Maybe not, if you are an hourly employee at McDonald's, according to WSJ. Mickey D sells limited coverage policies at $14 to $32 per week with benefits capped at $2000 to $10000 per year. The ratio of plan spending on medical care to total premium revenue is below the magic 80-85% threshold set under the health insurance regulation bill passed earlier this year. This regulation was intended to force insurers to minimize overhead. Mickey D claims high worker turnover raises their administrative costs so much that the 80-85% target may not be reachable. If it cannot receive some sort of waiver, the company is seriously considering dumping the plan. With the fines for violating the mandated coverage regs well below the cost of health insurance policies that meet the new federal standards, do not be surprised to see many other companies take a hard look at dropping their coverage as well.
So says today's WSJ. Among the promising signs are more students getting offers at the end of their summer internship, more companies engaged in on-campus recruiting, and the end to hiring freezes at some firms. Just met an NC State MBA alum here today interviewing for Chevron; Bank of America was here earlier this week. One key bit of advice from an IBM recruiter:
Going back even 10 years, we used to try and find someone who had the right attitude or personality. Now, it's how fast you can hit the ground running.
Southwest Airlines has historically followed a strategy of gradual expansion to new markets. Now they have thrown out the old playbook and radically increased their potential market share by buying AirTran. This will create a number of challenges:
Southwest has specialized in city-to-city flights and has avoided the hub and spoke system employed by the major carriers. Most of AirTran's operations are based in Atlanta with many passengers transferring from one plane to another. How to merge the two business models?
Airline mergers are usually messy businesses, especially as unionized employees jockey for position on seniority. Southwest's business model relies heavily on high employee engagement. How will they keep everyone aligned with the mission and vision?
Southwest currently flies only one type of plane, the Boeing 737. Airtran uses 717s as well as 737s. How can the two types of planes be meshed into an integrated system that relies on fast turnaround time on the ground and employee familiarity with only one type of aircraft?
The upside for Southwest is greater access to some major markets: Atlanta, New York and Washington DC. A greater presence for Southwest in those markets is also good news for consumers.
One final thought: after approving the United-Continental merger, surely the Antitrust Division of the U.S. Department of Justice will not block this merger on the grounds that it would limit competition?
The French business school SKEMA is coming to Centennial Campus this January. There will be about 250-300 students arriving, most of them undergraduates. SKEMA was formed last year through the merger of two top 10 French business schools: Ceram Business School in Nice and the ESC Lille School of Management. SKEMA currently operates campuses in Nice, Lille, Paris, Morocco, and China and plans to open a campus in Brazil next year.
What will this mean for NC State students? At a minimum we will be inviting SKEMA students to campus events, so expect to hear some French accents at next spring's Wachovia lectures. SKEMA will be sending its own faculty to teach courses, but I would expect that there will be some guest lectures going in both directions. As we develop relationships with SKEMA faculty, I anticipate the opportunity to provide NC State students with access to a wider range of courses and degrees.
Aggregate output has been rising since June 2009, yet employment has dropped by 329,000 over the same period (July 2009 through August 2010). The only way to increase output with fewer workers is to raise productivity. There are now some signs, according to WSJ, that businesses have done all that they can do on the productivity front and that any future increases in output will have to be generated through increased hiring.
Usually increased productivity growth is viewed in a positive light, as the key to increased standards of living over the long run. Rapid productivity growth is most often associated with technological change, capital-labor substitution or increases in human capital (e.g., better trained or educated workers). Over the last two years there is some reason to believe that none of these factors has been at work; instead as fears of joblessness escalate companies have been able to "squeeze their work forces," as the article mentions. The good news for workers: as the economy recovers there will be more hiring opportunities and the squeeze will be over.
So says the Business Cycle Dating Committee of the National Bureau of Economic Research. In an announcement last Monday, BCDC determined that the recession began in December 2007 and ended in June 2009, lasting 18 months -- longer than any recession since the end of World War II. Labor market indicators (employment, hours worked) did not bottom out until December 2009, but most other measures hit their trough in or around June 2009.
Why does it take so long to make such a determination? The simple answer is that the government constantly revises and updates its measures of key economic indicators. As the official arbiter of the start and end of recessions and growth periods, NBER wants to make sure that it makes the correct call. Think of it as watching all of the camera angles on instant replay until you are sure you have the right decision.
The end of the recession does not necessarily translate into the beginning of good times for all. All it means is that GDP and other measures of aggregate economic activity have stopped declining.
WSJ cites two main reasons why large state schools are so popular. The first is essentially an argument about economies of scale: companies are cutting back on the number of core schools and feel they can hire more students per visit at the larger schools. Second, recruiters feel that graduates of large state schools have the practical skills that make them immediately effective on the job. Partnerships like NC State's SCRC are especially helpful.
Guilty of not providing any stimulus. At all. The plan only affected the timing of automobile purchases, according to a new National Bureau of Economic Research working paper from Atif Mian (Cal-Berkeley) and Amir Sufi (Chicago-Booth). The two economists took advantage of the fact that the supply of clunkers varied by city and found that auto sales during the plan were much higher in high-clunker cities than in otherwise similar low-clunker cities. But once the plan was over, the pattern was reversed. Exactly.
Today's NYT cites "research" from the left-leaning Center for Economic and Policy Research that shows as many as 45% of elderly workers hold physically demanding jobs. Workers in such jobs are concerned that they will be physically incapable of working past the current ages of eligibility for partial (62) or fill (66) benefits. Three reactions:
1) The economy has been shifting out of agriculture, mining, and manufacturing into services for quite some time. There is every reason to believe this trend will continue. This means that the jobs held by elderly workers 20-30 years from now (when any big changes in Social Security eligibility made today would take place) will be much less likely to be physically demanding than their jobs today.
2) The research is based on whether a worker says "yes" to any item on a long list of job characteristics, such as bending or twisting, trunk strength, significant time standing, etc. It does not ask how much time is spent in these activities (5 minutes a day or 8 hours a day) or make any attempt to tease out the magnitude of the demands when they arise (lifting 5 pound bags versus 50 pound bags). Here are the top 5 "physically demanding" occupations for workers 58 and above, by gender: janitors, supervisors of retail sales workers, retail sales workers, drivers and truck drivers, and carpenters (men); school teachers, retail sales persons, supervisors of retail sales workers, cashiers, and housekeepers (women).
3) Social Security does provide for disability benefits for those who are physically incapable of working. Of course, there is no mention of these benefits in today's NYT.
I do not pretend that changing Social Security will be easy. The real problem is the "one size fits all" design of the program. Instead of being totally ineligible for benefits until age 62, why not change the system so that more workers qualify for reduced benefits at younger ages?
The stock market rallied Friday in response to a "not as bad as expected" August jobs report. Overall employment fell by 54,000 according to WSJ, but that was mostly because the Census was winding up. Private sector employment grew by 67,000 with most of the gains in services, especially health and education.
No matter how you spin the data, one conclusion is inescapable -- the labor market is in terrible shape: GDP is growing (modestly) but employment is not. The economics profession is still trying to come to grips with the situation. Paul Krugman and others claim that the stimulus packages to date have been inadequate and we need to double down on those efforts. Two recent pieces, one in WSJ and another in the Economist, look at research by Narayana Kocherlakota (president of the Fed branch in Minneapolis) on how the labor market itself has been affected by the financial crisis and recession. Kocherlakota argues "Firms have jobs, but can't find appropriate workers. The workers want to work, but can't find appropriate jobs. Whatever the source, though, it is hard to see how the Fed can do much to cure this problem."
Kocherlakota thinks there is a mismatch between the skills demanded by employers with open positions and the skills supplied by unemployed workers. One intriguing bit of supportive evidence: normally in recessions, the number of open positions falls as employers can fill open jobs more quickly, whereas this time the vacancy rate has actually risen over the last year from 1.8 to 2.2 percent. Why such a mismatch? (1) The housing market collapse has reduced geographical mobility and (2) the skills needed to succeed in autos, construction, and finance are not a good fit for health care and technology.
It would be interesting to hear from part-time MBAs concerning the difficulty (or lack thereof) their firms are having in filling open positions.
Sell assets. WSJ writes about various state and local governments who have decided to convert various properties into revenue streams. You name it: office buildings, airports, parking meters, toll roads, and zoos have all been auctioned off to the highest bidder.
What does this mean for economic well-being? The good news for consumers is that private owners are likely to run these assets more efficiently than state or local governments. The not-so-good news is the substitution of private for public monopoly could mean higher prices and less output. Also, asset sales provide one time relief -- you can only sell I-95 off once. Unless state and local governments take other steps to bring their income in line with their expenditures, these sales only postpone the ultimate day of reckoning.
When you hear the words "federal bailout," most people think about big banks, big auto companies, AIG, or Fannie and Freddie. Yet another debt crisis is brewing and it is not receiving any attention from the mainstream media: student loans at for-profit schools. WSJ reports that candidates for associates degrees at for-profit schools are twice as likely to take out loans and their debt is nearly twice as high as candidates for these degrees at nonprofit and public schools. Many for-profits receive more than 80% of their revenue from federal loans.
The Department of Education is considering setting a minimal loan repayment rate for schools, perhaps around 45%. Some big players could be in big trouble if this ends up being the rule; Capella has a repayment rate of 40%, Kaplan 28%, Strayer 25%, and Phoenix is right at 44%. Of course we all know who is on the hook for the portion of the federal loans that the students do not repay.
To their credit, the for-profits have developed a market by making higher education more accessible to the public at large with their decentralized campuses and online courses. Established institutions of higher education could learn from the entrepreneurial approach of some of these schools. NC State is currently exploring ways to make its MBA program more accessible.
Regulation can play a useful role in this situation, especially rules that require full disclosure of data on graduation, student placement and loan repayment rates. This would allow students to better decide for themselves what opportunities are best for them.
Not just a lyric from the Who -- now students have a chance to make their own hedging strategies in the classroom by placing online bets on their grades. Ultrinsic.com allows students to wager on their GPA for the semester. The founders, according to WSJ, want to encourage students to work harder. But students also can bet against themselves. In any case, Ultrinsic gives students the chance to always be happy for one reason or another when final grades come out.
It will be interesting to see how this plays out. Students are likely to initially have more data about their odds of getting an A in a particular course than Ultrinsic's algorithms. They know who the easiest professors are AND they know which subjects they are best at. However, like any racetrack or casino, Ultrinsic should set the odds at such a level that the house wins way more than it loses. To paraphrase Harry Callahan, "Do I feel lucky? Well, do ya?"
Steve Allen is Associate Dean for Graduate Programs and Research in the College of Management at NC State University. He has appointments in the Department of Economics as well as the Department of Management, Innovation, and Entrepreneurship. Steve also is a Research Associate of the National Bureau of Economic Research, a non-profit research organization located in Cambridge, Mass.