Prospects for unionizing in Silicon Valley

A topic I've heard increasing buzz about at parties^[1] is the idea that Silicon Valley tech workers should be unionizing. The New York Times was discussing unionization in digital media a month ago:

Daniel Marans, a reporter at HuffPost, said the treatment of employees at digital media companies should not remain stuck in a time when websites were small and scrappy, staffed by younger workers who were happy to see their names in pixels.
"That comes to things like transparency on pay, having a decent pay scale that allows a ladder of sustainability where you can support yourself on such an income, and having due process and a guarantee of severance in the case of layoffs," Mr. Marans said.

Ooh, that looks like a great slate of demands, straight out of the union playbook. Let's unpack it.

The union demands

Transparency on pay

Know what everyone else is paid based on level - no practical scope for varying pay based on the positive or negative impact to the company. Any perceptible skew by race, gender or other minority status gets jumped on. This ties in to the next point very well.

Ladder of sustainability

a.k.a. "pay by seniority". The longer you work here, the more pay you get. No concept of "you haven't materially contributed more - or even as much - this year than you did last year, no rise for you." Per the above point, if you're a mother who's been working short hours to match with your daycare needs then you should be paid as much as a single man who's been employed for the same duration as you but has put in twice the hours. (Also as much as a single woman in the same situation as the man, which is even more invidious, but for some reason the law doesn't care about this situation.) And if you've spent 75% of your working day on Twitter supporting the Resistance Against Trump, or endorsing Chelsea Manning for Senate, that is a perfectly appropriate component of your day job.

Due process

Several states in the USA - including California, home of Silicon Valley - follow employment at will where a company can fire a worker just because they don't like them. They don't have to conduct a specific act of misconduct, it's just "it's not working out between us, goodbye!" There are carefully crafted exceptions in each state's laws, but the basic principle holds true for most employees. This violates one of the fundamental tenets of union laws worldwide - employees should not be fireable except in the most egregious circumstances.

Where you can support yourself on such an income

This refers to the lower-level employees - in practice, contractors - and the minimum wage. The more money union employees earn, the higher the dues that the union can ask for. "You're getting $15/hour? We Fought For Fifteen!" Of course, the employees who lost their jobs because their labor wasn't worth $15/hour don't really benefit from this. But screw them, right?

Guarantee of severance in the case of layoffs

As noted above, unions don't really believe in layoffs unless you're irretrievably conservative or Republican - in which case, fuck you. But if severance is unavoidable, you may be out of luck. I was surprised to learn that even in California, severance pay is not required although in practice it's present in most contracts.

Where is this coming from?

My personal opinion - which you should take with a whole bag of salt - is that this drive is a reaction to the past year's tepid (by Social Justice Warrior standards) reaction by Silicon Valley engineer peons to the cases of "hate speech" by such luminaries as Googler James Damore. The 2014 ousting of Mozilla's Brendon Eich seems to have been a misleading catalyst for social justice organizing: the perception was that the relatively small number of social justice crusaders had disproportionate power to influence media opinions and drive online lynch mobs.

The carefully union-unaffiliated Tech Workers Coalition has been pushing this line for a while:

The Tech Workers Coalition is a home for progressives in tech in the Bay Area. We’re an all-volunteer community organization. Our active participants include workers in the tech industry, members from labor union locals, community organizers, and friends.

"Labor union locals", huh? Why am I not surprised?

And now unions are concerned about the possibility of a nationwide “right-to-work” law which would effectively gut their funding. Tech workers need to stand with service workers in these fights.

Translation: we need tech money to fight the union-gutting right-to-work law. California in particular is not a right to work state - if you want to be a public school teacher, for instance, you're going to pay union dues.

Certain things are safer than others, and safer for different people. An undocumented contract worker is in a very different situation than a salaried citizen worker.

Well, there's the teeny tiny issue that the contract company is clearly breaking the law of the nation, so yes...

For tech, it’d be cool to see the strike weapon on the table. History shows us the tactics that will change the world for the better — the tactics that will not only get rid of Trump, but change the conditions that we’re all forced to live and work under.

Oh, that'll be an interesting one. Tech workers striking - "Facebook will go dark for 24 hours unless FB guarantees contractors the right to employ undocumented workers". How exactly do you expect the tech company leadership to react to this existential threat?

You should also give careful scrutiny to Coworker.org who has been publicly allying with union-oriented Silicon Valley employees. It looks to be funded principally by New Venture Fund (a $315M turnover organization whose turnover doubled from 2014 to 2015, and whose 2016 and 2017 turnover I'd be extremely interested to see. In turn they get "advised" by Arabella Advisors who have a very interesting management team with cited connections to e.g. Barack Obama's secretary of commerce, a company focus on regional food and divestment from fossil fuels.

Will it work?

What do I think? Twitter, Facebook and Google offices in the USA are going to be hit with unionization efforts in the next 12 months, initially as a trial in the most favorable locations but if they succeed then this will be ramped up quickly nationwide. This will be framed as a push to align the companies to approved socially just policies - which their boards mostly favor already - but will be used to leapfrog the activist employees into union-endorsed and -funded positions of influence. That approach neatly nullifies the increasing concern about their lack of material contribution to the company as they spend more time on Twitter and producing social justice memes than actually writing code and making the applications work better.

I wonder, though. The bulk of Silicon Valley engineering employees - who are still the majority of the company - are white, Indian and Chinese males. They are used to ruthless meritocracy from the age of, oh, eight or so. The prospect that some slacker [foreign epithet] could supplant them in promotion or pay just by unfireably hanging around the company while they sweat blood, or block them from a union-favored sinecure by dint of being black / female / transgender / identifying as a dragon is unlikely to be something they'd lie down and accept. I fear that the social justice crusaders are mistaking silence for acceptance, and the settling of accounts after the unionization effort will be (metaphorically) bloody indeed.

I doubt this will get off the ground with Apple. They are notoriously controlling and will both detect and ruthlessly act on any twitches of unionization.

For Amazon, of course, it's much more simple. Any Amazon employee pushing unionization will be deniably but publically killed by an Amazon warehouse robot. I can't imagine Jeff Bezos taking such a challenge to his authority lying down.

TL;DR - there will be a big unionization push for Silicon Valley companies in 2018, and it will go horribly wrong.

[1] You almost certainly don't want to go to the kind of parties I go to. There are no kegs, vol-au-vents, or mini sausage rolls. There's organic Chardonnay, sushi of dubious provenance, and acceptably ethnic cuisine like Vietnamese bánh cuốn and Mexican chilaquiles. I happen to like bánh cuốn, but am under no illusion that the food and beverages are based on what the guests find appealing.

Don't blame the tech industry for its "lack of diversity"

Tekla S. Perry, who's experienced enough in the technology world to know better, wrote a provocative piece in IEEE Spectrum this week titled "Why Isn't the Tech Industry Doing Better on Diversity? It's Google's and Facebook's Fault". This sprang from a discussion at "Inclusion In Silicon Valley" where Leslie Miley, Slack's director of engineering, excoriated Bay Area tech companies for their alleged lack of inclusion:

You come to Silicon Valley and you don't see people that look like me in positions of power [Miley is black]. If that's not hostile, what is?

You don't see Chinese Americans or Indian Americans in positions of power in the Federal government, despite 8 years of a black president. If that's not hostile to Chinese and Indian Americans, what is?

Leslie Miley is a mendacious asshole. There are many legitimate points to make about the disproportionately small number of black software engineers, and the horrendous educational and societal failings behind that - and let's be clear, prejudice against academically successful black engineers is a real thing from both the black and white communities - but Leslie's point is not one of those. He is jumping from "X is not happening" (observation) to "X must be being blocked by Y" (assumption). You'd think that a competent engineer would be better acquainted with logical reasoning. But looking at Miley's LinkedIn profile he's only spent a series of 2-3 year stints at a list of major tech companies (Google, Apple, Twitter) in engineering management roles; since you spend 3-6 months coming up to speed with a job like that, and assume you draw down effort in the 3 months looking for a replacement job before you leave, his actual engineering experience doesn't seem that great, and you wonder why he kept leaving each firm before his stock options started to vest in quantity... (This is of course the "play the man, not the ball" approach to argument, which is intellectually facile but no less well founded that Miley's approach to argument.)

I've said this before but let's say it again. The main reason that people of Afro-Caribbean descent are under-represented in the software engineering industry is because the dominant education requirement for that industry is a bachelor's degree in a numerical subject (STEM), and such people are correspondingly under-represented in that qualification bucket. Such under-representation is a major issue that needs fixing, but it's happening way before the Silicon Valley and other engineering companies get involved. There's a secondary issue that engineering companies in general should get better at finding bright numerate non-STEM-degree holders who will do well in software engineering with a small investment of training, but that's another blog post entirely - and in any case, Silicon Valley big firms do spend time and money looking in that general area.

It's not just Miley who's making dumb remarks at this diversity love-fest, of course:

The lack of diversity stems from hidden and systemic bias, believes Monique Woodard, a partner in 500 startups. "If you turned off the imported talent, would you look to Oakland and Atlanta? I'm not sure people would," she said.

This is bollocks on stilts, but not just for the reasons you think. Oakland is stuffed full of Bay Area tech workers, especially junior engineers. They live there because it is relatively cheap compared to San Francisco, Palo Alto, San Jose, Milpitas etc. Tech companies recruit people from Oakland all the gosh-darn time. What Monique Woodard means is that she doesn't believe that tech companies will go looking for the black talent in Oakland and Atlanta. Why isn't she saying this explicitly? You be the judge.

"Changing the practices that perpetuate the overwhelmingly white and male character of the Silicon Valley workforce are not going to be easy"

Male: yep. White: nope. In Silicon Valley, Caucasians are actually under-represented per the general population; Chinese and Indians are significantly overrepresented. In my experience, people who openly identify as gay or transgender are also markedly over-represented. By many reasonable measures, Silicon Valley is one of the most diverse environments there is - there is a huge population of people whose national original is not the USA, and they aren't just Indians and Chinese: there are substantial Russian, Korean, Polish, Filipino, Vietnamese and other nationalities.

What Ms. Woodard is actually saying is: "there aren't enough engineers with dark skin - excluding Indians - in Silicon Valley." Well, Ms. Woodard, why is that? Is there a peculiar conspiracy in hiring where the recruiters and hiring deciders are wide open to all sorts of people except those who are of Afro-Caribbean extraction? Is that what you are saying, or is it such a ridiculous notion that you have to resort to camouflaging it behind the umbrella of "diversity"?

Behind Miley's comments, at least, there's a nugget of good sense. The competition for engineers in Silicon Valley and its environs, and to some extent other places like Seattle (Microsoft/Amazon) and New York (Big Finance) is intense. If big firms want to find a cheaper source of good engineers then they should look at other major cities, such as Atlanta, Dallas, Austin. This is something of a risk though: you need to start a new engineering office, which means recruiting many tens of new engineers in addition to migrating some of your existing senior engineers down there to help build and train the teams, reinforce company culture and keep strong communication with the root offices. Up until now, this has been more of a risk than just upping the game in recruiting from the Bay: I suspect soon the numbers will cross a threshold that makes new engineering offices sufficiently financially attractive to be worth a try.

Bringing in new engineers from Republican states such as Texas and Georgia is also excellent for increasing diversity in the heavily Democratic (and worse, Californian) engineering cohorts of Silicon Valley. Yet, why is it that I suspect that Miley, Woodard et al don't regard that kind of diversity as desirable?

Analysing the blue-red hat problem in the face of user error

Everyone knows computers are getting smarter - unless they're being programmed by a major corporation for a government contract - but there has recently been another leap in the level of smart. DeepMind (now part of Google) has built an AI that has successfully deduced the optimal solution to the hat problem:

100 prisoners stand in line, one in front of the other. Each wears either a red hat or a blue hat. Every prisoner can see the hats of the people in front – but not their own hat, or the hats worn by anyone behind. Starting at the back of the line, a prison guard asks each prisoner the colour of their hat. If they answer correctly, they will be pardoned [and if not, executed]. Before lining up, the prisoners confer on a strategy to help them. What should they do?

Tricky, n'est ce pas?

The obvious part first: the first prisoner to answer, whom we'll designate number 1, has no information about his hat colour. Assuming blue and red hats are assigned with equal probability, he can answer either "red" or "blue" with a 50% chance of success and 50% chance of getting executed; he has no better strategy for self-survival. What about the other prisoners?

Applying information theory, our system has 100 binary bits of state - 100 people, each with 1 bit of state relating to whether their hat is blue or not. We generate 99 bits of knowledge about that state as the hat-wearers give answers. So the maximum we can expect to discover reliably is 99/100 hat values. How can we get close to this?

If everyone just guesses their own hat colour randomly, or everyone says "blue", or everyone says "red", then on average 50% of people survive. How to do better? We need to communicate information to people further down their line about their hat colour.

Let's get the first 50 people in line to tell the next 50 people in line about their hat colour. Person 1 announces the hat colour of person 51, person 2 of person 52 and so on. So the last 50 people are guaranteed to survive because they have been told their hat colour. The first 50 people each have a 50-50 chance of survival because the colour they "guess" has no necessary relation to the colour of their hat. On average 25 of them survive, giving an average survival of 75% of people.

The DeepMind algorithm relies on an insight based on the concept of parity: an 0/1 value encapsulating critical state, in this case the number of blue hats seen and guessed, modulo 2. The first user counts the number of blue hats seen and says "blue" if that number is even, and "red" if odd. He still has a 50-50 chance of survival because he has no information about his hat. The second user counts the number of blue hats. If even, and the first person said "blue", then he and the first person both saw the same number of blue hats - so his hat must be red. If even, and the first person said "red", his hat must be blue because it changed the number of blue hats seen between the first person and him. Similar reasoning on the odd case means that he can announce his hat colour with full confidence.

What about person 3? He has to listen to person 1 and person 2, and observe the hat colours in front of him, to deduce whether his hat is blue; his strategy, which works for all others after him too, is to add the parity values (0 for blue, 1 for red) for heard and seen hats modulo 2, and if 0 then announce "blue", if 1 then announce "red". Follow this down the line, and persons 2 through 100 are guaranteed survival while person 1 has a 50-50 chance, for an average 99.5% survival rate.

Of course, this is a fairly complicated algorithm. What if someone mis-counts - what effect does it have? We don't want a fragile algorithm where one person's error can mess up everyone else's calculations, such as with "Chinese whispers." Luckily, a bit of thought (confirmed by experiment) shows us that both the future-casting and parity approaches are resilient to individual error. For future-casting, if one of the first 50 people makes an error then it makes no difference to their chance of survival but their correspondent in the second half of the line is doomed. If one of the second 50 people makes an error then they are doomed unless their correspondent also makes a mistake - generally unlikely, a 10% chance. So if 10% of users make errors then the approximate number of survivors is (75 - 10) + 1, i.e. 66%.

Surprisingly, the parity approach is also robust. It turns out that if user N makes a mistake then they doom themselves, and also doom user N+1 who relies on user N's calculation. But because both user N and N+1 make erroneous guesses, this brings the parity value back in line for user N+2, whose guess will be correct (absent any other errors). So the approximate number of survivors given a 10% error rate is 99.5 - 10*2 = 79.5%

Here's Python code to test the various algorithms: save it as "hats.py" and run it (e.g. "chmod 0755 hats.py ; ./hats.py" on OS X or Linux). It runs 10 trials of 100 people and reports the average number of survivors, based on a 10% error rate in hat wearers following their strategy. Default strategy is the parity algorithm.

#!/usr/bin/python

import random

person_count = 100
half_person_count = person_count / 2
# Hat choices
hat_choices = ['r','b']
hat_opposite = {'b':'r', 'r':'b'}
# 10% error rate in guesses
error_rate = 0.1

def guess_constant(heard_guesses, seen_hats):
    return 'b'

def guess_random(heard_guesses, seen_hats):
    return random.choice(hat_choices)

def guess_future(heard_guesses, seen_hats):
    """ First half of list calls out hat of correspondent in second half of list """
    full_list = heard_guesses + ['x'] + seen_hats
    my_index = len(heard_guesses)
    if my_index < half_person_count:
        # Call out the hat of the person in the second half of the list, hope same as mine
        return full_list[my_index+half_person_count]
    else:
        # Remember what was called out by my corresponding person in first half of list
        return heard_guesses[my_index - half_person_count]

def guess_parity(heard_guesses, seen_hats):
    """ Measure heard and seen parity of blue hats, call out blue for even, red for odd."""
    heard_blue_count = len([g for g in heard_guesses if g == 'b'])
    seen_blue_count = len([s for s in seen_hats if s == 'b'])
    if (heard_blue_count + seen_blue_count) % 2 == 0:
        return 'b'
    else:
        return 'r'

def run_test(guess_fun):
    hat_list = [ random.choice(hat_choices) for i in range(0, person_count) ]
    print "Actual: " + "".join(hat_list)
    answer_list = []
    score_list = []
    error_list = []
    correct = 0
    for i in range(0, person_count):
        guess = guess_fun(answer_list, hat_list[i+1:])
        if random.random() < error_rate:
            guess = hat_opposite[guess]
            error_list.append('X')
        else:
            error_list.append('-')
        answer_list.append(guess)
        if guess == hat_list[i]:
            correct += 1
            score_list.append('-')
        else:
            score_list.append('X')
    print "Called: " + "".join(answer_list)
    print "Score:  " + "".join(score_list)
    print "Errors: " + "".join(error_list)
    print "%d correct" % correct
    return correct

if __name__ == "__main__":
    trial_count = 10
    correct_total = 0
    for i in range(0, trial_count):
        print "\nTrial %d" % (i+1)
        correct_total += run_test(guess_parity)
    print "\nAverage correct: %d" % (correct_total / trial_count)

You can change the "guess_parity" value in the run_test() invocation on the penultimate line to "guess_future" for the "warn the second half" strategy, or "guess_random" for the random choice.

This is a lousy problem for use in software engineering job interviews, by the way. It's a famous problem, so candidates who have heard it are at a major advantage to those who haven't. It relies on a key and non-obvious insight. A candidate who hasn't encountered the problem before and solves it gives a very strong "hire" signal, but a candidate who fails to find the optimal solution could still be a valid hire. The least worst way to assess candidates based on this problem is whether they can write code to evaluate these algorithms, once the algorithms are described to them.

The logistics of de-immigration

Eminent social justice activist Shaun King raises a pertinent point on the current topic (in the sphere of the US presidential candidate selection process) of what to do with the "immigrants of dubious legality" in the USA:

What do you think it would look like, practically speaking, for Trump to "round up" 450,000 immigrants per month and "ship them off".

— Shaun King (@ShaunKing) October 15, 2015

This is, as several people has observed, quite a hard problem.

The first problem you have is finding the immigrants, and this is probably the killer. You've got 360M people in the USA, illegal immigrants are 10M-20M in number by various estimates, so for every 1000 illegals found you have to trawl (naively) about 20,000 legal citizens - and at 450K illegals/month constant rate you're looking at 2 years to remove nearly everyone. So every month you need to annoy 9M legal residents at some level in order to meet your quota. As immigrant numbers fall, that number of recently annoyed legal residents will rise. You'll start with unobtrusive measures, but as time goes on you'll need to get more and more intrusive - and most of the annoyed legal residents are citizens, and can vote against representatives who are supporting this measure.

Then you need to make them leave the country. Detention is expensive, ask anybody in the Federal Bureau of Prisons - average is about $100/day and that assumes amortizing entry and exit costs over many months. The sooner you can export them, the better. You need to fund daily 1-way flights from a wide range of cities to the dominant countries of residence of illegal immigrants: Mexico (obviously), major nations in Central/South America, and Pakistan/India/Bangladesh. The immigrants won't be paying for this - they'd rather pass their US$ to legal resident friends and rely on that largesse being transmitted to their home country for later pick-up, at a generous margin. So the US government will be implicitly boosting illegal financial transactions as a result. Occupancy rate on those planes is going to be highly variable. Assuming average occupancy of an evacuation plane at 50% - realistically, you can't fill them with paying passengers, ask anyone in the UK - that $700 is a reasonable round trip fare to Latin America, and noting that the return journey will need to be empty (don't even think about eating the profit margins of existing airlines, there's no way this turns out well) you're spending about $700M/month just on the export. This assumes zero cost on detention and transport to the airport, which is "optimistic".

What's the end run around this? Make the illegals deport themselves. Illegal immigrants come to the USA to work and earn money for their family, with the (faint) hope that they can eventually stay. This might occur by having a baby in the USA who will be a US citizen, and applying for residency on compassionate grounds; alternatively they might eventually find an employer willing to sponsor them. So remove that attraction. There are definite areas of employment for illegal immigrants; it depends on the region, but generally agriculture (crop picking), daily manual labour and domestic service are the top areas. Focus tax audits on those areas, reduce the marginal cost of legal labor (e.g. by increasing the deductability of costs associated with a provably legal labourer) and watch the illegal employment rate plummet.

This isn't a free ride - the government will still need to fund the free no-questions-asked one-way flights home, but if they really want to make this happen then it's probably the cheapest way to achieve the goal. With no income, and easy access to return journeys to one's home country, the labour problem will mostly fix itself.

Of course, this reduces the government benefit of illegal employment - is an incumbent administration willing to forego all the income from illegal activity?

The trials and tribulations of government employees

A rather instructive NPR article tries to raise sympathies for the plight of US federal government workers in 2013:

There are reasons for federal employees to be unhappy. Thanks to sequestration, most have taken unpaid furlough days and work for agencies that are under de facto hiring freezes. This is the first year government employees have received an across-the-board pay raise since 2010 — Obama signed an executive order Monday to bump up base pay by 1 percent.

Note that it's extremely hard to fire government employees, and similarly difficult to reduce their pay and benefits. This is in marked contrast to the experience of private sector workers, who have seen a real squeeze in pay and benefits over the past five years and rising unemployment. It's also in contrast to state and local government workers, whose pension payments have grown to dominate local budgets and hence have seen their pay and/or benefits squeezed.

I can certainly understand disillusionment after a while working at certain government agencies. The EPA is one of my personal bugbears, because it's almost perfectly designed to obstruct businesses with no consideration at all for cost/benefit tradeoffs:

At EPA, for example — which saw the largest drop in employee morale among large agencies this year — the bulk of the work is devoted to supporting state environmental departments. Members of the public may or may not support its policies, but much of what EPA does is largely invisible to them.

I like that weasel "may or may not". In January this year the Supreme Court took a rather dim view of the EPA's attempt to block homeowners from even contesting their direction:

The justices said the order would be read as a strong threat from a powerful agency, not a mere warning of a potential problem. "It said this is an order," observed Justice Stephen G. Breyer. Justice Antonin Scalia said the action "shows the highhandedness of the agency."
Justice Elena Kagan said it was a "strange position" for the government to insist the property owner had no right to a hearing.

The EPA was unanimously reversed by the Supreme Court on this matter, a bipartisan measure of how demented their attitude was. If I was working for the EPA and cared at all about how the public viewed my job, this would rather sting. Oddly, the authors of this article don't mention this kind of event as a cause of government employee disillusionment.

Finally, of course, the truth comes out about why government employees don't just find another job and quit:

Federal employees enjoy decent pensions and generous health benefits — perks they may be loathe to give up, turning them into "golden handcuffs," Edwards says.
"They're there for the salaries and benefits," he says. "They're not there because the jobs make them happy."

This is not a terrible problem for a federal employee to have, considering the alternatives. Unlike a state or city employer, there's no danger of the federal government running out of money to pay the salaries and benefits of its employees any time soon. There are any number of unemployed or disposably-employed people who would love to have the problem of frozen wages, in exchange for a reasonable salary, good benefits and close to zero chance of being fired. The irony is that, to make the federal agencies better places to work, the right approach is to fire the hangers-on and under-performers - but there's no chance in hell that this is going to happen. Federal employees are stuck with Floyd Remora as long as they work there.

I'm just curious; if federal employees were allowed to vote on their agency being mandated to fire the lowest-performing 2% of employees each year, as long as they were allowed to hire people into the vacancies despite a hiring freeze, would they go for it?

Minimum wage, maximum unemployment

Following the previously-blogged move by SeaTac to up its minimum wage to $15/hour, this campaign seems to be going national in the USA, heavily backed by unions such as SEIU:

Organisers hope workers in as many as 100 cities will participate in what is the latest in a series of such actions.
Unions want a $15-an-hour (£9.19) federal minimum wage. The current one, set in 2009, is $7.25 per hour.

Oh dear. Where to start? Well, $15/hour in NYC is very different from $15/hour in rural Kansas in terms of buying power. In the latter, you'll be lumping a huge range of jobs together with the same wage. I don't know what socioeconomic effect this is going to have, but it's not going to be pretty.

There's also the small matter of unemployment. Some businesses won't be economic to operate with a doubled wage bill. They'll either have to get more productivity out of their existing workers, or do without them all together. This is where the much-famed robot burger flipper comes in - for a fast food establishment you shrink your workforce to a small number of managers and technicians who deliver $15+/hour of organisational value, and then steadily replace the servers and burger flippers with machines. This is more likely for larger businesses since they can more easily amortise the costs of integrating the machine with their menu and kitchen layouts. Once the principle of robotic food preparation (and self-cleaning bathrooms) is established, there will be a lively market in the associated hardware and software. Meanwhile the number of jobs for relatively unskilled workers plummets, with the most likely unreplaceable jobs involving customer interactions like waitressing and more skilled cooking - and if you don't have great people skills or a trade skill, you're screwed because there's a much larger pool of people competing with you.

Given all the likely and very visible negative effects of a doubled minimum wage, I'm desperately curious why the major unions are pursuing it. They're not stupid, after all. It would seem that they're making a massive millstone for their own necks, and those of the politicians they own, when the wage goes up and unemployment shoots up to match. Are they that confident in the media carrying water for them and blaming the unemployment effects on "the rich", and panning the opposition when they proposed lowering the minimum wage back to something like $8/hour?

"What we need is a social movement in this country that says enough is enough," said David Rolf, the president of the local Service Employees International Union.

Yes, enough with employment for many - let's restrict it to the elite. Doesn't seem like a very progressive message to me, but what do I know?

The human face of excessive state spending

When you promise future benefits that can't possibly be paid, you end up like Detroit:

"I object to being referred to as a creditor," said retiree Paulette Brown, a former water department employee who got notice of the bankruptcy because her pension is at risk. "What I am is a dedicated public servant … Who's going to prison for the proposed cruelty to retirees?"

Less compassionate commentators make the observation that Detroit was obviously heading down the tubes and future promised income was at risk, but that's a pretty sophisticated observation to make from the point of view of a low-level government employee who believed that her pension money was safe and now is faced with a huge chunk being taken out of it through no fault of her own.

I have slightly less sympathy for Cynthia Blair, on a $3,000-a-month pension from her police sergeant husband. This is $36,000 per annum - and very little, if any, tax taken off that - which goes a long way in Detroit. Even the headline figure in sterling is £22,500, which is a seriously good pension. Perhaps if pensions had been less generous in the past, Detroit wouldn't be in such a mess in the present.

In the end, though, you can't fight the math, as resident Jean Vortkamp discovered:

Jean Vortkamp, got emotional as she described the bleak state of city services. She said the body of a young murder victim remained on her street for five hours before being removed.
"Detroit is not an airline or a cupcake company. We are a family that deserves respect," Vortkamp told the judge.

Well, Ms. Vortkamp, why are the city services so appallingly poor? It's because they have no money. Why do they have no more money? Because 25% of it is already being spent on pensioners and the police and fire department costs have exploded. The city is not getting anywhere near the bang per buck that it used to.

I have no idea how Detroit can be fixed. I have serious doubts it can be fixed. You can't magic new income for the city - profitable people and companies are leaving the city rather than be taxed to the hilt. You can't stop spending on the police force, the murder rate is bad enough already. The federal government won't touch Detroit with a bargepole, since any federal intervention will set a precedent for unbounded claims on the government as other major cities follow Detroit. Razing Detroit to the ground and sowing the earth with salt is rhetorically attractive but glibly skips over the pensioners who had a not unreasonable expectation of adequate provision for their old age and are left with little.

If you want to pin the blame on anyone, I'd start with the mayors of Detroit, especially those since 1960 when the employment and spending really started to get out of hand:

• Louis Mirani (R) 1957-1962
• Jerome Cavanagh (D) 1962-1970
• Roman Gribbs (D) 1970-1974
• Coleman Young (D) 1974-1994 (yes, 20 years in power)
• Dennis Archer (D) 1994-2001
• Kwame Kilpatrick (D) 2002-2008
• Kenneth Cockrel Jr (D) 2008-2009
• Dave Bing (D) 2009-present

I would personally drag each of these gentlemen into court, strip them of their financial assets and use the confiscated funds to support affected pensioners. I don't see it making a big difference to the debt mountain, but at least it would make me feel better. It also might just make high-spending politicos in current state and city administrations think twice before glibly promising future money for which they have made no sensible provision.

Stability is no longer a workplace option

In the category of "tragic news that everyone will laugh at", Megan McArdle reports that job security for lawyers in the USA is very much a thing of the past:

The odds are increasingly long that a recent law-school grad will find a job. Five years ago, during a recession, American law schools produced 43,600 graduates and 75 percent had positions as lawyers within nine months. Last year, the numbers were 46,500 and 64 percent. In addition to the emotional toll unemployment exacts, it is often financially ruinous. The average law student graduates $100,000 in debt.

Amusing enough for anyone who has ever been envious of the over-paid privileged legal practitioners, but this is merely the legal field catching up with most of the rest of society.

The concept of "a job for life" is now sufficiently rare that the very phrase sounds archaic; instead of something to aspire to, it's a facet of workplace history. The assumption is no longer that once you join a workplace you'll be there forever; rather, there's a divide between those who hop from job to job at the same (low) level, desperately trying to keep their head above the financial waterline, and those who use jobs in a similar way that animated sprites use the platforms in a game of "Donkey Kong" - steadily leaping higher and higher in an attempt to rescue the heroine and beat the game.

Because of this, it never ceases to amaze me - you'd have thought I would have learned by now - when people explicitly or implicitly assume that they will stay in the same place, working the same job, for the indefinite future. It seems so contrary to any rational expectation. I suppose it's a hard thing to contemplate moving job / house / country, but that's the world in which we live. Having made several major leaps across the country in pursuit of jobs, I can sympathise with those recoiling from the prospect of dislocation; and yet, in hindsight and in comparison with my friends and colleagues that stayed in the same place, it was definitely the right move.

McArdle nails the modern day situation:

But remember that we are not facing anything that our ancestors didn’t have to cope with. Insecurity is rarely fatal, even if it’s really frightening. And we may have to learn to live with it, because no one seems to have a very good answer for how to fix it.

You hope for a stable future, but hope is not a strategy. If you want a stable life, you have to be planning actively how to handle instability. Closing your eyes and humming "lalala" is not going to make the world of change go away.

Interviewers don't know jack

At least, that's the impression given by Google's HR head Laszlo Bock:

Years ago, we did a study to determine whether anyone at Google is particularly good at hiring. We looked at tens of thousands of interviews, and everyone who had done the interviews and what they scored the candidate, and how that person ultimately performed in their job. We found zero relationship. It’s a complete random mess, except for one guy who was highly predictive because he only interviewed people for a very specialized area, where he happened to be the world’s leading expert.

For anyone who's done any substantial amount of interviewing, this will ring a bell. Without the data following-up on hired candidate performance in their jobs, there's very little that the individual interviewer receives as feedback on their interviewing. If you consistently have 4+ people doing interviewing the same candidate on closely-related topics you can compare their score and identify interviewers who give diverging scores - but then you have no idea whether the outlying interviewer was correct or not. I sometimes wonder whether in these situations companies should hire a small fraction of candidates who score highly with divergent interviewers but moderate-to-low for the rest. Of course, that's an expensive way of stats gathering.

Megan McArdle analyzes the interview and draws conclusions that I think are slightly off:

Resume and past work history are much better predictors of future performance [than brainteasers]. The problem is that in most fields, these are hard to ascertain unless you're pretty prominent.

I take a little more hope from Bock's analysis. I'd agree with McArdle (and Bock) about the relative useless of brainteasers. I would disagree to some extent with the resume and work history as predictors. What resume and work history really give you as an interviewer is a baseline for what to expect of an interviewee's performance, and to give the interviewer a pointer to the work-related questions to ask.

Example: the resume (CV) claims that the interviewee has experience building distributed systems, and has 8 years of Perl development. Immediately you, as hiring manager, know that one of your interviewers should throw a (company-standard) distributed systems development at them, and expect them to nail most of the high points. All interviewers should expect them to be able to write some Perl on demand and expect it to parse, use modern idioms, and employ efficient and suitable constructs. Falling short on any of these indicates that either the resume is "generous" with the facts or that the interviewee does not learn and increase their ability with experience as quickly as could be expected.

To make use of these facts, as Bock notes, you need to have standardised assessments of your candidates - a smallish bank of interview questions with a calibrated range of possible responses. This may well not be the world's best predictor of ability in a job, but at the very least it's a reliable way of screening out the under-performers and the outright resume fabricators.

CEO in favor of government penalising his competitors

Howard Schultz, CEO of Starbucks, is in favour of raising the Federal minimum wage. Quoted in the Huffington Post:

"On balance, I am a supporter of the minimum wage going up," he said. "We've got to be very careful what we wish for because some employers -- and there could be a lot of them -- will be scared away from hiring new people or creating incremental hours for part-time people as a result of that wage going up."

The Federal minimum wage is $7.25/hr and Obama is proposing to raise it to $9/hr. Since Starbucks baristas generally earn close to $9/hr, this change is unlikely to hurt Starbucks much. But smaller coffee chains that rely on minimum wage employees to undercut Starbucks and prevent their customers going next door for a banana latte and gluten-free cookie are going to be squeezed and forced to raise their prices, thus migrating more customers to Starbucks. I have to admire Schultz's business sense, but let's not fool ourself that his support for the minimum wage is anything but self-serving.

One point that's being lost among all the minimum wage discussion is that this pertains to the minimum wage set by the US Federal Government, not the states. Minimum wages can also be set in states and even cities. New York state is planning to raise the minimum wage from $7.25 to $8.75 for instance. The Federal minimum wage doesn't apply to small firms whose commerce doesn't cross state lines, but it looks like Burger King etc. are all exposed to this. So in a poor state where wages are low (often Republican-leaning states), the federal minimum wage hike is likely to leapfrog any state or city minimum wage setting. It's likely to have less of an effect in Democrat states like California and New York where wages and minimum wage levels are already high.

Interestingly, it's really going to hit employers of tipped workers (waitresses etc.) Since they are often employed on $2-$4/hr and rely on tips to hit $7.25, and the employer is responsible for paying the gap if tips fall short, and given that prices and hence tips are unlikely to rise, the employer may have to find another $1.75/hr - 50% or more of his current wage payments.

The Huff Post article has a slideshow of "People who hate the minimum wage", and first up is ex-Republican presidential candidate contender Herman Cain:

Though Republican presidential candidate Herman Cain never outright advocated abolishing the minimum wage, he did argue that minimum wage laws prevent workers at the margins from getting their first jobs. Cain was an executive in the restaurant industry, which is one of the largest employers of low-wage workers.

Sounds to me as if Herman Cain was ideally positioned to see the effect of minimum wage laws on low-wage workers. Why aren't we listening to what he has to say?

Retirement risk - you can't remove it

Megan McArdle always wrote interesting (if occasionally economic-nerd-appealing) articles when she was at The Atlantic, and I'm glad to see that her move to the Daily Beast hasn't quenched the fire. Her latest piece on risk transfer in the USA retirement system should be required reading for anyone with a vested interest in retirement - and if you're planning to live to 65, this means you:

There is no system that gets rid of retirement risk. It just shifts who bears the risk. And don't think that there's some easy political fix, because the same political incentives that have stymied sound regulation of whatever system you want to fix, will also shape whatever new system you want to create.

McArdle is looking at the US retirement system, but the same situations and incentives apply almost equally in the UK. Indeed, she points out that the US state retirement solution (Social Security) is generally lauded for its relative lack of perverse incentives compared to other countries - yes, George Osborne (and Gordon Brown), we're looking at you.

For UK readers of McArdle's article, a 401K is pretty much the same as a personal (defined contribution) pension with tax relief on the contribution; Roth and IRAs (Individual Retirement Accounts) are similar though have different tax relief components. The problems faced both sides of the Atlantic appear to be distressingly similar:

That is, private pensions no longer rely on the premise that retirement can be made cheaper through investment in assets that grow faster than GDP. But such a free lunch was what made the plans attractive for employers in the first place, and as employers have faced the plans' real costs, they have increasingly eliminated them.

For anyone on the receiving end of a shutdown of a defined benefit private pension, McArdle's explanation will doubtless be cold comfort, but the truth is usually uncomfortable. She also identifies the risks associated with retirement:

• investment risk: the money you put into the stock market gives lower returns than you were promised;
• savings risk: you've saved too little for your retirement;
• sovereign debt risk: government has borrowed too much and run out of the money promised to public sector workers and social security retirees.
• company risk: the company pension fund either has too little money to pay retirees the full whack, or is nailed by a company bankruptcy.
• tail vs idiosyncratic risk: attempts to provide a more "reliable" retirement funding concentrate risk so that previous common-but-small-impact failures (like companies going bankrupt) are replaced with unlikely-but-catastrophic failures (government running out of money, affecting pretty much everyone).

She points out that the move away from defined benefit pensions in the private sector removes company risk but replaces it with investment and savings risk. The attempts to get government to backstop all pensions are removing idiosyncratic risk but trading it for tail risk - if you think a government running out of money is unlikely, just look at Greece. And look at Spain, and Portugal, and in 10-20 years maybe France as well. She doesn't cover actuarial risk, but it's a factor too - if people live longer, annuity rates will fall and governments will need to pay out state benefits for longer.

Luckily public sector workers are rolling in the clover - aren't they? Well, being in the public sector they've traded idiosyncratic risk for tail risk:

Idiosyncratic failures are less likely to be catastrophic. It's very bad if your pension fund collapses. But you may have a sibling whose pension fund has not collapsed, or a spouse. Your children have a spare bedroom. You have social security benefits. And unless you live in a company town, you can probably pick up a part-time job--and if you do, you can move to one. But if everyone loses half of their social security benefits, your social network is probably suffering just as badly as you are.

For this reason, any country with an increasing fraction of employees employed by the public sector should be terrified. The cost of public sector pension payments can be met by increased public sector contributions, but governments find it much easier to raise contributions by employing more people - thereby deferring the problem, but ensuring that it's going to be that much worse when it hits.

The one solution I really like is Denmark's:

Denmark's quasi-mandatory system forces almost everyone to put 9-15% of their income into a defined contribution plan. Average assets in these plans total almost $200,000 per person.

Let's be clear; there's still investment risk here, but at least Denmark has eliminated savings risk. I doubt, however, that such a system can be extended to the UK (let alone the USA) without a massive depressive effect on the economy, and no politician is going to go for that. After all, the benefits won't be felt for 10-20 years, and he'll be up for election in 4.

Prince Philip tells it like it is

Much frothing and indignation over the Duke of Edinburgh's latest "gaffe" that the Philippines must be half empty because the natives are all here running the NHS. Oh, would that this were true. If Filipino nurses really were running the NHS, it would be doing a damn sight better job of caring for its patients.

There are about 12.5M Filipinos working overseas and about 200K of them are in the UK - I'd suspect at least 50% working in the NHS, and of those 50% as nurses, 50% as carers or auxiliary staff. Given 410K qualified nurses in the UK, that implies about 1 NHS nurse in 8 is Filipino; my admittedly limited encounters with the NHS support this data. They tend to be more competent than the average UK-educated nurse; all Filipino-educated nurses must hold a Bachelor's degree in Nursing, but this tends to have a much more practical and technical focus than the UK nursing degrees. One can't imagine a Filipino nursing tutor teaching his students about diversity, for instance. If you tried to sell a Filipino nurse on the University of Nottingham's nursing curriculum, she'd think you were making some sort of practical joke.

Prince Philip, once again, has put his finger on a salient issue of public policy. If the UK were serious about caring for its sick, it would be recruiting Filipino nurses hand over fist. Since it is not doing so, one can only conclude that the demands of the Royal College of Nursing for job security for its members have trumped the needs of NHS patients. I find it especially instructive that the RCN's view of supporting diversity is organising Gay Nursing Pride events given that 2-5% of the population is gay (depending on whose figures you believe) but 12% of the UK nursing profession is Filipino. Frankly, I would have thought that overseas nurses were in far greater need of support from the RCN than gay nurses. Since an influx of competent foreign nurses with a good command of English language and grammar would put downwards pressure on nursing wages and make the native nurses look uncaring, incompetent and badly educated, maybe it's not surprising that the RCN is not campaigning for this influx - we should, however, realise that the RCN does not concern itself with the best interests of patients.

Comp season, break out the popcorn

This week is banking bonus week and the Daily Mail is carefully working itself (and its readership) into a froth of rage, hyperbole and errors:

...staff at Goldman Sachs are expected to reward themselves(1) £8.3 billion in bonuses(2) on Wednesday. The American investment bank, which employs 5,500 staff in the UK, will be the first to unveil its telephone number-sized(3) rewards – an average of £250,000 a person(4) – as part of the latest round of bonus updates.

Taking them in order:

1. Hopefully obviously, it's not the case that every banker sticks his or her grubby paws into a barrel full of dollars and pulls out what he or she likes. The Goldman Sachs partners will allocate the available bonus pool between the divisions; each division's partners will then allocate most of what they have around their profitable traders, and the remnants get handed down the management chain, shrinking as they go. The only way a "banker" can determine his own bonus is to threaten to leave if he doesn't get at least $X, and in today's banking job market the number of people who can make that threat effective are few.
2. The "bonus" pool is actually total compensation - you have to take away what people are actually paid as a salary before you can start to dole it out in cash bonuses, shares, and deferred shares.
3. Taking a typical phone number of 01234 567890, that looks like $1.2bn (if we are generous and assume the DM is referring to the original dollar figure rather than the UK equivalent). I rather doubt even the top partner is going to get 10% of all compensation to himself.
4. There will be very few people with a total compensation around £250,000. The troops in the trenches making up most of Goldman Sachs' 32,600 headcount will get much less than £100,000 in total compensation; they'll be lucky to get a bonus of 25% of their salary. Not peanuts, to be sure, but less than half the average. Those earning above £250,000 will mostly be managing directors, partners and perhaps very senior vice presidents. Best guess is that there are around 2000 MDs and partners.

I particularly treasure the Daily Mail reader comments on this:

The US government gave them huge amounts of money with no recourse. So what happened there and now that they are making losts of money how is the US taxpayer going to get some of it back. Its absolutely Obscene. What sort of INSIDE deals were being done in US government. Seriously.
- EUSSR, London, 13/1/2013 17:28

Yes, I'd imagine the US government is gnashing its teeth at only getting a 22% (annualised) profit on its enforced loan to Goldman Sachs. The fiends!

What I don't expect to see is any comment about Goldman Sachs profits and bonuses from a certain G. Osborne. Assume the DM is correct in the figure of £8.3 billion total comp, and given 5000 people in London, that's £1.3bn in pay to be taxed. Assuming a conservative average tax take of 50% (50% top level income tax + 2% ee NI + 13.8% er NI == 65.8% marginal tax over £150K, so 50% average over all employees seems low if anything) the Treasury will see a total of £650 million in tax from London-based Goldman Sachs employees this year. Toss in JP Morgan, Barclays, Lloyds into the mix and I would think Mr. Osborne is going to keep his mouth shut about the evil bankers.

Minimum wage experiment - San Jose, California

I just stumbled across this in the US election coverage: it seems that the city of San Jose, California is going to raise the minimum wage from $8/hr to $10/hr.

Measure D supporters argued that raising the wage floor in San Jose from the current state hourly minimum of $8 to $10 with annual inflation adjustments is a moral necessity in pricey Silicon Valley. San Jose State sociology students hatched the idea that quickly gained labor union support.

Sociology students? Moral necessity? You couldn't make it up.

What could possibly go wrong?

Here is the San Jose unemployment rate: coming down to about 9% from a 13% peak in 2010. I would wage a quid or two that in 6-12 months you're going to be looking it climbing above 10% once more.

Demented QE

Ben Bernanke is all out of ideas, so he signs off on another round of quantative easing. After all it worked so well the last two times, right?

The Fed said it will buy $40 billion of mortgage-backed securities per month in an attempt to foster a nascent recovery in the real estate market.

Oh Lordy. Look, Ben, the USA's housing market collapsed because it was massively overvalued. So far, so good. But ultra-low interest rates induce asset bubbles, and so the housing market (along with gold, oil etc.) is rapidly re-inflating. You don't need QE to force house prices up, they're rising rapidly enough already.

If you want to fix the American economy, you have to reduce the costs to American small and medium businesses of doing business (the large businesses generally have good lobbyists and are doing just fine). The current administration's plans (Obamacare etc.) are having precisely the opposite effect; uncertainty and worry about the future costs of employment are making them pull in their heads and wait to see what will happen. In the meantime we get no economic growth.

I think Ben Bernanke has no idea what to do, and is pulling QE out of the hat in response to the famous "Yes, Minister" syllogism: "We must do something, this is something, therefore we must do it." I note that he's never had a job that involves employing people or trying to make a profit.

"Undocumented" - the latest euphemism

You would imagine that "undocumented" in relation to a resident's immigration status means that they are lacking a document that would prove their status. You would not, for instance, think that it meant that the reason for a lack of documentation was that they lacked the actual status. Unless, it seems, you are a notorious hippie reporter writing in the Guardian about immigrants in the USA:

Here in Charlotte, outside the convention center, ten brave souls, among them a young woman and her mother, a couple and their daughter, sat down in the pouring rain on a large banner they placed in the middle of the intersection. The banner read "No Papers, No Fear" (in Spanish, "Sin Papeles, Sin Miedo"), with a large butterfly in the center.

Hmm. The implication here is that the banner was written in Spanish; I believe that English is still the universal language of the USA. Why write your banner in Spanish if you're aiming at the bulk of USA voters?

There are quotes from undocumented citizens:

"I am undocumented. I've been living here for 18 years. I pay taxes, and I'm paying more taxes than Citibank."

Fascinating. What SSN is on his IRS form 1040? He'll need one, if he's to pay taxes. Where did he get it? Bet it wasn't from the IRS if he provided only authentic documentation. And, while we're at it, Citibank paid $3.5bn in income tax in 2011.

You can argue all you like about the various demented parts of the USA immigration laws, and the states' need for workers who are prepared to work at sub-minimum wage in the fields of the agricultural states, but let's not pussy around with terms like "undocumented". This could apply to children of illegal immigrants who were brought in to the USA by their parents, and bear no responsibility for their current status: it does not apply to their parents who came into the country in full knowledge of their illegal status.

Give your employer your social login?

I was fascinated by this piece on the Beeb about prospective employers demanding the login information from their job candidates. Can it ever be justified?

My reflexive response, is "hell, no!" but I think the real answer is a little more subtle. However, let's tackle the easy case straight away. If a prospective employer asks you for your username and password (as happened to Robert Collins in the Beeb article) then they are almost certainly making you violate the terms of service of your social media account (Facebook, G+, Twitter etc.) and you should tell them to take a running jump.

What if they just ask you for your social media account info so they can look at what you're posting publically? No harm there, right? Um, well...

There are very few positions where the social media postings of a prospective hire are relevant. You are under no contractual agreement with this company, so there are no non-disclosure agreements to violate. If they can Google your name and find your postings, fine; you are however under no obligation to assist them. (This is obviously a better cover for John Smith than it is for Thomas Wanker.) The only exception to this that I can think of is if you are under consideration for a PR-type role where your public social media persona is a significant issue. In this case it's only reasonable for the employer to ask you to point them at your posts, in case there's anything there that may blow up out of proportion if they hire you.

Perhaps you don't post anything of note publically? They may require you to give them access to your posts (in FB, by you "friend"ing them - in Google+ it's a lot more complex, since different posts are visible to different circles and they have no idea how many circles you have, or to which circles you post.) This is really treading on your toes, and even if you are being hired for a social role you should consider whether you regard it as a reasonable request.

In most cases, however, this request by a company's HR department is a very useful piece of information to a prospective hire. It tells you that the HR department is stuffed with humourless control freaks, and you should tell them to take a running jump. Alternatively, construct a new Facebook account; add a few very, very understanding friends, and make some suitably tasteful posts about Internet shock sites such as goatse.cx. You won't get hired, but if you are imaginative you can get the HR drone on the phone as you give them your details ("I don't like to send this information out via email, it's not secure") and ask them if they can view your posts OK.

Incidentally, if you use social media and you are employed, you should without question read the Evil HR Lady on how to avoid being fired.

Polly's NEETS

I hope my readers appreciate the sacrifices made in bringing this blog to the Net: after reading today's Polly missive on how to save the NEETs I have to admit to throwing up in my mouth a little.

In common with so many Polly columns, it takes a small collection of relatively undisputable facts ("the number of 16-year-olds staying on in education has fallen for the first time in years, raising Neets – those not in education, employment or training – by 8%", "Numbers of Neets were falling steadily until 2010, when the Cameron government snatched away that crucial £30 a week.") and builds an increasingly tall and rickety tower of a column whose base spreads beyond the rock of facts to the sand of speculation and the marsh of Polly's opinions.

Polly's pivotal contention is that it's far better for the unemployed youth to remain in any form of education than to seek a job:

At a time when leaving school without plans has never been a worse life choice, more teenagers are walking away to do nothing at all. Unemployment when young scars for life: studies show most are destined for a life of underpaid work, punctuated with no work.

I suspect that here Polly is (once again) falling into the trap of confusing correlation with causation. I would totally believe that the average wage of students with one or more A-level is at a statistically significant measurement about that of students with just GCSEs. What I would find harder to believe is that the marginal wage gain of the least able 20% of A-level students from their 2 years studying will outweigh that of equally-able GCSE students working 2 years in their chosen employment. Let's not forget that Educational Maintenance Allowance only pertains to the 16-19 age group so you can forget the degree premium for this argument.

Polly's claims centre around two propositions:

1. The withdrawal of EMA for most students caused many of them to drop out of further education; and
2. More NEETs are therefore unemployable due to their reduced educational qualifications.

I can believe the coupling of these propositions in the case of some students, but frankly find it hard to credit that it makes a material difference in most cases. Most students live with their parent(s) until age 16. At that age they became eligible for EMA. Are we to believe that they moved out of the parental house on that princely £30/week? I find that hard to credit. This was additional money for the household. In most cases, if the household could afford to support the student at age 15, they can do so at age 16. I'm sure the £30/week made life easier in many cases, but find it hard to credit that it made much difference to employment needs for the majority. Rather, I suspect that the prospect of a salary and cash-in-the-pocket trumped the nebulous benefits of A-levels or equivalent. And frankly, I can't blame them. Unless you get qualifications directly relevant to your area of employment, I can't see two years out of the job market doing half-arsed studying giving you much of an employment premium to someone demonstrating two years of employment in the area.

What the abolishment of EMA is about is making students do a practical calculation of what two years of education is worth to them. Why should the taxpayer (and, let us be clear, this means the full-time minimum-wage worker) be on the hook for the student's studying time if doesn't materially benefit them?

Lest we forget this is Polly, she reminds us:

Michael Gove as education secretary seems entirely preoccupied with more able children.

Yes Polly, God forbid that we should focus the spending of taxpayer money on those students who are most able to benefit from education. FFS.

Whenever he talks of "social mobility", he speaks of those from humble backgrounds soaring up to Oxbridge.

Precisely why this aim is a bad expression of social mobility escapes me. Maybe her own Oxbridge experience put her off studying:

...she won a scholarship to read history at St Anne's College, Oxford, despite gaining only one A-level ... During her gap year she worked for Amnesty International in pre-independence Rhodesia, before being expelled by the government ... After 18 months at Oxford, she dropped out, finding work in a factory and a burger bar and hoping to write in her spare time. She later said "I had a loopy idea that I could work with my hands during the day and in the evening come home and write novels and poetry, and be Tolstoy... But I very quickly discovered why people who work in factories don't usually have the energy to write when they get home."

Ladies and gentlemen, that is education. A shame that it burned up that scholarship money for Polly to make that discovery.

It's not your gender, pet

Shock! Horror! The BBC discovers that Women are losing their jobs!

Beneath the headlines are many puzzling aspects of the jobs market, one of which is that female unemployment has been rising a lot faster than the male total.

Now, why might that be? Well, the public sector has been losing a lot of jobs recently, and women are overrepresented in that sector (not least because of its positive attitude towards flexible hours and part-time working). Oddly, the article doesn't follow that line of enquiry.

Instead we get a parade of anecdotes, which the author hopes will add up to actual data:

Jessica Beale, who is in her 30s, has a son at primary school and is his sole carer. She needs to find work which will allow her to fit in her childcare commitments. [...] Jessica Beale fears her need for flexible working hours is affecting her chances of getting a job

Well... yes, it would do really. Her situation immediately limits the kinds of job she can get, and places her in competition for the remaining jobs with all the other part-time or reduced-hours mothers. And yes, it is almost always the mothers rather than the fathers in this situation.

And on the more educated end:

Rose McConnachie, 27, has a degree and postgraduate qualifications from Edinburgh University. She cannot find any work relevant to her training in psychology and criminology, so has widened her search for any paid work. But she has drawn a blank.

I'm not surprised that she can't find relevant work - for criminology, I can only think of a few potential employers and they're all in the cutbacks-and-no-recruiting parts of the public sector. Unfortunate timing by Ms McConnachie, and I can't help but wonder why she thought that taking a Masters (I assume it's not a Ph.D.) in the subject would help her prospects at all.

However, Rose is looking for paid work outside her specialist sector. Why has she drawn a blank?

"I mean, I'm great! I'm very clever, I'm very talented, I've got a lot of transferable skills and I'm very employable, but there just doesn't seem to be anywhere for me to be utilised for anyone's benefit."

Oh Lordy. I think I see the problem. While I'm sure part of the issue is that she's 27 years old and therefore many employers are automatically assuming she'll get pregnant within a year of joining, a much more immediate issue is that she thinks she walks on water.

The Emperor has no austerity

Well, this isn't going to win Tullett Prebon any friends. They come out and says that there hasn't been any detectable austerity in Britain no matter what Cameron et al might claim.

Clearly he doesn't read the Guardian, except maybe for a laugh.

It's hard to fault their reasoning or indeed their forthrightness:

"Government has done very little about its spending, has appropriated three-quarters of all gains in economic output for its own use, has carried on piling up debt – and has tried to pass all this off as 'responsible austerity'."

Harsh, but fair.

The Government, of course isn't taking this lying down:

Ministers have insisted that public spending is being cut at a rate not seen since the Second World War and trade unions have launched mass protests about reductions in the public sector.

As far as I can tell, though, both sides are correct. Government is spending more than ever, though an increasing fraction is going on servicing debt costs, and so actual non-debt spending is just about going down (kinda, if you squint at it, in real terms). Yet the demands of welfare, NHS and pensions are such that significant cuts to public services are inevitable - the slices of pie are just being shifted around, there's not a detectable difference in the overall amount of pie served.

Where now? I think Tullett Prebon are piddling into the wind a bit here. The uncomfortable truth is, no matter how half-arsed the Government austerity is, they're still more responsible than many other Western nations. This is somewhat depressing unless you're well stocked up with gold bars.