A winning woman, successful jocks and social media FOMO 13 October 2023 Torsten Bell Afternoon all, Conference season is done. South of border anyway. The punters will have taken away from it that the Government can’t get a train line built and Keir Starmer got glittered – which may not be bad for a man accused of not having enough glitz. And they’ll rightly recognise all of it pales into insignificance compared to the terrible news unfolding in the Middle East. TOTC wise we’ve got some celebrating to do – for Claudia Goldin’s Nobel Prize – and a COTW to give us pause for thought on whether our high minimum wage means it’s job done in terms of improving work for lower earners. Have a good weekend. Torsten Chief Executive Resolution Foundation TikTok trap. It’s free(ish) world, so the fact that millions of idiots us use social media must mean the products are giving us something valuable – as economists phrase it, they must be boosting our welfare. Otherwise we’d all just log out. But an interesting paper has a different take by recognising that the platforms have an effect on users *and* non-users. We all know about network effects – the more people already on a platform, the more appealing it is (and the harder it is for alternative platforms to compete). But the paper’s new point is that once a network has reached a certain point of ubiquity it can begin to have negative consequences for non-users – basically via social exclusion. The result can be that people are prompted to join, not because they enjoying using the platform, but because they enjoy being excluded from it even less. If the only thing worse than a terrible party is not being at the terrible party, then we all end up at a terrible party. The authors conclusion about Tiktok? For many, it’s a trap. Top tweeting. It’s important to be balanced. So for a “social media isn’t just rotting your brain” take read new research that finds promoting research on ex-Twitter/X has big effects on how influential academic papers are. Twitter activity gets you 20 per cent more citations, and mid-Covid, authors who were well known on the platform got a lot more attention than their co-authors. So Twitter does make a big difference to the reach of research – or did before Elon Musk turned it into a cesspit. Victorious varsity. We tell the kids not to worry if they’re not “cool” at school, for the nerds shall inherit the earth good jobs. But it turns out we lie. A new study digs into the career outcomes of athletes and non-athletes attending Ivy League colleges in America from 1970 to 2021. It finds jocks athletes are more likely to go into finance/business related careers, more likely to do an MBA (but not a PhD), attain more senior positions over their careers and earn 3.4 per cent more overall. Interestingly this divergence takes time to build – it only emerges five plus years after graduation, and grows as much as twenty-five years after university. The authors show this can’t all be put down to athletes’ socio-economic advantages (not enough of them play lacrosse…). Their uncontroversial conclusion is that non-academic human capital (social skills) plays a growing role through our careers. More controversially they suggest this maybe justifies admitting people to top universities on basis of athletic ability to develop this human capital. Which is nuts. What do they think Sunday league football is for? Congratulating Claudia. Earlier this week Claudia Goldin was awarded the Nobel Prize for economics, recognising her leading role of bringing gender into economics – particularly labour market economics. For a decent summary of her ludicrously broad work you can read the Royal Swedish Academy of Sciences go but Alice Evans has a punchier, chart filled version I’d focus on. What stands out is the combining of rigorous economics – and economic history – with a rare attention to questions of political and social change: for a flavour read Goldin’s latest paper, pleasingly published this week and even more pleasingly titled Why Women Won. It highlights the coming together of forces that made the decade between 1963 and 1973 central to progress on women’s rights. Her most relevant work for our future highlights the biggest barrier to closing the gender pay gap (after employment and education gaps have been shrunk/reversed respectively): the greediness of highest paying jobs – demanding very long, and specific, hours that mothers understandably opt out of. Sorting that is tomorrow’s job, today’s is congratulating Claudia. Spending savings. You’ll all remember one of the big pandemic stories was the surge in savings – even with Amazon existing it’s harder to spend when you’re locked in your house. The same thing happened across advanced economies, ranging from a 6.5 percentage points rise in the euro area to 10 percentage points in Canada (with Japan, the US and the UK in between). A new New York Fed blog shows that since then savings rates, while falling back, have largely remained above pre-pandemic levels in all these economies bar one: the US (which has a savings rate 2.5 percentage points down on its 2015-2019 average). Only the Yanks are spending down their pandemic savings (contributing to US GDP returning to its pre-pandemic trend). But it leaves a puzzle. Why aren’t Europeans running down their savings to deal with a massive energy price shock? Chart of the Week Nothing sorts out what you think more than writing it down. So prepping for a lecture on good work in Belfast on Monday has given me food for thought. For lower earners the last two decades have been transformational thanks to the minimum wage. As COTW shows, the wage floor has been rapidly increased – since the introduction of the National Living Wage in 2016 real pay growth has averaged 2.5 per cent a year at the bottom vs 0.6 per cent in the middle and falls at the top). So is it job done? No, COTW explains. Because even as the wage floor has risen, the job satisfaction of those with the lowest wages has fallen most (it’s hardly budged for everyone else – who traditionally had lower job satisfaction). One conclusion people might draw is that the higher minimum wage has resulted in firms making low earners’ jobs worse in other ways. I’d caution against this being the only conclusion though – partly because the job satisfaction fall is about the lowest monthly, not hourly, wages, covering part-time workers as much as those on the lowest hourly rate. And our research shows this is a lot to do with their work becoming more intense/stressful – with interactions with customers a key driver. Instead my conclusions are we should be cautious about claims that raising productivity in lower paying sectors (sometimes called the everyday economy) is the right path to economic growth – it might just mean cheaper prices for yuppies and more intense work for lower earners. More generally we need to celebrate wage rises but focus on new problems – from low security to weak progression prospects and high stress levels. The triumph of the minimum wage should be just the start.
