We’re still getting your questions about the newly passed Inflation Reduction Act, and we’ll try to answer them! Like, why is it called the Inflation Reduction Act and what is it actually going to do about inflation? Kimberly and Kai share some insight on that and field a few more questions, like where are we going to get all the water needed to make more semiconductors in the United States? And how do you measure productivity in an economy that doesn’t make as many widgets as it used to?
Here’s everything we talked about today:
- “What the Inflation Reduction Act does and doesn’t do about rising prices” from NPR
- “Water shortages loom over future semiconductor fabs in Arizona” from The Verge
- Overview of BLS Productivity Statistics from the U.S. Bureau of Labor Statistics
- “The Rise of the Worker Productivity Score” from The New York Times
- Measuring productivity in service industries from the U.S. Bureau of Labor Statistics
- “Can a Hot but Smaller Labor Market Keep Making Gains in Participation?” from the Hamilton Project
If you have more questions about the Inflation Reduction Act or anything else, send them our way. We’re at email@example.com or leave a voice message at 508-U-B-SMART.
Make Me Smart August 17, 2022 transcript
Note: Marketplace podcasts are meant to be heard, with emphasis, tone and audio elements a transcript can’t capture. Transcripts are generated using a combination of automated software and human transcribers, and may contain errors. Please check the corresponding audio before quoting it.
Kimberly Adams: It’s gonna be great! We can go ahead and start.
Kai Ryssdal: Oh, we’re gonna start. Must be Charlton. Hey everybody, welcome back to Make Me Smart, where we make today make sense, no matter who is pushing the buttons downtown. I’m Kai Ryssdal.
Kimberly Adams: And I’m Kimberly Adams, thank you for joining us on Whaddya Wanna Know Wednesday, the day in the week where we answer listener questions. And there are a bunch of good ones this week.
Kai Ryssdal: There are some good ones. I should be clear, by the way, the engineers at Marketplace, they do more than just push buttons.
Kimberly Adams: They are wonderful.
Kai Ryssdal: … give them their due. Yes. If you have a question, by the way, about the economy or business or technology, email us firstname.lastname@example.org. Leave us a voicemail if you’d like. Our number is 508-U-B-SMART. And here we go, I guess. Right?
Kimberly Adams: Yeah, our first question.
Clint: Hi, Kai and Kimberly, this is Clint from Austin. And I have a question about the Inflation Reduction Act. We keep talking about the climate aspects of it and all the positive things that it’s doing to fight climate change. But I didn’t really hear a lot about what it was doing to fight inflation or if it is doing anything. So I’m just curious was that name, you know, not the best name for it? Should we call it the climate bill? Why did we call it the Inflation Reduction? Help make me smart? Thank you.
Kai Ryssdal: Yeah, so let’s remember that this bill in its original formulation was called the Build Back Better Act. And then, after much trials and tribulation in Washington, DC, it came to be known as the Build Back Manchin Bill, because they were trying to please Joe Manchin. And then there was yes and no and negotiations, and then tada! Joe Manchin and Chuck Schumer came out with this agreement, that there was going to be some progress on the Democratic agenda, as put forth by the President. But they were going to call it the Inflation Reduction Act. So the reason it’s called the inflation Reduction Act is to keep Joe Manchin happy, because that had been Joe Manchin’s a big thing, “I’m worried about inflation.” Okay? So that’s number one. Number two is, it’s really not going to do a whole lot to control inflation. I mean, look at the margins, might bring down some energy costs, might bring out some healthcare cost. It will reduce the deficit, which some economists will tell you will reduce the amount of money floating around out in the economy and thus help bring down inflation a little bit. But there is spending in this bill too, a lot of the climate change stuff is spending. The Wharton School at the University of Pennsylvania did a study. And they said it’s going to be 1/10 of one percentage point over five years in the reduction in inflation. And I’m just here to tell you that if we only get a 10th of a percentage point reduction in inflation in this economy over the next five years, there will be very bad times to come. So that is not what this bill does. This bill is the President’s agenda. It’s climate, it’s healthcare, it’s a bunch of stuff. But really reducing inflation? I don’t think so.
Kimberly Adams: I mean, it’s a branding thing, really, because Build Back Better has been like excoriated for months and months and months. So just call it something else. Everybody hates inflation. So here’s a legislation to tackle inflation, assuming most Americans won’t get too lost in the details and say here’re all the good things and just hopefully make the jump that that would reduce the inflation that’s hurting your pocketbook right now. Or wallet or, you know, satchel or whatever you may have. But anyway, a good rebrand always helps.
Kai Ryssdal: That brand is everything. Alright, here we go. Next one.
Klaus: Hey, this is Klaus from Vancouver, Canada. And with regards to the chip makers announcing multiple billions of dollars in chip manufacturing on American soil, what happens with all the water that they will need to manufacture these chips? Because from what I understand, they require a ton of water in the process in order to make these chips. How are they going to manage that? Thanks for making me smart.
Kimberly Adams: You understand correctly, Klaus. It takes a lot, a lot, a lot of water. So you’re probably talking about the Chips and Science Act of 2022, which the President signed into law I think, what, last week, week before or something like that. It includes $50 billion in investments for semiconductors and chips to be manufactured here in the US plus money for additional research on sort of next-generation chips and semiconductors, all to help ease up some of these supply chain problems and also to decrease dependence on mainly China and other countries. So that we can do some of this stuff here. All of – not all of them, but many, many, many of the supply chain problems we’ve had over the last couple of years have been because of chips. The reason cars are so expensive right now, part of that is because of chips. And so, it’s been a big agenda item for the Biden administration, for industry and all those things. So yes, all those things. It does take a lot of water, also chemicals. And this is something that’s going to have to be figured out. The Verge has a story that semiconductor chip manufacturing, in Ari–, mainly about it in Arizona, that these chip manufacturers were trying to ramp up production just as the drought was hitting. And the state is feeling like the drought from the Colorado River. And so a semiconductor factory there can use as much water in a day as between – this is according to Verge – 13,600 and 27,000 Arizona residents use in the same time period. So it’s definitely going to be an issue. And I imagine when the semiconductor companies that have pledged all these investments are picking where they’re going to set up shop, that’s going to start to be a much more significant consideration. Another option is that, for example, Intel tries to do this restore and return program, created as a public private partnership with the city of Chandler, for a brine reduction facility where they’re basically trying to capture some of the water they use, treat it themselves, and then reuse it. This is something that a lot of people are worrying about. And the Biden administration has arranged for an interagency working group to try to figure out the permitting for all of these new chip and semiconductor plants. Part of that group that’s going to figure out how all this is going to work is the EPA and also the Council on Environmental Quality. And I have to imagine that, what’s up with water is going to be a big part of those discussions.
Kai Ryssdal: It’s so dry out here right now. I can’t even tell you how dry it is. It’s so bad. It’s so bad. Yeah.
Kimberly Adams: Do you have a lawn?
Kai Ryssdal: Yeah. look, as it should be, as it should be.
Kimberly Adams: Have people just like stopped having grass in their yard?
Kai Ryssdal: No, no, it’s still – I mean, you go out in the early mornings for exercises as I do, and you see people sprinkling and you know, it’s really bad. It’s really bad. And we’re gonna have to, it’s gonna have to, it’s gonna take a mind change out here, right? Because we are being reminded that we live in fundamentally a desert. And you can’t have what you want to have when you live in a desert. Right? You just. Yeah.
Kimberly Adams: Yeah. Okay, here’s another one.
Matt: Hi, this is Matt from Maynard, Massachusetts, home of where Babe Ruth used to buy cigars and play billiards. Also, the country scene from that set. I had a question about productivity. It’s so often explained as number of widgets per hour. But since we’re mostly a service-based economy, how is that calculated? Hope you make me smart. Thank you.
Kai Ryssdal: Yeah, that’s a really good question. And it’s really hard, right? Because for car manufacturers or chip makers or what have you, it’s a measurement of the conversion of inputs, which is labor unit, into outputs, which is chips or cars or widgets or what have you. And that’s the basic one, right? They also do, though, at the Bureau of Labor Statistics, measure services as an output, but it is monstrously complicated. And there are a whole lot of things that aren’t measured. Because I mean, let’s just take me, right. I’m an office worker, okay. I have an output thing every day, Marketplace reporters have an output thing every day. But how do you measure the input, right? How do you measure my work toward that output every day? You can measure Marketplace as a product every single day, you can measure a reporter spot or feature as an output every single day. But how do you take care of the labor inputs to that service, right? We do five Marketplace afternoon shows a week, right? David Brancaccio does six morning feeds the morning, right?
Kimberly Adams: Five.
Kai Ryssdal: Five? I don’t even know. Five. David does five morning feeds every morning. One of them comes out this morning right. The challenge for the Bureau of Labor Statistics is how to measure the labor input to the service economy. They have been thinking about this for a very long time and I direct your attention now to the Monthly Labor Review, it’s a journal, the June 82 edition, Jerome Mark, he’s the Assistant Commissioner back then. He wrote a whole like six-or-eight-page paper on how to figure that out. It’s really, really complicated. But they do do it. Here’s the other thing, okay? And this adds to the conversation of office workers and technology. I don’t know if you saw the piece in the New York Times the other day, by Jody Kantor and a couple of others, about productivity measurement tools that companies are using now, for workers who spend a lot of time on keyboards. Terrifying, dystopian, stressful. We will put a link in the show page to this piece, it’s wild. Wild, wild, wild, wild, wild. Big brother really is watching. And that’s how companies are measuring office worker, white-collar productivity.
Kimberly Adams: So I saw a really funny – I don’t know if it was on Tiktok or Instagram reels or YouTube or whatever. But you know how sometimes you have a stationary mouse – mice, you know, mouse things – anyway, at the trackball? They had taken the trackball out of their mouse and given it to their cat, and the cat was batting around on the floor, it made it look like their cursor was moving across the screen. So it looked like they were still active on their computer for their company’s tracking software.
Kai Ryssdal: That’s too far. That is too far.
Kimberly Adams: Anyway, I actually, if you really want to get into the weeds on this, I highly recommend that paper from the 1980s. It’s really fascinating, because they’re talking about how like, you know, if you’re measuring the productivity of a truck driver, do you measure their number of deliveries, the amount of time that they spend loading and unloading, and how for every single different service, you have to know a lot of data about how each of the jobs works, in order to figure out how to measure that input relative to the output and weigh it appropriately. So that’s some heavy-duty economics works – economic word there.
Kai Ryssdal: For sure, for sure. Okay, so here’s another one. It’s a listener. The Twitter handle is @ – I’m gonna butcher this pronunciation – wrichers, W-R-I-C-H-E-R-S, @wrichers tweeted at us wanting to know this. What is the story on job recovery for women? And she included a tweet from Catherine Rampell, one of our Friday regulars, with a graph that showed we have now recovered – or we, everybody, male and female, have recovered all the jobs lost in the pandemic.
Kimberly Adams: It also decimated the pandemic being it, women’s workforce participation, especially for moms. So the US Bureau of Labor Statistics reported on August 5 that – and I’m just going to read the quote here: total nonfarm payroll employment rose by 528,000 in July, and the employment rate edged down to 3.5%, both total nonfarm employment and the unemployment rate have returned to their February 2020 pre-pandemic levels. So that’s a good thing. That’s what we’re talking about when we say that we’ve returned to the pre pandemic level. But we talked to Lauren Bauer, who’s the associate director of the Hamilton Project at the Brookings Institution. And she said that the thing that’s very clear from the data is that, you know, a lot of that is because families really didn’t want to get off track during the pandemic. And so they put this extraordinary burden on themselves, to find work and to support their family. And so a lot of these jobs that were lost pre pandemic aren’t necessarily the same ones being added back. So maybe you were a manager, you know, with a job that made you work like long hours and weird hours all week pre pandemic, but then you had all these family duties, so when you return to the workforce, you returned working part time or working a job that was a little less demanding and maybe made a little bit less. The hardest hit sector during the pandemic, as we’ve talked about lots of times, were leisure and hospitality. And many of them left those leisure and hospitality jobs, went out and found other work because those leisure and hospitality jobs went away while other jobs still existed. And then they stayed in those jobs. So those jobs were recovered, but not in the same place. And women really represent a lot of those leisure and hospitality workers. Yes, as we’ve also discussed, women have handled the brunt of the childcare responsibilities, and they were the most likely to leave the labor force. But the comeback is better than a lot of us expected. The portion of women who are not working because of childcare, after the pandemic, although it’s not really after the pandemic, but now-ish compared to before the pandemic is relatively small and getting much smaller. It’s the labor force participation rate. That is the thing that everybody’s paying attention to – oh sorry.
Kai Ryssdal: I heard it, I hear it. Is that the kitten or is that Jasper?
Kimberly Adams: That’s the kitten attempting to play with Jasper. Anyway. From 2016 to 2022, June of this year, women made the greatest positive contribution to the overall labor force participation rates. Marissa pulled this detail for us, netting an increase of 0.4 of a percentage point compared to men who came back, who are contributing just a 10th of a percent. Anyway, women are coming back, often in the not the same jobs as they had before. That’s the larger point I was trying to get at before the kitten distracted me.
Kai Ryssdal: It’s all right. It’s all good. Tell you what, let’s save that last one for next week, huh? Does that work?
Kimberly Adams: Yes, okay. That works.
Kai Ryssdal: All right, good.
Kimberly Adams: Anyway, that’s it for us today. Thank you for listening. Make Me Smart is going to be back tomorrow…
Kai Ryssdal: Oh my god. That’s so funny. Sounds like a baby actually.
Kimberly Adams: He is a baby! The kitten I think is like three months old, and my friend who’s at a town has been watching him and he makes these noises pretty much only when I’m trying to record something.
Kai Ryssdal: Of course, of course.
Kimberly Adams: Anyway. And that’s your make me smile today, is the kitten. We’re gonna have more make me smile tomorrow.
Kai Ryssdal: More questions please. More comments. More everything. We’ll take it all. Our email is email@example.com. Leave us a voicemail if you’d like, 508-U-B-SMART.
Kimberly Adams: Make Me Smart is produced by Marissa Cabrera. Olivia Zhao was our intern and Ellen Rolfes writes our newsletter.
Kai Ryssdal: Today’s show was engineered by Jayk Cherry. Ben Tolliday and Daniel Ramirez composed our theme music. Our Senior Producer is Bridget Bodnar.
Kimberly Adams: Jasper has been so long suffering with this kitten, he just keeps looking at me. Why have you brought this into the house?
Kai Ryssdal: What are you doing?
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