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Digital divide: Data highlights internet inequities in Chicago

In 2021, the Infrastructure Investment and Jobs Act authorized $65 billion to expand broadband access and adoption, and address disparities highlighted…

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In 2021, the Infrastructure Investment and Jobs Act authorized $65 billion to expand broadband access and adoption, and address disparities highlighted by the COVID pandemic and the shift to remote work, school and health care. But to invest that funding most effectively for improving digital equity in the United States, new and deep data at a local scale must be gathered and analyzed to drive effective policy and advocacy solutions for the citizens and neighborhoods most in need.

Credit: University of Chicago Data Science Institute

In 2021, the Infrastructure Investment and Jobs Act authorized $65 billion to expand broadband access and adoption, and address disparities highlighted by the COVID pandemic and the shift to remote work, school and health care. But to invest that funding most effectively for improving digital equity in the United States, new and deep data at a local scale must be gathered and analyzed to drive effective policy and advocacy solutions for the citizens and neighborhoods most in need.

The Internet Equity Initiative, an innovative effort from the University of Chicago Data Science Institute, seeks to fill this gap through a combination of new research, data analysis and communication, and community collaboration. The initiative is driven by an interdisciplinary team of researchers from UChicago’s Crown Family School of Social Work, Policy, and Practice and UChicago’s Department of Computer Science. 

At today’s inaugural Data Science Institute Summit, the initiative unveiled a new data portal that combines public and private data from 20 cities around the nation. The site makes data accessible to governments, community groups, data scientists, and other interested stakeholders seeking to improve Internet connectivity to mitigate the “digital divide.” 

UChicago researchers used data gathered on the portal to create a new analysis on disparities that ranked Chicago neighborhoods by Internet connectivity. The results – with neighborhood rankings included at the end of this release – emphasize the need for continued, targeted intervention to improve connectivity in particular sections of the city. In coming months, researchers will continue to deepen the Chicago data, adding critical, fine-grained information on where to take action to improve Internet connectivity and, in turn, develop approaches and tools that can be used for similar efforts in cities around the nation.

“It is now widely known and accepted that significant disparities exist in Internet connectivity across the United States,” said Nick Feamster, Neubauer Professor of Computer Science and The College, Faculty Director of Research at the Data Science Institute, and principal investigator of the Internet Equity Initiative. “Existing datasets affirm the existence of that problem. Yet, we are now at an inflection point where completely new datasets—and new analysis techniques—are needed for us to understand the nature of the problem, to determine how to appropriately target investments, particularly at the city and local level, and ultimately evaluate the effectiveness of those investments.” 

The portal also features “data stories” showing how the data collected by the new research initiative can be used to answer a wide range of research and policy questions. Current data stories discuss the level of home Internet connectivity needed to support video-conferencing applications for remote home and school, and a comparison of the Internet performance in two households from different neighborhoods in Chicago  that pay for the same Internet service.

“Ultimately, our aim is to reframe how all stakeholders think about Internet equity, so that discussions and decisions concerning this challenging problem can be grounded in sound data and analysis that directly speak to underlying causes and solutions,” Feamster said.

Finding Inequities Beneath The Surface of Data

Using the portal, researchers found that, in Chicago, about 80 percent of households are connected to the Internet. But when the data is disaggregated to the 77 community areas of the city, it reveals deep, local inequities. 

Burnside, West Englewood, Fuller Park, Englewood, and West Garfield Park have the lowest percentage of households connected to the Internet, each with over one third of homes offline. In contrast, neighborhoods such as the Loop, Lincoln Park, and Beverly show over 90 percent connectivity. (A ranking of Chicago neighborhoods, by percentage of households connected to the Internet, follows at the end of this release.)

These statistics come from an analysis performed by UChicago undergraduate students Lena Diasti and Amy Maldonado and Computational Analysis and Public Policy master’s student Drew Keller, working with postdoctoral researcher Tarun Mangla from the Internet Equity Initiative. Together, they combined pre-pandemic information from the U.S. Census, the American Community Survey, the FCC, and the Chicago Data Portal to capture a localized snapshot of Internet connectivity in Chicago.

The students also found that connectivity strongly correlates with income, unemployment, race/ethnicity, and an economic hardship index. The data highlights and motivates the need to look at the data at a community level, underscores the need for continued intervention to improve connectivity in particular sections of the city, and can help quantify the impact of recently launched programs such as Chicago Connected, which provides free high speed Internet to households with Chicago Public Schools students.

“The students’ analysis gives us a clear quantification of the disparities motivating the work we are doing to change the way we think about the Internet as critical infrastructure,” said Nicole Marwell, Associate Professor in the Crown Family School of Social Work, Policy, and Practice and principal investigator of the Internet Equity Initiative. “The new data we are collecting goes beyond the traditional metrics to understand a new question about how the performance of the Internet varies across Chicago neighborhoods. This new information can help us advise on where new investments can build Internet equity.”

Multi-Scale Science for a Complex Challenge

To add critical detail to the picture in Chicago, the initiative is also working with local community organizations and residents to collect several different measurements of Internet performance in households across Chicago. These data are distinct from any other available data on Internet performance, thereby filling key gaps in existing datasets.

Volunteers from across Chicago have installed a small device on their router, which allows the researchers to measure the performance of the Internet as data travels to and from the household. The study is currently in its pilot phase in 30 community areas and researchers are continuing to recruit volunteers and expand data collection. Researchers will conduct comparisons between neighborhoods, such as Logan Square and South Shore, with different community area-level statistics, while also examining variability across a larger set of neighborhoods across the city.

Together, the initiative’s portal and household-level research study on performance reflect a challenge that is national in scope but will require interdisciplinary, local research and intervention to address.

“Answering these questions requires developing entirely new approaches—from the types of data we gather, to the choices we make regarding where and how to gather it, to the techniques we develop to inform decisions,” Marwell said. “While we are piloting this approach in Chicago, we are producing a set of tools, procedures, and analyses that will enable researchers in other cities to replicate what we are doing in Chicago in their own communities.”

About University of Chicago Data Science Institute

The Data Science Institute (DSI) executes the University of Chicago’s bold, innovative vision of Data Science as a new discipline. The DSI seeds research on the interdisciplinary frontiers of this emerging field, forms partnerships with industry, government, and social impact organizations, and supports holistic data science education. The mission of DSI is to address important scientific and societal questions through coordinated advances in applications, models, algorithms, and platforms. Learn more at datascience.uchicago.edu, and follow us on Twitter and LinkedIn.

Data source: American Community Survey, 2015-2019

Community Area

Households w/ Internet (%)

Burnside

57.77

West Englewood

61.91

Fuller Park

65.34

Englewood

65.40

West Garfield Park

67.38

Greater Grand Crossing

68.35

East Garfield Park

68.37

Auburn Gresham

69.22

South Lawndale

69.97

Austin

69.98

North Lawndale

70.01

Chatham

70.28

Armour Square

72.42

Washington Park

73.91

Roseland

73.95

Avalon Park

74.29

South Shore

74.46

New City

75.27

Humboldt Park

75.58

Riverdale

75.62

Chicago Lawn

76.31

Montclare

76.51

Grand Boulevard

76.82

Woodlawn

76.85

Washington Heights

77.08

South Deering

77.55

Belmont Cragin

77.97

South Chicago

78.57

Brighton Park

79.09

West Pullman

79.47

Archer Heights

80.30

Gage Park

80.40

O’Hare

80.42

Oakland

80.58

Morgan Park

80.58

Hermosa

80.60

Dunning

80.72

West Lawn

81.10

West Elsdon

81.46

Hegewisch

81.76

Calumet Heights

81.78

Douglas

81.82

Norwood Park

82.47

Pullman

82.65

East Side

82.86

Garfield Ridge

83.12

Clearing

83.44

Rogers Park

83.66

Kenwood

83.69

Albany Park

84.19

Avondale

84.79

Lower West Side

85.44

Irving Park

85.47

Portage Park

85.49

West Ridge

85.70

Uptown

85.79

Edison Park

85.97

Ashburn

85.98

North Park

86.06

Mount Greenwood

87.04

Bridgeport

87.06

McKinley Park

87.42

Logan Square

87.83

Edgewater

88.20

Jefferson Park

88.27

Near West Side

89.30

Hyde Park

90.88

Forest Glen

91.21

West Town

91.57

North Center

91.76

Beverly

92.21

Lincoln Square

92.78

Lincoln Park

93.75

Lake View

94.27

Near South Side

94.83

Near North Side

94.93

Loop

97.86


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Economics

What Is the Great Resignation? Definition, Causes & Impact

What Is the Great Resignation (AKA the Big Quit)? The Great Resignation—also commonly called the Big Quit or the Great Reshuffle—is an ongoing phenomenon…

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Employees have been leaving their jobs in search of better prospects at a higher rate than usual since the drop in the quit rate during the early stages of the COVID-19 pandemic. 

chayanuphol via Shutterstock; Canva

What Is the Great Resignation (AKA the Big Quit)?

The Great Resignation—also commonly called the Big Quit or the Great Reshuffle—is an ongoing phenomenon involving employees voluntarily leaving their jobs in unprecedented numbers. According to most, this phenomenon officially began around late 2020 or early 2021, after the quit rate (the number of monthly resignations divided by total employment) dropped sharply during the early stages of the COVID-19 pandemic due to a shortage of work as a result of large-scale shutdowns.

Once vaccines were rolled out and restrictions were loosened, many companies resumed business, and the number of job openings increased. At the same time, the quit rate nearly doubled from around 1.6% in early 2020 to about 3% by late 2021.

According to most pundits, this uptrend marked the start of the Big Quit, but the quit rate, which started being measured in 2000, tells a different story. A graph of the data shows a slow but steady uptrend since 2009 that is only interrupted by the work shortage caused by 2020’s shutdowns and resulting layoffs. When looked at from this perspective, the great resignation is a 10+ year-old phenomenon that has been gaining momentum for years.

Had it not been for the job shortage during the early stages of the COVID-19 pandemic, the quit rate may have simply continued to rise at a steady pace. 

Bureau of Labor and Statistics via St. Louis FRED

What Conditions Led to 2021’s Great Resignation?

During the COVID-19 pandemic, so-called “essential workers” (e.g., those who worked at grocery and retail stores, hospitals, and restaurants) found themselves under-compensated and overworked by their employers, many of whom didn’t seem eager to reward the significant risks they were taking with anything more than shallow praise for keeping essential services available to the public.

Essential workers were commonly lauded as heroes, but few received the hazard pay one would expect to accompany such work. Because of this, many frontline workers felt like expendable cogs in an uncaring machine, and as more jobs became available in late 2020 and early 2021, workers left the retail, restaurant, grocery, and hospitality industries in record numbers.

During the COVID-19 shutdowns, many companies whose businesses weren’t based around manufacturing or customer service shifted toward remote work for office-type employees, and the office-based workforce realized that this could become the norm. Why spend money and time commuting to an office when the same work could be done at home? In many cases, remote work also meant that money could be saved on child and pet care.

As vaccines became widely available and shutdowns subsided in late 2020 and early 2021, an abundance of job openings meant workers had more options, and due to the high cost of living and the lifestyle changes brought about by the pandemic, many weren’t satisfied with jobs that didn’t offer living wages or flexible work environments.

Money from unemployment and federal stimulus payments also meant that some workers had enough cash on hand to search more thoroughly for positions that met their requirements rather than accepting less-than-ideal work in order to survive after quitting.

These and other factors contributed to low unemployment and high labor demand, which made for an environment that favors workers’ ability to resign and seek new prospects.

What Reasons Did Workers Give for Quitting Their Jobs?

According to surveys created by the Pew Research Center, “low pay (63%), no opportunities for advancement (63%), and feeling disrespected at work (57%)” were the top three reasons respondents cited for leaving their jobs during this particular wave of resignations. The study also showed that younger adults and those with lower incomes quit at higher rates than older adults and those with higher incomes.

What Did People Do After Resigning?

So, where did all these people go after resigning from their jobs? The answer is unsurprising—they got other jobs. According to the Bureau of Labor and Statistics, the quit rate and swap rate had a correlation of close to 100 percent. Workers weren’t resigning just to resign; they were resigning in order to leverage their labor and land themselves jobs with better pay, better benefits, and more flexibility.

With unemployment low and labor demand high, companies had to compete with one another for job seekers by providing incentives. According to the New York Times, “When workers switched jobs, they often increased their pay. Wages grew nearly 10 percent in leisure and hospitality [from May 2021 to May 2022] and more than 7 percent in retail,” two of the industries most heavily hit by the Big Quit.

In some cases, non-resigning workers were also able to leverage this shift in the labor market by demanding better pay and more flexible conditions. For many office workers, this often meant the ability to start (or keep) working remotely.

Do Workers Have More Bargaining Power Than They Did Before 2020?

In general, the conditions that existed during the Great Reshuffle shifted a degree of bargaining power from employers to workers. But will it stay that way? In general, the more demand there is for labor, and the lower the unemployment rate, the more bargaining power workers (and job seekers) have.

Interestingly, this shifting power dynamic seemed to bring about a resurgence in the labor movement, as a wave of unionization efforts followed the Great Resignation. These efforts were not, in most cases, welcomed by large employers, many of whom—such as Amazon and Starbucks—invested considerable capital into union-busting efforts and other (sometimes illegal) forms of retaliation. Nevertheless, unionization efforts continued. By May of 2022, 100 Starbucks stores had voted in favor of unionization.

Concurrently, many workers expressed their mutual solidarity in online communities. A subreddit called r/antiwork grew by over 900,000 members in 2021 and drew the ire of Fox News, a network that tends to be associated with right-wing, anti-labor-movement politics. Within the r/antiwork community, workers not only shared stories about low pay, horrible working conditions, and villainous bosses—they also shared legal information about workers’ rights and the unionization process.

Members encouraged each other to be transparent with their coworkers about pay and reminded one another that the prohibition of discussions of pay in the workplace by bosses and managers is against the law. The community continues to grow, and as of mid-2022, it had over 2 million members.

Is the Great Resignation Still Occurring?

The quit rate has fallen somewhat from its November 2021 peak, but as of late June 2022, it remains relatively high at about 2.9%. Unionization efforts are still on the rise, and workers are learning about their rights and collective power.

Given the Great Resignation’s generally upward trajectory since 2009, and the resurgence of the labor movement, it doesn’t appear as if the Big Quit is going anywhere anytime soon. According to Katherine Ross’ interview with ZipRecruiter CEO Ian Siegl, the “post-pandemic job-seeker” is here to stay. 

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Economics

US housing market is at a crossroads

With a sharp rise in mortgage rates and weak existing-home sales, Moody’s concluded that the incredible rise in home prices is over. Other housing market…

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The real estate market is cooling down

Reports released this week by several respected market observers point to less good and increased bad and ugly ahead for the housing market.

For some of the good, a U.S. Census Bureau report released late last week spurred a bout of optimism when it revealed that new-home sales jumped by nearly 11% month-over-month in May on a seasonally adjusted basis, after declining by 12% in April. 

Moody’s Investors Service, in a housing-market report released this week, puts some ugly back into the home-sales figures for May, however.

“At 696,000 units, May new home sales were around 17% below the recent peak of 839,000 units in December last year,” the Moody’s report notes. “[On June 21], the National Association of Realtors said that existing-home sales declined for the fourth consecutive month. 

“Existing-home sales fell in May by 3.4% on a seasonally adjusted basis to 5.41 million, the lowest since June of 2020 and similar to pre-pandemic levels.”

Those figures, along with “sharp recent increases in mortgage rates” and other supporting data, lead Moody’s to conclude that the “U.S. home-price boom is over.” The firm, which rates securitization offerings and provides other capital-market services, predicts “material declines” in both new- and existing-home transactions this year, compared with 2021.

Supporting the ugly outlook for the housing market is the release today, June 29, of the quarterly CFO Survey, conducted jointly by Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta. The survey of more than 300 U.S. financial executives conducted between May 25 and June 10, shows optimism about the broader U.S. economy continuing to decline.

The average index score for the current survey was 50.7, compared with 54.8 in the prior quarter and 60.3 two quarters ago.

“Price pressures have increased, real revenue growth has stalled and optimism about the overall economy has fallen sharply,” said John Graham, a Fuqua finance professor and the survey’s academic director. “Monetary tightening [by the Federal Reserve] is one of several factors dampening the economic outlook.” 

The CFO Survey’s findings are echoed by a revised first-quarter 2022 gross domestic product (GDP) estimate released Wednesday by the U.S. Department of Commerce’s Bureau of Economic Analysis (BEA). It shows that a drastic economic slowdown is already underway.

“Real gross domestic product [a measure of all goods and services produced in the economy] decreased at an annual rate of 1.6 percent in the first quarter of 2022 …,” the BEA report states. “In the fourth quarter of 2021, real GDP increased 6.9 percent.”

The BEA’s first-quarter GDP estimate, it’s third to date, was revised downward from -1.4% and -1.5% in the two prior estimates. The grim data led Mortgage Capital Trading (MCT), a San Diego-based capital market software and services firm, to broach the “R“ word in its daily market-overview report.

“Concern over a slowing economy and aggressive interest rate hikes from the Fed are beginning to dominate market sentiment,” the MCT report states. “This morning’s GDP release [on June 29] came with a downward revision for the last reading, further supporting views that a recession is either in progress or coming soon.”

What does all this mean for the housing market in the months ahead? The Moody’s report attempts to frame some of the expectations.

“We expect some increases in existing-house prices over the next 18 months, though for appreciation to be well below the general rate of inflation,” the Moody’s report states. “After that, we expect home appreciation to settle in at levels somewhat lower than the rate of overall U.S. inflation.”

The report even indicates that there “is risk that existing home prices will have a minor correction over the next two years, similar to housing markets in many other developed counties facing risks after recent booms.” 

The “moderation” in the U.S. housing market is ongoing and the full effects of recent rate increases have yet to be fully realized, the Moody’s report adds, especially with respect to housing prices.

Moody’s predicts that housing demand will “dampen significantly” in the months ahead due to the doubling of rates for 30-year fixed mortgages since the start of the year, which is fueling a huge jump in monthly mortgage costs. Freddie Mac’s most recent Primary Mortgage Market Survey shows the average 30-year fixed rate mortgage at 5.81% as of June 23. 

“The monthly costs of new mortgages on existing homes sold at median transaction prices [are] more than 60% higher than a year ago,” the Moody’s report states. “Although higher mortgage rates do not always drive home prices lower, they typically affect sales activity and drive down the rate of price appreciation. 

“We also expect higher rates to restrict for-sale supply because current homeowners will be reluctant to lose low-rate fixed borrowing costs.”

So, in effect, moderating or even declining home prices could be neutralized by rising borrowing costs, leading the housing market toward stagnation — the doldrums — in the worst-case scenario.

There is some good news mixed in with all this bad and ugly, however. Moody’s points out that some “fundamental housing strengths” will likely help to mitigate the degree of any market correction, at least over the next 12 to 18 months.

Those strengths include “favorable demographic trends, solid underwriting of outstanding mortgages and lingering housing supply constraints from a period of underbuilding,” according to the Moody’s report. Also on the bright side, according to Moody’s, is that a moderate decline in housing prices could be good for the market longer-term. That’s assuming the Federal Reserve wins the fight to tame inflation, now running at 8.6%,  without causing a major spike in unemployment, which was at 3.6% in May for the third month in a row, according to the Bureau of Labor Statistics.

In short, the housing market has reached a fork in the road, based on the Moody’s analysis — with one path leading to the doldrums, or even decline, and the other toward resurgence and a new normal.

“If U.S. home prices were to decline modestly, it would increase affordability for potential homebuyers and improve demand, including for individuals who were priced out of the market in the recent months because of rapidly rising interest rates,” Moody’s reasons in its report. “However, sustained large increases in mortgage rates or a material weakening in the labor market could lead to sharper declines in housing activity and prices.”

The post US housing market is at a crossroads appeared first on HousingWire.

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Spread & Containment

Why Is The VIX So Low? A Surprising Answer Emerges In The Market’s Microstructure

Why Is The VIX So Low? A Surprising Answer Emerges In The Market’s Microstructure

One of the most frequent questions tossed around Wall Street…

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Why Is The VIX So Low? A Surprising Answer Emerges In The Market's Microstructure

One of the most frequent questions tossed around Wall Street trading desks (and strip clubs), and which was duly covered by Bloomberg recently in "Fear Has Gone Missing in Wall Street’s Slow-Motion Bear Market", is why despite the crushing bear market and the coming recession, does the VIX refuse to rise sustainably above 30, or in other words, why is the VIX so low?

As Goldman's Rocky Fishman wrote in a recent note "Option Markets Take the SPX Bear Market in Stride" (available to professional subs), "one of the most popular questions we have received is why the VIX hasn't surpassed its March peak (36) despite the SPX being lower than it was in March and realized vol being higher than it was in March."

Here, Fishman notes that implied volatility was unusually high in March, and the current VIX level (29) is only slightly low for the current level of realized vol. Furthermore, a VIX around 30 typically happens with the 5Y CDX HY spread above 600, and although it has risen steadily it's currently in the mid 500's.

Meanwhile, even as the VIX has fallen moderately since late April, both vol risk premium and skew have both fallen dramatically.

Picking up on this quandary, overnight JMorgan also joined the discussion with its analyst Peng Cheng laying out his own thoughts on why the VIX remains so low (note is also available to professional subs), and similar to Goldman notes that the current bear market, despite being deeper in magnitude, has produced VIX levels well below the peak observed during previous market sell-offs:

However, unlike Goldman which mostly analyzes the VIX in the context of a macro framework, JPM's Cheng offers observations based on his analysis of market microstructure in both equity and options markets.

Cheng starts with the previously noted low realized volatility: as the JPM strategist writes, YTD, the SPX realized vol, measured on a close to close basis, is only 25.5, which means that delta-hedged put options would have lost money in the gamma component. From a technical perspective, JPM believes that return volatility is dampened by a lack of intraday price momentum and increasingly frequent occurrences of intraday price reversal. As seen in the next chart, intraday reversal has only started to become noticeable in the last two years. Prior to that, intraday momentum was the dominant market behavior.

This diminishing intraday price momentum has had a non-trivial impact on realized volatility, according to JPM which estimates that if the intraday return correlation remained the same as pre-pandemic, YTD volatility would be close to 28.8, or 3.3 vol points higher than realized.

As an aside, those asking for the reason behind this change in intraday patterns in the last couple of years, Cheng notes that "this is a complex topic" but in short, his view is that it is a result of 1) crowding in intraday momentum trading strategies and 2) a potential shift in option gamma dynamics as discussed below.

Supply/demand of S&P 500 options: Although the estimation of market level option gamma profile is highly dependent on many factors, including assumptions on open interest, OTC options, and leveraged ETFs, etc., in a report published earlier this year, JPM's quants presented a more dynamic estimation of the gamma profile by using tick level data. Specifically, they assigned directions to SPX and SPY option trades based on their distance to the best bid/offer at the tick level, rather than the constant assumption of investors being outright long puts and short calls. The updated results are shown below.

Tha chart shows that starting in 2020, the put gamma imbalance has fallen meaningfully. This is the result of investors’ changing preference from buying outright puts to put spreads for protection, in JPM's view. And year to date, the decline in gamma demand has not improved. Moreover, and echoing what we have said on several recent occasions, JPM notes that judging from the outright negative put gamma imbalance in early 2022, it appears that investors have been monetizing hedges that had been held since 2021 - note the consistently positive and relatively elevated put gamma imbalance throughout 2021, which suggests that protections were put on during this period.

More in the full note available to pro subs

Tyler Durden Wed, 06/29/2022 - 15:05

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