July 2023, Volume 29, Number 3
Labor, H-1B, Education
The US economy continued to add jobs in 2023 and the unemployment rate remained below four percent despite a rising labor force participation rate. Real wages declined as inflation exceeded wage increases, and many economists predicted a recession before the end of 2023.
The household survey used to generate the unemployment rate is based on interviews with 60,000 households, while the payroll survey used to estimate employment is based on responses from 122,000 employers with 42 million employees. The household survey includes both wage and salary employees and the self-employed.
Uber, which accounts for three-fourths of the US ride share market, aims to keep costs low for riders while keeping drivers independent and happy. Drivers want to see destinations before accepting riders so that they can determine if the trip will be worthwhile, but critics worry that the result could be riders unable to reach high-crime areas.
Some 13 million workers or 10 percent of the private sector workforce is employed in manufacturing. Many US factory jobs moved to lower wage countries between 1990 and 2020. After covid supply chain disruptions and automation, some factory jobs are returning to the US.
OpenAI launched ChatGPT in November 2022, which responds to questions with humanlike language fluency. AI can spread faster and cheaper than computers because it is mostly software that takes advantage of existing hardware. Some experts expect AI to displace up to half of administrative support workers and many of those who perform routine legal services such as reading, analyzing, and summarizing. Automation often generates higher returns to capital and lower returns to labor.
Past predictions of how many jobs would be lost to new technologies have proven to be wrong. Most US workers could have some of their tasks done by AI uncertain, but they may still have jobs. By changing the focus to automating tasks rather than eliminating jobs, researchers emphasize that most jobs involve multiple tasks, and that technology can make some of them easier, as when AI makes it faster to read X-rays accurately.
Many downtown office buildings are empty and may remain so as more businesses accept worker desires for hybrid work. Tech firms are among the most permissive in allowing employees to work remotely, helping to explain high vacancy rates in San Francisco, Seattle and San Jose. Some office buildings are selling for less than they cost to build.
H-1B. Employers requested 781,000 H-1B visas in FY24; 85,000 are available for profit-seeking employers, up from 484,000 requested for the FY23 lottery and 301,000 in FY22. USCIS found that 96,000 individuals accounted for 408,000 registrations because their names were submitted by multiple employers, suggesting efforts by employers to game the H-1B lottery and improve the chances of a particular individual obtaining a visa. USCIS is considering an increase in the registration fee from $10 to $215 per individual.
Education. The US Supreme Court ruled 6-3 in June 2023 against race-conscious affirmative action to favor particular applicants for admissions at universities that receive federal support. Affirmative action divides Americans. California voters rejected affirmative action in 1996, eight other states followed suit.
Voters rejected Prop 16 in 2020 to allow a return to affirmative action. California Blacks favored Prop 16, while Asians and whites rejected it; Hispanics were almost evenly divided.
K-12 schools remain cultural flashpoints on issues ranging from who can use which bathrooms to how to teach reading. For most of the 20th century, sound-it-out phonics was used to teach young children to read. However, a balanced literacy approach developed at elite universities had children guessing words from pictures. The US has over 10,000 school districts, so imposing a uniform curriculum is difficult.
Diversity, equity and inclusion are becoming flashpoints in corporations and educational institutions. DEI consultants often divide employees and students into villains and victims, and try to teach villains to change their behavior and victims to fight back. The result can be more divisiveness rather than togetherness.
The US continues to grapple with race and ethnicity. The Census defines Hispanics as persons “of Cuban, Mexican, Puerto Rican, South or Central American, or other Spanish culture or origin, regardless of race.” This raises questions such as how to treat Brazilians, who are of Portuguese rather than Spanish origin.
College students are shifting majors. The largest number of students, over 1.5 million, have business-related majors, followed by a million in health-related majors and 500,000 each in biological sciences, engineering, and computer sciences. The number of history and English majors has fallen to less than 100,000.
The share of US-born PhD economists whose parents had a graduate degree was 20 percent in 1970, and almost 70 percent in 2023. A seventh of parents who have college age children also have graduate degrees, and many of those who earn PhDs and are from families with resources seek academic jobs because they can afford to value creativity over money.
Taxes. Income taxes provide about 55 percent of US government revenue, and the 900,000 returns with incomes above $1 million receive a sixth of US income and pay 40 percent of federal income taxes. The 10 percent of returns with incomes of $200,000 or more pay 80 percent of federal income taxes.
Almost 45 percent of the 180 million returns report incomes of less than $50,000; these filers earn 10 percent of US income and receive an additional five percent via various earned income tax programs. Social insurance payroll taxes provide 30 percent of federal revenue and corporate income taxes almost 10 percent.
US federal debt topped $32 trillion in mid-2023, more than the $27 trillion US GDP; the debt is on track to reach $50 trillion by 2050 due to the rising cost of Medicare, Social Security, and interest on the debt. The limit on how much the federal government can borrow must be raised periodically to cover the rising debt. Republicans and Democrats cooperated to raise the debt ceiling before the US treasury ran out of money in June 2023.
Defining terms such as housing shortage is difficult. The US has 142 million housing units. Some nine million new housing units were built between 2012 and 2022 when 16 million new households formed, leaving a gap of seven million that is reduced to two million when condos and apartments are included. Some definitions of shortage include the price of housing. If the incomes of people are compared to house prices, the shortage is larger.
There are more light trucks, including pickups, vans, and SUVs, than cars on US highways. Beginning in Alaska in 1989, trucks began to outnumber cars, and by 2018 trucks outnumbered cars in all states. Trucks are more profitable for manufacturers than cars and are exempt from extra taxes applied to cars with low-fuel efficiency. The most common light trucks are SUVs, which account for almost half of new vehicles sold in the US and get an average 24 mpg.
The economy is rebounding, with demand for consumer services jumping. Airplanes are full despite higher fares, enabling US carriers to swing from a $2.8 billion loss in 2021 to a $1.6 billion profit in 2022. TSA screened 825 million passengers in 2019, 325 million in 2020, 585 million in 2021, and 735 million in 2022.