This article was originally published by the Fiscal Times on Thursday, Aug. 26, 2010.
Despite one of the worst recessions of modern times, the U.S. economy could face significant labor shortages in the coming months because of a mismatch between the quality of the available labor and the demands of industry.
By Katherine Reynolds Lewis
Alan Yellowitz of Fairfax, Va., has been job hunting since January 2009, when he was laid off from his information technology sales job along with the rest of his department. Competing with hundreds of applicants for every opening, he has clawed his way to the final round of interviews several times — only to fall short of winning the position. "There are so many more people looking for the same jobs," Yellowitz, 47, said in an interview. "It's crazy how companies are picking and choosing. You feel beat up after a while."
Yellowitz — like many of the other 14.6 million unemployed Americans like him — wasn’t supposed to be in this bind, as the oldest Baby Boomers started to retire and the labor supply began to tighten. Nearly 20 years ago, the first in a series of economic reports predicted a dramatic labor shortage as an estimated 76 million Baby Boomers departed the workforce and the smaller cohort of Generation X workers — or Baby Bust — took their place. As recently as this spring, researchers predicted there could be five million more jobs than workers available to fill them by 2018, resulting in $3 trillion of lost U.S. economic output.
"We have this huge bump coming through of older people followed by a dearth of younger people," said lead researcher Barry Bluestone, an economist and dean of the School of Public Policy and Urban Affairs at Northeastern University. "We're going to have a huge labor market shortage."
Huge labor shortage? That’s hard to imagine amid the worst recession in modern times, with unemployment locked at 9.5 percent and many discouraged Americans simply dropping out of the market. One skeptic, Wharton business school professor Peter Cappelli, said. "They've been predicting a labor shortage since the mid-1990's and guess what, it's not happening.”
Yet some evidence suggests there may already be spot shortages of labor, as employers complain about the difficulty of filling open positions and the lack of skilled workers.
Recession Aside, Are We Headed for a Labor Shortage?
New Financial Rules Will Lower Bank Profits
This article was originally published by the Fiscal Times on Friday, July 2, 2010.
The landmark financial overhaul legislation will raise banking industry regulatory costs, lower their profits and limit their use of their own assets in risky investments.
By Katherine Reynolds Lewis
A major overhaul of financial regulations that cleared the House this week will put the banking industry on course for higher regulatory costs, lower profits and a renewed emphasis on more traditional activities like taking deposits and making loans.
The landmark legislation awaiting final action in the Senate later this month stops short of banning banks from investing their own assets, dealing in highly speculative derivatives or investing in hedge funds and private equity firms, as many reformists had urged. But the complex web of new rules in the 2,000-plus-page document will add an estimated $11 billion to the industry’s regulatory costs in the coming years. And it would put a crimp in the industry’s activities and shed more light on their activities with the use of clearinghouses and data repositories.
Rather than marking the finish line in marathon legislative negotiations, the new law's approval is more of a handoff in a relay race. Regulators will receive the baton and a mandate to write dozens of new rules to restrict banks' activities, increase capital requirements, protect consumers from fraud, and impose more oversight to prevent a repeat of the problems that caused the near meltdown of global financial markets and triggered a worldwide recession.
Once the financial industry emerges from the near-term pain of that transition, the new regulatory structure could facilitate measured growth in a new environment with less moneymaking potential but greater transparency and protection from failure, analysts said.
"In the long run the industry will be safer, people will be more confident and the spreads will be narrower," said Robert Litan, vice president for research and policy at the Kauffman Foundation. "The bill is sweeping in nature but a lot of the details have yet to be filled in" by regulators, Litan noted. "We don't know whether that's going to be a heavy touch or light touch."
Scott Brown Blocks Financial Reform Vote
This article was originally published by the Fiscal Times on Wednesday, June 30, 2010.
Freshman Republican Sen. Scott Brown objected to a stiff new banking fee which would cover the $19 billion cost of implementing new financial regulation.
By Katherine Reynolds Lewis
Just as Congress was on the verge of passing the broadest overhaul of financial regulation since the Great Depression — following hundreds of hours of debate over the last year — lawmakers are back at the drawing boards. Freshman Republican Sen. Scott Brown objected to a stiff new banking fee which would cover the $19 billion cost of implementing the new regulation.
"It is especially troubling that this provision was inserted in the conference report in the dead of night without hearings or economic analysis," Brown, R-Mass., wrote to the Democratic lawmakers shepherding the legislation through Congress. "Costs would be passed on to the millions of American consumers and small businesses who rely on major U.S. financial institutions for their checking, ATM, loans or other services."
Brown's constituents include the country's largest mutual funds, such as Fidelity Investments and State Street Corp., which objected to paying a fee when it was excesses in the banking industry at the heart of the financial crisis that sparked a worldwide recession.
Why Do Dads Lie?
This article was originally published by Slate on Thursday, June 17, 2010.
Why do dads lie on surveys about fatherhood? And why their lying is socially significant.
By Katherine Reynolds Lewis
A new Boston College study makes the modern American dad look positively Swedish in his dedication to his children and his zeal to participate equally in raising them. The yearlong qualitative study of 33 first-time fathers, released yesterday, found that they viewed themselves as sharing family responsibilities 50-50 with their wives and claimed to devote an average of 3.3 hours each workday to child care. The new dads openly gushed about the way parenthood had changed their priorities and career aspirations. "I love being a father so much more than I thought I would," said one study participant about his new baby girl. "The highlight of my day is in the morning when I hear her start to wake up and I can just go in there and pick her up."
Could that be true? Has the American father adapted so quickly to modern feminist demands? The researchers themselves were somewhat suspicious. After all, the most recent large-scale, benchmark studies on time use found that fathers spend significantly less time on child care than mothers. The Families and Work Institute, for instance, puts fathers at three hours and mothers at 3.8 hours with kids under 13, while Census Bureau time-use surveys found that married men spend about 1.2 hours per weekday caring for children under age 6, while married women spend 2.6 hours on the same activity. (For both benchmark surveys, the most recent year available is 2008.)
The answer, it turns out, is that the men in the Boston College study were probably lying about how they spend their time. But that's no reason to be disappointed. The Boston study relied upon in-depth interviews with men after the fact. Time-use studies involve questions about the previous day's behavior. With in-depth interviews, researchers expect subjects to have imperfect recall or exaggerate behaviors they perceive as being socially desirable—weight loss and breastfeeding are classic examples. But the direction in which they lie is socially significant. Thirty years ago, dads claimed to spend less time with their children than they actually did, since child-rearing was considered women's work. Now they are lying in the opposite direction, which suggests that they perceive doing half of the parenting to be a manly affair.
Obama's King of Cool
This article was originally published by the Fiscal Times on Monday, June 14, 2010.
Obama's performance czar, Jeff Zients, seeks to streamline the bureaucracy and make it cool to work for the government.
By Katherine Reynolds Lewis
Just a week after Jeffrey D. Zients assumed his first management job 18 years ago, he slashed the size of his staff from six to two and replaced one of the remaining individuals. The ambitious 25-year-old was on a fast track at a Washington consulting firm, and he knew he needed the right people in place as quickly as possible.
But when he took over as President Obama's first-ever government performance officer a year ago, there was no way Zients could replicate that quick start. That's because it takes on average five months to hire a worker under the convoluted federal hiring process
"I knew there was no way we would be able to meet the president's challenge to make government service cool again and at the same time have such a broken hiring process that, for the most part, did not have senior leaders spending the appropriate amount of time on people," recalled Zients, a trim 43-year-old who is graying around the temples.
What he did next tells a lot about how Zients attacks a problem: He quickly enlisted Housing Secretary Shaun Donovan to launch a pilot project at his agency to try to dramatically reduce the time it takes to bring a new worker on board. First, department officials mapped the convoluted hiring process, identified logjams and cut out redundancies, which reduced the number of steps from 40 to only 14. Then, they trained hiring managers on techniques for getting involved much earlier and identifying job candidates with the right skills. Finally, they tracked each step in the process to see how close managers were to hitting the time allotted for each stage.
Six months later, the experiment succeeded in reducing the hiring process from an average of 139 days to a mere 77. When Office of Personnel Management Director John Berry and Zients rolled out hiring reform for the entire government in May, they were able to point to this success as evidence that the changes would work.
"Organizations often spend too much time thinking about and planning and preparing for change management," Zients said during a recent interview with The Fiscal Times, over mugs of hot tea from his wife's native South Africa. "The best way to change is to begin to change, and then to celebrate those early wins. That builds a natural momentum."
Banking Bill Leaves Huge Gaps in Financial Reform
This article was originally published by the Fiscal Times on Monday, May 24, 2010.
Financial regulation legislation silent on key issues.
By Katherine Reynolds Lewis
The Senate's action last week to discourage high-risk behavior and regulatory failures has been hailed as the most sweeping reform of the banking and financial system since the 1930s, yet the landmark legislation leaves huge gaps in addressing the causes of the 2008 financial crisis, according to analysts and experts.
Most notably, the Senate-passed bill doesn't address the future of Fannie Mae and Freddie Mac, the mortgage giants at the center of the credit market collapse, which hold $5.5 trillion of residential housing loans, about three-quarters of the market. Nor does the massive, 1,500-page bill establish comprehensive regulation of insurance companies, such as American International Group. Instead, the bill would create an insurance office at the Treasury Department merely to collect data from state insurance regulators.
Obama Administration Speeds Up Hiring
This article was originally published by the Fiscal Times on Tuesday, May 11, 2010.
The Obama administration has ordered sweeping changes to speed up the federal hiring process and to make it less frustrating to apply for a job.
By Katherine Reynolds Lewis
The Obama administration implemented sweeping changes to the federal hiring process Tuesday to make it easier and faster to hire new government employees. Following years of complaints that federal hiring practices were hopelessly mired in red tape and bureaucratic delays, the change is expected to reduce by half the time it takes to fill vacancies and enhance the government’s ability to compete with the private sector for strong talent.
Under the old method, the hiring process took an average of five months, with as many as 40 individual steps and 19 signatures needed, said John Berry, director of the Office of Personnel Management, in unveiling the changes. The overhaul eliminates required knowledge skills assessment essays, which will allow people to apply for a job with a simple cover letter and resume, saving millions of hours and getting rid of cumbersome paperwork. "This initiative is the biggest step forward for fixing federal hiring in over three decades," Berry said. "It will substantially reduce the time and aggravation it takes to find and hire the best. When we've achieved that goal, all of government will work better."
Each year, the federal government adds about 330,000 employees to its 2 million person workforce, through a process that has long been criticized as byzantine and cumbersome by lawmakers, according to the Government Accountability Office and academics. Streamlining hiring will save time and money, and result in better talent, Berry told an audience of government employees, managers and journalists.
"Mounting deficits and debt are placing enormous pressure on government spending. At the same time, trust in government is on the decline," said Jeffrey Zients, Obama's chief performance officer, noting that only 22 percent of Americans trust the government -- a half-century low. "To make sure every tax dollar is spent wisely, we have to get the right people."
In addition to throwing out the knowledge essays, Berry said the changes will:
Controversy Dogs Efforts to Regulate Derivatives
This article was originally published by the Fiscal Times on Wednesday, May 5, 2010.
Efforts to regulate financial derivatives trigger memories of a failed effort during the Clinton administration to impose regulations.
By Katherine Reynolds Lewis
As the Senate negotiates sweeping changes to financial regulations, some policy experts are flashing back to the late 1990s, when a Clinton administration appointee named Brooksley Born explored oversight of complex financial contracts known as over-the-counter derivatives.
Born, an attorney, chaired the Commodity Futures Trading Commission. Her efforts to shed light on and regulate the opaque world of derivatives quickly died in the face of vehement opposition from then-Federal Reserve Board chairman Alan Greenspan, Treasury secretary Robert Rubin, powerful members of Congress, and Wall Street executives who opposed increased market regulation.
Now that credit default swaps and mortgage-based derivatives have been implicated in the near collapse of the international financial markets, it's only natural to wonder what the world would have looked like if Born and the CFTC had succeeded in bringing transparency to the $600 trillion derivatives market — or even imposing capital and margin requirements.
"It would've prevented the meltdown because there would've been too much information that would have countered the theory that housing prices would always go up," said Michael Greenberger, who was director of the division of trading and markets at Born's CFTC. "If regulators had seen the gambling, they would've seen that the risk was being repeated by multiple institutions."
Senate Showdown Over Too Big to Fail
This article was originally published by the Fiscal Times on Sunday, April 18, 2010
Democrats and Republicans disagree on the methods to prevent future emergency bailouts.
By Katherine Reynolds Lewis
In the wake of a major government fraud case against Goldman Sachs, the Obama administration and Senate Democrats are poised to forge a consensus this week on a sweeping overhaul of financial regulations. Treasury Secretary Timothy F. Geithner declared yesterday on NBC's "Meet the Press" that Democrats and some Republicans "are very close on this," and suggested that the Securities and Exchange Commission's civil suit last week, charging Goldman Sachs with selling investors a subprime mortgage investment designed to lose value, might provide added impetus for the financial regulatory legislation.
As Senate leaders and the White House attempt to push legislation that responds to the lessons of the global financial crisis, perhaps the single most important question will be whether they can successfully address the potential damage from financial institutions deemed "too big to fail."
It was the collapse of Lehman Brothers and near-death of American International Group (AIG) and other major banks and institutions that prompted unprecedented government intervention in the financial markets in the fall of 2008. As Senate negotiators and the administration exchange ideas this week on the final shape of a financial regulatory reform package, Democrats and Republicans agree on the essential goal of preventing future emergency bailouts, but they disagree markedly on the methods.
The Return
This story was originally published by the Washington Post Magazine on Sunday, April 4, 2010, in conjunction with an online discussion.
A stay at home mom attempts to go back to work after nearly two decades. Can she revive her career?
By Katherine Reynolds Lewis
Amy Beckett put away her reading glasses and file folder and stood up.
It was time. It was almost past time.
She tossed the empty paper cup into the trash and swung open the door to leave the deli on Rhode Island Avenue NW. As Beckett walked into an upscale office lobby, her scarf slipped from around her neck and drifted to the ground. She scooped it up and shoved it into her shoulder bag. She didn't want to arrive late for the job interview.
She handed the security guard a photo ID. Once in the elevator, she looked up at the ceiling and exhaled noisily. "I'm never doing this again," she said, closing her jade-colored eyes for a moment. At the seventh floor, she opened the heavy wooden door to Suite 713, identified in gold lettering as the Law Offices of Stephen H. Marcus. The suite's unique double doors, parquet floor and crown molding signaled its former life as the ticket office for EL AL Airlines. The receptionist looked up from her desk with a smile. She took Beckett's business card and said it would be a few moments until Marcus finished with a client.
With her back straight in a modern brown chair by the door, Beckett folded her hands over the bag on her knees and waited. It was March of last year, three days after she had turned 52 and 17 years since she'd last held a job.
