Sunday, June 17, 2018

Job openings exceed number of unemployed

Earlier this month the Labor Department reported that there are more open positions than there are unemployed workers.  There were 6.7m openings at the end of April, well above the 6.3m unemployed.  This is the first time this has happened since the data series on job openings launched in 2000.

Although this is encouraging news for individuals looking for work, keep in mind that many employers prefer to poach talent away from someone else.  The unemployed have to compete against people who already have jobs for open positions.  Also there are many people involuntarily working part-time who are trying to gain full-time positions.  Takeaway: employers still have a large pool of position-seekers from which to draw, but the pool has gotten smaller relative to the number of open posts.

Companies with open positions will now consider changing the skill and experience requirements and increasing wages.  Consider the following example from WSJ:
To attract workers, the Saladworks restaurant chain has raised its starting wages about 5%. It also has relaxed standards on tattoos and piercings, allowed employees to wear jeans and bandannas, and gotten more flexible about schedules.

Monday, June 4, 2018

How much do new employees value corporate social responsibility?

Many firms tout their devotion to the triple bottom line and corporate social responsibility (CSR).  Why do they do it?  One answer, according to University of Chicago economist John List in an interview on Freakonomics, is that it helps attract and retain workers.

List made his reputation doing field experiments in economics.  He is so devoted to this approach that he has set up his own data collection firm HHL Solutions to do experiments on labor market issues.  HHL posted help-wanted ads on Craigslist in 12 cities.  The ads varied in terms of the hourly wage ($11 to $15) and whether they mentioned HHL's commitment to corporate social responsibility.  Not surprisingly the application volume was 33% higher at $15 per hour than it was at $11.  Surprisingly (at least to me), the application volume also was 33% higher when the ads mentioned CSR.

The next surprise: the people who responded to the ads mentioning CSR were more 10 to 25 percent more productive and more accurate in their data entry tasks.

So let's see -- lower your hourly wage costs AND get more output.  Sounds like at least one part of the triple bottom line is dong just fine in firms dedicated to CSR.

Wednesday, May 30, 2018

Sacramento Chick-fil-A starts paying $18/hour

Today's WP reports that a Chick-fil-A franchise in Sacramento will bump up its starting hourly wage from $12-13 to $17-18.  The current minimum wage in California is $11, so this decision is clearly being made with the franchise's self interest in mind.  Quote from the owner Eric Mason:
As the owner, I'm looking at it big-picture and long-term.  What that does for the business is provide consistency, someone that has relationships with our guests, and it's going to be building a long-term culture.  
The business case for the raise is based on the franchise's ability to attract and retain qualified workers.  Mason certainly will have less difficulty filling open positions for the next few years.

Will other fast food franchisees follow suit?  The national unemployment rate is below 4 percent, labor force participation has not increased and immigration is being actively discouraged on multiple fronts.  So you might have to pay more the next time you crave some nuggets and waffle fries.  

Monday, April 2, 2018

Does Amazon have a sweetheart deal with USPS?

The US Postal Service has lost significant sums of money every year for at least a decade.  President Trump claims that USPS's contract with Amazon has made things worse.  This article in VOX provides some insights to help analyze Trump's claim.  Key takeaways:

  1. Shipping and packages is the only major component of USPS's revenue stream that is increasing, growing by $2 b in 2017 over 2016.  
  2. First class mail and marketing mail revenue are down by $3 b over the same period.  
  3. USPS costs are largely fixed.  Delivery takes place over the same routes every day; the same sorting and shipping operations take place each day as well, subject to some seasonal fluctuations.  
  4. Unlike any private company, USPS must pre-fund its pension and retiree health benefits for the next 75 years.  This costs $6b annually and accounts for most of USPS annual losses.  
As long as the Amazon contract covers the variable costs of weekend deliveries, USPS comes out ahead.  Could USPS charge Amazon a higher rate?  That depends on whether Amazon could find close substitutes for package delivery.  I would not underestimate them.  

Sunday, April 1, 2018

Economics of tipping

Tips are welcome in many occupations and are absolutely expected by restaurant servers who are paid well below the minimum wage.  Recently some restaurants have eliminated tipping, increased hourly wages and then hiked menu prices to compensate.

How do incentives change in a no-tip restaurant?  Under tipping the wait staff has two incentives: (1) provide good service because many customers have a "pay-for-performance" ethos and (2) upsell the customers because most base their tip on a percentage of the total tab.  In most cases tips are not shared with cooks and dishwashers, leading to less than optimal teamwork.  Finally tips are risky; restaurant traffic goes up and down with the weather and some customers are less than generous.  The result is partial alignment with the incentives of the restaurant owner.

Danny Meyer, CEO of Union Square Hospitality Group, has moved to the no-tip model.  The benefits, he argues in a recent WP op-ed, include more predictable income for wait staff and improved performance management (managers are in a better position to do this than customers).  But the implementation has been far from seamless.  With pay the same on every shift, servers who begged for weekend shifts (with their higher sales volume) now want to work the quieter weekdays.  Some customers balked at the higher menu prices, especially the ones that were less than generous tippers.

Thursday, March 8, 2018

FT ranks NC State Online MBA #17 in the world

More great rankings news for NC State's MBA program.  On Monday the new Financial Times global rankings of online MBAs came out and our program placed #17, up one spot from last year.

FT also ranked programs on specific dimensions.  NC State's online MBA placed #1 in the world in two categories: program delivery and online interaction.

Saturday, February 10, 2018

NC State MBA ranked in top 10 for ROI

NC State’s full-time MBA program has just been ranked in the top 10 in the country for best ROI by SoFi, a financial services company that makes student loans.  

We came in at #8.  The top school for ROI was Wisconsin.  The other schools include Brigham Young, Florida, Harvard, Houston, Loyola, Pitt, Stanford, and Villanova.  SoFi calculates ROI as the ratio of average starting salary to average debt.  The data come from 60,000 student load financing applications over three years (2015-2017).  

The ranking is already getting play in the leading MBA blog Poets and Quants run by John Byrne who launched the Business Week rankings years ago.  

We have been saying for years that our MBA program is a great value, so it is rewarding to see some outside confirmation.  Kudos to the faculty and staff who have been so dedicated to the career success of our students and alumni!

Sunday, January 21, 2018

NC State MBA faculty research on diversity and innovation

Poole College of Management faculty members Roger Mayer and Richard Warr have published a study in the journal Financial Management that shows that companies can profit from diversity.  Mayer and Warr found that companies with a more diverse workforce (in terms of gender, ethnicity and sexual orientation) produce more new products and obtain more patents.  Warr was interviewed recently on WUNC-FM radio about the study.

Monday, January 15, 2018

NC State online MBA rises in US News rankings

NC State's online MBA rose 4 spots to #14 in the US in the latest US News and World Report rankings.  The program ranked very strongly in terms of student engagement and admissions selectivity.  The program has been in the top 20 every time US News has ranked online MBAs.  Our growing enrollment provides further evidence that NC State offers a great online MBA and a fantastic value.