The public benefits of strikers and tweeters

Coronavirus? There’s NOT an app for that we learnt today. And unfortunately, there’s no quick fix for the unemployment spreading across Britain either. 600,000 fewer people on payrolls in just two months was the headline from this week’s depressing job news, while we’ve now seen the numbers on Universal Credit rise from 3 to 5.3 million since March.

Of course, as today’s retail sales figures (headline = 12 per cent growth in May) show, we should expect an initial rapid bounce back from the depths of the economic shutdown. But if you fall off a massive cliff, the fact that you bounce when you hit the bottom isn’t the issue – it’s whether you come back far enough to reach the top.

Undoing the pandemic’s damage to our labour market is going to be the economic policy challenge of the early 2020s, and it’s a task requiring a full spectrum response sooner rather than later. We’re talking job guarantees, job creation, wage subsidies, work search support, training and broad-based fiscal stimulus.

Those of you working on labour market policy should get on with the above. For everyone else here’s some reading for the weekend. Have a good one.

Torsten
Chief Executive
Resolution Foundation

Home work(ing). We’ve shown before that pre-pandemic low earners were much less likely to be able to work from home. But what has actually happened since Covid stuck? A new paper digs into the rapid evolution of home working, finding that on average we can do around 40 per cent of our work tasks from home. It confirms what many of you have already experienced – more work can be done from home than we thought. The increase is mainly for those jobs where there was already quite a lot of home working possible, but there is a general increase too. Pre-crisis most surveys found up to half of occupations had zero possibility of home working – but the authors now find that there is no occupation where the average worker can do no tasks from home. But there is still big variation, even within occupations. Among “office and administrative support” workers, some are able to do a lot from home but there is another big group able to do very little. This field of study is going to matter a lot for the economics of the next few years.

Tweeting scientists. Twitter is a great way for experts to reach wider audiences beyond their own field of expertise – indeed we take tweeting (fairly) seriously as part of our charitable objective to inform public debates. But does Twitter make any difference to how widely research travels amongst other experts in any area? Yes is the answer from a fascinating paper exploring the potential for tweets to spread science. It examines 112 papers randomly chosen to be shared (or not shared) on Twitter by a group of surgeons with around 58,000 followers. Papers that were tweeted had four times more citations a year later. I’m loath to say this (it’s not clear the thing the 21^st century lacks is narcissism) but the good scientists out there need to get self-promoting.

Storm brewing. I mentioned the grim jobs data about the recent past. But what does the future hold? A thoughtful blog from Paul Gregg bravely takes up that question with some important insights and a warning: a storm’s coming. He rightly notes that the scale of employment losses relative to the GDP hit varies a lot between recessions – employment fell half as much as GDP in 2008 but 50 per cent more in the 1990s recession. Paul focuses on two reasons for these very different outcomes – the level of financial distress firms are in, and how labour intensive the sectors being hit hardest are. His conclusion on both counts isn’t perky: firm profits have been falling in recent years in the UK and it’s our most labour -intensive sectors that have been hit hardest this time around (hospitality/retail). The conclusion? Prepare for a rerun of the 80s or 90s recessions, not the relatively low unemployment hit of the financial crisis. We’ve got a major paper on the future of the labour market – and the necessary policy response – out in about ten days.

Growing Trust. Some cheering news to end on: more trusting societies see faster productivity growth. That’s the finding from Diane Coyle and the Bennett Institute for Public Policy. Looking across a set of European countries between 2002-2016, the paper builds on a growing discussion of the role of social capital in driving economic outcomes. Why might trust matter? Because it reduces the costs of economic transactions. In further good news the UK has a fair amount of this trust thing going on. Obviously we’re not up there with the ludicrously trusting/socially pressured Scandinavians, but we’re well up on most of the rest of Europe. The authors’ argument is simple: all of us that have been worrying about the productivity disaster of the last decade or so should spend more time focusing on how policy can improve social capital and trust in our society. We’d all live happier lives if we were more trusting, and it turns out we might lead richer ones too.

Chart of the Week

Tuesday’s official take on the labour market had good news – the headline unemployment rate is unchanged – and bad news – this doesn’t remotely reflect reality. One clear way of getting a view of what’s going on is to look at how many hours are being worked – a time series that reflects not only people losing their jobs, but those being furloughed and having their hours cut too. The picture is pretty stark. In April the number of hours worked fell 94.2 million – a drop of almost 9 per cent. This far surpasses the previous record fall of 3.9 per cent at the height of the financial crisis. As noted earlier, this will bounce back up as shops reopen, but the job of policy is to make sure it bounces right back up.