NEWSWIRE: 3/25/19

  • Experts are debating the importance of the U.S. multiple jobholding rate, which shows that around 5% of U.S. workers hold at least two concurrent jobs. While alarmists like to point out that multiple jobholding remains prevalent even in a tightening labor market, the fact remains that the rate remains near historical lows. (Bloomberg)
    • NH: For the last year, many leading Democrats looking for something to complain about in the "Trump economy"--including Bernie Sanders, Kamala Harris, Elizabeth Warren, and Alexandria Ocasio-Cortez--have been saying that employment is high only because many if not most Americans are forced to work "two or three jobs" or to work "70 or 80 hours a week." These claims are untrue. In fact, as any quick look at BLS numbers would show, under 5% of employed Americans work at more than one job and this share has been declining over time. (See chart below.) What's more, only 6% of these individuals (that is, 0.3% of everyone) work at two full-time jobs. Average weekly hours is identical to what it was during the Obama presidency. All this is pretty much what we should expect late in a business cycle--along with a declining share of part-time workers and a high share of temp workers.
    • AOC is the most egregious and consistent offender in this sort of factual misstatement game, winning her at one point "four Pinocchios" from The Washington Post. But I do admire AOC for possessing something that is signally lacking in most emerging Millennial leaders: It is what the ancient Greeks called "thymos" or spirit. She is unafraid to throw rhetorical bombs just to get the other side to scream. Thus she may be bringing to the populist left what Donald Trump has already brought to the populist right--the boldness in our post-truth society to claim something is true just because it feels true. After the 2016 election, many conservatives told liberals that they underestimated Trump by "taking him literally, but not seriously." Maybe now it's time for the left to find a similar voice.
    • In defending his wall proposal, for example, Trump recently claimed that Barack Obama himself lives in a house surrounded by a 10-foot wall. This was untrue: There is no wall. But it felt true, didn't it? Wasn't Trump making a bigger point about elitist progressives that might as well be true? Well, ditto for the rising young left, if AOC is a leading indicator. No, not many Americans are working multiple jobs. But what the populist left is counting on is that many Americans feel like they're working many jobs in late-capitalist America--and therefore may be persuaded to pull the lever for a "democratic socialist" agenda.
    • No, this is not what a deliberative democracy is supposed to be about. But I fear it's where we're headed. For an entertaining account of how we got here, take a look at a recent NYT bestseller by Kurt Andersen, Fantasyland: How America Went Haywire, A 500-Year History.

What to Make of the Multiple Jobholding Rate. NewsWire - Mar24 chart2

  • For op-ed columnist Helaine Olen, Beto O’Rourke and his wife Amy are an example of the “born-again... traditionalism” of Generation X. Though Olen is not so focused on traditionalism as she is on sexism, she does make an important point: In many ways, Xer parents have reverted—both intentionally and not—to the gender roles of the past. (The Washington Post)
    • NH: We wrote about this trend five years ago (see: "Give Me That New-Time Tradition"), pointing out that Gen Xers entering midlife (women and the affluent especially) were veering toward traditional mores that Boomers, at the same age, would have considered retrograde. In behavior, we're talking about lower rates of divorce and female labor force participation and growing weekly hours spent with family and children. In attitudes, we're talking about the rise of "third-wave feminism," a greater acceptance of the stay-at-home mom, and the sharply rising share of moms who consider themselves "traditional." 
    • Gen-X moms have toppled the anti-traditional (you can have it all!) “supermom” once touted by Boomers. They have replaced it with their own more realistic and time-tested notion of the “core competency mom” or “the good enough mom.” Even June Cleaver Would Forget the Juice Box: Cut Yourself Some Slack (and Still Raise Great Kids) in the Age of Extreme Parenting is the self-explanatory title of a recent book that hits the Gen-X sweet spot.
    • "Gen Xers have one important advantage over Boomers in reaching back to grab useful lessons from the 'traditional' way America lived before the social explosions of the 1960s," we further explained in our report. "They have no memory of that era. They never actually had to deal with a June Cleaver mom. For many Boomer women, 'the way we were'—in our marriages, families, and churches—is fraught with emotional baggage. It is the way they hope we never are again... Gen-X women can be more attracted to traditions they never had to break from."
  • New research by the SEC finds that corporate executives tend to cash out more of their shares after announcing a buyback. The research also shows that this insider activity is associated with stock underperformance, undermining the argument that buybacks result in the net creation of shareholder value. (Yahoo Finance)
    • NH: Last year, SEC Commissioner Robert Jackson, Jr. (one of five SEC commissioners, a Trump-nominated Democrat) presented evidence that corporate insiders were overwhelmingly more likely to sell their shares just after their company had announced a stock buyback. (See: "Taking Stock of Corporate Buybacks.") As we pointed out, Jackson's evidence undermines the most frequently heard defense of buybacks--that firms buy back shares when they are convinced that the shares are undervalued. Clearly, many of these firms' managers beg to differ. Jackson's new data (published in a letter to Senator Chris Van Hollen, D-MD) indicate that the price of firms experiencing the most post-buyback insider selling tends to do best in the week just after the announcement but the worst after 90 days. This isn't flying well with either Democrats or Republicans in Congress.
    • There are many reasons why buybacks have been trending upwards ever since the SEC passed its famous rule 10b-18 back in 1982. The most obvious is probably benign: Buybacks are clearly a more tax-efficient way than dividends to distribute earnings to shareholders. (This reason could be eliminated by equalizing the tax treatment of these two types of corporate payouts.) But the other reasons are less benign. The worst is self-dealing by firm managers, especially those incentivized by EPS targets. (Addressing this would require, as Jackson implies, new SEC regulations.) Another bad reason is the tendency of firms to over-lever themselves in times of low interest rates and low credit spreads--like now. When firms borrow to buy back, as so many of them do, they are essentially performing an LBO on themselves. (This problem could be greatly alleviated by getting rid of the deductibility of interest on corporate taxation--which was a reform included in the original "Auerbach" blueprint for the Trump tax reform... but then rejected.)
    • Republicans would do well to attend to these issues asap, since massive buybacks are a prima facie embarrassment to capitalism. Could private enterprise be losing its nerve? (See: "Declining Business Dynamism: A Visual Guide.") As we have pointed out, when you add Apple's buybacks to its dividends, its total cash-out rate of 6.5% makes it look more like a dowdy utility than a whiz-bang tech company. There is a bottom line to all this. The public wants to know why, in an era when corporate profits are so high (relative to national income or to the real value of their assets) and interest rates are so low, corporations as a whole seem more interested in liquidating themselves than in investing in their own future.
  • Fully 74% of parents of 18- to 28-year-olds make appointments for them, including doctor’s appointments. New data drive home the degree to which young adult Millennials and their parents are emotionally and economically enmeshed, with a large share (across income levels) frequently texting with their kids and offering them relationship advice and financial support. (The New York Times)
    • NH: OK, we've already commented plenty on how much parents are helping out adult Millennials financially. (See: "The New 30-Something: Bankrolled by Mom and Dad" and "Millennials Get Financial Help from Mom and Dad.") This Morning Consult survey focuses more on how parents are helping out their 18-and-over kids in nonfinancial ways as well. (See below.) One finding that comes across clearly in such surveys is that the rising involvement of Boomer and Xer parents in their kids' lives is not just driven by the economic needs of kids. It also represents a fundamental generational shift: Boomers and Xers report that, no matter what the degree of need when they were young, their own (G.I. and Silent Generation) parents never took anywhere near the same interest in their lives.
    • In general, this rising parental involvement extends across all SES levels (i.e., income, education, and profession). But there are differences worth noting. Due to the rising economic inequality among parents, that same inequality can be tracked in the dollars spent on kids. (See below for the numbers for kids age 18 and under.) No surprise there. High-SES parents also show a higher rise in conversations and task-oriented activities spent with their kids. Lower-SES parents, on the other hand, show a higher rise in total personal time spent living and working with their kids--mostly because they show the highest rise in living in the same home with their kids.

What to Make of the Multiple Jobholding Rate. NewsWire - Mar24 chart6

What to Make of the Multiple Jobholding Rate. NewsWire - Mar24 chart7

  • A new research roundup documents all the ways in which Millennials differ from their predecessors. The common theme is postponement: Faced with worse economic prospects than their parents, Millennials are pushing back all of the traditional markers of adulthood, from homeownership to marriage to childrearing. (The Washington Post)
    • NH: Generational differences in the timing of basic life choices--like getting married and buying a home--are pretty easy to track and compare. That's what The Washington Post has done here. They've also done a good job comparing the economic environment of each generation (Boomers, Xers, and Millennials) in the ten years after each birth cohort reached age 18.

What to Make of the Multiple Jobholding Rate. NewsWire - Mar24 chart8

What to Make of the Multiple Jobholding Rate. NewsWire - Mar24 chart9

  • According to Gen-X columnist Jason Wilson, Xers’ rocky formative years have prepared them to lead with “pragmatic resilience” in old age. Whether it’s facing climate change or another crisis, no obstacle is too great for Xers: “We were never really in charge anyway, so let’s keep rolling with the punches.” (The Guardian)
    • NH: The word "roll" has an interesting Gen-X connection. The passive idiom "to roll with something"--as in to show resilience by simply enduring or surviving something--has proven to be very popular with Xers. Ngram shows a three-fold increase in usage since the early 1990s. Of course, the active idiom "let's roll"--as in, let's get up and do something--also has special significance for this generation. While the expression dates back to at least the 1920s, it was immortalized by 9/11 hero Ted Beamer (born 1968) on Flight 93 over Pennsylvania. 
  • New payment apps like Afterpay and Affirm bring layaway plans to everyday purchases. While “buy now, pay later” may seem like a good fit for cash-strapped Millennials, it could breed financial irresponsibility: After all, if you can’t afford to pay for an Urban Outfitters sweatshirt all at once, you probably shouldn’t be buying it at all. (Cassandra Report)
    • NH: In student debt, Millennials are borrowing much more than older generations did at the same age. In nearly all other forms of debt, Millennials are borrowing less. "Nearly all," however, does not mean "all." One type of debt prevalence that is rising for Millennials is auto loans or leases. Millennials think of cars less as property and more as a rentable service. They also use them less, so the rise in the share of Millennials taking out auto loans is roughly cancelled out by the decline in auto spending or borrowing per Millennial. The other type of debt prevalence that is rising is so-called "personal loans." That's the subject of this Cassandra report.
    • While the popularity of such borrowing is rising among young adults, it remains small in absolute numbers. Total growth from Xers to Millennials is only about 2 percentage points. Compare that to the 7 percentage-point decline in credit card usage--which typically involves much greater per-person debt. What's more, an important selling point for these payment apps is that they constitute a "retail tool," not a "financing service." Millennials don't like to think they're going into debt for taking possession of goods before paying for them. And with Elizabeth Warren's CFPB rendered toothless by President Trump, it's unlikely that any federal regulator will force these "retail tools" to remind them of the meaning of the word "debt." For now, anyway.

What to Make of the Multiple Jobholding Rate. NewsWire - Mar24 chart10

  • For the first time, a higher share of U.S. households subscribe to a streaming video service (69%) than to traditional pay TV (65%). But with the freedom of streaming has come frustration: Subscribers’ top complaint is shows disappearing from the services they use, which is only going to become more common as more networks prepare to launch their own services. (Deloitte)
  • Only 45% of middle-income Boomers expect they’ll need long-term care in retirement, but experts put that share at 69%. A mere 21% have savings set aside for long-term care at all—an ominous disconnect that spells financial disaster for many Boomers down the road. (Center for a Secure Retirement)
    • NH: Yes, most Americans can expect to require long-term care at some point. But so long as long-term care insurance does such a poor job covering this risk at a fair price (due to moral hazard, asymmetric information, tail risk, and other problems), few Americans will choose to directly insure themselves against this risk in private markets. The conventional wisdom regarding long-term care is that the wealthy should self-insure and the poor should count on Medicaid. Only those somewhere in the "middle" should consider buying long-term care insurance. IMO, it's a bad deal even for the middle.
    • So what should Boomers in the middle do? Other than maximizing your savings and net worth (and protecting your heirs early with an irrevocable trust), most of what you should do has nothing to do with finances. First, take an active interest in your own wellness. If you extend your healthspan so that it approaches your lifespan, you're in the clear. Second, stay connected to family and close friends, who will inevitably constitute the most meaningful and trustworthy "back up plan" if your health fails. In the worst case scenario, the federal government does provide a floor of protection. Yes, it's called Medicaid. But contrary to popular impression, Medicaid does not require destitution to qualify (though rules do vary by state) and Medicaid-funded home services are often the same as those paid with your own money.
  • The number of pedestrians killed on U.S. roads has reached a 28-year high, according to a new report. While driver fatalities have declined over time, the dangers have increased for pedestrians, in part due to SUVs, smartphone use, and infrastructure that wasn’t designed with walkability in mind. (Governors Highway Safety Association)
    • NH: What accounts for the steep relative rise in pedestrian fatalities? One theory is that more people are commuting to work by walking. But this doesn't explain why the biggest rise in pedestrian deaths has been during the night. The rise in distracted driving--while not explaining many driver deaths (see: How Millennials Are Steering the Future of Auto Insurance")--may well be a bigger culprit. Texting while driving together with texting while walking are a deadly combination. That's especially true at night, when drivers need to respond instantly to objects appearing in their field of vision. As we know, even AI-driven cars augmented with all-seeing radar and LiDAR have experienced deadly failures with pedestrians at night. Still another explanation is the rising share of all vehicles that are light trucks or SUVs. These vehicles hit pedestrians higher than ordinary cars, thereby inflicting injuries to the torso and chest that are less survivable. 

                                          DID YOU KNOW?

                                          An Epidemic of the Mind. Teenagers are more stressed than ever (see: “The Young and the Anxious”), and it shows. According to Pew Research Center, fully 70% of 13- to 17-year-olds say anxiety and depression is a “major problem” among people their age where they live, by far the highest share of any issue. For comparison, the next-most-pervasive problems among teens are bullying (with 55% saying it’s a major problem), drug addiction (51%), and alcohol use (45%). What are kids so stressed about? Nearly two-thirds (61%) of 13- to 17-year-olds say they feel a lot of pressure to get good grades. Today’s teens are far less concerned with issues that were top of mind for previous generations of kids, like looking good (29%) or fitting in socially (28%). Teens’ drive to get good grades can be explained by their higher-ed ambitions: Fully 59% say they plan to attend a four-year college. Once on campus, of course, these teens can expect better mental health services than their parents ever got. (See: “Mental Health Counseling Goes to School.”)