distinguished lecture on economics in government lessons from past productivity booms the u s economy has been enjoying substantially faster productivity growth for the past eight years than it did over the preceding two decades from 1995 to 2003 labor productivity rose at an average annual rate of about 3 percent up from an average annual rate of around 1 5 percent between 1973 and 1995 in both 2002 and 2003 output per hour increased more than 4 percent the significance of the improvement since 1995 can hardly be overstated even after one takes into account the possibility that the increases of the past two years in part reflect cyclical influences and thus overstate the underlying trend if productivity were to continue to rise at an average annual rate of 3 percent the standard of living in the united states would double roughly every 24 years if on the other hand productivity growth were to revert to an average annual pace of 1 5 percent a doubling in the standard of living would occur every 47 years a number of observers argue that the present era of robust trend productivity growth will soon come to an end others contend that the potential gains to productivity from the technological advances associated with the computer revolu

does adding up of economic capital for market and credit risk amount to conservative risk assessment there is a tradition in the banking industry of dividing risk into market risk and credit risk both categories are treated independently in the calculation of risk capital but many financial positions depend simultaneously on both market risk and credit risk factors in this case an approximation of the portfolio value function separating value changes into a pure market risk plus pure credit risk component can result not only in an overestimation but also in an underestimation of risk we discuss this compounding effect in the context of foreign currency loans and argue that a separate calculation of economic capital for market risk and for credit risk may significantly underestimate true risk

railways and the local economy evidence from qingzang railway abstractthis article empirically examines the causal effect of railway infrastructure on local economic development using the construction of qingzang railway as a natural experiment we apply the difference in difference method and find that the qingzang railway significantly stimulated the economy of the counties along its path railway counties the local gdp per capita increased by about 33 after the railway had begun to operate the effect manifested primarily through the positive railway effect on the manufacturing industry in addition the effect did not vary significantly with the initial economic status of the railway counties the gdp per capita of the off railway counties that are adjacent to the railway counties was not significantly affected

scheduling the production of several items with random demands in a single facility consider the problem of scheduling the production of several items in a single facility that can produce only one item at a time this problem occurs since it is often economic to produce several items in a single facility the objective is to reduce the long run average holding backorder and setup costs we assume that demands are random with constant expected rates we allow backorders and charge holding and backlogging costs at linear time weighted rates items are produced at continuous constant rates setup times and setup costs are item dependent constants these parameters however are independent of the order of setups a real time scheduling tool is developed in three steps first with demands replaced by their expectations we compute an optimal or near optimal target cyclic schedule next we study the problem of scheduling the facility after a single disruption perturbs the inventories the goal is to recover the target cyclic schedule at minimal excess over the average cost of the cyclic schedule we formulate this as a control problem and obtain a linear recovery policy that is optimal for a large configuration of disruptions finally we select safety stocks to minimize the long run average cost of following the target schedule with the recovery policy we show that optimal safety stocks are unique and have the property that in the long run the proportion of time that an item is in stock is the ratio of backorder to holding plus backorder cost we present an example that integrates the cyclic schedule the control policy and the safety stocks

modeling correlated market and credit risk in fixed income portfolios abstract current risk assessment methodologies separate the analysis of market and credit risk and thus misestimate security and portfolio risk levels we propose a new approach that relates financial market volatility to firm specific credit risk and integrates interest rate interest rate spread and foreign exchange rate risk into one overall fixed income portfolio risk assessment accounting for the correlation between these significant risk factors as well as portfolio diversification results in improved risk measurement and management the methodology is shown to produce reasonable credit transition probabilities prices for bonds with credit risk and portfolio value at risk measures

determination of safety stocks for cyclic schedules with stochastic demands abstract this paper considers the problem of scheduling the production of multiple items each with random demand on a single facility we show how the variance in demand during lead time can be estimated and present a model for determination of safety stocks and order up to levels for a fixed cyclic sequence both with and without idle time for systems with idle time we present a control model to make the decision to produce next item in sequence or idle the facility the performance of the model is tested in a simulation study

integrating market and credit risk a simulation and optimisation perspective abstract we introduce a modelling paradigm which integrates credit risk and market risk in describing the random dynamical behaviour of the underlying fixed income assets we then consider an asset and liability management alm problem and develop a multistage stochastic programming model which focuses on optimum risk decisions these models exploit the dynamical multiperiod structure of credit risk and provide insight into the corrective recourse decisions whereby issues such as the timing risk of default is appropriately taken into consideration we also present an index tracking model in which risk is measured and optimised by the cvar of the tracking portfolio in relation to the index in sample as well as out of sample backtesting experiments are undertaken to validate our approach the main benefits of backtesting that is ex post analysis are that a we gain insight into asset allocation decisions and b we are able to demonstrate the feasibility and flexibility of the chosen framework

the valuation of floating rate instruments abstract a framework for valuing floating rate notes is developed to examine the effects of 1 lags in the coupon formula 2 special contractual features and 3 default risk evidence from a sample of floaters indicates they sold at significant discounts while lags in the coupon formulas and other contractual features make these notes more variable they do not account for the magnitude of the discounts we conclude that the fixed default premium in the coupon formula of a typical note is inadequate to compensate for time varying default premiums demanded by investors who treat other corporate short term paper as close substitutes

lead time minimization of a multi product single processor system a comparison of cyclic policies abstract the supply chain under consideration is a two echelon system consisting of a retailer and a manufacturer the n different products face stochastic demand at the retailer and are produced using a shared facility at the manufacturer production changeover involves setup time that is significantly higher than the processing time a cyclic polling model with exhaustive limited service policy from the networking literature is applied to the supply chain problem and the service limit values are obtained to minimize the lead time mathematically the exhaustive service policy gives least value but in practice we can set the service limit to values near the stability condition and obtain similar results other cyclic policies that take into consideration either the minimum lot size or the production quantity band or the idle time between cycles are also studied these are tested for different values of plant utilization and a comparison is drawn through simulation limitations of the model are discussed and possible extensions identified

determination of an order up to policy in the stochastic economic lot scheduling model we consider a production inventory problem with compound renewal item demand the model consists of stockpoints one for each item controlled according to r s policies and one machine which replenishes them the replenishment orders are produced with a fixed rate on the machine with significant setup times and costs which are stochastic and sequence dependent the time between the release and the production of the replenishment order is called the waiting time we develop analytical approximations for the first two moments of this waiting time the order up to levels and the average physical inventory levels for all stockpoints given the target fill rates these analytical approximations allows for a quick evaluation of the waiting time which is important when optimization of the system is considered

cyclical schedules vs dynamic sequencing replenishment dynamics and inventory efficiency abstract this paper addresses the efficiency of fixed sequence cyclical scheduling systems relative to that of dynamically sequenced order point methods of production control the criterion for comparison is the aggregate inventory required to achieve a target fill rate taking into account the alternative replenishment dynamics arising under the respective systems a simulation analysis demonstrates that cyclical scheduling may have smaller aggregate inventory requirement when the production process is highly utilized and when this utilization is due to demand for a small number of items having large setup times

market specific effects of rail deregulation since partial deregulation of the railroad industry in 1980 real rail rates have fallen yet previous studies are inconclusive in identifying deregulation as the reason for lower rates in this paper the author develops a model that tests a variety of deregulation effects on the rates charged for transporting thirty four different commodities the results suggest that deregulation has significantly affected almost all commodities and that the effects vary by commodity and through time initially deregulation increased rates for some commodities had no effect on others and decreased rates on still others however by 1988 deregulation lowered rates significantly for almost all commodities copyright 1994 by blackwell publishing ltd

defaulted bonds demand supply and performance 1987 1992 estimates of the market value of total private and public defaulted and distressed debt are as high as 200 billion in 1990 with a slight decline to about 175 billion in 1992 the supply can be expected to shrink in the nearfuture as defaults and bankruptcies by large us companies appear to have peaked at the same time the demand for such securities is likely to remain fairly constant as long as they can offer competitive returns

quasi fixed cyclic production schemes for multiple products with stochastic demand abstract in this paper we present an approach to generate cyclic production schemes for multiple products with stochastic demand to be produced on a single production unit this scheme specifies a fixed and periodic production sequence called a cycle where each product may occur more than once in the sequence in order to stabilize the cycle length alternative control strategies are introduced these strategies keep the cycle length close to a target length by means of adding idle time to the cycle cutting production short or overproduction on basis of the selected control strategy as well as a base stock policy target inventory levels are determined for each production run in the cycle demand can be backlogged but a certain service level is required setup times are sequence dependent and the storage is capacitated employing the developed strategies we investigate the tradeoff between stability of cycle length and total cost induced by the production schedule in a computational study based on both real world data and random test instances

costly gains to breaking up lecs and the baby bells while the divestiture of at t was intended to produce benefits in the long distance market the evidence suggests it has created an unexpected side benefit in local telephone markets the authors results show that local exchange carriers have realized immediate cost savings in responding to competitive pressures since the breakup with the baby bells experiencing generally larger gains dynamically these productivity gains have increased over time at a relatively constant rate although gains of 3 5 percent of total cost are not that large the absolutely large costs of telephone companies imply significant cost savings of nearly 72 million for the representative firm copyright 1993 by mit press

globalizing carbon lock in this paper extends the arguments surrounding carbon lock in elaborated in unruh energy policy 28 2000 817 30 2002 317 to countries currently undergoing industrialization it argues that for numerous reasons industrializing countries are unlikely to leapfrog carbon intensive energy development on the contrary carbon lock in may be globalizing and could further constrain climate change mitigation options it is then argued that many policy recommendations ignore carbon lock in possibly limiting their potential for successful implementation the paper then discusses four policy approaches that appear to have advantages given lock in conditions it is recognized however that relative ease of implementation does not necessarily equate with superiority instead it is merely a path dependent outcome of past development decisions pursuing policies on the basis of relative implementation ease may help address the issue of climate change but could also result in sub optimal outcomes along other dimensions of sustainable development

an economic capital model integrating credit and interest rate risk in the banking book banks often measure credit and interest rate risk in the banking book separately and then add the risk measures to determine economic capital this approach misses complex interactions between the two risk types we develop a framework where these risks are analysed jointly since banking book positions are generally not marked to market our model is based on book value accounting our simulations show that interactions matter and that ignoring them leads to risk overstatement the magnitude of the errors depends on the structure of the balance sheet and on the repricing characteristics of assets and liabilities

simulation based sequencing and lot size optimisation for a production and inventory system with multiple items abstract we investigate the following decision problem a manufacturing unit has to meet a random demand for n items at the same time only one item can be manufactured manufacturing times are random whereas set up times are known positive constants but different for different items finished production is stored in a warehouse with finite capacity the availability of raw material is always guaranteed demand that cannot be satisfied by items in the warehouse will be backordered in a queue with given capacity demand that meets a full backorder queue is lost we assume cost for manufacturing items for production switches for holding items in the warehouse for waiting and lost demand for sold items a given reward is earned the problem now is to define such a manufacturing policy i e a sequencing rule and a lot size rule which maximises the expected profit per time unit since that problem is too complex for an analytical solution we restrict our search for an optimal policy to simple structured policies which can be described by a few parameters to find optimal parameter values we use simulation optimisation where a simulator for the system is combined with a genetic algorithm as an optimiser the paper is finished with some numerical examples to show the applicability of the proposed approach

measuring the benefits of a large public investment the case of the u s federal aid highway system abstract this paper presents an analysis of an important component of the benefits of federal aid highway infrastructure investments in the united states specifically it focuses on the effects of those investments since 1950 on costs and productivity of firms in the u s road freight transport industry using a theoretical and statistical model of regional truck firm costs the paper documents that the rapid growth of highway infrastructure which occured between 1950 and 1973 had a strong and positive effect on productivity growth in trucking furthermore the results indicate the benefits of these investments to be substantial large enough to justify between one third and one half of the cost of the federal aid highway system over this period on the basis of benefits to trucking alone

regulatory reform and technical change new evidence of scale economics in trucking economists have long argued against the regulation of motor carriers in the united states because the industry has been considered to be competitive in nature federal control of trucking has produced inefficiently high rates as well as costs advocates of regulatory reform have foreseen benefits accruing to shippers and consumers in general as greater rate freedom the entry of new firms and the removal of regulatory constraints lead motor carriers to reduce costs 16 and lower prices 17 many of these projected benefits were premised on the perceived competitive market structure of the trucking industry these perceptions have been largely supported by pre deregulation cost studies of general freight carriers which have found evidence of either constant returns to scale or diseconomies of scale friedlaender and wang chiang 8 find that for 20 interregional carriers over 1965 73 the typical firm operating at the sample mean is subject to mild scale diseconomies in a subsequent study of multiproduct economies of scale using 1976 proprietary data they 14 obtain the same basic results the typical firm has constant returns to scale while the representative large firm operates under moderate diminishing returns daughety nelson and vigdor 4 also find mild decreasing returns to scale for a panel of firms spanning 1953 58 in another study over 1974 79 friedlaender and bruce 6 find slight economies of scale for the typical firm based on simulations with the largest and smallest firms in their sample they suggest that over time large carriers have become more characterized by scale economies and small carriers by scale diseconomies however their evidence is far from clear cut given this conventional wisdom that the technology of the less than truckload segment of this industry was constant returns to scale before deregulation few if any economists doubted the desirability of the motor carrier act of 1980 the purpose of this paper is to determine empirically whether the sweeping legislative changes were justified on solely economic grounds it is possible that previous cost studies are biased as a consequence of the regulatory constraints facing the firms has deregulation itself corrected for distortions created by the regulatory environment and thus produced changes in the production choices of trucking companies was friedlaender and spady s 7 contention that truckload carriers may have experienced regulatory rather than technology based increasing returns to scale correct if so perhaps past results for general freight carriers are similarly due to regulation however in this case the reason may be regulatory

periodic versus can order policies for coordinated multi item inventory systems the coordinated multi item inventory problem refers to the problem of managing inventories where there is a joint fixed cost for replenishing plus an item by item fixed cost for each item included in the replenishment order given that the optimal solution is likely to be too complex attention has focused on fixed heuristics and in particular can order or s c s policies this paper makes two contributions first a new lower bound on the cost of the optimal policy is proposed in order that the performance of heuristics may be measured second motivated by the lower bound a simple periodic policy is proposed and shown to be an improvement over can order policies for many data sets

optimizing service level and relevant cost for a stochastic multi item cyclic production system a multi item make to order production system in a stochastic environment is analyzed assuming a common cycle production approach the impact of safety stock cycle time demand processing time and setup time on service level and total relevant cost holding setup and backorder cost is determined to illustrate this relationship a trajectory for the service level with respect to the relevant cost holding and setup is presented furthermore algorithms to calculate the cycle time which leads to maximum service level at constant safety stock and to calculate the pair cycle time and safety stock which minimize total relevant cost are introduced

the rise of risk based pricing of mortgage interest rates in italy abstract this paper assesses how much mortgage interest rates in italy are priced on credit risk as proxied by the probability of household mortgage delinquency estimated using the eu silc database owing to data availability we restrict the analysis of mortgage pricing to italian households consistent with the more widespread use of credit scoring estimates indicate that italian lenders have increasingly priced mortgage interest rates on household credit risk for mortgages granted between 2000 and 2007 we find that a 1 point increase in the probability of default is associated with a 21 basis point rise in mortgage interest rates lower than the 38 basis point premium edelberg 2006 estimated for the us at the end of the 1990s

the default rate experience on high yield corporate debt recent 1978 83 net returns on high yield low rated debt have been impressive averaging 490 to 580 basis points above the long term government bond index but low rated junk bonds pose a risk of default not present in the higher rated segment of the bond market the authors divided the par value of defaulting debt by total low rated straight debt outstanding to arrive at an estimate of the default rate for high yield bonds excluding johns manville which had the only defaulting debt rated investment grade just prior to the default date for the 1974 84 period this averaged 1 52 per cent or 152 basis points annually year to year variations in the rate were substantial furthermore default experience differed across various industry segments railroads and reits were particularly vulnerable to default in the past although they are unlikely to represent a large portion of future defaults retailer electronic computer airline and oil and gas defaults have become more common in recent years losses from default are actually lower than the default rate alone implies defaulted bonds traded on average at 41 per cent of par shortly after default after accounting for the bonds retained value and the loss of interest the average reduction in return to the investor who had purchased the bonds at par would have been in the range of 96 to 100 basis points annually

the intersection of market and credit risk abstract economic theory tells us that market and credit risks are intrinsically related to each other and not separable we describe the two main approaches to pricing credit risky instruments the structural approach and the reduced form approach it is argued that the standard approaches to credit risk management creditmetrics creditrisk and kmv are of limited value when applied to portfolios of interest rate sensitive instruments and in measuring market and credit risk empirically returns on high yield bonds have a higher correlation with equity index returns and a lower correlation with treasury bond index returns than do low yield bonds also macro economic variables appear to influence the aggregate rate of business failures the creditmetrics creditrisk and kmv methodologies cannot reproduce these empirical observations given their constant interest rate assumption however we can incorporate these empirical observations into the reduced form of jarrow and turnbull 1995b drawing the analogy risk 5 63 70 model here default probabilities are correlated due to their dependence on common economic factors default risk and recovery rate uncertainty may not be the sole determinants of the credit spread we show how to incorporate a convenience yield as one of the determinants of the credit spread for credit risk management the time horizon is typically one year or longer this has two important implications since the standard approximations do not apply over a one year horizon first we must use pricing models for risk management some practitioners have taken a different approach than academics in the pricing of credit risky bonds in the event of default a bond holder is legally entitled to accrued interest plus principal we discuss the implications of this fact for pricing second it is necessary to keep track of two probability measures the martingale probability for pricing and the natural probability for value at risk we discuss the benefits of keeping track of these two measures

the risk and return of low grade bonds an update 1991 the risk and return of low grade bonds an update financial analysts journal vol 47 no 5 pp 85 89

intermodal traffic regulatory change and carbon energy conservation in us freight transport conserving transport carbon emissions is an important policy goal conventional wisdom often holds that conservation is best achieved by increased regulation and that such gains are best achieved in passenger auto transport fuel efficiency standards or diversion to transit we argue that the growth of rail freight has conserved carbon fuel use in the united states and that fuel saving changes have been facilitated by reduced regulation since 1980 methods used include estimation of translog cost functions and related demand functions for fuel for intermodal rail and for truck allowing controlled comparisons of modal fuel use we find intermodal rail e g trailer on flatcar to be a powerful conserver if intermodal rail were eliminated and traffic transferred to over the highway truck extra annual carbon emissions would be nearly 25 tg by comparison if urban passenger transit were eliminated and replaced by autos according to one study the extra annual emissions would be only 3 9 tg

the stochastic economic lot scheduling problem cyclical base stock policies with idle times in this paper we discuss stochastic economic lot scheduling problems elsp i e settings where several items need to be produced in a common facility with limited capacity under significant uncertainty regarding demands production times setup times or combinations thereof we propose a class of production inventory strategies for stochastic elsps and describe how a strategy which minimizes holding backlogging and setup costs within this class can be effectively determined and evaluated the proposed class of strategies is simple but rich and effective when the facility is assigned to a given item production continues until either a specific target inventory level is reached or a specific production batch has been completed the different items are produced in a given sequence or rotation cycle possibly with idle times inserted between the completion of an item s production batch and the setup for the next item an optimal strategy within the class can be determined and all relevant performance measures can be evaluated in just a few cpu seconds using a 486 based pc we also derive a number of easily computable lower bounds for the optimal cost value and establish a comparison with deterministic elsps

the incidence of regulatory rents in the motor carrier industry this article focuses on two questions in the debate over motor carrier regulation first did regulation create eliminate or have no effect on monopoly rents in the trucking industry second ifthere were rents what was their incidence were they received by owners oftrucking firms dissipated through higher costs or captured by the teamsters union data on share price responses to deregulation announcements reveal declines in expected profits of 8 19 of totalfirm value this suggests that regulation created monopoly profits and indicates that at least some of these rents accrued to owners of trucking firms firms responses to regulatory change are modelled as functions of company s operating characteristics and measures of unionization operating efficiency and service characteristics are shown to affect the impact of deregulation on share values

recovery rates default probabilities and the credit cycle in recessions the number of defaulting firms rises on top of this the average amount recovered on the bonds of defaulting firms tends to decrease this paper proposes an econometric model in which this joint time variation in default rates and recovery rate distributions is driven by an unobserved markov chain which we interpret as the credit cycle this model is shown to fit better than models in which this joint time variation is driven by observed macroeconomic variables we use the model to quantitatively assess the importance of allowing for systematic time variation in recovery rates which is often ignored in risk management and pricing models

the inefficiency of regulating a competitive industry productivity gains in trucking following reform this study confirms the higher productivity levels predicted by advocates of regulatory reform in trucking and shows that these gains have been substantial cost simulations suggest that following a year of higher expenditures efforts to remain competitive have yielded considerable cost savings that increase over time from 1 percent in 1981 to 23 percent in 1984 the indirect effects of reform through the independent variables initially decrease costs but later lead to higher costs the cumulative effect has been a less than 1 percent increase in costs in 1980 becoming by 1984 a significant 16 percent productivity gain copyright 1990 by mit press

the impact of unionization on motor carrier costs i introduction the increasingly competitive markets fostered by the motor carrier act of 1980 have forced motor carriers to focus on cost saving strategies intended to reduce operating miles fuel consumption and capital and labor expenses there are two reasons unions firms may be at a competitive disadvantage in these efforts first although the union nonunion wage differential has decreased following regulatory reform rose 1987 and hirsch 1988 find that union firms still pay higher wages second managers of unionized firms may have less flexibility in the use of inputs since union work rules restrict the activities and substitutability of drivers terminal workers and terminal facilities indeed harrington 1987 reports that post 1980 trucking expenses are still 40 higher for unionized motor carriers than for nonunion firms unionization may affect carrier cost both by increasing the price of labor and by potentially affecting cost function parameters if union rules make labor less productive the entire cost function will shift upwards for a given set of factor input prices further freeman and medoff 1982 argue that work rules may be expected to result in reduced elasticities of substitution between labor and other inputs in the unionized setting indeed they find that substitution between production labor and other labor in manufacturing is generally lower in unionized settings the impact of unionization on production has been investigated in industries such as construction coal mining hospitals and the cement industry by allen 1984 1986a 1986b byrnes et al 1988 and clark 1980a 1980b the results have been inconclusive with unionized firms being more productive than nonunion firms in some instances and less productive in others studies such as allen 1986c and addison and hirsch 1989 have utilized production function methodologies that use restrictive functional forms which impose homogeneity and identical elasticities of substitution between pairs of inputs allen 1986c examines the relative efficiency of union and nonunion firms with a translog cost function allowing for union effects using intercept and slope parameters that vary by union status in his study of different types of construction projects he finds significant differences between the cost functions for union and nonunion firms but no evidence of the inelasticity of factor substitutions as hypothesized by medoff and freeman in fact his estimates of factor demand elasticities show no discernible pattern for union versus nonunion firms leading him to conclude that work rules do not have the anticipated impact on elasticity the purpose of this study is to test whether unionization impacts motor carrier costs and if so to determine the direction of the impact of particular interest is whether the work rules imposed by the teamster s union have had a significant impact on factor substitutability in unionized firms as argued by freeman and medoff 1982 friedlaender and spady 1981 daughety et al 1985 mcmullen and stanley 1988 grimm et al 1989 and ying s 1990 studies of motor carrier industry costs have used translog cost functions which implicitly assume that union and nonunion cost functions arise from the same production technology this is equivalent to accepting the hypothesis that unionization does not affect the production structure of motor carrier firms if unionization does affect a firm s production process the results from these studies could be biased accordingly this study uses a translog cost function to test for differences in the cost structure of union and nonunion carriers not only is the translog cost function standard in the motor carrier literature permitting comparison of these results with those of previous work it also allows the flexibility necessary to examine the differential impact of unions on cost function parameters and elasticities of substitution between factors

interaction of market and credit risk abstract experience during the financial crisis illustrates that the integrated measurement and management of different forms of risk remains a challenge for industry practitioners researchers and financial supervisors alike in the context of related literature this article summarizes new research on the interaction of market and credit risk and implications for risk management that is presented in this special issue the research covered highlights in particular the errors that can occur in the aggregation of the two types of risk and the strong relationships between them that suggest caution in the use of pragmatic distinctions between them the article also touches on some research based lessons for supervisory policies and suggests some directions for future research

compensation unionization and deregulation in the motor carrier industry abstract previous research on the deregulation of the motor carrier industry has concluded that firms have become more efficient under deregulation and that costs have fallen largely at the expense of labor most studies that examine the effects on labor use current population survey data and find that wage premiums to union labor have fallen as a result of deregulation this study uses firm data and finds that deregulation had a very small effect on the average compensation paid by surviving union firms for nonunion firms the impact of deregulation is much larger these results suggest that the compensation premium for the labor of surviving union firms has increased but this increase applies only to surviving union labor in the paper we also point to and note a major exodus of union firms with the result that union labor levels have fallen and fallen dramatically