Macro Roundup

“…On average, 53% of Americans aged over 65 spend more than eight hours of waking time on their own every day, according to my analysis of data from the American Time Use Survey. The trend remains unchanged for people over 60. But compared with a decade ago, the rise in the number of young people who spend more than eight hours on their own is alarming. Time on your own is one thing; feeling lonely is quite another. And young people seem worse affected by the latter. A March 2022 ONS survey found that 40% of women aged 16 to 29 in the UK report “feeling lonely often, always or some of the time,” compared with 22% of women over 70. For men, some 22% of this age group report feeling lonely, compared with 13% of the over-70s. And, of course, the impact of Covid lockdowns cannot be ignored…”

Federica Cocco, “Are we ready for the approaching loneliness epidemic?” Financial Times, November 24, 2022, https://www.ft.com/content/c3aef690-b5a5-4f0d-9da5-2bf4c560c4f4

Are we ready for the approaching loneliness epidemic?

At most points in human history, being alone meant mortal danger and was to be avoided at all costs. It is only in recent decades that our risky experiment with loneliness has become almost mainstream.

A high incidence of single households is now a mark of a wealthy society. This is partly a consequence of avoiding or delaying marriage and childbirth, and of single housing becoming more affordable, but it has serious implications.

When we live alone we are more likely to engage in unhealthy behaviour, such as smoking or eating badly, because no one else can see. Studies show that people who live by themselves are more likely to suffer from alcoholism, high blood pressure, insomnia and weak immune systems.

In developed countries the share of people who report having friends or relatives they can count on has been steadily dropping over the past 15 years.

Older people are consistently worse affected: on average 53 per cent of Americans aged over 65 spend more than eight hours of waking time on their own every day according to my analysis of data from the American Time Use Survey.

The trend remains unchanged for people over 60. But compared with a decade ago, the rise in the number of young people who spend more than eight hours on their own is alarming.

Time on your own is one thing, feeling lonely is quite another. And young people seem worse affected by the latter. A March 2022 ONS survey found that 40 per cent of women aged 16 to 29 in the UK report “feeling lonely often, always or some of the time”, compared with 22 per cent of women over 70. For men, some 22 per cent of this age group report feeling lonely, compared with 13 per cent of the over-70s. And of course, the impact of Covid lockdowns cannot be ignored.

Aside from the effects this has on individual health, there is an impact on societies, too. Psychologists Roy Baumeister and Jean Twenge found evidence that feelings of social exclusion can make people more fearful and aggressive: with few superficial interactions our sense of reality can become distorted. Another study found a link with violent extremism. Hannah Arendt painted loneliness as fertile ground for terror in her 1951 classic The Origins of Totalitarianism.

A number of countries, including the UK, Japan, Denmark and Australia, are trying to tackle loneliness. Those searching for solutions might want to visit the small English town of Frome to see its innovative approach to social isolation.

The town’s GP practice employs staff who reach out to lonely people in the area. There are talking cafés and “talking benches” where these NHS employees are available for a chat. Taxi drivers are given information on services for vulnerable customers.

The data makes the argument: from 2013 when the initiative started to 2017, emergency hospital admissions in the town fell 14 per cent. During the same period, they rose 29 per cent across the rest of the county.

China’s trade surplus has continued to grow since the pandemic, with manufacturing exports ~ 14% of GDP. The trade surplus is poised to grow, as China’s bill for imported commodities falls “…The popular deglobalization narrative simply isn’t in China’s trade data — manufacturing exports are up massively, and that has pushed the surplus up even as China’s commodity import bill reached record levels (the commodity bill is poised to fall now, by the way.) China’s currency is (still) managed (in my judgment, even if the PBOC’s reported reserves don’t change,) so movements reflect the interaction of market pressure and political decisions. But at some level, a weaker CNY, even with a massive trade surplus, reflects a judgment by China’s policymakers that they need to sustain the rise in exports (relative to China’s GDP) even as global demand for manufactures drops (to offset China’s domestic weakness.)..”

Brad Setser, “Setser On China’s Trade Surplus,” @Brad_Setser, November 27, 2022, https://twitter.com/Brad_Setser/status/1597000480760410114

There are all sorts of reasons why China’s yuan is under pressure to depreciate right now – notably, China’s domestic economic troubles and the difficulties created by zero COVID. But Robin is absolutely right to note the scale of China’s trade surplus. It really is massive. For one measure of the underlying surplus, look at China’s surplus in manufactures in dollars … (in the customs data, using the goods current account numbers actually scales everything down a lot for fairly inexplicable reasons)

The popular deglobalization narrative simply isn’t in China’s trade data — manufacturing exports are up massively, and that has pushed the surplus up even as China’s commodity import bill reached record levels (the commodity bill is poised to fall now by the way)

China’s currency is (still) managed (in my judgement, even if the PBOC’s reported reserves don’t change) so movements reflect the interaction of market pressure and political decisions. But at some level, a weaker CNY even with a massive trade surplus reflects a judgement by China’s policy makers that they need to sustain the rise in exports (relative to China’s GDP) even as global demand for manufactures drops (to offset China’s own domestic weakness)

p.s. one reason why China’s trade surplus hasn’t gotten as much attention as its scale warrants is that it hasn’t been reflected in the current account (even goods in the BoP is well below customs). I am starting to suspect the reported current account data is managed too!

“…“We find,” they wrote in the abstract of their paper, “that this one test score explains all of the black-white wage gap for young women and much of the gap for young men.” With their approach, antiblack bias played no role in the divergent wages among women; a black woman with the same qualifications as a white woman made slightly more money. And it accounted for at most 29% of the racial difference among men, with 71% traceable to disparate performance on the AFQT. The AFQT itself was evaluated by the Pentagon, which found that black and white military recruits with similar AFQT scores performed similarly on the job—indicating no racial bias….”

Roland Fryer, "Disparity Doesn’t Necessarily Imply Racism,"Wall Street Journal, November 25, 2022, https://www.wsj.com/articles/disparity-doesnt-necessarily-imply-racism-skills-wages-black-white-afqt-research-discrimination-jim-crow-grandmother-11669383926

Disparity Doesn’t Necessarily Imply Racism

I was raised, in part, by my paternal grandmother—a phenomenal black woman born in 1925 who came of age during Jim Crow, attended Bethune-Cookman University in the early 1940s, and experienced both the promise and limitations of the civil-rights era when integrating schools in Florida in 1969. She did her best to teach sixth-graders subject-verb agreement minutes after being spat on by their parents. Her life’s journey provided unlimited content as we sat together for nearly three decades, stuck to the plastic slipcovers on her sofa, playing cards, drinking sweet tea, and talking uninhibitedly about race in America.

The first discussion I can remember happened in 1988, when I was 11, after a visit to McDonald’s. After ordering, my grandmother paid with a crisp $20 bill from her pocketbook, and the cashier put the change directly on the counter. When we got to the parking lot, she was incensed. “You see that? White woman didn’t want to touch me.” I had noticed it too, but thought the cashier was being nice, trying to avoid passing on her own germs.

My grandmother—no doubt based in part on her experiences—saw racism everywhere, in every inequity, every statistic. Racial differences in wages? Racism. Racial differences in educational achievement? Racism. Racial differences in teen birth rates? Racism. This sort of casual empiricism—which has crept back into mainstream media and other institutions—was a competitive sport among my family and friends. Did you see the way that white woman tightened her grip on her purse, because I was behind her? Does this guy follow everyone around the store?

A decade after the McDonald’s incident, in graduate school, I read a 1995 paper titled “The Role of Premarket Factors in Black-White Wage Differences.” Using a nationally representative sample of more than 12,000 14- to 17-year-olds from 1979, Derek A. Neal and William R. Johnson estimated that blacks earned between 35% to 45% less than whites on average.

They examined how much of the wage gap could be attributed to present-day discrimination in the workplace versus differences in skill as measured by the Armed Forces Qualification Test, a cousin of the ACT and SAT. Importantly, they weren’t trying to measure the effect of America’s racist history running back to the early 17th century, when the first African slaves were brought to work the tobacco farms of Virginia, only the extent to which blacks earn lower incomes because employers today make racially discriminatory decisions. Nor did they focus on prejudice more broadly: They ignored that my grandmother was spat on in the parking lot at work and concentrated on whether she was treated fairly once she entered the building.

“We find,” they wrote in the abstract of their paper, “that this one test score explains all of the black-white wage gap for young women and much of the gap for young men.” With their approach, antiblack bias played no role in the divergent wages among women; a black woman with the same qualifications as a white woman made slightly more money. And it accounted for at most 29% of the racial difference among men, with 71% traceable to disparate performance on the AFQT. The AFQT itself was evaluated by the Pentagon, which found that black and white military recruits with similar AFQT scores performed similarly on the job—indicating no racial bias.

The paper felt like an attack on what I knew. An assault on all those conversations with my grandmother, which taught me that racism—present-tense racism—dictated black-white inequality. I told myself that Messrs. Neal and Johnson, both of whom were white, were probably bigots, and I set out on a mission to disprove their work.

I vented about my battle with Messrs. Neal and Johnson to a fellow graduate student at Penn State, a white guy from the cornfields of Southern Illinois. He was no more at home at a top-25 economics doctoral program than I was, and we spent a fair amount of time together during our first year, staring at Euler equations in our favorite textbook, “Recursive Methods in Economic Dynamics.”

I told him I was sure discrimination was a bigger factor than Messrs. Neal and Johnson were letting on, but “I just can’t get this data to cooperate.” He asked why I was so convinced, and I erupted in a rant about the prevalence of racism and recognizing bigots on sight. My grandmother would’ve nodded rhythmically along. My friend responded with a burst of loud, sharp laughter in my face.

He pointed out how far I was straying from our Euler equations. How on any subject other than race, I would have never given in to such sloppy thinking. The double identity—a classically trained economist taught to tease out causal relationships and a black Southern boy taught that discrimination is ubiquitous—had lived seamlessly inside me until that moment. Messrs. Neal and Johnson, as it turns out, aren’t bigots, and their conclusions have stood the test of time and my attempts to disprove them. I extended their analysis to unemployment, teen pregnancy, incarceration and other outcomes—all of which follow the same pattern. Moreover, the relationship between skills and wages has been confirmed by study after study, even when using different data and methods. Kevin Lang, an economist at Boston University, corrects important issues in Messrs. Neal and Johnson’s work but finds the same relationship between AFQT scores and wages. Taken together, an honest review of the evidence suggests that current racial inequities are more a result of differences in skill than differences in treatment of those with the same skill.

I write this with some degree of trepidation, in part because I still have my grandmother in my ear and in part because I am keenly aware of the harm in underestimating bias. But there is also a cost to overemphasizing its impact. A black kid who believes he will face daunting societal obstacles is likely to underinvest in trying to climb society’s rungs. Every black student in the country needs to know that his return on investment in education is, if anything, higher than for white students.

The solution is neither to stop fighting biased behavior nor to curb honest inquiry about race in America. We shouldn’t stop searching for and penalizing discriminatory employers, or trying to reduce racial differences in police brutality, or estimating whether the value of a home appraisal depends on the race of the homeowner, or reducing bias in bail decisions by using artificial intelligence. I could go on, like the conversations stuck to those slipcovers. The solution isn’t to look away from discrimination. It does exist. But we also can’t point at every gap in outcomes and instantly conclude it’s racism. Prejudice must be measured rigorously. Statistically. Disparity doesn’t necessarily imply racism. It may feel omnipresent, but it isn’t all-powerful. Skills matter most.

Fryer“Disparity doesn’t necessarily imply racism. It may feel omnipresent, but it isn’t all-powerful. Skills matter most. ”

There has been a sharp uptick in the number of men working as stay-at-home parents. Almost 5% of stay-at-home parents are men, compared to about 1% in the mid-1990s.

“…[The Census Bureau defines stay-at-home males] as husbands in opposite-sex marriages with children under 15 who specifically say they’re not working so that they can care for family and whose wives are either working or looking for work. Under those terms, men accounted this year for 5% of the one-fifth of US families with a stay-at-home parent, up from about 1% in the mid-’90s and representing 239,000 fathers. According to a broader analysis by the Pew Research Center—which expands the pool to include any father of a child under 18 who hasn’t been working, regardless of reason or marital status, and also incorporates men in same-sex relationships—the number of stay-at-home dads had swelled to about 2.1M by 2021, equal to 18% of all stay-at-home parents, up from 10% in 1989….”

Jordan Yadoo, “More Men Are Staying Out of the Workforce to Care for Kids,” Bloomberg, November 29, 2022, https://www.bloomberg.com/news/articles/2022-11-29/more-men-ditch-jobs-to-become-stay-at-home-dads-and-care-for-kids?sref=U3dOGIDF

More Men Are Staying Out of the Workforce to Care for Kids

For Ryan Burdick, the incessant questions about when he plans to go back to work have gotten old. So has the “Mr. Mom” label.

Still, the 38-year-old father of two says he has no regrets about his decision 10 years ago to step away from his burgeoning career as a commercial pilot to care for his children full time. “My joke forever has been, ‘I’m retired,’ when people ask me what I do,” says Burdick, whose wife, Stephanie, 36, is a physician at a hospital in Grand Rapids, Michigan.

“I still get emails all the time from companies trying to get me to come back and fly,” he says, adding that while he occasionally misses the work, he doesn’t plan on returning anytime soon. Sons Walter, 10, and George, 7, are his focus.

Burdick’s wife was working as a resident when the couple realized that the nanny they’d just hired couldn’t cope with the demands of their on-call jobs. After reviewing other child-care options, the couple decided it would make more sense for Ryan to assume care and household responsibilities. The setup has enabled Stephanie to advance much faster in her profession, which has eased the financial strain of living on one income. “My career potential is much higher because he stays home,” she says.

The slow slide in the labor force participation rate of American men in their prime working years—defined by the Bureau of Labor Statistics as ages 25 to 54—has perplexed economists and policymakers, who have attributed the decline to a number of factors including shrinking payrolls in manufacturing and other traditionally male-dominated sectors, along with lagging educational attainment by men.

Some 88.5% of prime-age men were either working or looking for work last month. That’s down more than 9 percentage points from around the time the BLS began tracking the data in the 1950s. Meanwhile, the rate of workforce engagement for women has more than doubled, from about one-third of the population back then to 77% in the late 1990s; it has since leveled out. The phenomenon has been extensively chronicled in books with such fatalistic titles as The End of Men and The Boy Crisis.

Men dropping out of the workforce to assume caregiving responsibilities have played a comparatively small role in the overall trend, but the numbers have been climbing and, by at least one measure, may have hit a record last year.

Often-cited government data may be underestimating the size of the cohort, because the census defines the category narrowly, as husbands in opposite-sex marriages with children under 15 who specifically say they’re not working so that they can care for family, and whose wives are either working or looking for work. Under those terms, men accounted this year for 5% of the one-fifth of US families with a stay-at-home parent, up from about 1% in the mid-’90s and representing 239,000 fathers.

According to a broader analysis by the Pew Research Center—which expands the pool to include any father of a child under 18 who hasn’t been working, regardless of reason or marital status, and also incorporates men in same-sex relationships—the number of stay-at-home dads had swelled to about 2.1 million by 2021, equal to 18% of all stay-at-home parents, up from 10% in 1989.

In the Pew study, 23% said the reason they had exited the labor force was to care for children, as opposed to job loss (13%), disability (34%), or being in school or retired (20%). That’s up from just 4% who cited caregiving in 1989, according to Pew.

Some men transition into full-time parenting after being laid off or becoming disabled, and may cite those instead of caregiving as reasons they aren’t working, because of lingering societal stigma, says Arielle Kuperberg, an associate professor of sociology and gender studies at the University of North Carolina at Greensboro who’s conducted her own review of federal statistics.

Kuperberg found a record 15.2% of fathers of children under 18 were not working last year, up from 14% in 2019 and less than 8% in 1980. Many men may be “functionally stay-at-home parents, even though that’s not the reason they would give on a survey,” she says.

Cultural norms on masculinity, work and family have been slow to evolve, according to Richard Reeves, the author of the new book Of Boys and Men: Why the Modern Male Is Struggling, Why It Matters, and What to Do about It. “We’ve recast motherhood and what it means to be a mom in such a way that moms can be breadwinners, too, now,” says Reeves, a senior fellow at the Brookings Institution. “But we haven’t recast fatherhood in such a way as to make it easier for men, both culturally and practically and economically, to become more hands-on fathers.”

Burdick concurs. “The world isn’t really built for stay-at-home dads,” he says, noting, among other impediments, the lack of diaper-changing stations in men’s bathrooms. School administrators routinely call his wife with questions and in emergencies, even though he’s listed as the primary contact.

The large-scale disruption in families’ work and school schedules caused by the pandemic forced a new division of labor in many households. Men 18 years and older spent an average of 1.91 hours a day caring for and helping household members in 2021, according to BLS data. That compares with 2.39 hours for women, but is up from 1.62 hours in 2019 and 1.67 hours in 2003, when the BLS began tracking the figures. It’s too soon to tell whether this represents a more permanent shift in gender roles.

In that regard, a more important driver of change has been the divergence in the evolution of earnings dynamics for men and women. Almost a third of women who were married or co-habiting were contributing at least half of the couple’s total earnings in 2017, up from 25% in 2000 and just 13% in 1980, according to a Pew report.

“All those years of higher-education enrollments going up for women have now started to bear fruit,” says Jennifer Glass, a sociology professor at the University of Texas at Austin who published a report last year on the increase in female breadwinners. “They have jobs that are more stable, that provide health insurance, that are unlikely to go away during a recession.”

She notes that, historically, women who were the main source of household income were mainly unmarried, divorced or widowed. In more recent decades, the increase in breadwinning mothers has been among partnered women. Their in-demand skills in fields such as health care and education have boosted their earning power, which contrasts with the “slide in inflation-adjusted earnings” among their male counterparts, a trend attributable in part to downsizing amid increased corporate mergers and the growth of contract work.

This disparity in earning potential is what helped push Jason Mitchell to take on the role of full-time parent in 2014. At the time, Mitchell was an adjunct professor of English composition at Appalachian State University in Boone, North Carolina, while his wife had a Ph.D. and a better-paid tenure-track position in information systems at the university’s business school.

The couple juggled their teaching schedules as best they could after the birth of their first child. That no longer worked with the arrival of baby No. 2. “We were sort of like two ships passing in the night,” recalls Mitchell, 40, who now cares for a brood of four, ages 4 to 11. “Honestly, my English job was not going to be sufficient to cover child-care costs for more than one kid.”

The pandemic drove up America’s already high child-care costs by causing many day-care centers to close while also triggering an exodus of staff seeking higher-paying jobs. In a recent survey, 58% of families said they would spend upward of $10,000 on child care this year, compared with the 45% who said they’d spent at least that much in 2019.

Even once his youngest starts going to school full time, Mitchell says he doesn’t see himself returning to work, “only because there’s so much to do” managing the home and coordinating the schedules of four children.

He considers himself lucky. “I thought I would miss teaching, and I do sometimes,” he says. “But it sort of pales in comparison to being able to watch the children grow and spend as much time with them as I get to.”

Of course most American families don’t have the luxury of living on a single income. Kristopher Park, 34, resigned last year from his job with the state of Delaware as an intake processor for food benefits and other government-assistance programs upon realizing, after comparing options, that his roughly $1,000 biweekly paychecks wouldn’t cover the $2,500 monthly cost of day care for his sons, now 5 and 2.

It made more sense for his wife, Nicole, 32, to accept a $50,000-a-year job as an accountant with the Wilmington Housing Authority and to care for the kids (their third, a daughter, was born in October) than route all of his earnings to a nanny or day care, he says, lamenting the lack of affordable choices.

Although he’s committed to full-time caregiving for the time being, Park uses his spare hours to develop his skills in computer programming and 3D modeling, hoping this will open the doors to better-paying jobs that would make working outside the home worthwhile. “The reality is, with her income alone, we have basically no buffer in the event of an emergency,” he says.

The rise in child-care expenses mirrors an increase in elder-care costs. Out-of-pocket expenses for elders increased 41% from 2009 to 2019. The number of elder-care workers, like the number of child-care providers, remains stubbornly below its pre-pandemic level.

The dearth of affordable options is what motivated Mario Matthews to move in 2020 from Los Angeles to his native Oklahoma City to care for his 60-year-old mother, Kathy Grant, who’d been diagnosed two years before with early onset dementia.

“Some days she remembers her name, other days she doesn’t,” says Matthews, 42, who left his job as a server at celebrity hotspots such as Beauty & Essex and Soho House after Grant’s waning independence and depleted savings effectively pushed her out of the $5,000-a-month assisted living facility where she’d been residing.

Grant can no longer eat or get dressed without assistance. She speaks in patterns, rather than sentences, says Matthews, and is now gripped by a fear of falling down, even when moving about her home. “I have seen it in her eyes,” he says of her anxiety, noting that she now requires sedation for routine checkups at the dentist and eye doctor.

Men accounted for almost 39% of family-care providers in 2020, up from 27% in 1997, according to AARP and the National Alliance for Caregiving. “We see more men are self-identifying as caregivers than they did before, perhaps underscoring the culture shift that is taking place around caregiving, who provides it and who is comfortable talking about it,” says Fawn Cothran, a research director at the NAC.

Some 9% of caregivers of people with Alzheimer’s or other forms of dementia gave up working entirely last year, figures from the Alzheimer’s Association and the NAC show. Some 18% went from full- to part-time work or cut back hours.

Matthews considered looking for a 9-5 job after he moved to Oklahoma City, but quickly determined that his wages would go entirely to cover the cost of a nurse. He says that in many ways he prefers to look after his mother himself than having to screen potential caregivers. Although Kathy has lost many of her abilities, she responds positively to music and lights up when Matthews dances around or makes funny faces. “It is very fun to see her laugh,” he says.

For some families, caregiving responsibilities shift, with men and women trading places and dipping in and out of the workforce for different stretches of time.

About 70% of American mothers can expect to be the primary breadwinner in their household for at least one year before their first child turns 18, according to a recent study by Glass, the professor in Austin. The average time such mothers can expect to spend as primary earners is about six years, her research showed.

Having one parent at home was always a priority for Andrew Molitor and Meg Bartelt, who chose the town of Bellingham, Washington, in part for its more manageable expenses. “The cost of living is not low, but it’s not San Francisco and it’s not Brooklyn,” says Andrew, 56, who left his $150,000 a year software engineering job at Hewlett-Packard in 2016 to swap caregiving responsibilities with Meg, who was eager to start her own financial-planning firm after years of dipping in and out of part-time work. “If you have one reasonably good job, and you happen to have a cushion of cash to fall back on like we did, then you can actually make this work. You can have that kind of 1950s Leave It to Beaver lifestyle here.”

Leave It to Beaver has a modern twist, with Andrew doing the dishes and tending to daughters Alice, 13, and Beatrice, 9, while Meg works out of a detached office at the back of their property. Marriage counseling, which the couple began before swapping roles, has been key to their success, says Meg: “We went, not because we were on the brink of divorce, but because we wanted to be able to communicate more effectively, comfortably and lovingly with one another.”

Andrew describes their decision-making and child rearing as “a steady process of negotiation and renegotiation,” and says he has no misgivings about leaving his corporate job behind, despite some challenges at the beginning. “After about two years of more or less continual meltdowns, hysteria and freak-out, I kind of got the hang of it.”