with the graduates and (3) faculty research.  NC State's MBA placed #45 in student satisfaction, #60 in employer satisfaction, and #71 in research.

As an MBA program that only has been in existence for 12 years, we have come a very long way.  We have been on quite the rankings roll over the last year:

  • #15 supply chain MBA, Gartner
  • #17 online MBA, Poets and Quants
  • #20 part-time MBA, Bloomberg Businessweek
  • #36 online MBA, US News
  • #61 part-time MBA, US News
  • #65 full-time MBA, US News

Kudos to the alums, faculty, staff and students in the NC State Jenkins MBA community for making this happen!  Our focus on innovation, experiential learning, and value is getting the recognition it has long deserved.

Thursday, October 30, 2014

Even health economists have trouble choosing the right plan

Austin Frakt has a PhD in statistical and applied mathematics from MIT and has published in the New England Journal of Medicine and the Journal of the American Medical Association.  In other words, a real intellectual heavyweight.  Yet he confesses in an NYT blog post: "I am a health economist, and I cannot rationally select a health plan."

The reasons are pretty simple.  First, the plans are maddeningly complex.  It is relatively easy to see the rates, deductibles and copays (I am not saying easy, just easy compared to what comes next) but very tough to figure out what you are actually buying.  Which medical conditions are covered and which are not?  If you need medical services, which providers are included in the network covered by the plan?

Second, you must buy the plan based on a forecast of what health services you think you will need in the coming year.  Some are predictable (e.g., annual checkups) but many (perhaps most) are not.

Expect this issue to receive more attention in the future as more and more companies get out of the business of providing employee health insurance.  Today's WSJ has a piece on how more and more small companies are doing this.

Wednesday, October 29, 2014

#WhyMBA competition @ BusinessWeek

As a lead-in to its full-time MBA rankings announcement Nov. 11, Bloomberg Businessweek has launched a #WhyMBA competition on Twitter.  Students and alums at all MBA programs have been encouraged to post tweets explaining what makes their school special.  Schools are ranked on tweet volume; right now NC State's Jenkins MBA is #57.  UNC-CH is #60.

What makes NC State so special?  Great value. ROI.  Real world experience.  Community service. Click here to see all the tweets.

I encourage all members of the NC State Jenkins MBA community to join the #WhyMBA discussion.  Let's aim for top 50 for both the tweet count and the actual program ranking!

Sunday, October 26, 2014

Wake Forest drops full-time MBA program

Wake Forest announced Wednesday that it will no longer admit students to its full-time MBA program.  The class admitted this fall will finish in spring 2016.  Faculty will be redeployed to other programs -- undergraduate business, a one year MA in Management, and the Professional MBA.

Like many other smaller MBA programs, WF had seen a significant drop in enrollment, from 240 in the 1990s to 114 now.  With better growth opportunities in the evening and Saturday MBA, the school decided to focus its resources on programs with more upside potential.

Poets and Quants interviewed WF dean Charles Iacovou:

Asked why he believes there is declining interest in full-time MBA programs, Iacovou cited the proliferation of one-year specialized master’s degrees and the increasing demand for more flexible programs. “The change is coming from the students themselves. They are choosing to receive an MBA differently than they had. Many of them don’t want to walk away from income or they choose to get more specialized degrees." 
Two reactions:  
1) I am not surprised to see a well-regarded school drop its full-time MBA program.  The market remains strong for the 15-20 largest schools but the remainder are fighting over a shrinking pool of applicants.  I am surprised that WF made this decision when it did, just after moving into a new facility.  But they will have company.  Soon.
2) NC State has long relied on Working Professionals who want classes in the evening and online.  We are looking to create a more flexible program where students can take both face-to-face and online classes as needed.  

Tuesday, October 21, 2014

A first sign of wage growth

Numbers about the labor market continue to send mixed messages.  The unemployment rate is down to 5.9 percent, a level last seen in summer 2008.  In contrast the employment-population ratio dropped from 63 per cent in early 2008 to 58.5 percent by fall 2009 and has not recovered since (still at 59.0 percent).  So is the labor market back to full employment, as the unemployment data indicate, or is there still a significant excess supply of potential workers?

A key signal, many observers feel, is what will happen to wages as output expands.  If those out of the labor force are really just like the unemployed, employers will be able to fill new positions without having to raise salaries.  On the other hand, if those who have left are out for good and we really are near full employment, then salaries will need to increase.

It is too early to know which interpretation will turn out to be correct.  Last week WSJ reported rising "manufacturing wages ... in some major industrial states as shortages of certain skills ... force more companies to pay up to attract and retain workers."

However, most jobs are in the service sector.  When we hear about Walmart having trouble getting greeters and cashiers, we will know for sure that the labor market is getting near capacity.

Sunday, October 19, 2014

N&O features NC State MBA career coach John Hutchings

Today's Raleigh N&O has a long story providing advice about how to work a job fair.  The first person quoted and the person who appeared to be quoted the most (because he is THE expert) is our own John Hutchings, associate director of career development in the NC State Jenkins MBA.

Career development support is a key difference between a good MBA program and a great one.  Most MBA programs for part-time students provide little, if any, of this support.  John has been with NC State's MBA program for six years and he has become the go-to guy for career advice for working professional MBAs.

Going to a career fair soon?  John has the following pointers:

  • Research carefully the companies you are interested in.  Don't just look at the web page; use Linked In to network with employees.
  • Dress professionally, even if the interviewers are wearing polo shirts.  
  • Tailor your resume for each company that you are excited about contacting.