Showing posts with label employment. Show all posts
Showing posts with label employment. Show all posts
Thursday, October 17, 2019
Trucker Labor Shortage
by Jacyn Dawes, Graduate Assistant with the Gwartney Institute
Trucks have fascinated kids for many years. Their size, noise, and colors probably play an important role. The creation of Transformers in the 1980s, with Optimus Prime as the leader, only enhanced the fun. Optimus Prime brought a cool new spin on a Class 8 truck, which might have inspired some kids to grow up and be truck drivers themselves. Truck driving was a skyrocketing profession during the 1900s.
Unfortunately, in recent years the bulk of those drivers are reaching retirement age with few to fill their shoes. The average age of a truck driver is currently 49, putting this industry seven years above the average worker in the U.S. Aside from the strain truck driving can cause mentally and physically, there are a few recent factors that are affecting the truck driver work pool, including regulations and money.
The trucking industry remains one of the most heavily regulated industries in the world. In the United States, the government has added a mandate recently that has to do with the electronic logging device, also known as an ELD. This mandate moves from an open platform of hour of service recording, such as paper, to a strictly electronic form. This keeps companies more accountable for the hours that their drivers are working to minimize the fatigue and stress while on the road. The ELD mandate does come with difficult restrictions that drivers must meet or be forced to turn off their trucks.
Along with the recently added ELD mandate, 2019 has been a particularly rough year for the trucking industry and many experts are concluding that the industry is currently in a recession. The rates that trucking companies are paid to haul freight have dropped significantly, but costs have not. This market is making it hard for trucking companies to pay drivers fair wages.
HVH Transportation was one of many examples of this when they shut down their business including fuel cards, leaving 324 truck drivers stranded. This has caused many to look more into the possibility of autonomous trucks, but the fact remains that this industry is far from making it without drivers in the trucks. Freight like liquid in totes or hazardous materials require special endorsements and certifications, paperwork that needs to be completed and check at locations, and the inevitable truck breakdowns are just a few examples of this.
This new mandate combined with the decreasing prices, stable costs, and ever-changing labor demographic all play a role in the truck driver shortage. In years to come, it will be interesting to see if the trucking industry can make the jobs seem more attractive to a younger labor force. There is a chance that autonomous trucks will be able to make the job of a truck driver easier, giving them time to look for their next haul and keeping their fatigue low. After the difficulty Optimus Prime faced on his home planet Cybertron, he might agree that while autonomous driving is a possibility in the near future, there will still be a need for human presence.
Black, T. (2019, Jul 23). U.S. Truck Driver Shortage is On Course to Double in a Decade. Bloomberg. Retrieved from https://www.bloomberg.com/news/articles/2019-07-24/u-s-truck-driver-shortage-is-on-course-to-double-in-a-decade
Freight Waves (2019, Aug 28). 344 Unit Truckload Carrier Suddenly Shuts Down, Leaving Drivers Stranded. Retrieved from https://www.benzinga.com/news/19/08/14339776/344-unit-truckload-carrier-suddenly-shuts-down-leaving-drivers-stranded#/targetText=344%20Unit%20Truckload%20Carrier%20Suddenly%20Shuts%20Down,%20Leaving%20Drivers%20Stranded&targetText=HVH%20transportation,%20a%20344%20unit,their%20fuel-cards%20shut%20off.
Kar, S. (2019, Jul). Truck Drivers are Aging… Or Are We Entering a Golden Age in Trucking? Freight Waves. Retrieved from https://www.freightwaves.com/news/commentary-truck-drivers-are-aging-or-are-we-entering-a-golden-age-in-trucking
Kilcarr, S. (2017, Sep 20). Demographics are Changing Truck Driver Management. Fleet Owner. Retrieved from https://www.fleetowner.com/driver-management/demographics-are-changing-truck-driver-management
Strickland, Z. (2019, Jun). Trucking Rates Have Fallen Back to 2017 Levels, But Costs Have Not. Freight Waves. Retrieved from https://www.freightwaves.com/news/trucking-rates-have-fallen-back-to-2017-but-costs-have-not
TCI (n.d.). Driving Regulations. Retrieved from https://www.tcicapital.com/tci-insights/driving-regulations-trucking-companies/
Tuesday, July 2, 2019
USDA move to KC could benefit Franklin County
by Levi A. Russell
Originally published by the Ottawa Herald on June 26, 2019
Big changes are coming to the USDA and to the Kansas City metro area. Last week, Secretary of Agriculture Perdue announced that two major arms of the U.S. Department of Agriculture, the Economic Research Service (ERS) and the National Institute for Food and Agriculture (NIFA), would be moving to the Kansas City area this summer. What does this mean for the KC metro’s economy? What about Franklin County farmers?
To answer the first question, we have to look at what we know about the move. Roughly 600 employees will be relocating from Washington D.C. to the Kansas City area, though we don’t know which side of the state line they will call their new home. The General Services Administration has put out a call for proposals for buildings in the area and, of the 6 buildings that fit their specifications, the closest to Ottawa is the Sprint office building in Overland Park.
Certainly the broader Kansas City area will benefit from the additional jobs, larger tax base, and economic activity from support services provided to these new-to-Kansas-City federal workers. Additionally, the federal government estimates that there will be a $300 million in federal government budget savings over the next 15 years due to lower building rent and other advantages from the relocation.
NIFA allocates grant funding for the bulk of the grant programs the USDA provides each year. Due primarily to our world-class Land Grant University in Manhattan, Kansas receives tens of millions of dollars each year in research funds from NIFA for a range of research efforts including crop and animal agriculture, agricultural economics, natural resources, food science, health, and education. I don’t think NIFA’s location change will mean much for Franklin County agriculture; grant funds will flow into and out of NIFA just as they did when the employees were housed in D.C.
However, I think there’s a possibility that Franklin County agriculture will benefit from ERS’s move to Kansas City. ERS is an in-house research division within the USDA. It houses a gaggle of economists who are trained in analysis of markets, rural economies, farm management, food and nutrition assistance, food safety, international trade, and other issues related to agriculture.
What I’m about to say is not intended to be a jab at ERS employees. I’m sure all of them are fine people, and the ones I’ve met over my short career as an agricultural economist were sharp, knowledgeable people who really want to help U.S. agriculture succeed. However, I think it’s possible that living and working in D.C. has a stifling effect on one’s broader perspective of agriculture. There’s nothing wrong with boutique organic stores and high-overhead-cost hydroponics operations, but these niche businesses don’t represent the backbone of agriculture.
I’ve written in this column before about Franklin County agriculture. We have a lot of cattle, corn, and beans around here. I think it will be good for the economists at ERS to be a little bit closer to the agricultural producers who feed our nation and the world. It just might broaden their perspective and increase their focus. If it does, Franklin County producers will benefit from more effective government policy driven by the analysis of the fine folks at ERS. I hope all our new neighbors working at the USDA will feel welcome in northeast Kansas.
Dr. Levi A. Russell is the Gwartney Institute Professor of Economic Education and Research at Ottawa University
Originally published by the Ottawa Herald on June 26, 2019
Big changes are coming to the USDA and to the Kansas City metro area. Last week, Secretary of Agriculture Perdue announced that two major arms of the U.S. Department of Agriculture, the Economic Research Service (ERS) and the National Institute for Food and Agriculture (NIFA), would be moving to the Kansas City area this summer. What does this mean for the KC metro’s economy? What about Franklin County farmers?
To answer the first question, we have to look at what we know about the move. Roughly 600 employees will be relocating from Washington D.C. to the Kansas City area, though we don’t know which side of the state line they will call their new home. The General Services Administration has put out a call for proposals for buildings in the area and, of the 6 buildings that fit their specifications, the closest to Ottawa is the Sprint office building in Overland Park.
Certainly the broader Kansas City area will benefit from the additional jobs, larger tax base, and economic activity from support services provided to these new-to-Kansas-City federal workers. Additionally, the federal government estimates that there will be a $300 million in federal government budget savings over the next 15 years due to lower building rent and other advantages from the relocation.
NIFA allocates grant funding for the bulk of the grant programs the USDA provides each year. Due primarily to our world-class Land Grant University in Manhattan, Kansas receives tens of millions of dollars each year in research funds from NIFA for a range of research efforts including crop and animal agriculture, agricultural economics, natural resources, food science, health, and education. I don’t think NIFA’s location change will mean much for Franklin County agriculture; grant funds will flow into and out of NIFA just as they did when the employees were housed in D.C.
However, I think there’s a possibility that Franklin County agriculture will benefit from ERS’s move to Kansas City. ERS is an in-house research division within the USDA. It houses a gaggle of economists who are trained in analysis of markets, rural economies, farm management, food and nutrition assistance, food safety, international trade, and other issues related to agriculture.
What I’m about to say is not intended to be a jab at ERS employees. I’m sure all of them are fine people, and the ones I’ve met over my short career as an agricultural economist were sharp, knowledgeable people who really want to help U.S. agriculture succeed. However, I think it’s possible that living and working in D.C. has a stifling effect on one’s broader perspective of agriculture. There’s nothing wrong with boutique organic stores and high-overhead-cost hydroponics operations, but these niche businesses don’t represent the backbone of agriculture.
I’ve written in this column before about Franklin County agriculture. We have a lot of cattle, corn, and beans around here. I think it will be good for the economists at ERS to be a little bit closer to the agricultural producers who feed our nation and the world. It just might broaden their perspective and increase their focus. If it does, Franklin County producers will benefit from more effective government policy driven by the analysis of the fine folks at ERS. I hope all our new neighbors working at the USDA will feel welcome in northeast Kansas.
Dr. Levi A. Russell is the Gwartney Institute Professor of Economic Education and Research at Ottawa University
Tuesday, February 12, 2019
Economics of the Federal Government Shutdown
by Levi A. Russell
What does the shutdown cost us? Is there irreversible damage to the economy? Is it worth it to create a shutdown to get the funding President Trump wants for the border wall or, from the other perspective, to keep the wall from being built?
The most recent estimate I could find of economic losses from a government shutdown is from a 2013 Office of Management and Budget report. The report indicates that the 16-day shutdown in October of 2013 reduced fourth quarter 2013 GDP growth by $2 to $6 billion. In the private and government sectors combined, 120,000 fewer jobs were created during the first two weeks of that October as a result. These sound like very large numbers, but the reduced GDP growth only amounted to 0.2% to 0.6% lost growth. In December of 2018, 312,000 jobs were created in the U.S. economy, which easily makes up for any lost job growth the shutdown may have caused. This suggests that there is not much in the way of irreversible damage to the U.S. economy as a result of even a long government shutdown.
The term “government shutdown” is bandied about in the media regularly, but it’s difficult to justify this term in my opinion. Most of the largest agencies in the federal government are still humming along, including social security, medicaid, medicare, food aid, food inspection, law enforcement, investigations, and veterans’ benefits. Some government employees in these agencies are currently working without pay, but they will receive back pay when the shutdown ends.
Other functions have partially or fully closed operations for the duration of the shutdown and furloughed employees. Those employees may or may not receive back pay. Agencies that have closed are the IRS (no tax refunds will be processed during the shutdown, but you still have to pay taxes), national parks and museums, the US Department of Agriculture’s rural home loan approval system, and other “non-essential” services that aren’t currently funded.
Certainly the shutdown has a negative impact on a segment of the population. Tens of thousands of federal employees have to work without pay for a period of time and others are laid off and won’t receive pay. As a former state employee, I have a little different point of view on this. Federal government jobs are typically well-paid and very secure. The richest counties in terms of household income surround our nation’s capital. In effect, federal employees trade higher pay and lower risk of being laid off or fired in general for higher political risk. Most of our jobs are dependent on our ability to add value to the company, owners’ and managers’ ability to keep the company in business, and our customers’ preferences; federal employees’ jobs avoid a lot of that risk but have to deal with political risk.
Ultimately, this shutdown is political in nature. It isn’t about large segments of the budget, the maximum allowable amount of debt the federal government can incur (debt ceiling), or a big piece of legislation like Obamacare (the cause of the 2013 shutdown). The $5 billion price tag on the border wall is a drop in the bucket when compared with the proposed $4+ trillion budget. Put another way, the fight over the border wall funding is less than 0.12% of the proposed budget. I won’t pretend to know the benefits or drawbacks of the existence of a stronger border wall, but the shutdown itself will only have lasting impact on a relatively small group of federal employees. Most of us won’t even notice it.
Dr. Levi A. Russell is the Gwartney Institute Professor of Economic Education and Research at Ottawa University
Tuesday, January 29, 2019
Ottawa's Employment Situation
by Levi Russell
This article originally appeared in the Ottawa Herald.
At the end of each month, the Bureau of Labor Statistics releases a report detailing the number of jobs added to the U.S. economy during the previous month. The November report, released on the 7th of this month, was a bit of a disappointment. Economists had expected 198,000 additional jobs to be added in November, but the report indicated only 155,000 were added. One bright spot, the transportation sector, added 25,000 jobs nationwide.
The relatively good performance of the transportation sector made me think of all the new intermodal jobs being added in our area. This prompted me to look at Franklin County’s employment situation over the last few years. Franklin County’s labor force participation rate has been increasing steadily since the recovery from the 2009 recession. Labor force participation is the number of people in the labor force divided by the population aged 16 to 64. What does it mean to be “in the labor force?” Isn’t that just everyone with a job?
Not really. The labor force is defined as people who are working or actively seeking work. My wife Lana, who spends the majority of her waking hours as the primary caregiver of our children, is not in the labor force. Don’t get me wrong, she works very hard, but she would not part of the labor force. She just isn’t interested in working outside the home right now and so isn’t actively seeking work. Other people between the ages of 16 and 64 might leave the labor force when, after seeking work for a long time, simply give up and find another arrangement to provide for themselves.
So it’s good to see that, along with several years of population growth (with the exception of 2015), Franklin County’s labor force participation rate has increased. More people call Franklin County home, and a higher percentage of the total population of the county have been entering the labor force over the last several years. Another good sign for Franklin County’s economy is a very low unemployment rate. Currently, the unemployment here is at 3%, which is the lowest it has been since 2003. From the recession in 2009 to 2017, unemployment steadily declined here in Franklin County. Once the unemployment rate started approaching 3% in late 2017, unemployment has been relatively flat.
This isn’t necessarily a bad sign. There will always be some unemployment in a dynamic economy. People change jobs and might be unemployed for a short period between them. Some people’s skill sets become obsolete and they have to find training to get them into a new job. Looking at data on the unemployment history of Franklin County, it makes sense that unemployment leveled off here around 3%. This seems to be Franklin’s natural rate of unemployment.
But, similar to the labor force participation rate, the unemployment rate is complicated. People might enter or leave the labor force for good or bad reasons, and the unemployment rate may go up or down for good or bad reasons. The unemployment rate can go down — which sounds like a good thing in general — because some people give up looking for work and, by definition, leave the labor force! This may be a good thing, my wife is certainly happy being outside the labor force, but it may also represent people in very bad situations.
The takeaway point here is that you should always look beyond the headline unemployment number. Has the population grown? Has the labor force grown or shrunk? Has anyone looked into the reasons some people are either leaving or entering the labor force in greater numbers than before? Answers to these questions help us understand what is driving that headline unemployment number.
For example, if the population is growing and the labor force participation rate is growing because investors are creating many new jobs and people are able to get the skills to fill those jobs, the unemployment rate might actually tick up for a short period of time while people leave their current jobs, get trained, and move into better-paying jobs! We might think an increase in the unemployment rate is bad, but in this case it’s a small price to pay for a long-run benefit.
We might also see what appear to be negative effects on employment data when good things are happening. If innovation is driving the cost of the goods we buy every day lower — relative to the wages we earn — we may see people leave the labor force because their spouses can earn adequate income for the family. A decrease in labor force participation from a lack of opportunity over a long period of time is a bad thing, but people might also leave the labor force by choice.
In terms of overall employment, Ottawa is doing well and has been steadily improving since the end of the most recent recession. A larger percentage of the population are in the labor force and fewer people in the labor force are having trouble finding work. Next time I will discuss the economics of federal policy changes coming soon for agriculture, one of the county’s most important industries.
Dr. Levi A. Russell is the Gwartney Institute Professor of Economic Education and Research at Ottawa University
This article originally appeared in the Ottawa Herald.
At the end of each month, the Bureau of Labor Statistics releases a report detailing the number of jobs added to the U.S. economy during the previous month. The November report, released on the 7th of this month, was a bit of a disappointment. Economists had expected 198,000 additional jobs to be added in November, but the report indicated only 155,000 were added. One bright spot, the transportation sector, added 25,000 jobs nationwide.
The relatively good performance of the transportation sector made me think of all the new intermodal jobs being added in our area. This prompted me to look at Franklin County’s employment situation over the last few years. Franklin County’s labor force participation rate has been increasing steadily since the recovery from the 2009 recession. Labor force participation is the number of people in the labor force divided by the population aged 16 to 64. What does it mean to be “in the labor force?” Isn’t that just everyone with a job?
Not really. The labor force is defined as people who are working or actively seeking work. My wife Lana, who spends the majority of her waking hours as the primary caregiver of our children, is not in the labor force. Don’t get me wrong, she works very hard, but she would not part of the labor force. She just isn’t interested in working outside the home right now and so isn’t actively seeking work. Other people between the ages of 16 and 64 might leave the labor force when, after seeking work for a long time, simply give up and find another arrangement to provide for themselves.
So it’s good to see that, along with several years of population growth (with the exception of 2015), Franklin County’s labor force participation rate has increased. More people call Franklin County home, and a higher percentage of the total population of the county have been entering the labor force over the last several years. Another good sign for Franklin County’s economy is a very low unemployment rate. Currently, the unemployment here is at 3%, which is the lowest it has been since 2003. From the recession in 2009 to 2017, unemployment steadily declined here in Franklin County. Once the unemployment rate started approaching 3% in late 2017, unemployment has been relatively flat.
This isn’t necessarily a bad sign. There will always be some unemployment in a dynamic economy. People change jobs and might be unemployed for a short period between them. Some people’s skill sets become obsolete and they have to find training to get them into a new job. Looking at data on the unemployment history of Franklin County, it makes sense that unemployment leveled off here around 3%. This seems to be Franklin’s natural rate of unemployment.
But, similar to the labor force participation rate, the unemployment rate is complicated. People might enter or leave the labor force for good or bad reasons, and the unemployment rate may go up or down for good or bad reasons. The unemployment rate can go down — which sounds like a good thing in general — because some people give up looking for work and, by definition, leave the labor force! This may be a good thing, my wife is certainly happy being outside the labor force, but it may also represent people in very bad situations.
The takeaway point here is that you should always look beyond the headline unemployment number. Has the population grown? Has the labor force grown or shrunk? Has anyone looked into the reasons some people are either leaving or entering the labor force in greater numbers than before? Answers to these questions help us understand what is driving that headline unemployment number.
For example, if the population is growing and the labor force participation rate is growing because investors are creating many new jobs and people are able to get the skills to fill those jobs, the unemployment rate might actually tick up for a short period of time while people leave their current jobs, get trained, and move into better-paying jobs! We might think an increase in the unemployment rate is bad, but in this case it’s a small price to pay for a long-run benefit.
We might also see what appear to be negative effects on employment data when good things are happening. If innovation is driving the cost of the goods we buy every day lower — relative to the wages we earn — we may see people leave the labor force because their spouses can earn adequate income for the family. A decrease in labor force participation from a lack of opportunity over a long period of time is a bad thing, but people might also leave the labor force by choice.
In terms of overall employment, Ottawa is doing well and has been steadily improving since the end of the most recent recession. A larger percentage of the population are in the labor force and fewer people in the labor force are having trouble finding work. Next time I will discuss the economics of federal policy changes coming soon for agriculture, one of the county’s most important industries.
Dr. Levi A. Russell is the Gwartney Institute Professor of Economic Education and Research at Ottawa University
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