Remarked before Edward Glaeser burst on the scene in the early 1990s urban economics was dried up. Noted come up with some new ways to look at the cities. Ed continue to redefine the economics particularly urban economics from his perch at hardware has taught since 1992. He has published dozens of papers on why cities rise and fall, and original book triumph of the city became a new times bestseller. He served as director of the center for state and local government and director of the Rappaport Institute or greater boston. The Manhattan Institute is as well as competing editor to see the joker one of the first talks he gave back in 2006 was titled what our skilled city getting more skilled . Today he is revisiting the Human Capital theme with a discussion of whether 12 years later we have reached quote the end of work because someone who just sent in his final College Tuition bill, let me say i hope the answer to that question is a solid not. Please join me in welcoming ed glaeser. [applause] thank you. Thank you, larry. I am so thrilled to the opportunity to give this lecture. Im deeply honored that youve given me your time. This is a somewhat unusual lecture in that its not about the things that are at the core of my research. Instead its about a social problem i think is americas largest. You may think its odd an academic person thinks of what he thinks i is that the most important thing. Thats quite unusual, but this is something that has disturbed me and i think they should distribute as well. My objective in the next 20 minutes is not to convince you that i think another right answers for dealing with this but convince you this is the great social problem facing america today. What you are looking at is the Unemployment Rate, not Unemployment Rate, not the Labor Force Participation rate. Roughly the late 1950s to this day. Where i was born in 1967, 5 of prime aged males were jobless. That is more or less been true for 20 years before the. Today more than 15 of prime aged males are jobless. This is an enormous change and you can see from the data what happened is during every crisis, to Unemployment Rate drops and he comes back maybe half as much. I think thats what were seeing again in this crisis. When you parse together whats happening lately, im putting this up so you dont feel too good about the slight decline at the end although much of this crowd is likely to feel too good about that. When you look at the data cutting it apart you see in fact 2530, 40 year old employment has been coming back. The people were 172007, they are reentering the labor force, working. When you turn to the 3544 year olds, or the 4554yearolds, the air out. Those drops but now than they appear to be permanent. Thats what you are seeing. Howard pointed out report that came out this month on this issue. On by the force participation, never should employment of prime aged males. Needless to say i dont agree with all the recommendations in the report bottom glad theyre casting a light on this. What this shows you is the triangle shows where we were in 1990. If you look at 1990, the u. S. Was 10 for nonemployment, which was less than journey to understand less than germany, less than away. Today we are at 17 and we are in the territory of belgium and the slovak republic. We are not quite greece yet butt we are in a different place, profoundly moving in the wrong direction. One thing i want you to take away from this is not an execrable that you go in the wrong direction. Look at germany. Germany was significantly higher in 1990 that it is today. This reflects our changes of germany to its labor market practices over the past 15 years. I think it is a minimum of what we will be required to do in this country. A series of facts that relates to this. Theres a tripling of the show nonemployment prime aged males in 1976. In may 1996 there were 73 to 8 million americans who are not employed. And may 2016, 112 million. A huge increase. The employment population ratio differs by education. 72. 5 of College Graduates are employed, 41. 3 of High School Dropouts are employed. Massive gaps with education. The background of this is a combination, and not come back to this again, a combination of trends in the labor market the government is not responsible for and policies which interact with them in an absolutely poisonous manner. Manufacturing employment has fallen. Theres been of course a massive rise in the number of disability recipients. This is a boring craft but it makes the point. Disability 4 million people, we are up to 9 million today. Massive change in disability. Its not because americans have gotten sick. This is a choice about a Public Policy program that very strongly discourages people from working. If theres a scene it is not theres anything wrong with the wellmeaning impose what people have been hurt. I understand that the i believe in that either something wrong with policies put strong disincentives to people working. We all get upset when we think about high skilled people who face marginal tax rates of 50 . Its bad. But those high skilled people have relative jobs. They have a tradition of work. How about we have effective tax rates of 70, 80, 90 of people at the other end of the scale of distribution . People is 30 cents on the dollar, another sense because the housing voucher. It is a bit more because of the earned income tax credit an in e benefits they lose. We have tax rates for the poor that we close to 100 . We dont need to look farther to that to see why work look so unappealing to so many americans. This is an important point. In some since there were not Government Policies to discourage work. Every unemployed person is a field of entrepreneurial imagination. The recipe, the thing that needs to come out against underemployment is we need new startups, new ideas, new firms will come up with new things or people to do and yet we are at a point at which have a crisis of entrepreneurship. These are the number of jobs in the mid 90s we are over 4. 5 million a year. Now under 3 million. Very large difference, very large decline. This is the backdrop. Lets look at the Public Policy response. The focus is on income and wages, not on underemployment. Let me give you a couple of quotes from our political leaders on the 2016 state of the union, third paragraph. Equal pay for equal work. Paid leave, raising the minimum wage, all these things matter to hardworking families. I agree, but, of course, they will probably not be working at all those things are done. Bernie sanders leading the fight for 15 an hour minimum wage at a union for fast food workers. All the focus is on the wages. Not focus at all on the unemployment problem. A deaf ear to this massive wave that is troubling america. Unemployment insurance extension, doubling the amount of time you can get Unemployment Insurance. For each month you on Unemployment Insurance to face a major disincentive against many different working. The Unemployment Insurance extension would make a difference of 6000 jobs. I think i agree on that. I think she has the sign wrong. I think its far more likely to eliminate 600,000 jobs and to create. Idq that nonemployment, unemployment is a far worse social problem than stagnant wages. Theres a fair amount of data to support this. Making sure some and wages are going up by 4 rather than 2 is a very, very small potatoes relative to making sure more americans have jobs, a meaningful connection, the electrolytes have a purpose. Let me summarize a set of facts. Very strong data on the happiness. The unemployed are deeply unhappy. Suicide is higher for unemployed. Divorce rates go up substantially, doubling the rate. Drug abuse, much higher for the unemployed. Unemployment the nonemployment has a pervasive and painful things the to become permanent. Thats the last point i will make. This comes from my own work on unhappy cities look at the reduction in happiness relative to employed earnings over 75,000. If you earn 60,000, one is measurable, number four is gleeful. You lose maybe we won six of a point. If you go down to 35, 50k unique users point to five of a point. If you lose your job, unemployed for more than a year it is a reduction of one on this scale. If the distance five times as large. How the world could look at this date [inaudible] an awful category with their miserable. Economist have has had finished understate the cost of unemployment. After all, they giunta plan is voluntary, maybe people are having a great time being unemployed. I think if anything have taken away from economics is this is the wrong way to think about unemployment. This is not some happy state of leisure. This is a state that trap shoot and make you miserable and people are unable to muster the way to change things. One of the tables is helpful because its showing us what time is used. Uses nonparticipating prime aged men. I had a graph previous which included all participating people, men and women. Women do useful things. They take care of their families, they do whole bunch of nice stuff. What do boys do . Mostly its tv. Theres a lot of television. The number of minutes spent the day socializing is 472 minutes. I dont think ive done that in the last year in terms of number of minutes socializing. 335 minutes a day watching television. So maybe if you start with a hypothesis the watching tv major happy you would be surprised but i think in fact this is not a recipe for feelings of life satisfaction, spending five hours a day watching television. They do sleep a little bit more. They spend more time caring for household members. Theres a new work, this is from a paper last year that came out, showing what should not surprise you, unemployed is associate with massively more suicide and slow downs or economic growth. Suicide is tightly tied to the disruptions in the labor force, being alone, socially disconnected. This is a very wilsonian the point. Its why city are so successful. The bond people around us keep us healthy and all, make a smarter, make a stronger. A terrible thing is you break those bonds. You are a weight in your home watching television. You lose all the support networks all of us have around us. This is catastrophic impact on life satisfaction. It also is catastrophic impact on divorce rates. This was the most legible version. This is from finland i think. Divorces per thousand marriages. If youre employed, on the point, divorce rate goes up about 80 . A massive increase. If you look across income, between one and five, theres almost no difference. Income isnt causing this difference. Its undergone, social. Very large effects of being nondeployed. About 18 of the unemployed have used an illegal substance in the last month as opposed to about 8 . Massive difference. This is for my own work on opener at depths. What weve done is look at the relationship, and the share of the population on disability 1991. As you can see its the variable in our data set that has the strongest coalition with the rise of opa death is what share of the population. Its about joblessness, hopelessness but its also about things that happen with disabilities as well. This is one of the many papers showing the ethics of unemployment. What they should is what happens when you get laid off, get back to your job eventually. You have a permanent impact of about 5 on your wages going forward. Early unemployment spells are not free, not a temporary blip. This is the i apologize, this is a 15 year old graph from a really, really great paper. Its just that the graphics are awful. What this is showing is a cluster of Unemployment Rate in European Countries over 19602000. The point of this paper is that it was the combination in europe of their labor market policies and the adverse economic shock. You start having social democracy in the 60s and 70s. Very little effect because when the economy is coming along the safeguards didnt come into play and start working. By the 1980s when you the destruction in the oil, you have people laid off and the system takes over. All of a sudden they are in a system which they no longer have incentives to go to work. They have incentives to stay home. They are connected to people at work rather than being in work. In some sense theres a difference between europe, Northern Europe and southern europe. This isnt the germany, the sweden point. Variety of northern social democracies 15, 20 years ago saw this and responded. They understood they could not go on with this system. They changed things. They listened of the labor market, moved in with more sensible policies to provide social insurance, whereas southern europe, italy, greece, spain, did nothing. Those problems are still very much with us. They are unable to make the changes. Ask yourself, are we norway, germany, or are we greece . We are at the threshold right as a country whether not we will go one way or the other. Im just going to go through a few of the policies that i think make up the war on work. They are motivated by very understandable reasons. They are motivated by desire to make the lives of people who do work better but they are not motivated with any attempt to try to solve the unemployment problem. Extending ui is one example. These drastic extensions of unemployment interest in the face of a recession work i believe the wrong direction because it eliminated incentives to go back to work. Housing vouchers, poses 30 tax on earnings the disability must, permanent discouragement to work. Today were in the midst of a 15 minimum wage craze. I will go back to this in terms of the new evidence but because american minimum wage have stayed so low for so long we were at a position where we forget minimum wages can have major effects. We compared new jersey and pennsylvania with these tiny differences. That let us conclude even if huge minimum wages cote de bourmont matter. Thats the wrong conclusion. A paper shows just how costly higher minimum wages were in the tooth of the recession to low skilled workers. At me show you all of it of the data. This is a classic paper. The our debates about this but the basic fact is along the x. Factor, a week until the your ui payments by now. Theres a 5 chance of getting a job all the time youre getting ui and it suddenly sparks just as ui payments are running out. I think its a telling fact that when the cash runs out you suddenly start looking for work, which means of a double the number of weeks youre getting ui, i will keep the number of weeks you dont work there. This is a paper, what it looks at is the extension of disability compensation for veterans, and this was particularly for type two diabetes and motivated by agent orange during the vietnam war. What this meant was those people that boots on the ground in vietnam have access to this, and the people who serve at exactly the same pot country to do. Theyre able to compare these groups which looked relatively similar both before and afterwards. After 2001 when the change happens theres a huge gap between the boots on the ground people versus the nonboots on the ground people. 20 of them leave the labor force. Guaranteed basic income, this is actually, an idea, let me remind you the differences between guaranteed basic and guaranteed minimum. This is the alternative to how we want to think that ui and disability insurance. When people talk about guaranteed minimum income they mean a means tested thing or if you earn more that gets passed away. Guaranteed basic and the economics of that, totally feasible for the economics are much better but youre just giving people catch and thats it. No strings attached. If you had an infinite amount of cash, the absence of infinite amount does pose a slight problem. The idea of guaranteed income is wrong or does the insurance and unemployment interest. The pernicious effects of these are because they discourage work or because theyre tied to networking. The government, i cannot tell you what an awful thing i think this is. Stop you from going to work. Something this is when you get unemployed you just get a check based on your expected duration. Maybe we require you to look for work but we dont stop the payments when you go back to work. A smaller check overall the same thing with disabilities we give them a check, theres a proven medical condition. We dont reduce. In some sense this puts of the normal fears about this build on its head. Often for fear of a disability, its terrible, hes working with these getting disability. We should worry less about fraud and worry more about the fact over stopping people from using their talents to make the world a better. That is a more important problem. The government needs to stop bribing people to the idle. This is the fundamental point. The minimum wage, we have a new resurgence of work on the minimum wage. A former student from harvard has a terrific new paper that looks at the impact of minimum wage during the peaks of the great recession. 20 years ago, papers around new jersey and pennsylvania defined not affect. What happened after 2007 was those a series of bomb office in the federal minimum wage that had poor parts of america. Not new jersey, not pennsylvania. It mattered and particularly matter for low skilled people. This is, this shows you the unemployed a young High School Dropouts in states bound by the federal minimum wage increase and states not down. The states that were bound, that means that lower minimum wage, they started out with a lot more employment. They start out with more young High School Dropouts working because they didnt have a minimum wage. That it starts falling as the minimum wage comes in the it falls against the by the end of it, once the minimum wage is all lower and they converge on each other. Theres a 5. 6 but decrease in employment for this group due to the minimum wage which represents about 43 of the overall decline in the Unemployment Rate for this group. Minimum wage is not a free lunch. Moving wages to 15 an hour will be a recipe for disaster for the less skilled workers. Theres a nice paper 20 years ago now which came out during this earlier space which said new jersey and Pennsylvania State was too small to they urged us to look at puerto rico which had much higher Unemployment Rates. Youve got the Unemployment Rate. Its close to one over there.