Q&A with Eileen Appelbaum on the Recently Released Data from the Contingent Worker Survey

CEPR Co-Director Eileen Appelbaum took part in a recent panel discussion on the Future of Work. This is a Q&A prepared for the event.

What are the most important takeaways from the new CWS data?

In February 2005, 7.4 percent of workers were independent contractors. In the new CWS data for 2017, this has decreased to 6.9 percent — about what it was in 2001. Gig economy workers are a subset of these workers — so the decline in the share of independent contractors was a surprise to many pundits. But other studies have shown that gig workers are less than 1 percent of the US labor force.

The low share of independent contractors is not surprising to economists who follow these issues. Independent contractors are about 60 percent of self-employed workers. Regularly published data on self-employed workers show that this category has hardly increased since 2005.

This doesn’t mean that nothing has changed since 2005. For example, the number of independent contractors in transportation has increased by about 250,000 — probably due to Uber, Lyft, Via — while those in construction decreased by almost as much. Still, 19.3 percent of construction workers are independent contractors compared with 5.7 percent of transportation workers.

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CEO Pay: Still Not Related to Performance

Earlier this year we did an analysis of CEO compensation in the health insurance industry to see if it was affected by the cap on deductibility imposed by the Affordable Care Act (ACA). One of the provisions of the ACA limited the amount of CEO pay that health insurers could deduct on their taxes to $500,000, beginning in 2013.

This provision effectively raised the cost of CEO pay to insurers by more than 50 percent. Prior to 2013, the deduction in effect meant that the government was picking up 35 cents of every dollar of CEO pay, while the companies were paying just 65 cents.[1] With the new provision in place, insurers are now paying 100 cents of every dollar of CEO pay in excess of $500,000.

If the pay reflects the value of the CEO to the company, we should expect this change to reduce the pay of CEOs in the insurance industry. For example, if a CEO gets paid $20 million a year, this should mean that she delivers roughly $20 million in additional value to shareholders.

When the CEO’s pay was fully deductible, the $20 million paid to the CEO actually only cost the company $13 million. This would presumably be the number that matters to shareholders since they care about how much money comes out of their pockets, not the number on the CEO’s paycheck.

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Core and Overall CPI Both Rise 0.2 Percent in May

The May Consumer Price Index (CPI) was very much in line with expectations, as both the core and overall index rose 0.2 percent in the month. Over the last year, the core index has risen 2.2 percent, while the overall CPI has risen 2.8 percent. Inflation in the core continues to be driven largely by higher shelter costs. A core index that excludes shelter rose just 0.1 percent in May. It is up 1.3 percent over the last year.

The shelter component of the index rose 0.3 percent in May driven in part by a huge 2.9 percent jump in the “lodging away from home” (primarily hotels and motels) category. This figure is highly erratic. It has risen 4.4 percent over the last year. The shelter component has risen 3.5 percent over the last year, driven by a 3.6 percent increase in the rent proper index, and a 3.4 percent increase in the owners’ equivalent rent (OER) index. The rent proper index includes utilities in many units. As a result, when energy prices rise rapidly it would be expected to increase at a faster rate than the OER index. For the month of May, the OER increased by 0.2 percent and the rent proper index increased by 0.3 percent.

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Will Schumer and Senate Dems Embrace or Reject the Revolving Door?

Why did the Revolving Door Project work with more than 30 other organizations in May to urge Senate Democrats to choose strong public interest-minded candidates for open leadership positions allocated to Democrats at key financial agencies, including the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC)?

Because we have learned that when reformers and progressives do not recognize that “personnel is policy” and work to identify appropriate senior leaders for Independent Agencies, the consequences can be catastrophic.

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Bitbank will take bitcoins on credit from its customers

Wishing to increase the number of new users and its liquidity, the Japanese trading platform Bitbank announced a new program to attract bitcoins, Yahoo Finance reports. According to the statement, the exchange will enable users to invest at least 1 bitcoin in the Virtual Currency Lending service in exchange for a fixed interest rate. Initially, […]
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Mining applications are no longer available in App Store

The American multinational technology company Apple has established new publishing rules and conditions for using BTC, as well as other cryptocurrency applications in App Store. These changes have affected wallets, exchanges, platforms for ICO and applications for mining. This was reported in the company’s blog. “You can store cryptocurrency in app-wallets from developers registered as […]
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Listing of NEM and Aeternity on Bithumb

One of South Africa’s largest crypto-exchange Bithumb will add trading in NEM (XEM) and Aeternity (AE) cryptocurrency pairs. They announced on their twitter account that the listing will be held in June. Aeternity(AE) and NEM(XEM) will be listed on Bithumb Today! ✨ ▶ https://t.co/TpDg4w8lx4 — Bithumb (@BithumbOfficial) June 7, 2018 However, on the official website […]
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Konstantin Khabensky is going to create ICO

The well-known Russian actor Konstantin Khabensky together with his partners is developing a blockchain Cinematix. The purpose of it is to raise funds for the development of the film industry. The partners of Khabensky in this project are Ilya Zibarev, ex-chairman of the board of the bank “Russian Standard” and co-owner of the company ICOBox […]
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Huobi Pro has added support for Monero

The popular crypto exchange Huobi Pro added Monero in support, which is focused on increased privacy. Launch of @monero (#XMR) on #HuobiPro! Deposit has already started. XMR/ #BTC & XMR/ #ETH #trading pairs will be available tomorrow from 4:00pm June 8, 2018(GMT+8). Full Article: https://t.co/eIxGZJAqpI — Huobi Pro (@Huobi_Pro) June 7, 2018 The official site […]
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Weekly Game Plan 2 Jul 18

Back on deck after a brief break from the markets. Welcome to H2 2018! This week starts with Canada Day and then we get US Independence Day on Wednesday.

Themes for the week ahead: 

China will remain a big focal point this week. Over the weekend, PMI data disappointed, most likely suffering from tighter credit growth and rising US/China trade tensions. The new export order sub-index fell into contraction territory for the first time since February. If that weren’t bad enough,  US trade tariffs on China are set to take effect on July 6 (Fri). CNY fixes will be watched closely as participants feel that the PBOC is allowing the CNY to drop in order to fend off the tariffs. This isn’t positive because int’l investors want to see a stable (non-manipulated) currency in order to have confidence in a country as influential as China.

Beyond that, the CSU (Merkel’s coalition partner) still has to  decide whether Friday’s EU immigration deal satisfies their concerns about containing the borders. The vote hasn’t been issued just yet so participants will likely look for that tomorrow first thing. Expectations are for a positive vote…I’m not so sure. 

Will Saudi Arabia bow to Trump? Just after OPEC decided to increase production by around 1 million bpd, Trump demanded an extra 2 Mln bpd! Obviously the markets will sell Crude if Saudi complies. Keep your eyes on the story and on Trump’s tweets.

Data in the week ahead: 

On the data front, the big item is NFP but ahead of that we get Caixin Manufacturing and Services PMI, RBA rates decision and Australian Retail Sales, UK PMIs and CAD Employment.

What’s on the Radar:

The moves in the USD on Friday were heavily influenced by technical and month-end factors – so don’t give them too much weight. Moreover, NZD is a clear loser after RBNZ’s dovish hold; CAD is a clear winner after Crude Oil’s ascent. Copper is still weak. Regarding equities, we’ll need to wait & see what comes of CSU’s vote and tariffs this week.

  • NZDCAD: https://www.tradingview.com/chart/NZDCAD/CfiW6Rqk-NZDCAD-Bias-Remains-Short/
  • EURNZD: https://www.tradingview.com/chart/EURNZD/302APxVk-EURNZD-Bias-Up-but-Strong-Resistance-Ahead/
  • Crude: https://www.tradingview.com/chart/CL1!/FngjjYd5-Crude-Oil-Bias-Remains-Positive/
  • Copper: https://www.tradingview.com/chart/HG1!/WhFvFeez-Copper-Bias-remains-negative-but-supports-in-focus/

About the Author

Justin is a Forex trader and Coach. He is co-owner of www.fxrenew.com, a provider of Forex signals from ex-bank and hedge fund traders (get a free trial), or get FREE access to the Advanced Forex Course for Smart Traders. If you like his writing you can subscribe to the newsletter for free.

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