People have a wide array of preferences for working conditions, which creates a heterogeneous workforce. Some workers may need to be paid extra to compensate for unpleasant conditions (known as a compensating differential) while others may be willing to be paid less to work a job that they enjoy. Workers are often assumed to be utility maximizers, not income maximizers, in the decision of which jobs to work and how many hours to work. Adam highlights that notion at the end of this brief scene with a USDA veterinarian who specializes in the disease.
Monsters at Work: No More Scaring
Tylor was one of the best young monsters to graduate from Monsters University and always dreamed of becoming a Scarer. Once he lands a job at Monsters, Inc. he discovers that scaring is out and laughter is in. This brief scene from the movie’s trailer is a good opportunity to discuss skill-biased technological change. While scaring was previously seen as a good-paying job with a bright future, the world has changed suddenly and those skills are no longer needed.
A Series of Unfortunate Events – Paid in Coupons
The Baudelaire orphans have been sent to the Lucky Smells Lumbermill and are being forced to work on the production floor. After a grueling morning of “log day,” the workers are given an entire five minutes for lunch, but the Baudelaire’s come to find that lunch consists of gum. Frustrated, they wonder if they can use their wages to buy something else, but it turns out that the Lucky Smells Lumbermill pays their workers in coupons rather than actual currency. The coupons don’t have any value since the workers don’t have any money to go out and buy things anyway. The workers also don’t have power to leave or demand better conditions because Lucky Smells is the only place to work in town.
When a single firm controls the labor market in a region, they are said to have monopsony power in the market. Monopsonies can pay workers below competitive wages because workers are unable to find alternative employment opportunities. In this case, the Lucky Smells Lumbermill pays them almost nothing since the coupons can’t really be redeemed anywhere.
History of the World — Unemployment Insurance
For someone to be considered unemployed, they must actively search for employment and not be currently employed. In this scene from Mel Brooks’ History of the World, the unemployment officer asks two key questions of citizens looking for their unemployment payment:
- Have you worked (killed) last week?
- Did you try to work (kill) last week?
She also warns that their unemployment is about to run out and that they need to make sure that they find work, which is similar to how many unemployment systems are setup.
Thanks to Alex Marsella for the clip submission!
The Simpsons — MoneyBART
The local little league team has a new coach, and she plans on using statistical analysis to improve their chances of winning. She tracks player tendencies and digs into the work of Bill James to bring a Moneyball approach to the Isotots. Bart laments that she has taken the fun out of the game, which begs the question of the team’s objective function. Are sports teams win-maximizers or should some teams focus on having fun?
At the end of the segment, Bart has a choice to make. Should he take the statistical approach to win the game or should he swing and try to preserve his hot streak. The hot hand fallacy is the belief that previous observations are correlated with upcoming observations. This fallacy leads us to believe batters “get hot” even though the probability of the next hit is independent of the previous ones.
Brooklyn 99 — Moneyball
Captain Holt and Lieutenant Jeffords want to streamline the department and improve efficiency across the precinct. Jeffords is concerned that Capt. Holt is getting to greedy and can’t make many more improvements, but Capt. Holt believes he’s taking a Moneyball approach to the department. The film is his favorite and he finds the statistical analysis beautiful.
While he may be improving efficiency through his new statistical approach, the two should be concerned about diminishing returns. Productivity can increase with revised strategies, but additional productivity may require a significant increase in cost. In order to determine the optimal outcome, the two should focus on marginal analysis.
Superstore — Election Day
It’s election day and Cloud 9 has placed pamphlets in the break room encouraging employees to vote for anti-union candidates. Cloud 9 knows that unionization could result in much higher labor costs, so they spend that money to encourage workers to not form a union. This form of managerial opposition is part of the explanation for the decline in unionization rates in the United States.
Pixar — Purl
The video shows how an investment in human capital and diversity can provide significant increases in productivity. Allowing employees to express their individuality brings new thoughts and ideas to the group. Without diversity, the company was trending down, when they embraced the balls of yarn it was trending up. While it was easy to keep everyone and everything the same, the company was not making money. By investing in a more diverse workforce, they were able to become profitable and a much more favorable place to work. The opportunity costs are implied but they are that diversity can have real bottom line impacts. In addition, diversifying your workforce can make you an employer of choice and allow you to hire more highly skilled employees. Lastly, it shows that diversity allowed the male employees to be more free with who they were and thus helped the company become more successful.
I think this video applies to everyone from women to men. Introverts to extroverts, it shows the benefits of staying true to who you are. Additionally, it shows the benefits to companies by encouraging diversity.
Clip suggestion & description submitted by Keven Tarantino
Catastrophe — Working to pay for child care
A husband and wife comically discuss their plans for preventing another child, whether to use an IUD or have a vasectomy. The conversation then leads into whether it’s time to go back to work after maternity leave. While she loves her children, she wants to be away from them a bit, but they can’t decide on the best option. One option is to hire a “child minder,” but that would cost nearly the same as her teaching salary, but Sharon is in favor of the option. She’s willing to work full time to pay for someone to watch her children, essentially have zero effective income. Why would she be willing to do something like this? She would derive utility from spending time away from her own children.
Thanks to Sheena Murray for the clip suggestion! If you have a great clip that you’d like to add to the site, just reach out to me!
CBS TV — Kennedy on the Labor Market & Unemployment
In a 1963 Labor Day interview with Walter Cronkite, President Kennedy discusses his position on handling the labor market of the United States with around 4 million unemployed (about 5.5% at the time). Kennedy notes that the growing labor force in the United States requires that if the US wants to “stand still,” they still need to move very fast. Kennedy’s main policy focus at the time was retraining workers who had been displaced by technology and making sure that significant amount of workers have the necessary education to handle the growing workforce.
Kennedy also speaks to the lost jobs in “hardcore unemployed” industries like coal and steel and how it’s important to make sure those workers are retrained because those workers are no longer needed. He then laments that there’s a different issue with older workers replaced by technology and younger workers who don’t have the education to handle that technology. Kennedy ends this portion of the interview with a very powerful quote about the fear of automation:
Too many people coming into the labor market, too many machines are throwing people out.
You can view the entire interview, courtesy of the Kennedy Presidential Library, on YouTube.