Macro Roundup

New York Fed looks at the impact of tariffs on US domestic prices, unsurprisingly finds effect relatively minor overall, ~ 33 bps.

"...back of the envelope calculation using the regression coefficients and the actual changes in tariffs is still informative—they suggest an effect on aggregateppI of around a third of a percentage point. The correlations between the overallppI and CPI suggest a pass-through that yields CPI effects of similar magnitude to theppI effects. In sum, our analysis suggests that that producer and consumer prices are about a third of a percent higher in 2018 as a result of higher import tariffs...."

Mary Amiti, Sebastian Heise, and Noah Kwicklis, "The Impact of Import Tariffs on U.S. Domestic Prices," Federal Reserve Bank of New York, January 4, 2019, https://libertystreeteconomics.newyorkfed.org/2019/01/the-impact-of-import-tariffs-on-us-domestic-prices.html

"....we found that Hispanic workers are assigned in higher proportions to lower-skill occupations. To explain these findings,we argue that the education of Hispanic workers lags behind that of non-Hispanic workers, so the observed pattern is consistent with recent assignment models, in which workers choose occupations on the basis of their comparative advantage....The data suggest that the observed disadvantages of Hispanic workers in the U.S. labor markets do not seem to be the result of labor market frictions, e.g., sheer discrimination or lack of information. Once we control for education, age and gender differences, the Hispanic/non-Hispanic gaps mostly disappear. Instead, the factor holding back Hispanic workers in the U.S. seems to be their educational attainment.To be sure, progress has been made there, but the Hispanic population is still lagging behind the rest of workers. Regardless of the reason why Hispanics remain behind, the aggregate productivity of the country would improve if that source of talent and skills is fully developed and exploited..... we found that women have advanced at a faster pace than men have. The patterns for Hispanic females are in line with the findings for all the workers in general...."
Alexander Monge-Naranjo and Juan Ignacio Vizcaino, "Hispanics and Their Contribution to America’s Human Capital," Federal Reserve Bank of St. Louis, 2018, https://www.stlouisfed.org/publications/regional-economist/second-quarter-2018/hispanics-contribution-human-capital

New paper finds that the decline in LFP in prime age men is in large part (20-40%) from "in and out" men who pop in and out of the labor force for periods of two years, as opposed to dropouts. these men are largely capable in that there absence from labor force doesn't effect their lifetime earnings, implies it's largely a function of personal preference, "....While out of the labor force, in-and-outs replace time spent working with leisure activities, primarily watching television. In-and-outs do not spend much more time on child care, care for adults, educational activities, or job search during these breaks...."

John Coglianese, "The Rise of In-and-Outs: Declining Labor Force Participation of Prime Age Men," American Economic Association, January 2019, https://www.aeaweb.org/conference/2019/preliminary/608

".....This paper documents that much of the decline in labor force participation of U.S. prime age men comes from “in-and-outs”—who I define as men who temporarily leave the labor force. Individuals moving in and out of the labor force have been an understudied margin of labor supplybut account for 20-40% of the decline in participation between 1984 and 2011. In-and-outs are distinct from unemployed individuals, experiencing no loss of future income as a result of their time out of the labor force, and represent a distinct margin of labor supply from long-term labor force dropouts. Examining explanations for the rise of in-and-outs,I find little evidence to suggest that changes in labor demand are responsible.... In 1960, more than 97% of American men between the ages of 25 and 54 were either employed or actively looking for work. By 2015, this rate had fallen to 88%, representing nearly 5.5 million fewer prime age workers in the labor force at any point in time.... document that participation has changed along an understudied margin of labor supply. I find that “in-and-outs”—men who temporarily leave the labor force—represent a growing fraction of prime age men across multiple data sources and are responsible for 20-40% of the decline in the participation rate between 1984 and 2011. In-and-outs take short, infrequent breaks out of the labor force in between jobs, but they are otherwise continuously attached to the labor force. Leading explanations for the growing share of permanent labor force dropouts, such as disability, do not apply to in-and-outs. Additionally, evidence indicates that the rise of in-and-outs does not result from a decline in labor demand for prime age men. Together, these facts paint a different picture of declining labor supply among prime age men than documented previously..... show that the rise of in-and-outs is a robust phenomenon observed over the last several decades in a number of different longitudinal data sources. In the Survey of Income and Program Participation (SIPP), the share of men who are out of the labor force in any given month rose 5.3 p.p. from 1984 to 2011, with between 1.3 and 2.0 p.p. of this increase coming from nonparticipation spells lasting less than two years. Similar increases in temporary nonparticipation are evident in other longitudinal datasets, including administrative earnings records. Additionally, retrospective data sources inaccurately estimate the number of in-and-outs, as measurement error in retrospective collection is growing over time, possibly due to recall problems or increased rounding by respondents. After returning to the labor force, most in-and-outs are highly attached to the workforce over the subsequent decade.... The rise of in-and-outs appears to be a distinct margin of labor supply from changes in permanent dropouts. The two groups cite different reasons for leaving the labor force, report different qualities of life, and show up in different regions. While some in-andouts could turn into dropouts, the distinctions between these two groups make it more natural to treat them as separate components of the participation decline, with separate explanations, rather than intertwined aspects of the same phenomenon. Additionally, some of the most common explanations that have been put forward for the growth of permanent dropouts, such as disability insurance or incarceration, cannot explain the rise of in-and-outs. In-and-outs do not represent men switching between market-sector work and home production. While out of the labor force, in-and-outs replace time spent working with leisure activities, primarily watching television. In-and-outs do not spend much more time on child care, care for adults, educational activities, or job search during these breaks..... I find that changes in men’s market opportunities can explain little of the rise of in-and-outs.... The rise of in-and-outs forms a different picture of declining labor supply than the common view of men permanently withdrawn from the labor force. In-and-outs are highly attached to the labor force, work typical jobs, and are only notable in that they take brief breaks out of the labor force. I have presented evidence that the increasing prevalence of these breaks does not reflect a change in labor demand. Instead, the rise of in-and-outs may be due to changes in the desired amount of labor supply among prime age men in the US. Since in-and-outs’ breaks are typically short and infrequent, as well as incurring no permanent costs, the rise of in-and-outs likely has had a minimal effect on the inequality of lifetime incomes among men. In contrast, the growth of permanent dropouts over the last several decades, responsible for the other two-thirds of the decline in participation since 1977, likely raised lifetime income inequality substantially. Dropouts not only forgo years of income while out of the labor force but may also experience lower wages if they return to the labor force, compounding the increase in inequality. The differences in consequences between changes along these two margins illustrates the importance of separating in-and-outs from dropouts when studying changes in labor supply....."

The Editorial Board, "The Latest Front Against Civil Rights,"New York Times, January 4, 2019, https://www.nytimes.com/2019/01/04/opinion/disparate-impact-discrimination-trump.html

The law of “disparate impact” isn’t broken. There’s no need for Donald Trump to rewrite it.

Reaffirming that “much progress remains to be made … in moving the nation toward a more integrated society,” Justice Anthony Kennedy wrote in a 5-4 Supreme Court decision in 2015 that it was appropriate for the Fair Housing Act of 1968 to let discrimination be measured by its “disparate impact” on minorities even if there was not proof of intentional discrimination.

The reason, as he noted, is that discrimination doesn’t just happen overtly, that governments and private actors sometimes take actions that fall hardest — or have a disparate impact — on people of color or other groups.

But the Trump administration, which has already rolled back Justice Department oversight of police departments and Education Department protections for transgender students, may be targeting the principle of disparate impact in its latest effort to undermine civil rights enforcement, according to a report in The Washington Post.

Of course, some trial balloons floated out of the Trump administration vanish into the ether without becoming policy. May this be one of them. The reported changes would be a major shift in the way the executive branch has enforced civil rights laws for the past few decades.

Federal voting rights and employment statutes, as well as the Fair Housing Act, recognize the use of disparate impact to find discrimination in those areas, and Donald Trump would need Congress to rewrite such laws if he wants to do anything about that.

But regulations and what the administration likes to call “sub-regulatory guidance” that accept the use of disparate impact may be changed or scrapped by administrative action — as Betsy DeVos, the secretary of education, did last month when she did away with school discipline guidelines the Obama administration issued to curb the disproportionate punishment of black and brown schoolchildren.

In a report published ahead of that decision, the Education Department said disparate impact “may lead schools to adopt racial quotas or proportionality requirements.”

This same attitude is likely what drove the Department of Housing and Urban Development, under Secretary Ben Carson, to reconsider a 2013 rule that set up a standard for how to impose liability for housing practices that had a disparate impact on minorities. The rule revision is still pending, but in 2017, the Treasury Department told HUD that disparate impact assessments could be illegal and disrupt the insurance industry.

What the Trump administration is doing is nothing new. Republicans and conservative legal theorists have long set their sights on the disparate impact principle, claiming that the only true evil that needs to be rooted out under the law is intentional discrimination. To the Reagan Justice Department, disparate impact was a “rhetorical misappropriation” of the word “discrimination” — a “contrived theory” that only perpetuates injustice and inequality.

In reality, discrimination is often subtle and systemic, and Congress and the courts over time have recognized that by bolstering, not weakening, the use of disparate impact in a broad spectrum of civil rights protections.

Justice Kennedy has been replaced by Justice Brett Kavanaugh, a more doctrinaire conservative. Given the court’s increasing disregard for precedent, the 2015 decision that Justice Kennedy wrote may not last long.

As the nation continues its long march toward equality, it would be outrageous to destroy such an important means of advancement — one the civil rights bar still depends on to make its case in court.

“Marriott ROA 2006-2020,” Macrotrends, Accessed May 15, 2020, https://www.macrotrends.net/stocks/charts/MAR/marriott/roa