How not to create jobs

Punishing the unemployed doesn't accomplish very much.

For Times Subscribers View in browsernytimes.com August 24, 2021 Newsletter Notice Beginning in September, the Paul Krugman newsletter will be available only to Times subscribers. Subscribe to The Times to continue receiving it. A selection of our newsletters will soon be reserved for Times subscribers. Subscribe now for $1/week for access to Times journalism and all of our newsletters — to follow your interests and discover others. Whitney Curtis for The New York Times By Paul Krugman Opinion Columnist Last Friday, as the clock ticked toward 10 a.m., many labor economists were poised at their keyboards like runners about to do a 100-yard sprint. You see, the Bureau of Labor Statistics was scheduled to release its latest monthly report on state employment and unemployment, and everyone wanted to crunch the numbers and learn what they showed. Why was this report different from any other report? In June, roughly half the states did something remarkable: They cut off enhanced unemployment benefits, even though the federal government was paying for those enhancements. That is, they turned away free money from Washington — money that was helping many of their residents, and also flowing into their states' economies. The justification for this aid cutoff was the claim that generous unemployment benefits were deterring workers from searching for or accepting jobs, holding back economic recovery. So economists wanted to know whether states that slashed benefits would show faster job growth than states that didn't. This B.L.S. report would give a first indication of whether that was actually happening. It wasn't; or to be more precise, if there was any effect, it wasn't strong enough to cut through the statistical noise. This was more or less what economists who have been studying the issue expected to see. There have been huge swings in the size of the unemployment supplement since the pandemic began, from nothing to $600 a week, then back to nothing, then back to $300 a week. Those swings didn't seem to have much effect on employment. For example, a study by Peter Ganong and co-authors that used detailed individual data found some effect of unemployment benefits on the rate at which unemployed workers found jobs, but this effect was small. Still, it was good to have confirmation from the B.L.S. data. However, the absence of a large employment payoff to states that slashed benefits raises two questions. First, why didn't unemployment benefits seem to have much effect on employment? Second, why did half of states rush to cut benefits despite the absence of evidence that this was a good idea? One answer to the first question is that the reluctance of some Americans to return to work reflects multiple factors — things like perceptions of risk, lack of child care and, as I suggested in yesterday's column, the fact that during the pandemic some workers came to realize how much they had hated their old jobs. It's also likely that before the aid cutoffs some workers were accepting job offers even if these jobs paid less than they were receiving in unemployment benefits, believing that it was important to get established in a new job before the enhanced benefits ended. But given all that, why were red-state governors and legislatures so sure that cutting off benefits would be a good idea? Well, conservatives always seem to believe that social programs severely reduce the incentive to work, that we're becoming a "Nation of Takers" in which low earners are better off living on the dole. In most cases the disincentives created by social programs are, in fact, much smaller than people on the right tend to claim, but that fact probably hasn't gotten through. I'm not saying that incentives never matter. Retirement age seems to be affected strongly by how much workers get if they retire early; France, which has made early retirement financially easy, has much lower employment among older adults than we do. On the other hand, prime-aged adults are more likely to be employed in generous welfare states like France and Denmark than they are here. But why are conservatives so sure that social programs have huge disincentive effects on work? Maybe because what they really want is to cut benefits, and incentive effects are largely an excuse for doing so. After all, many states that rushed to cut off unemployment benefits, including the big states of Texas, Florida and Georgia, have also refused to take advantage of Medicaid expansion under the Affordable Care Act. That is, they have rejected federal money that would help their states' citizens and put money into their states' economies — and they're doing this even though Medicaid, unlike unemployment benefits, doesn't greatly reduce the incentive to get a job. It's hard to get a coherent explanation of why these states have rejected Medicaid expansion, but what's clear is that some politicians just dislike helping the poor and near-poor, never mind the economics. So the evidence that cutting off unemployment benefits has produced a lot of pain for very little gain — another recent study, by Arindrajit Dube and co-authors, finds that only one of every eight people losing benefits found a new job, and that earnings made up for only seven percent of the lost benefits — probably won't cause any regrets among those responsible. The pain isn't a bug, it's a feature. Quick Hits Cutting pandemic aid just as the pandemic comes roaring back. Florida. "Unemployment benefits incentivize laziness." Same as it ever was. Feedback If you're enjoying what you're reading, please consider recommending it to friends. They can sign up here. If you want to share your thoughts on an item in this week's newsletter or on the newsletter in general, please email me at krugman-newsletter@nytimes.com. Facing the Music A widely shared sentimentYouTube The title of this song was the original headline for this week's column. In the Times IN THE TIMES Democrats Scrounge for Votes to Pass $3.5 Trillion Budget Plan With moderates balking, Speaker Nancy Pelosi was working to secure their support for the budget. Democrats ultimately scrapped tentative plans for a vote late Monday. By Emily Cochrane and Jim Tankersley What an Adult Tricycle Says About the World's Bottleneck Problems The supply-chain problems rocking companies may get worse heading into the holidays, as delays continue to snarl global trade and shipping prices jump even higher. By Jeanna Smialek and Madeleine Ngo President Biden's economic aides insist his spending plans won't stoke further inflation. By Jim Tankersley Enjoy this newsletter? Subscribe to keep receiving it. We've reserved a selection of newsletters, including this one, for Times subscribers. Subscriber support ensures that we have the resources to deliver original, quality journalism in every form — including our newsletters. Your access to this newsletter ends in September. Become a Times subscriber to enjoy our journalism and to continue to read this newsletter and any others you find interesting. Reminder: This newsletter will soon be reserved for Times subscribers. Your access to the Paul Krugman newsletter ends in September. Subscribe now to keep receiving it and to enjoy all the benefits of being a Times subscriber. Need help? Review our newsletter help page or contact us for assistance. You received this email because you signed up for Paul Krugman from The New York Times. 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On Tech: A thumbs down for streaming privacy

The streaming apps and devices we pay for aren't necessarily careful with our personal information.

For Times Subscribers View in browsernytimes.com August 24, 2021 Newsletter Notice Beginning in September, the On Tech newsletter will be available only to Times subscribers. Subscribe to The Times to continue receiving it. A selection of our newsletters will soon be reserved for Times subscribers. Subscribe now for $1/week for access to Times journalism and all of our newsletters — to follow your interests and discover new ones. A thumbs down for streaming privacy The streaming apps and devices we pay for aren't necessarily careful with our personal information. Miriam Persand By Shira Ovide On Tech will be off until Sept. 7. See you again after Labor Day. There's an expression about the personal-information-grubbing practices of free digital services that sell ads, including Facebook and weather apps: If you don't pay for the product, you are the product. But sometimes you can pay for a product and be the product. Common Sense Media, a nonprofit advocacy group for children and families, published a report this week that found that most of America's popular streaming services and TV streaming gadgets such as Netflix, Roku and Disney+ failed to meet the group's minimum requirements for privacy and security practices. The lone exception was Apple. We've become accustomed to the corporate arms race to track our every mouse click and credit card swipe. But what's surprising from the group's report is that streaming entertainment products for which people pay out of their pockets have some of the same data habits of sites like Facebook and Google that make their money renting our data for advertising dollars. "This should be a wake up call to the streaming platforms," James P. Steyer, the chief executive of Common Sense Media, told me. "These platforms can and should do better, and I think that they will." The organization said that streaming companies could be doing more to keep to themselves the data they collect from American households, carve out exceptions to their information practices to better protect children, and offer more assurances that people's data won't be used to blitz customers with advertisements all over the internet or get fed into the dossiers compiled by data middlemen. Researchers have previously analyzed the data habits of some streaming products. What Common Sense Media did with this latest report was cleverly comprehensive. It examined the privacy policies of 10 online video services, like HBO Max, and five streaming devices, including those from Roku and Amazon's Fire TV. The organization also set up computer systems to follow where the digital information leaving the streaming video apps or devices went. Common Sense Media found that most of the companies in its analysis could use information about what people do on their services to tailor ads to customers all over the internet, or allow other companies to do the same. It was able to see, for example, that many of the streaming companies piped data to Amazon and Google's advertising businesses. Some streaming companies, including Netflix, say that they don't typically permit other companies to know what we watch on a Friday night binge session. Some others in the analysis leave open the possibility that information on what we watch might be used for targeted ads or for other purposes. Data from streaming companies could also wind up with companies that compile reams of information like what brand of toothpaste you buy in the store and what you do on your phone. And Common Sense Media said some efforts to offer customers informed consent were overly complicated. For example, the organization said that Amazon asked people on a Fire streaming gadget to click through 25 policies to use the device, plus two more to use its Alexa voice assistant. The organization said that Apple, which touts its consumer privacy principles but doesn't always deliver on its stated ideals, had stronger protections in its Apple TV+ streaming video service and its TV connector gadget called Apple TV than the others examined. (Apple helps fund a Common Sense Media news literacy program for schools, and it is among the companies that license the organization's ratings and reviews. Common Sense Media told me that has no bearing on its privacy evaluations.) Not all collection or uses of our data are necessarily harmful. Streaming companies use people's information to help us reset a forgotten password and make sure that we can watch Hulu as we hop from a smartphone to a TV set. The problem that Common Sense Media highlighted is that Americans, with limited exceptions, simply cannot know what companies do with all the information they gather about us. Mostly we have to rely on legal documents that offer an illusion of control and think through the hypothetical risks of what could go wrong with our personal information out in the wild. That condition has contributed to Americans' mistrust of tech companies and concerns about what happens to our personal data, but Steyer said that there's a silver lining in our collective anxiety: Companies and politicians know that more Americans care about information privacy. "I am incredibly gratified to see the fundamental change in public perception and awareness, and that is what will drive both political change and industry change," Steyer said. "The tide is turning." If you don't already get this newsletter in your inbox, please sign up here. Reminder: This newsletter will soon be reserved for Times subscribers. Your access to the On Tech newsletter ends in September. Subscribe now to keep receiving it and to enjoy all the benefits of being a Times subscriber. Before we go … The stigma of Theranos: My colleague Erin Griffith writes that some female founders of start-ups — particularly those in life sciences, biotechnology and health care — have to fight comparisons to Elizabeth Holmes, whose blood-testing start-up Theranos shut down in 2018 after a reporter's investigation questioned her claims about the company. Holmes will soon be on trial facing criminal fraud allegations. Productive and respectful conversations! On Facebook! The Washington Post writes about a Facebook group called Vaccine Talk that has 70,000 members and is a forum for civil and evidence-based discussions about vaccines. The group has 25 moderators and administrators to monitor posts and strict rules against offering medical advice or making scientific claims without evidence. It's hard to be green in consumer electronics: In two articles, Protocol examines why it's difficult for manufacturers of smartphones, TVs and other electronics to make their products in a more environmentally sustainable way. Doing so may require drastic changes in manufacturing and in shoppers' expectations to get companies and people to embrace more expensive, longer-lasting gadgets. Hugs to this Check out this llama strolling on a beach in the Bay Area. The dogs seem confused about their unfamiliar new friend, who is named Chubby. Enjoy this newsletter? Subscribe to keep receiving it. We've reserved a selection of newsletters, including this one, for Times subscribers. Subscriber support ensures that we have the resources to deliver original, quality journalism in every form — including our newsletters. Your access to this newsletter ends in September. Become a Times subscriber to enjoy our journalism and to continue to read this newsletter and any others you find interesting. We want to hear from you. Tell us what you think of this newsletter and what else you'd like us to explore. You can reach us at ontech@nytimes.com. If you don't already get this newsletter in your inbox, please sign up here. You can also read past On Tech columns. Need help? Review our newsletter help page or contact us for assistance. You received this email because you signed up for On Tech With Shira Ovide from The New York Times. To stop receiving these emails, unsubscribe or manage your email preferences. Subscribe to The TimesGet The New York Times app Connect with us on: Change Your EmailPrivacy PolicyContact UsCalifornia Notices The New York Times Company. 620 Eighth Avenue New York, NY 10018

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