Betsy Stevenson

This is really about, are we giving you the inputs you need to be as productive as possible?

One problem for family-run firms is it can be hard to innovate. How do you think outside the box when you've never left the box?

I am an economist and professor at the University of Michigan, and I study labor markets. Are you a football fan, Betsy? I teach at the University of Michigan, so I have to just plead the fifth and refuse to answer this question.

Yeah, it's really awkward.

I served as the chief economist at the Department of Labor, and I served as a member of the Council of Economic Advisors, giving advice to President Obama.

One big thing we talked a lot about was whether we should require forms of compensation outside of wages. Like, should people be required to get paid sick days? Should we require that people get paid maternity or paternity leave? What makes a good job and what's the role of government in shaping the conditions?

Yeah, it's hard because we all have different preferences. And I think the hope of economists who believe in market forces is everybody wants different things and they'll just be able to sort around the labor market until they find the thing that works for them.

economists have come up with two buckets of reasons. So the first bucket is the benefits might be a complement to hard work. We actually see higher productivity because it induces more effort from workers. The second bucket is that employees might value the benefits more than it costs the employer to provide those benefits. So let's start with the first bucket, complement to hard work.

It's why every company going back to the 50s that has office workers has coffee in the break room, right? You got to caffeinate your workers to get them to work hard. The tech sector went a little crazy with this, like, hey, let's have ping pong tables. But it really was the same idea. Well, if you're socializing at work, you'll have less of a reason to leave.

One of the more extreme examples was some of the tech companies started providing a benefit, which is we will pay for you to freeze your eggs. Oh, no, we have these hardworking female employees wringing their hands in their early 30s thinking they better have a baby. I know what we'll do. We'll pay to freeze their eggs. And then they'll be able to keep working hard for a few more years.

Yeah, it's great because you can actually see the categories here, which are clearly a complement to high productivity. Nutrition. They're like, what you eat is going to affect how you play, so we're going to feed you. The weight room, how you train up is going to affect how you play. We're going to give you a weight room.

This is really about, are we giving you the inputs you need to be as productive as possible? When we think about things like the treatment of families... That's bucket two, I assume? Yeah, this is something that's going to have a cost to them. But the question is, what's the value to the person receiving it? And that value might be quite high.

Looks like a lot of teams are doing a really bad job. I mean, I saw a lot of Fs.

Like maybe they're not getting the great inflation that our university students get these days, but a lot of Fs. And I think what that says is this is a job where there's a lot of cash thrown at these players and they don't think about anything else.

I am surprised that any team is messing up when it comes to perks and benefits that would actually increase the productivity of the players. I think that's a clear mistake because those perks and benefits are probably quite cheap compared to not just pay, but compared to the benefits they yield on the playing field.

One more victory is worth a lot of money, right? You could probably do a full renovation of your weight room.

I'm pausing only because like sometimes people do stupid things, Stephen. So I think that's one answer is like they're just being dumb. Now, another answer is what's necessary in the weight room or the training room or nutrition in order to get the best out of your players on the field is being given.

But players are looking for little aspects of that that don't actually have any impact on their productivity. You know, maybe they want a brighter, sunnier room. It can be hard to measure these things. Maybe if you had the brighter, sunnier room, they'd work harder in training. And if they worked harder in training, they'd do better on the playing field.

So you should figure out how to make it brighter or sunnier. You know, I painted little poppies on the wall in my gym, and I swear I Peloton faster because I love my field of poppies.

That would be fun. Yeah.

Right, right, right.

Yeah. Yeah, yeah, yeah. You wouldn't have any levers to pull. You wouldn't know what to do. So you're stuck.

Okay. So we know what Americans are worried about. The investing advice is always wait it out. Like, just wait it out. Is that actually good advice? Like, are there any safe havens? If I were a smart economist, would I be doing something totally different than what the average American is being told to do?

Which, around lunchtime, caused the second extraordinary thing. The stock market surged, had one of its biggest single-day jumps in history. What is happening? I'm Hannah Rosen. This is Radio Atlantic. We are living in a world in which the president makes decisions that have enormous global consequences and then unmakes them 24 hours later.

It's not even called BetsyCoin.

Okay, fair, fair, fair.

So you don't know either. Nobody knows.

Okay, a last thing. Let's say you're not in the stock market at all. Is there any downside to what's happening right now?

Yes. Yeah, you could be unemployed.

And that's going to trickle down to you, whoever you are in your job.

Although Trump would say that's just not yet. But, you know, I know what you mean.

Better than you do, yeah, I guess.

Right. Exactly. Exactly. Okay. I'm going to summarize this conversation. It's a teeny, teeny bit better than it was a day ago, but we are definitely not out of crisis yet. Is that fair?

Okay. Thanks, Justin.

That's okay. This episode of Radio Atlantic was produced by Janae West and edited by Claudina Bade. It was engineered by Rob Smirciak. Claudina Bade is the executive producer of Atlantic Audio, and Andrea Valdez is our managing editor.

Listeners, if you like what you hear on Radio Atlantic, remember you can support our work and the work of all Atlantic journalists when you subscribe to The Atlantic at theatlantic.com slash podsub. That's theatlantic.com slash P-O-D-S-U-B. I'm Hannah Rosa. Thank you for listening.

So today we are going to try and get a handle on all this volatility. Is it over? Are we still in it?

To help us, we have University of Michigan economist Justin Wolford.

I mean, like, OK, I'm just going to tell you my experience of the day. It's Wednesday afternoon. That's when we're recording. I mean, I feel like what happened today for a lot of people who track the news, you go to lunch, you're worried about tariffs, you're worried about what's going to happen. You come back from lunch and it's like Trump backs down, pauses tariff for 90 days.

Is that what happened to you today?

Your wife.

Was today real? Honestly, like today just seemed like an unreal day. Truly.

Was this week real? Exactly.

So we've just gone around the world and come back to where we were. Is that what you're saying?

It's only Wednesday.

Got it. So what you are saying, what I understand you to be saying is crisis not averted. He reset our expectations in the course of that week to some absurd level and then lowered them back to what is still too dangerously high a level.

Yeah, yeah. What's this?

Now, there was speculation that it was because of the bond market that he backed down. Can you explain what the bond market is and why it's important?

Are you talking about the president?

And safe is the important word here. Like an investment advisor would tell you, do you want to be safe? Do you want to rest easy? Safety. It's our safe space.

Yes. Right, right, right.

OK, in one single day this week — I'm talking about Wednesday, yesterday — two extraordinary things happened. In the morning, we woke up to the news that investors had started rapidly selling off U.S. bonds, which worried economists because U.S. bonds are the safe haven, and it's a very bad sign for the U.S. economy if investors no longer trust the safe haven.

Right. So the volatility such as it is already so far has made America a less predictable place, made the foreign investors' appetite dip.

Yeah. Okay.

Yeah. So, Justin, everything you just said, the cycle of events you just described, actually could make one feel safer because it suggests that what seemed chaotic, unpredictable, capricious... is actually responding to real-world inputs.

So if I'm a business owner and I'm trying to make decisions about sourcing or investments or whatever, you know, am I feeling like, oh, the future is predictable? The president actually does respond to changes in the market when it gets really serious.

Yeah, yeah, yeah, yeah, yeah.

Does anyone stand to gain from this kind of volatility? Like, you know, he did tweet, this is a great time to buy. And some people speculated he was setting a sign to followers before juicing the market again. That's maybe paranoid. I don't know.

Okay. So you don't think it's paranoid.

After the break, how this might affect the chances of a recession for all of us. Or the thing economists fear the most, stagflation.

I think when an LLM tells you something that appears to be sentient, it's just mimicking human data.

And then midday, Donald Trump made the announcement that he was going to reverse course on tariffs, sort of. We'll get into it.

So we've been through a couple of recessions, near recessions, 2008, the pandemic. The words that economists are using, depression and stagflation. Why? What's the likelihood of those? How do you think about those?

That's because of everything you've talked about. Trust, people don't trust. It's unpredictability. Like you can't make decisions if you're in an unpredictable environment.

Got it. Okay. That makes sense. That's the soft numbers.

So it's high unemployment and high inflation at the same time.

And why is that every economist's worst nightmare? Why is that the worst thing?

Got it. It's just because it's the doubling of terrible outcomes. And it's hard to know how to control that.