Chronic Unemployment Bulletin, 2014
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- 20141207 : Temporary Work is Bad for Your Cognitive Health by Yves Smith ( December 6, 2014 , nakedcapitalism.com )
- 20141207 : Why Piketty is a Defender of Neoclassical Economics and an Enemy of Egalitarianism ( Dec 7, 2014 , naked capitalism )
- 20141205 : The Rise of Invisible Unemployment by Derek Thompson ( Nov 9, 2015 , theatlantic.com )
- 20141205 : Fed Watch Ahead of the November Employment Report ( Economist's View )
- 20141203 : Attacking the New Normal of Secular Stagnation by George R. Tyler ( January 2, 2014 The Globalist )
- 20141203 : Why the Next Recession Will Be Different ( Dec 02, 2014 , The Fiscal Times )
- 20141203 : Workers vs. Undocumented Immigrants The Politics of Divide & Conquer ( naked capitalism )
- 20141129 : Possible Headline for Next Friday Best Year for Employment since the 90s Hoocoodanode ( Possible Headline for Next Friday Best Year for Employment since the '90s Hoocoodanode, Nov 29, 2014 )
- 20141128 : Being homeless is better than working for Amazon by Nichole Gracely ( Nov 28, 2014 , theguardian.com )
- 20141128 : Faces of part-time workers: food stamps and multiple low-paid jobs by Jana Kasperkevic ( Nov 28 2014 , theguardian.com )
- 20141125 : At European Parliament, Pope Bluntly Critiques a Continent's Malaise ( Nov 25, 2014 , NYTimes.com )
- 20141125 : Pope visit to the Council of Europe (Strasbourg, 25 November 2014) ( Pope visit to the Council of Europe (Strasbourg, 25 November 2014), Nov 25, 2014 )
- 20141015 : Ferguson protests reveal undercurrent of dissatisfaction with economic inequality ( theguardian.com )
- 20140922 : Those Lazy Jobless by Paul Krugman ( NYTimes.com )
- 20140901 : Franklin Roosevelt On Labor, Wages, and Confidence ( Jesse's Café Américain )
- 20140207 : SP 500 and NDX Futures Daily Charts - Non-Farm Payrolls Tomorrow ( SP 500 and NDX Futures Daily Charts - Non-Farm Payrolls Tomorrow, Feb 07, 2014 )
- 20140207 : Over 1 in 6 Men in Prime Working Years Dont Have a Job ( naked capitalism )
- 20140207 : Neoliberalism and the End of Shorter Work Hours by Christoph Hermann ( January 02, 2014 , Global Research )
- 20131231 : The Task Rabbit Economy by Robert Kuttner ( October 10, 2013 , prospect.org )
- 20131218 : The Impact of Unemployment on Well-Being ( Economist's View )
- 20131020 : Ilargi Winter In America Gets Colder – Why We Choose Poverty ( naked capitalism )
- 20130807 : They wont be lovin it: McDonalds admits 90% of employees are on zero-hours contracts without guaranteed work or a stable income ( The Independent )
- 20130728 : Misdirected QE is mere sleight of hand by Henry C K Liu ( Jul 17, 2013 , Asia Times )
- 20130728 : Is This The Recovery Obama Is Talking About ( Zero Hedge )
- 20130728 : A charted history of robot evolution, and some thoughts on jobs ( FT Alphaville )
- 20130728 : Software eats the world, charges for the privilege ( July 22. 2013 , FT Alphaville )
- 20130728 : The Edifice of Recovery is Crumbling by Phoenix Capital Research ( July 24, 2013 , Zero Hedge )
- 20130718 : Research Labor force participation rate expected to stay flat through 2015 ( Calculated Risk )
- 20130718 : Weekly Initial Unemployment Claims decline to 334,000 ( Calculated Risk )
- 20130718 : Eligibility for Unemployment Insurance Benefits ( Eligibility for Unemployment Insurance Benefits, )
- 20130718 : Mass Layoffs (Monthly) News Release ( Mass Layoffs (Monthly) News Release, )
- 20130709 : Fed Watch A Solid But Not Spectacular Employment Report ( July 05, 2013 , Economist's View )
- 20130709 : Why Underemployment May Be Worse Than It Looks ( Why Underemployment May Be Worse Than It Looks, Jul 09, 2013 )
- 20130630 : The Oil Drum The Connection of Depressed Wages to High Oil Prices and Limits to Growth ( The Oil Drum The Connection of Depressed Wages to High Oil Prices and Limits to Growth, Jun 30, 2013 )
- 20130630 : Globalization and Macroeconomics ( June 19, 2013 , NYTimes.com )
- 20130620 : Men are disappearing from the workforce by Tami Luhby ( Jun 19, 2013 , CNNMoney.com )
- 20130527 : Tech Titans Are the New Masters of the Universe, Be Afraid Kotkin Daily Ticker ( Yahoo! Finance )
- 20130523 : Overdue Student Loans Reach Record as U.S. Graduates Seek Jobs by John Hechinger ( Bloomberg )
- 20130522 : In one chart we have a demand problem, not a skills problem by Heidi Shierholz ( Economic Policy Institute )
- 20130522 : The Internet Kills More Jobs Than It Creates by Jaron Lanier ( The Internet Kills More Jobs Than It Creates, )
- 20130522 : Yahoo! Finance ( Yahoo! Finance, )
- 20130512 : How Austerity Kills by DAVID STUCKLER and SANJAY BASU ( May 12, 2013 , nytimes.com )
- 20130512 : Goldman Caves The Unemployment Rate Is An Inappropriate Measure Of The Labor Market ( 05/06/2013 , Zero Hedge )
- 20130512 : The Fed Dials the Wrong Unemployment Number ( Economist's View )
- 20130508 : Rising Structural Unemployment by Tim Duy ( Rising Structural Unemployment, May 08, 2013 )
- 20130508 : Delusions of Economic Recovery by PAUL CRAIG ROBERTS ( May 06, 2013 , Counterpunch )
- 20130429 : Could Automation Lead to Chronic Unemployment Andrew McAfee Sounds the Alarm ( Forbes )
- 20130429 : The Clear Signs of a Global Inflationary Tsunami Are Already Visible Around the World ( Zero Hedge )
- 20130407 : Summary for Week ending April 5th ( Apr 07, 2013 , Calculated Risk )
- 20130310 : Fed Watch: A Solid Employment Report ( Fed Watch: A Solid Employment Report, Mar 10, 2013 )
- 20130310 : The Employment Situation -- February 2013 ( Economist's View )
- 20130310 : Jesses Café Américain US Unemployment Rates Adjusted For a Constant Labor Participation Rate ( The current elite just don't care... )
- 20130212 : Guest Post: The Siren Song Of The Robot ( Guest Post: The Siren Song Of The Robot, Feb 12, 2013 )
- 20130209 : That Robot Economy And The Rentier Class ( Forbes )
- 20130209 : Two Thirds Of Americans Aged 45-60 Plan To Delay Retirement ( Two Thirds Of Americans Aged 45-60 Plan To Delay Retirement, )
- 20130209 : Obsolete Humans Why Elites Want You to Fear the Robot Alternet ( Obsolete Humans Why Elites Want You to Fear the Robot Alternet, )
- 20130209 : Guest Post: Why Employment In The U.S. Isnt Coming Back ( Guest Post: Why Employment In The U.S. Isn't Coming Back, )
- 20130209 : Guest Post: Why Employment Is Dead in the Water ( Guest Post: Why Employment Is Dead in the Water, )
...The negative consequences of dual labour markets have been extensively documented, but so
far little attention has been paid to their effects on workers' on-the-job training and cognitive
skills. This column discusses evidence from PIAAC – an exam for adults designed by the OECD in 2013.
Temporary contracts are associated with a reduction of 8–16 percentage points in the probability
of receiving on-the-job training, and this training gap can explain up to half of the gap in numeracy
scores between permanent and temporary workers.
Starting with the seminal work by Saint-Paul (1996), there has been a large literature documenting
the negative consequences of dual labour markets in several EU countries.1 Among them,
Spain is often cited as the most extreme example, since its labour market is characterised by a
large gap between the firing costs of workers with permanent and temporary contracts, and by lax
regulation of the use of temporary contracts. Yet, so far not much attention has been paid to the
effects of dual labour markets on workers' on-the-job training (OJT) and the subsequent effect of
the latter on cognitive skills.2 A new element to add to the ample evidence of the negative
effects of duality on other dimensions of worker's performance is provided by the Programme for
the International Assessment of Adult Competencies (PIAAC), the exam for adults designed by the
OECD in 2013, in the spirit of the PISA exams but for the working-age population.
... ... ...
Concluding Remarks
The evidence presented above is not, strictly speaking, a 'smoking gun' of a harmful effect of
temporary contracts. Due to the nature of our data (a cross section), we cannot credibly establish
unambiguous causality for the statistical relation that we find. However, the evidence is quite
suggestive. We hope that future analysis will allow for a clearer causal inference, but given all
the evidence (not just ours) accumulated so far on the detrimental effects of dualism, we should
keep the suspect under house arrest and heavy police surveillance. If it really is a social danger,
we should at least try not to do more damage.
See
original post for references
Jeremy Grimm, December 6, 2014
What an annoying piece of writing! I do not believe the authors have ever worked as temps.
[I worked many years as a job-shopper to the Military-Industrial complex, a temporary engineer-programmer,
also called a contractor. No! I am not proud about it. I saw when I first started engineering
school how engineering was turning into a well-paid, but for other reasons crappy job. When
I was a kid, I saw an entire generation of the best engineers laid-off after man walked on the
moon. We all make the "best" choices open to us.]
Take the issue of training. Temps are not trained because often they are hired to provide
skills unavailable from the permanent employees, call them directs. Without some investment
in training, both time and money, directs generally lack the skills hired in with a temp. We
were always called "hired-guns", recalling the gun-fighters hired for their speed, shooting
accuracy, and willingness to shoot anyone identified as a target.
In other cases temps are hired with the needed skills, usually no different from the
skills of permanent employees doing the same job. The temps fill out temporary and long term
increases in demand for a good or service but ever remain expendable. One or two decades ago,
temps earned a pay differential for their mobility and easy expendability. In any case they
help put fear into directs.
The management at every job I was on went to lengths to create an enmity between directs
and temps. It was common practice to lay-off directs whenever opportunity presented, while
keeping the temps because they could be laid-off on a whim. Temps were often used as a prod
to push directs. As a temp I was expected to perform without training and without more than
a cursory description of the work required. Temps must read their clients desires and produce
accordingly. This is a skill lacking in many directs who require some efforts expended to explain
what was required of them.
My experiences as a temp worker clash greatly with the conclusions of this piece. Temps
have to come in already knowing the job. They have to perform or they will be laid-off,
sometimes within hours. In many cases they are expected to outperform directs and supplement
skills directs never developed. Of course, they are not trained. They are expected to bring
the skills with them. What is unmentioned in the article - often directs are not trained either.
I do not know what kind of temps and what kinds of employment the authors of this paper studied.
As I indicated above, temps are a way to steal the skills trained by other employers or to take
advantage of those who are "Smarter than the average bear" to get jobs done. Temps also give
employers a tool for increasing the anxiety of directs and forcing speedups with the stick -
"If you cannot perform as quickly and as well as the temps we keep, you too will be cast off.
Do you want to join this band of hired-gun gypsies?"
Temps give employers a tool to tell their employees how very fungible and unimportant
they are. In the days of unions, what are called temps now might have been called "scabs"
in some cases. I work in an amalgam of engineering and programming. I feel little guilt about
having worked as a job-shopper in the past and as a "consultant" in the very recent past - soon
to be unemployed. Engineers and programmers are too stupid and arrogant to ever form a union.
They are "Mexican-crabs" of the workplace (please forgive my use of a term sounding racist.
I am not racist, the term is, and the image fits too well not to use it).
Any engineers or programmers reading my comment may be my guest at feeling insulted. As a
group we deserve it, and I will go so far as to include myself if it pleases you! Lawyers are
already a casualty, but medical doctors remain as one of the last of the professions. For all
but medical doctors, profession only means that employers can legally not pay for overtime,
they neither pay time-and-a-half nor pay straight-time for hours worked. Though elliptical to
this discussion, we will all be professionals soon. It pains me to watch the demise of the medical
profession as they become subsumed into the Medical Industrial Complex.
Moneta , December 6, 2014
Unless it's for a very particular kind of job…
- -Lack of commitment on both sides
- -Lack of trust on both sides
Probably the 2 most important elements for mid to long-term business success.
craazyman, December 6, 2014
they certainly have less job security but I don't know about less cognitive skills.
if sucking up, ass kissing, looking busy, paper pushing, going to meetings and generally
unctuous bloviating are part of the family of cognitive skills then yes, temporary workers are
at a decided disadvantage. No doubt. They usually actually have to work!
to be fair, I tried to look up the original article to see what kind of inane madness was
on that test for cognitive skills but the link didn't seem to load. I admit, maybe I'm being
too cynical. (but I doubt it hahahahahhaha) sorry
Paul Lafargue, December 6, 2014
Can it be that the prime force behind devaluing labor – as in the dignity of work – are the
capitalists, freed from countervailing forces (a labor movement, government regulation, ethical
guidelines promulgated by esteemed religious figures), who gut whatever meaning remains in the
concept? Historically, can we say that the inherent value of labor (dignity) in great part motivated
the outrage of the proles of a previous era and was an impetus to fight back in order to achieve
what shreds of dignity could be achieved through solidarity? Let's assume these premises, then
is it logical to conclude that a large component of the current labor force is devoid of the
notion that there is Dignity in Labor? Further, again adopting all these assumptions, is it
important to revive that notion, by for example advocating a JG? Or, as I believe, is it better
to re-think the concept of Labor in such a way that it is divorced from the notion of a job
and squarely embedded in the tasks that promote social and individual well-being. These musings
may be criticized as an ahistorical quest for an age long gone when Labor was coterminous with
Skill, but I think we can imagine (and that may be the first step to realization) Labor more
as a ludic enterprise that may encompass skill as one aspect, but not a determining one. Those
who know the work of Johan Huizinga will recognize the drift of these remarks.
diptherio, December 6, 2014
Two words: worker co-ops
jrs, December 6, 2014
Has anyone here ever received on the job training even in jobs that lasted years? Oh probably
a boomer back in the days then? Because training is rare these days.
Management and so on are sometimes sent to training – it's a function of hierarchy of course.
Of course things might be different in the EU.
Alcofribas, December 7, 2014
Not at all. Inequalities of training curves follow exactly inequalities of salary and
robustness/precarity of jobs.
One only grants rich ones. It's a systemic faithful rule of [neo]liberalism, and so worldwide
applying.
not_me, December 6, 2014
Again we have the conflation of work with jobs; neither requires the other; one can work
without a job (ie. be self-employed) and one can have a job that does no or even negative work
(destruction) such as the military often does.
And it's a losing conflation too, from an equality standpoint, since eventually capital will
eliminate the need for almost all human workers. From whence jobs then? Pathetic and patronizing
make-work from the government?
Rather, we should aim for justice and let jobs take care of themselves since justice can
never become obsolete or be outflanked.
hunkerdown, December 6, 2014
Why would we want to *maximize* work? Trying to accelerate the heat death of the universe,
are we, or just the death of the underclass?
To hell with that Stakhanovite rubbish. We need livelihoods, not work. Work presents
itself well enough as it is.
rur42, December 7, 2014
Meaningful work … almost oxymoronic. "what kind of job do you want with that degree in sociology?"
asked the older halfbrother.
The younger halfbrother (born post WWII) replied, "I don't know, but I want to get a job
I like."
"Good god!" exclaimed the older halfbrother, born preDepression era. "I worked for 40
years and not once, not one goddamned time, did I have a job I liked."
Times change.
rur42, December 7, 2014
Should add: Younger halfbrother eventually became a tenured professor of sociology in a job
he came to loath, except for its benefits, salary, and free time.
washunate, December 7, 2014
I didn't intend to get into a detailed exchange on this. But you do raise an important clarification.
In a nutshell, especially the American context, I would describe temp work as when the employee
knows they need to be looking for another job. This could be for a number of reasons – the job
will move and the employee doesn't want to, the job will disappear, the job pays less than other
jobs, the boss is terrible, the next assignment is terrible, there's no room for growth, etc.
But the common principle in MMT is that JG is not designed for long-term mass employment.
It's supposed to transfer workers to the private sector. That's temp work.
Or are you suggesting that 100 million workers should be on the public payroll indefinitely?
Maybe more than that?
Just to put some numbers to things:
99 million workers made less than $40K last year (SSA #s –> totally random number since MMTers
can't agree on even a rough figure for the JG wage to be)
2 million people in prison who obviously don't want to be there, including 1 million who are
working as modern day slaves
92 million people not in labor force (BLS #s)
13 million full-time students in higher ed (NCES #s)
So that's about 200 million people (some overlap between full time students and workers,
of course - hmm, I wonder how the cost of college keeps going up despite massive unemployment
if buffer stocks are supposed to act as price anchors?). And of course some people are quite
happily retired, almost as if not going to work is more fulfilling than going to work…
To suggest that even a small portion of those who would benefit from a JG would have a job
as long as they want it is to say that the government will expand public sector staffing on
a massive scale. I'm not saying that can't happen. Quite the opposite, I'm taking seriously
what it would mean to offer an actually decent term of employment.
Rather, what I have run into is that when I suggest a JG that provides good working conditions,
meaningful work, and decent pay would attract tens of millions of workers, I'm usually ridiculed
for such absurdly high numbers.
But it can't go both ways. Either the JG is low-wage temp work that gets people back into
the private sector, with all the attendant problems of inequality and poor job performance inherent
in crap jobs, or it's a career opportunity that will massively expand the scope of government
permanently.
Now I'm not instinctively opposed to the latter; many Americans, especially younger ones,
are openly socialist, and it's a position that should be taken seriously. But it's not what
MMT is talking about. MMT is still fundamentally rooted in the idea of private sector decision-making,
right down to valuing increases in net private sector savings.
Moneta, December 7, 2014
The word stupid crossed your mind, not mine!
Cognitive refers to how the brain processes data. Without the temp work, he most probably
would not have had the same thoughts which made him structure his life around fear. Therefore
the temp work had a cognitive impact.
Jeremy Grimm, December 7, 2014
Fear? Others may speak for themselves – yes fear.
I became an engineer through fear. I have other gifts I might have tried. I working as an
engineer for DoD out of fear, as I watched non-DoD engineering jobs disappear and turn to shit.
Fear and anger against my employers kept me working as a job-shopper.
I quit job-shopping when I married - very late in life. It took me too long to learn my greatest
desire was to have children and a family. I greatly feared losing the mobility which kept me
employed.
Fear kept me working for the same consulting company as the market for engineers grew grimmer
than when I started work in the middle 70s. I had my two children and not too long thereafter,
I was divorced for reasons I still neither know nor fathom. Fear kept me working in engineering
as I grew older. Did you know once the state of New Jersey sets your child support payment,
based on your employment at the time of your divorce, changing it, whether you lose your job
or not, is nearly impossible - and not paying the set amount could place you in jail? Yes, fear!
As I grow old, the costs of college for my children, medical care, housing, and food grow
- some like college and medical care growing at rates I could never have anticipated and never
properly saved for. I am very afraid for the future. I am afraid for my children and the kind
of life they may have as the world I knew, and watched collapse, grows worse by the month. So,
yes I fear.
As I face unemployment, two years before retirement age, I cannot share your optimism that
I can probably land another job - unless you mean I could leverage my past experience working
graveyard cleanup crew and hamburger flipper for Foodmaker Corporation. So I fear losing my
job, such as it was.
Where we might disagree though is whether fear is a part of just middle class culture. I
know and have lived with those I considered poor, certainly not middle class in their values.
They too know fear - fear as well as they know hunger - a feeling I have so far avoided.
Remember the wisdom from "The Prince", whether it is better for retaining control to be loved
or feared?
What of the rationality of my fears? Fear is not a rational emotion. I believe a rational
thinker coldly examining my situation would feel fear. Middle class culture inculcates fear
- fear of slipping from the middle class. Is that fear so irrational - just a part of middle
class culture? I believe it is an ancient fear lived out lifetime-by-lifetime as those few who
rose up from poverty saw how many slipped back into poverty. I do not believe the wheel of fortune
spoke to kings and lords.
I remain fearful. My theme for many years comes from an old folk song, Joan Baez sang, which
admonishes "whoever treasures freedom, like the swallow, will learn to fly." I would fly - but
I do not know where to fly to. I am too old to be a revolutionary.
I fear too many of those younger than I am, facing situations more dire than any I faced,
will also not know where to fly to. Given how little it would cost to avoid this growing desperation
I believe those who own our fates have lost their way. I fear the consequences and long to get
far away from any large cities. When there is no hope left and nothing left to lose - nothing
will hold back the anger and blood lust of the disposed. I fear our lords and ladies are too
confident in their trust to militarized police, NSA, Blackwater and their like for defense of
their privileges. I fear becoming part of the collateral damage.
So yes, scared, and whether rational or not fear.
More directly referencing your comment - do you really believe engineers "can probably land
another job etc.?" and hence their fears are irrational or middle class? Most of the jobs for
engineers, to replace the job I will lose, are a thousand miles away and a thousand figurative
miles from the work I have done in the past. Employers started hiring people only to work at
jobs they have already done for years. That is why there are so few "quailed" STEM workers.
Except for the few scattered duplicates of my present job, my prospects are not bright. Fear
is not irrational. What makes my fear grow is how much my prospects are better than those of
the large part of our population seeking employment. Projecting my fears upon them and transforming
them through the options of this other population I grow extremely fearful of what may come.
Like the swallow, I would fly away - but to where?
Alcofribas, December 7, 2014
Thank you for your contribution, you nail the undergrounded reason why not only individuals
but entire societies become hopeless. Fear.
Remember the wisdom from "The Prince", whether it is better for retaining control to be loved
or feared?
Wisdom ? In the old days, power was conquered by arms, and retained with dogmas and affective
common events, celebrating the nations' self confidences. 1% of populations was educated. Now,
in themselves called democracies, only the way to reach the power level is apparently democratical.
The use of institutions is not. What to think about the 1787 Constitution of USA ? The best
religion to keep people fear and obey is neoliberal economy, dedicated to educated but frightened
and individually exploded populations. In the name of individual freedom, of course.
What is equal freedom when some play with good cards and the largest part of humanity with bad
ones ? When few rule the rules and others don't know obscene rules (out of the public scene)
? A mechanism to enlarge inequalities and a common suicide. The best ideas, as freedom, when
led to extreme, drive to the worst. Running fair institutions, fair rules, cannot be done with
faith of many in few representatives. Of course, families and frienships are broken by enforced
job mobility. Lost in translation…
"Democratical" powers are lost too or become schizophrenic. Huge promises to common citizens
during campaigns followed by crucial choices when elected : to have or not to have the courage
to change rules, reform institutions when they appear to be structurally unefficient ? PRC hasn't
this problem, runs a safer and cleverer capitalism…but treats people as unbrained chess pieces.
Can Dollar remain the widespread exchange money ? If for common american citizens, the interested
answer is NO (US public debts can only increase), for TBTF bankers and many congressmen, the
answer is YES : they don't sincerely regulate finance markets to protect citizens and real economy
enterprises. Financial markets rules the politician agendas. An instable world is good for speculators,
their greatest fear is to loose the power to evaluate the wealths of States's public finances,
firms values, labor's retribution. Going back to the 1936-1971 conception of banking ? Was the
american people happy with bankers during those days ? Is financial globalization a huge private
card for keeping UNO and democracies powers stupids ?
Like the swallow, I would fly away - but to where?
Can you escape from earth ? No and neither me. So the answer to feel secure for ourselves and
future generations stands on two points imho : 1- what I can do alone (effectively to be poor
in open country is not a life without beauty, even if rude), 2- what I can do as a social being
(to find out with others how to make democracy evoluate).
First solution is the hermit choice, or hermit community, that can be a solution for an existing
person, but not for his descendants. You can do that inside the local national you're living
in. Second is to recognize we are not what the liberal dogma says, simply individual living
objects that product and consume, born with good or bad cards in our hands. The difficulty is
just that 200 states organizations are unable to fit the problem of global challenges, climate
changes or finance regulation or inequal capitalism, for examples. You first need in that case
to understand what your citizenship has become, on 7 december 2014. Is it only New Jersey and
America based ? Or should it be World based too, but isn't ? So my answer stands here : I wish
you not to fear or dream for a fly to nowhere, not to dream to a sudden and perfect and unalterable
divine change of rules and powers structure, but to be convinced that billions of citizens worldwide
share with you the will of stability rather than profit. From purely ideological solutions,
communism and liberalism, teached on different territories to be both the best/the worst things,
we have to convince ourselves none was pure and true, but a part of truth stood in both, and
that the planet will be a very safe and beautiful place to leave on if we manage to bring up
new politicians, more balance managers than heroes. Democracies are sick, shooted with liberal
drugs that benefit to few and destroy many lifes. Fascimus trends go up, but the worst has not
come yet and can still be avoided. We have to keep lucid peoples for that.
optimader, December 7, 2014
Your comment is far more insightful than the article.
I observed highly skilled PEs of my fathers generation offed in perpetual fear of being offed
in the 1970s when they were in their late 40s-early 50s. Ugly. Observing them focused my personal
strategy.
The only real difference between permanent employees and temps is that the permanent
employees don't realize they are also temps. The bottom line is skillset, the one thing
a former employer cant do is take away what you know.
Lambert Strether, December 7, 2014
"The only real difference between permanent employees and temps is that the permanent employees
don't realize they are also temps."
Reminds me of the time I pointed out to a supervisor that there was no yarn on the floor
for the morning shift. Because of the layoff to come in a few hours, stupid me.
hunkerdown, December 6, 2014
I think Massinissa is correct. There is a class that feels itself entitled as a matter of
identity and tradition to exclude others from control over the means of production, and one
suspects they would sooner not live than live without their tradition of uselessness.
NotTimothyGeithner, December 6, 2014
Anecdotally, my next door neighbor had to be separated from his family for contracting work.
His wife wanted to stay with the kids*. Eventually, they moved, but the kids had to leave their
friends. The woman across the street divorced her husband over a similar situation. It's not
just the mental health of the worker but the family.
*The wife didn't take care of their hydrangeas, and the kids are ruining a hedge in Colorado
now and not leaving my gate open. All in all, my mental health has improved considerably since
they left.
Pepsi, December 6, 2014
Being stressed, exhausted, and poor is bad for the mind. Good to see some empirical evidence.
Noni Mausa, December 6, 2014
Controlling for motivation seems to me to consist of controlling for naïveté, or its opposite.
My current, half time job is a case in point. I get very little explicit training (the corporation
doesn't even have a training manual, for instance.) Yet, I am expected to know our point of
sale system, ship and receive, care for customers, understand and demonstrate our hundreds of
tools and paints and finishes, accurately recommend materials and tools for specific projects,
open and close the store, cash out and take in the deposit at the end of the day, create signage
and displays, clean the building, including the lunchroom and washrooms, and more. Any upgrading
of my knowledge of using our tools and supplies, I am expected to do on my own time at my own
expense. I am also expected to keep abreast of our many rotating sales and, I was told a number
of times, to memorize all the SKU numbers of our thousands of stock items. (Yeah, like that's
going to happen.) I am a keyholder, have been there 18 months, and am not in line for any bonuses,
raises, or other benefits. I make $11.25 an hour, about 75 cents above our minimum wage.
Why am I still there? Only because I am retired and find the job an interesting pastime,
which I can leave at any time without a backward glance. There is zero loyalty on either
side, and I could easily put down my clipboard any time and say, "You know what? I don't need
this."
My fellow staff members, including our young, overworked manager, do need the money, but
their stress levels from overwork and unrealistic demands cannot be good for their health.
Alcofribas, December 7, 2014
Some things to be explained to US contributors :
1- Till the 70's, Spain was not a democracy but run by a fascist regime. It hardly makes
2 generations. Not enough to change minds and turn them into respect of workers as doubtless
Know-how wealth of the firms. Quite the opposite of german situation, in which Kurzarbeit (time
reduction of work/incomes for everybody inside the firm when orders slow down, but no difficulty
for restart after the bad period, at no training cost and no research time loss).
2- There stands a main difficulty inside Europe, while inside the euro zone two employment
markets, supported by two different layers of cultural skills interfere. The study nails
rightly that in south european countries, a post feudal scheme of societies separates the population
in two parts : strong rights granted one, middle and upper class, and large far less granted
one.
A kind of two levels of citizenships system that underlay all relationships, very evident
in terms of temp or permanent jobs, without any consciousness that quality is everywhere in
the firm (from the boss to the few considered worker) or isn't. Management is there a purely
hierarchical organization, some taking all decisions, others executing them. Mix that with the
old taylorist division of tasks and you get it. In the north countries, despite of recent neoliberal
taste for financial profit even in manufacuring firms, the project culture and importance of
many small self-governing firms make for long a true concern for everyone in the firm's life.
This of course relies on very strong attachment to local social life, and technical improvements
are seen as survey conditions. Of course too, there only can be found two colleges co operating
together the strategical management of firms, one with employees, one with managers and shareolders.
Both being responsible of good or bad decisions, what Germans call Mitbestimmung. Not only the
single labor market is largely dominant, but unemployment increases slowly in that case, without
considering state's sectorial implications to enforce specific policies. And don't forget that
the cohesive action of Landern (micro economy) and federal german (macro economy) powers is
a real success.
3- Mobility for jobs inside Europe is strictly reserved to high educated people, because
of the creation of a continental multicultural country by union of many micro states. When nothing
has been done seriously to give all european citizens multilinguistic skills, engineers (speaking
3-4 langages) can easily find jobs where they are, and masons and carpenters are captive of
local employment situations.
4- Applying the selective dogma of comparative specialized competences, most european governments
have made of Europe a catastrophical continental area with well and bad diversified zones. Spanish
growth depending massively of building sector, spanish economy was brillant when financial risks
were taken by the government, local powers, banks and the citizens. Miracles don't exist. Never.
5- Inside a common money zone, you need a central state. Both to stop divergent local economical
policies, and to protect people when a great crisis occurs. Without this, some zones hardly
impressed severely fall down and no help is to be expected to restart economy and prevent deep
social consequences.
6- Potential Europe's GDP is being injured. Young generation of Europeans is now paying for
the irresponsible acts of their parents : maintaining local sovereignties in the macro economical
competence is a major political fault.
sgt_doom, December 7, 2014 at 3:07 pm
If only Thorstein Veblen were alive. Imagine what total mincemeat he would make of either
Piketty and Krugman for their reasoning.
Moneta, December 6, 2014 at 7:18 am
We are not going to get to equality – if we do ever get there – in one giant swoop. It's
going to be a little bit at a time, one idea at a time. And Picketty's work is somewhere along
that spectrum. It's still on the neo side, bit it's enough to get the neos rethinking their
ideologies. Then, when the neolibs have finally digested the fact that we need a little redistribution,
somebody else will come along with something a little more "osé".
And so on… if new ideas are too extreme, the neolibs will NEVER get converted, they will
just push back
hunkerdown, December 6, 2014 at 2:32 pm
Why would they understand something that goes against their class interests?
Frankly, one of the few advantages of the (insufficiently warmed) "melting pot" is that it makes
white cultural imperialists look silly. If one isn't particularly attached to the Establishment
and the claims it enforces (whether simply by the circumstance of bearing no such claims, or
by disinterest in what is on offer), it's better to prevent the ownership class from their superficial
ethical pleas that they have common cause with those outside of it, so that they can be prevented/extracted
from involvement within the political spheres in which their participation and presence are
*at best* a formerly necessary but now obsolete evil.
Moneta, December 6, 2014 at 8:52 pm
The neoliberals are not only found in the establishment.
NoFreeWill, December 6, 2014 at 3:26 pm
Actually it is extremists, like Malcom X, Communists, and the Tea Party, that scare the elite
into granting Martin Luther King a pulpit (and civil rights legislation), unions, FDR and welfare,
social security, etc., and government shutdowns/Republican resurgence. Reformism has only ever
succeeded when married with a more extreme threat (violence) waiting in the wings.
Moneta, December 6, 2014 at 8:45 pm
The thing is that in this case the extremist will only be able to accomplish anything once
the average population understands the full extent of the wealth distribution problem…
Which was not the case a year ago or even two. Why would the establishment be afraid
of extremists if they have no sway on the average Joe?
Vatch, December 7, 2014 at 12:16 pm
I believe that technique known as "Good cop, bad cop".
Moneta, December 6, 2014 at 7:43 am
To everything there is a season, a time for every purpose under the sun… All research shows
that Westerners, Americans in particular, were totally out of touch with the reality of wealth
distribution.
Pipetty's book has finally pulled the scales off many eyes. It has finally opened up the
conversation. That's it, that's all.
Now it's time to move on to the next step. No one book or person will offer the holy grail.
Moneta, December 7, 2014 at 7:26 am
And maybe it's not the book that opened the eyes but the eyes opening and/or the awakening
that propelled the book.
A case of what came first, the chicken or the egg? The population needs to understand the
extent of the theft (which is still not well understood) before anything can change.
This is perception vs. reality:
http://www.ritholtz.com/blog/2013/03/wealth-inequality-in-america/
MartyH, December 6, 2014 at 7:53 am
Thanks for pointing out an important video. Both speakers make interesting, and ocassionally
controversial, points but in the end, several simple things stood out. They agree that the ISLM-dominated
professional foundation ignores "money" and, thus, credit (leverage). Ultimately, that means
that Economics is attempting to be scientific without dealing with one of its foundational concepts.
They also recognize other weaknesses but I felt Yanis's comparison of Piketty's position with
that of John Rawls and the recounting of Nozick's Libertarian attack on that position was most
valuable.
I generally like to give authors, academic or otherwise, a chance to mature before coming
to some of the conclusions these speakers and so many others have drawn. Piketty's argument,
as I understand it, represents a recognition and validation of a condition. I think we should
give him and the community time to mature that thinking and help it evolve, hopefully in ways
suggested here.
susan the other, December 6, 2014 at 12:49 pm
Thank you for this interview. What to do with an economic "process" that is so efficient
at making money that it destroys its own reason for being? Purportedly creating an ever better
life for us humans. Capitalism is just that efficient. It accumulates more money than god. So
then all the capitalists say, well capital isn't money. OK. Whatever. I can vaguely understand
it the other way around, that money isn't capital.
Because capital is all of us getting together to cooperate to make a better world and money
is just an exchange mechanism that facilitates it. If capitalism can't evolve to be a distribution
mechanism that prevents inequality, capitalism will kill itself.
And speaking of libertarianism, it seems like libertarianism has been the underlying rationale
for capitalism for several hundred years and it has brought us to this impasse. Varoufakis'
best question was "Who is going to take out the garbage?" He was talking about bargaining power
but he was inadvertently prescient. Applying inequality to analyze capitalism we see ridiculous
wealth on one end and lotsa garbage on the other end. If we recycled this imbalance, forcing
the wonders of capitalism to actually pay for environmental destruction and barges of garbage
dumped in the ocean rather than recycled and etc. then human inequalities would be greatly diminished
and great wealth would probably never accumulate.
Jack King, December 6, 2014 at 2:22 pm
"The worst form of inequality is to try to make unequal things equal." - Aristotle
susan the other, December 6, 2014 at 2:48 pm
What did Aristotle say about making equal things unequal then?
bobs, December 7, 2014 at 12:25 pm
"[Piketty wants to prove] the proposition that this historical trend of increasing
inequality is capitalism's 'natural' tendency." [Yanis Varoufakis, Oct. 2014]
According to Piketty, the culprit is not the state of nature but capitalism itself. His book
makes a strong case. His remedy might well be impractical but it's rather disingenuous to attack
an economist for failing to come up with the perfect cure for capitalism at the end of a long
book whose main purpose is to present facts, trends, and relations.
Fact is, Piketty and Saez have done more to nucleate a debate on inequality than anyone else
on the left. So perhaps their theories are not quite right. Yes, that's called economics, a
field where no theory is ever quite right. Varoufakis seems to imply that, if only we had the
theory right, we'd be fine: "Piketty's particular theoretical construction, in the end, is the
greatest enemy."
Not Goldman Sachs or Jack Lew, mind you. No, no, the greatest enemy is the wrong set of mathematical
equations.
Speaking of which, Piketty was invited to talk to Jack Lew. Indeed, and Varoufakis advised the
Papandreou government for years. None of this is relevant to the discussion.
Marko, December 7, 2014 at 4:02 am
Odd.
Just recently Piketty was being praised here for "shredding" marginal utility , a neoclassic
touchstone :
http://www.nakedcapitalism.com/2014/11/shaky-foundations-neoliberal-economics-marginal-productivity.html
The worst "enemies of egalitarianism" are those who try to destroy their own allies , in obvious
attempts of self-promotion. Luckily , in this case , their aim was off , and they merely shot
themselves in the foot.
Like "bobs" , above , I thought Varoufakis was better than this. Unlike bobs , I don't now.
docg, December 7, 2014 at 12:55 pm
Most of this discussion struck me as incoherent. And I say that as long-time admirer of Varoufakis,
whose blog I've followed with great interest and sympathy. He is definitely one of the good
guys. So why so many cheap shots at Piketty? I get the feeling there is something personal going
on. If Varoufakis sees Piketty as part of the neoclassical mainstream then where does he see
himself? If he's a socialist he should come out and say so. If not, then what?
I like the idea of a wealth tax. Unlike so many economic prescriptions, it's simple and
to the point and everyone can (more or less) understand it. And no, your grandmother need not
worry about her silverware because obviously silverware sitting in a drawer isn't wealth in
anyone's definition of the term. Now piles of silverware sittting in a warehouse, that's a different
story.
As for confusing wealth and capital, Varoufakis himself seems to be confusing productive, socially
useful capital with any sort of capital at all (such as a warehouse full of silver or gold).
The sort of wealth represented by multiple dwellings, luxury items, investments in purely financial
products, vast real estate holdings, bank accounts, tax shelters, gold, silver, etc., i.e.,
unproductive and socially useless wealth, should certainly be taxed. And if you're worried about
everyone's grandmother, then tax all such wealth over and above a certain reasonable limit,
say a few million dollars worth. I.e., excess wealth. Wealth in the form of productive and socially
beneficial investments or projects, such as factories, socially valuable services, entertainment,
the arts, etc., should not be taxed. Not, at least, any more than it already is.
Of course, the existence of a wealth tax of any kind as a solution to inequality already implies
a very strong role for government and the type of government that would be committed to using
that tax as a means of redistribution. Which tells me that Piketty is, at heart, a socialist,
whether he wants to admit it or not. As for Varoufakis, I'm not sure exactly where he stands.
Edward McKenna, December 7, 2014 at 3:40 pm
There is much in this video that runs counter to what Piketty has actually written in his
book. I will just present one example. Both the interviewer and Varoufakis insist that power
plays absolutely no role in Piketty's analysis. Yet Piketty writes on page 305 "This theory
(neoclassical marginal productivity theory-ed.) is in some respects limited and naïve. (In
practice a worker's productivity is not an immutable, objective quantity inscribed on his fore
head, and the relative power of different social groups often plays a central role in determining
what each worker is paid.)
Nor is this an isolated quote. There are a number of places where Piketty refers to a bargaining
model based on power as providing a superior answer to how distribution is determined. Moreover,
in later chapters he explains why those with a greater share of wealth are able to attain a
return on wealth that increases with the amount of wealth. The reasons he provides are squarely
consistent with a relative power argument.
I believe that Yves reference to the Cambridge Capital Controversy as decisive evidence against
Piketty is also misleading. While his presentation of the controversy is flawed and inadequate,
there is nothing in his work that violates the conclusions of this controversy. The main conclusion
was that there was no physical unit in which to measure capital so that an aggregate measure
of capital could be obtained. Nowhere in his analysis does Piketty make use of such an aggregate
measure. Indeed, all of his work is in monetary terms, which one would have thought would have
been appealing to most heterodox economists, who make much of the fact that we live in a monetary
economy. ( There was one other important conclusion that came out of the controversy,But this
is a discussion for another time).
"invisible unemployment" is a discouraged workers and part-timers who want more hours. The official
unemployment rate doesn't consider them unemployed. So when we talk about the official unemployment
rate-now at a lowish 5.8 percent-we're ignoring these workers. They're statistically invisible. As the
saying goes: "It just goes to show how figures lie and liars figure". When Govt's resort to this level
of deceit and trickery the shadow of the USSR decend of the USA.
We're adding lots of jobs in industries with stagnant wages, and a few jobs in industries with
rising wages, according to new research out of the Cleveland Fed. "It may seem counterintuitive
that wages and salaries are growing the slowest in industries where jobs are growing the fastest,
but it actually is not," writes LaVaughn M. Henry, vice president of the bank's Cincinnati branch.
We're adding few jobs in goods-producing industries like manufacturing, which have the highest overall
post-recession wage growth, and lots of jobs in service-producing industries (e.g. health care,
leisure and hospitality, and education), which have the lowest real wage growth.
… ... ...
What is "invisible unemployment"? It's discouraged workers and part-timers who want more hours.
The official unemployment rate doesn't consider them unemployed. So when we talk about the official
unemployment rate-now at a lowish 5.8 percent-we're ignoring these workers. They're statistically
invisible.
... ... ...
In 2002, official unemployment swamped invisible unemployment. The official unemployment rate
was an accurate description of the labor force. But the spread between invisible and official unemployment
is shrinking. In the last 20 years, the six months with the smallest gaps between official and invisible
unemployment were all in 2014. That means the official unemployment rate is getting worse and worse
at describing the real conditions facing American workers.
Invisible unemployment is hurting the participation rate even more than economists predicted
with an aging work force. The entire developed world is getting older. But U.S. participation fell
faster in the years after the recession that just about any other country.
The rise of invisible work is too large to ignore
By "invisible work," I mean work done by American companies that isn't done by Americans workers.
Globalization and technology is allowing corporations to expand productivity, which shows up in
earnings reports and stock prices and other metrics that analysts typically associate with a healthy
economy. But globalization and technology don't always show up in U.S. wage growth because they
often represent alternatives to U.S.-based jobs. Corporations have used the recession and the recovery
to increase profits by
expanding abroad,
hiring abroad, and controlling labor costs at home.
It's a brilliant strategy to please investors. But it's an awful way to contribute to domestic
wage growth.
Derek Thompson
is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment
business.
tommariner
"Unemployment" statistics has been the political advertising media for every Administration
in modern times.
The reason we give the press protection is they are supposed to ignore the rosy exaggerations
and uncover White House incompetence. When major media only does their duty of the truth under
Republicans, why should they have the protection under a Democrat Administration?
LVTaxman > SimplyNaive
But policies have crushed the middle class making a part-time economy. The work force participation
rate hasn't been this low since women moved into the workforce en mass in the 70's and 80's.
Policies to help the middle class? How about more off shore drilling similar to the 80's
and 90's. How about getting rid of the employer mandate to allow people to work more hours and
encourage growth instead of limitations? How about fewer regulations to encourage more business?
How about not having the highest corporate tax rate in the world so that there is incentive
to expand in the United States?
60,500 pages of regulations in 5 years is astounding considering how many there were already
on the books.
LVTaxman > SimplyNaive
In the economic freedom index, the US dropped from 5th in 2008 to 12th in 2014. These are
the policies put in place by Obama.
"Burger flippers" is traditionally an entry level job, not a career. Under Obama, it has
become a career because of his job killing policies and regulations. Overqualified people are
working below their education because policies have has stifled the slowest recovery in history.
Black teen unemployment is over 50% because of his policies.
Why is there no demand - not enough people are in the workforce. People see the US economy
as the closed one because we put up barriers to success. It is easier to assemble overseas,
put in a container on a tanker and ship to the US than fight the regulations and taxes in the
US. If we made it easier to put business in the US, it would happen as long as it kept pricing
and timing better than the cost and timing of shipping.
The best example is California. Why do you think all the auto manufacturers and oil companies
have moved headquarters out of the state? They stayed in the US, but left California due to
taxes and regulations. Northup Grumman took their thousands of high paying jobs to Virginia
to get out of the stifling business climate. On a world stage, that is where the US is headed.
As far as your analogy of tax simplification - all accountants will still have jobs. Our
work changed tremendously with automation and the advent of Peachtree then Quickbooks. We adapt.
As the number one issue is hidden revenue, as long as there is a tax, there will be issues,
the IRS is not going away. If it is simplified, we can provide better planning services instead
of the constant fight to keep up with the goofy law changes, expiring and non-expiring extenders,
etc. Planning with more certainty would be a big boost in our quality of service.
SimplyNaive > LVTaxman
"In the economic freedom index, the US dropped from 5th in 2008 to 12th in 2014. These
are the policies put in place by Obama.
"Burger flippers" is traditionally an entry level job, not a career. Under Obama, it
has become a career because of his job killing policies and regulations. Overqualified people
are working below their education because policies have has stifled the slowest recovery
in history. Black teen unemployment is over 50% because of his policies."
it has nothing to do with Obama. Because of globalization more and more jobs have shifted
overseas. We have become a nation of Facebook programmers,bankers and rentiers on one side and
a mixture of welfare recipients, freelancers and servicing men on the other side. What do you
want black teens and for this sake other teens to do? Get a job? To do what? Go to college?
And after that to do what? The recovery is slow and may even reverse because the prosperity
was not real for the last 20 years and was based on the asset bubble ( like houses) and extreme
debt leverage. Americans was buying more on ever expanding credit and hit the ceiling. So called
growth happened because of the credit expansion. No wage growth.
'Why is there no demand - not enough people are in the workforce. People see the US economy
as the closed one because we put up barriers to success. It is easier to assemble overseas,
put in a container on a tanker and ship to the US than fight the regulations and taxes in the
US. If we made it easier to put business in the US, it would happen as long as it kept pricing
and timing better than the cost and timing of shipping."
Motorola tried with fanfares to assemble cell phones here. Hurray, lot of noise on opening
and not much noise when they closed it 2 years later. Why? Actually not because of the labor
cost but because of logistics, suppliers and efficiency. We just lost the competence to make
and produce.
A friend of mine is in semiconductors. Most of the companies here become fabless. MIles of
empty former bustling poants in San Jose. All is made in Taiwan, Korea and China, You just need
to draw on a napkin a rough sketch what you want and they say yes, how many and when. Done.
We lost the whole industries with the supply chain, now how and experienced workers
The best example is California. Why do you think all the auto manufacturers and oil
companies have moved headquarters out of the state?
That is a fool game. Sure they can move to Tennessee or Texas because the cost of doing business
is less plus subsidies.And how does it help workers. 1000s out in California with higher wages
and 1000s in somewhere with lower wages. The next step will be to move to another state with
even lower cost or abroad. And as I said they entitled to do so. The companies are not for charity.
In terms of accounting I agree with you that it is nightmare. However it feeds a lot of people.
If anybody can use Quickbooks, or any other tax software the loaf of bread will be much smaller.
However, I believe that one of the reasons why there is no tax simplification is because of
the huge accounting lobby.
jericho > LVTaxman
"They stayed in the US, but left California due to taxes and regulations. Northup
Grumman took their thousands of high paying jobs to Virginia to get out of the stifling
business climate."
Yeah, and Boeing just bailed out of Wichita, where they'd had a presence since WWII, because
Brownback has cut taxes and services and driven Kansas right into the ditch. It's not as simple
as you make it.
searambler > LVTaxman
The workforce participation rate is declining in large part because the baby boom generation
is retiring. That's a demographic fact.
Explain how expanded off shore oil drilling in the Gulf or Alaska will help the middle class.
Explain how having fewer poor and middle class people insured will help the middle class. Explain
why it's OK to sacrifice our environment and our air quality in order to allow corporate polluters
to pollute more.
Killing the planet for short term limited financial gains by a few industries is short-sighted
and stupid. What a legacy for our grand kids.
No corporation actually pays our 'official' corporate tax rate. Many big billion-dollar corporations
end up paying zero taxes. The tax code is written to benefit the corporate-Americans who have
the money to buy favorable tax policy. And the last change to this nations tax policy was the
two massive cuts enacted by GW that drove our deficit and our debt into the stratosphere.
And big numbers aren't astounding considering how incredibly complex our society has become.
Seriously.
What else ya got?
marathag > searambler
"The workforce participation rate is declining in large part because the baby boom generation
is retiring."
55-74 year olds are not retiring as fast as you think, they are staying in the workforce
longer
According to a 2014 report from the Bureau of Labor Statistics, "among 55- to 64-year-olds,
the [labor force] participation rate was 61.9 percent in 2002 and increased to 64.5 percent
in 2012. BLS projects their participation rate to increase further, to 67.5 percent in 2022.
The participation rate for people ages 65 to 74 years was 20.4 percent in 2002 and rose
to 26.8 percent in 2012. BLS projects the rate for this age group to continue increasing,
to 31.9 percent in 2022. People age 75 and over participate in the labor force at comparatively
low rates, but BLS also projects their participation rate to rise from 7.6 percent in 2012
to 10.5 percent in 2022."
Source:
Bureau of Labor Statistics. (2014). Labor force participation projected to fall for people
under age 55 and rise for older age groups: The editor's desk. Retrieved January 10, 2014, from
http://www.bls.gov/opub/ted/20...
JonF311 > marathag
If you exclude college age people and early retirement age people, workforce participation
has been recovering since 2011.
It's still quite low, and will likely never reach the late 90s peak again (which was abnormally
high), but it should eventually get back to the historical norm.
GoldBell
It is insulting to the intelligence of the majority, average people, to act as if no
one knows why wages and the amount of full time jobs are so low. The super wealthy and their
thuglings must really believe the Bell Curve and that anyone not living in Wealthy America is
stupid.
The Cause is So Called Free Trade
Those Corrupt, Anti- American Majority Trade Deals
Seriously, after decades of telling working Americans they have to accept paying US prices to
live but compete with low wage developing nation workers, you really think that they do not
know?
Just because Global Corporate Media does not cover it Truthfully and Fully does not mean they
do not know.
Benson Stein > Samuel C Cooler
Nice idea, but I doubt it will ever happen. The globalists/capitalists will never turn back
globalization of the economy. The/Their entire future is riding on it. There is about as much
chance of it happening as there was of stopping the Industrial Revolution. We are in the beginnings
of a quite nasty phenomenon, equal in importance to the Industrial Revolution. Five hundred
years from now, if humans survive, they will be teaching of this present economic period in
similar terms of importance, if not greater.
Sisyphus > Samuel C Cooler
And now we're starting to send lots of white collar jobs overseas. See accountants--used
to be a fairly stable, decent-paying, if boring, job for Americans. Now, more and more companies
are sending the majority of the work overseas to Indian workers, and only keeping around some
token US employees to make customers feel like they're still dealing with US expertise, when
the work is all being done overseas.
Globalization is what's going to kill the American Dream. Without law to say that you cannot
hire foreign workers to do a job that you could hire Americans to do, or some other legal disincentive
for offshoring work, companies will continue to do so.
Why hire an American accountant at $50,000 a year, when you can hire 2 or 3 Indian/Chinese
workers to do the same work, and STILL save money.
Dane Elder
The unemployment and the wage issue is not invisible. Wages are kept down by the confluence
of Big Data and lack of transparency and accountability in the hiring process. I have a friend
who had traveled to multiple interviews, and suddenly, without any fanfare, had not had any
calls back. His personal information is in the hands of the prospective company, and all of
the risks associated with that have been transferred to him--with no compensation for such a
risk. It has a chilling effect on the job search. I myself will not do business with companies
who pool applicants (yes, this means you also, Papa Johns and Jimmie Johns), nor will I do business
with companies that lie about their positions. Once I hear about it, I don't even give them
the time of day. And I have not had a pizza from Papa Johns or a Jimmy Johns sub for nearly
two years, now. Further, I will continue to build my own private database of companies who have
only online applications, and I will continue to ask my friends and friends of friends how their
own job search is going. You want to keep playing me, companies, just keep it up. You will be
out of business before long.
masher > Dane Elder
I can import foreign labor from all over the world into the US on work visas. You just need
to work harder.
jared > Dane Elder
what does "pool applicants" mean?
Benson Stein > jared
It means inviting, attractive but impoverished, female applicants to the pool parties at
your mansion. Where they can be hit upon and seduced by pot-bellied, middle age, executives,
of the ruling class.
Unka_George
We can spin the numbers all we want, but we are a consumer/consumption driven debt based
economy. While it may be momentarily profitable for employers to drive their labor costs
down by worker exploitation, and for the rentiers' share of the GDP to increase, it is national
suicide in the medium to long term.
It is clear we need to significantly increase the minimum wage and index it to both inflation
and worker productivity to insure the economic gains benefit everyone. It may also be necessary
to impose a capital levy on net assets above a reasonable floor (such as the median lifetime
family income) on all all assets owned or controlled by U. S. citizens and corporations, no
matter were these assets are physically/legally located.
Jeff T
Bottom line. As the global economy has grown we have not adjusted. Our political system is
not capable of dealing with the new paradigm and we are seeing the effects. Additionally, the
average U.S. citizen also has no appreciation of this new order and continues to vote for absolute
greedy and corrupt idiots who tell them what they want to hear vice what they need to hear.
The global economy is a tough place and it takes no prisoners. We better start having an honest
conversation about this because it is not going to get better on its own. A good first step,
dump the Democratic and Republican Parties. They are a cause/hindrance, not a help.
usabroad > Jeff T
Yes. This is especially clear living abroad. American corporations are everywhere on the
planet but our people and our domestic cultural concepts and identity are still North American
centric. Many distribution rights for corporate products are held by local partners who are
not American and few Americans work in such US brands like Proctor and Gamble etc.
Perhaps we could pass a law forcing American corporate to hire a % of their workers from
US citizens on a global basis, facilitating the global outlook of the American people that would
benefit the corporate and our nation.
shinynewtoken
I suspect #1 is most likely what is happening (although it's all connected). The economy
is bifurcating between high-paying/skill jobs where there is wage growth and low-paying/low
skill jobs where there is little to none. And the economy is creating mostly the latter. And
those are the jobs where most people who are in the invisible unemployed are going to return
to. Plus, the supply of labor for those jobs remains high, in part, due to our immigration policies.
And certainly, globalization plays a role in keeping down wage growth, as well.
This is really the defining issue of our times for most Americans, and it's an obvious reason
why the Democrats these days seem so out of touch to most Americans: when you're talking about
amnesty (to further depress low-skill wages), global warming, and the war on women, you're just
not addressing the concerns of the vast majority of the country. Whichever party solves this
issue will be in power for at least a decade.
SAlfin > shinynewtoken
That may be true, but even the low-paying retail jobs are suppressing full employment by
not giving their employees full time hours to avoid paying benefits. You can't buy your own
benefits working two 30-hour/week jobs at Starbucks; it doesn't pay enough.
So to recap, not only are companies suppressing employee hours and fighting minimum wage increases,
they are offloading benefit costs like health insurance to the taxpayer dime. And we wonder
why ACA is necessary?
OrangeGina > SAlfin
I believe it demonstrates why Single Payer is necessary, as it would take the employer out
of the picture. These are the gyrations needed to get there, it seems.
kmihindu > shinynewtoken
And even the skilled, higher paying jobs are very insecure. I am a scientist and
have seen colleagues (bachelors, masters and PhD-educated) struggle as federal funding gets
tighter and tighter, and congress/the president screw up budgets through sequestration and defunding
(significantly reducing funding) already funded projects.
And when you talk about the havoc this is wreaking, you get to hear nonsense about "getting
off the government teat".
Basic scientific research - the type that leads to ground breaking innovation is never
going to be profitable enough in the short-term to be privately funded.
So, if you want to watch loved ones suffer needlessly from diseases that require breakthroughs
from basic science research, by all means, defund that research and crow as scientists like
myself scramble to find employment. If I lose my job, society will be much better served by
me applying my knowledge and skills to the private sector, tweaking existing drugs just enough
to extend the patent and increase profits.
masher > Willow_girl
No, we had a labor movement and we ONLY had a labor movement because we ended slavery and
we slashed immigration. You can't have a labor movement AND have slavery and liberal immigration.
In the 1970's liberal and corporatist pushed for and won a massive expansion of immigration
quotas. We nearly tripled immigration in the 1970's. We went from 350,000/year to over 1.2 million/year!
And we started flirting with trade with nations like communist China. Bill Clinton pushed for
and won China's entrance into the WTO. Clinton also signed NAFTA into law. Trade with China
is effectively the same as having slave labor here.
Now, look at the unions and think about how they view immigration and trade with China. I don't
see one union fighting to reduce immigration to under 300,000/year. So the unions are not labor
movements anymore. They are something else, perhaps they are pension funds.
RobertSF > masher
liberal and corporatist
The correct term is neoliberal, which has nothing to do with traditional liberalism, just
like neocon (short for neoconservative) has nothing to do with traditional conservatism.
Neoliberalism and neoconservatism are mutually compatible ideologies that leverage the power
of technology to create a powerful, transnational, economic elite. The difference between
the two is stylistic. Neoliberals would use economic forces while neocons would use military
forces. And the two are mutually compatible because a person can believe in both without conflict
-- witness Obama, who is as much a hawkish warmonger as Bush and as much a corporatist lackey
as Clinton.
Abraham_Franklin > Willow_girl
American jobs paid well after World War II in part because the war left the U.S as the only
country with any significant industrial capacity.
efcdons > Abraham_Franklin
Can we kill this bs idea once and for all?
The Europe-in-Rubble
Excuse - NYTimes.com by Paul Krugman
It's not true.
Willow_girl > swampwiz0
Do you really think people would starve and go homeless before they'd buck up and get to
work? Heck, probably half the people on welfare are already working -- under the table for cash,
or in some illicit activity. This is where people who don't understand how the system works
frequently err in their thinking. They see well-dressed people using a SNAP card, then getting
into a late-model vehicle, and think that welfare alone provides a lavish lifestyle. It doesn't;
but for most recipients, it is only one among several income streams.
masher
Notice that there is no mention of what the rest of know is the obvious reasons: offshoring
of factories to dictatorships like Vietnam and China, NAFTA, and too many immigrants.
Between work visas, 1.2 million immigrants/year, student visas, and de facto amnesty for illegal
labor we know why wages are suppressed. Wages in the US can't rise because our government works
hard and does a great job of helping employers import labor or export jobs. Wages just can't
rise when you have a federal government dedicated to immigration as a tool of "helping employers
find the workers they need".
You all need to stop and think about that for a second. Do you not understand what our politicians
(both parties) are really saying when they say its the government's job to "find the workers
that employers need"?
Sam Smith
And it used to be that lower wage workers could put together a couple of jobs and survive.
Now corporate America only offers flex time jobs (with a snazzy its flexible title). Those flex
time jobs mean you don't get to pick your schedule and you must be available at all times. So
each week, and each month and even each day can be adjusted based on the outcomes of big data.
So, you are a single Mom and you've paid a baby sitter to pick up the kids so you can work at
Home Depot, at any time during your shift if the store data numbers dip you are sent home. Outcome,
you end up paying the baby sitter more than you earned that day.
And since you have no set schedule, you can't pick up a second part time job either. Low wage
workers are now at the will of big data outcomes, and yes the company vastly improves efficiency,
but the workers have no autonomy or ability to control their schedules which dramatically impacts
child care, transportation options and needs (no set time for someone to pick you up), ability
to take classes, etc.
Abraham_Franklin > RobertSF
If you have one full time job, flex time may be a burden but it's doable. If you have two
part time jobs, flex time becomes a logistical nightmare.
Again, blame the ACA and its absurd mandates that are encouraging employers to convert full
time positions into part time positions.
RobertSF > Abraham_Franklin
No, blame employers for their unquenchable sociopathic greed.
I'm reminded of when you don't want the cat on the couch. You push him off on one end and he
gets up on the other end. If you put your hand up, he goes around it. If you actually put your
hand on his head, he'll push against it, trying to get on the damn couch. He'll even meow in
frustration, while you're going, "Stupid cat, I don't want you on the couch!"
But at least the cat has the excuse that it's just a dumb animal. What excuse do employers have?
In how many ways must they be told that they need to take less profit because they're killing
the goose that lays the golden eggs? Companies like Walmart and McDonald's have seen several
years of slowing sales because, in their obsession to cut labor costs, they didn't stop to think,
"Oh, these are the people who buy our stuff."
And asking employers to provide health insurance to their employees is not an absurd requirement.
Even slave owners didn't leave their slaves to die of disease (they had paid too much for them).
Abraham_Franklin > RobertSF
"No, blame employers for their unquenchable sociopathic greed."
You're blaming a victim.
Employers aren't in business to lose money. If government mandates make it too expensive to
pay someone for full time work, they will be laid off or see their hours reduced.
"And asking employers to provide health insurance to their employees is not an absurd
requirement."
If employer-provided health insurance were a good idea, we'd see it in other countries.
RobertSF > Abraham_Franklin
You're blaming a victim. Employers aren't in business to lose money.
Don't be ridiculous. Corporate profits are at their highest since the 1920s. The 1920s! Employers
not making a profit these days -- an obscene profit! -- are simply incompetents that capitalist
rules say they should die.
Abraham_Franklin > RobertSF
Corporate profits are a red herring. Well managed companies don't keep workers whose compensation
exceeds their productivity.
RobertSF, why don't you buy shares in these obscenely profitable corporations and use your obscene
profits to start your own business? You could then hire all of the over-compensated workers
your heart desired.
RobertSF > Abraham_Franklin
Because I don't have enough discretionary funds to even buy stock in these obscenely profitable
corporations. Besides, most of the profit flow to the corporation's management, not to its shareholders.
Abraham_Franklin > RobertSF
RobertSF, think of all the stocks you could buy if you spent your free time working instead
of writing comments on the internet!
The purpose of a business is to make money, not to be charitable. Owners of that business are
then free to use their profits to help society in whatever way they see fit.
RobertSF > Abraham_Franklin
The issue is how much money. Nobody's expecting businesses to operate at no profit.
JonF311 > Abraham_Franklin
These sorts of work rules have been around (in service and retail industries) for years--
long before the ACA. Frankly it would not surprise me if someday people start blaming the ACA
for the San Francisco earthquake and the Assassination of Abraham Lincoln.
kmihindu > RobertSF
Very true. As a college student in the 90's, I worked in a hospital as a nurses' aide and
routinely got told not to come in 15 min before a shift or sent home part way through my shift.
I thought that the answer was more education, so I wouldn't be so expendable, but that has not
worked out as well as I hoped. I have a PhD, am doing valuable research (my PhD work is furthering
our fight against 2 types of cancer) and yet, I almost lost my job last year and live in fear
of further government funding cuts and layoffs.
GetYourPassports
Why do you leave out that people are counted as "unemployed" only as long as they are filling
out forms for benefits and checking boxes that say they are looking for work?
If no job is found by the time the benefits and the forms stop coming, then the unemployed no
longer exist to the system.
RobertSF > GetYourPassports
That's actually an urban myth. The unemployment numbers are not merely a count of how many
people are collecting unemployment benefits. The calculation is many times more complex than
that.
The BLS explains in great detail exactly how they calculate the unemployment figures. Check
it out. http://www.bls.gov
GetYourPassports > RobertSF
The people whose benefits run out is in the millions. They do not automatically become part
of any BLS surveys. Thus people dropping off the unemployment rolls tends to make the unemployment
rate drop, even though they have not found work.
Steve C
There isn't once single overriding cause for flat wages, but it doesn't help that the minimum
wage hasn't been raised. Raising that would make a new floor - and boosts wages even for those
making a few dollars an hour over the minimum.
It's time to index the minimum wage to the CPI.
Attila Iskander > Steve C
And then as the rising wages increase to operating costs of busineses, they are forced to
raise their prices.
Funny how that consequence is ALWAYS ignored by the "let's raise minimum wages" fans..
It has also been found, that the very first group to suffer from a minimum wage hike, are also
the people most apt to turn into the invisible unemployed.
Steve C > Attila Iskander
This is a prime example of the "single-lever" theory of economics - that every action is
met by an equal and opposite reaction. Raise the wage by a dollar, x number of people lose their
jobs.
Real-world analysis shows that it's just not that simple.
http://www.washingtonpost.com/...
From there:
3. Raising the minimum wage increases unemployment.
In
a perfectly competitive market, anything that raises the wage above a
level at which the supply of workers equals the demand for them will
create unemployment. But a perfectly competitive labor market requires
that neither workers nor firms have bargaining power; that everyone has
all the necessary information; that workers are a commodity, rather than
different people with different skills and a need to be motivated; and
that there are no frictions preventing supply from matching demand.
Although everyone I know who teaches introductory economics presents
this model to students, few believe that it describes the real world. In
fact, in a survey of 40 leading economists through the Initiative on Global Markets, a diverse
group including both prominent liberals and conservatives, only about a third agreed
that raising the minimum wage would make it harder for low-skilled
workers to find employment. Because only about one in 10 thought the
costs of hiring probably would be bigger than the benefits of higher
wages for low-skilled workers, even that number overstates how concerned
these economists are about the potential negative effects of raising
the minimum wage.
So what's the discrepancy between theory and
what so many economists think? When economists have analyzed the data,
many have found few, if any, negative effects of a minimum wage on
employment. This has shifted some of the thinking in the profession -
and pointed to flaws in a perfectly competitive model.
Attila Iskander > Steve C
This is a false argument
At the lower end of the labor scale, workers are completely fungible and interchangeable.
They have no particular skills to offer, and they have no skills to use a leverage in negotiations.
The US market also has it's own skewing mechanism, called illegal immigrant labor who happily
accept work below the minimum wage, and as a displacement mechanism, replacing the (legal) employees
who have now been priced out of the market.
The disrepancy occurs when people ascribe all kinds of factors that are not in play at the bottom
of the labor market, where either skill requirements are non-existent or so minimal as to be
meanigless and easiy compensated for with a few hours of training.
RobertSF > Attila Iskander
Except agricultural workers aren't covered by the minimum wage laws, so raising the minimum
wage wouldn't affect the price of fruits and vegetables.
Moreover, even if it did affect their wages, labor is such a small amount of the overall cost
that it wouldn't affect the price of fruits and vegetables. Consider tomatoes.
Plus, to make $400 a week, you're going to have to pick between 150 and 170 buckets a
day. At 32 pounds per bucket, that adds up to nearly three tons a day.
http://www.naplesnews.com/news...
Let's go with the lower figure of 150 times 30 pounds a day. That's 4,500 pounds, and times
5 days per week, comes to 22,500 pounds. That costs the farmer $400 or 1.78 cents per pound.
If you doubled tomato picker's wages to $800 a week, that would only push the price of tomatoes
up by 1.78 cents per pound. And since tomatoes go for about $2-3 a pound, it's not even noticeable.
And while it's true that the poor eat lots of fast food, don't forget that, from a worker's
point of view, working at Olive Garden isn't much different from working at McDonald's.
People earn about the same at both. So once you consider the low-wage food-service industry
as a while, it's the middle class that consumes the most.
Stewart
All three of the above are true, but none gets at the root cause.
WHY have recessions since 1990 always begun a 'jobless recovery'? What's been different about
these recessions and recoveries?
The answer, of course, is monetary policy, which has been far more aggressive in both the
boom before the bust, and in the attempted recovery.
The reality of it is, when monetary and fiscal policy tools are used to 'stimulate' the economy,
we get a jobless recovery because it is hardly a recovery at all. When government primes the
pump, nearly all the benefits go to asset holders. In other words, the rich get richer. The
growth in wealth of asset holders drives up GDP numbers, but the rest of us hardly feel anything,
other than maybe a little more spending from the rich folk.
Worse, when a flood of government money enters the economy through fiscal and monetary police,
it distorts the pricing mechanism, and THAT, my friends, is why these recessions and recoveries
are so painful. With the pricing signals misfiring due to government interference, it is much
harder for investors to judge which projects will produce a real return. Investment flows not
into investments that create value and a return through the generation of real wealth, but instead
to investment vehicles that are closely connected to the government gravy train (in this recovery,
investors wanted in on the stock market any way they could get in, where all that loose money
from the Fed drove prices up across the board).
Until more policymakers understand this, we will continue to have rampant income inequality
and stagnant wages even as the GDP numbers grow. We need steady, regular, predictable monetary
policy, and we need fiscal policy as a tool to be relegated to the dustbin of history, where
history's lessons are overwhelmingly telling us it belongs
RobertSF > Stewart
When government primes the pump, nearly all the benefits go to asset holders.
While that is true, I disagree with the rest of your analysis because it is basically supply-side
thinking. It's the thinking that if businesses could or would only expand, that prosperity would
flow through the nation. But that thinking forgets that for business expansion to work, there
needs to be enough consumption. Yet how is a nation of high unemployment and low wages to consume
more than it does already?
If the flood of money that enters the economy were handed not to the asset holders directly
but to the people, it would indeed have a stimulative effect. QE hands over $85 billion a month.
The US has about 150 million taxpayers. Now imagine that those $85 billion were instead distributed
to the bottom 60% of taxpayers. Each taxpayer would then get $944 a month.
Even assuming they saved part of it, can you imagine the effect of 90 million families and
households buying $750 more worth of stuff every month? Imagine how many toys, computers, TVs,
pairs of jeans, and fancy lattes that could buy! Business growth would have to shoot up.
(in this recovery, investors wanted in on the stock market any way they could get
in, where all that loose money from the Fed drove prices up across the board)
Actually, most of the gains in the stock market are attributed to corporate stock buybacks.
https://hbr.org/2014/09/profit...
http://online.wsj.com/articles...
Stewart > RobertSF
Your links about corporate stock buybacks are interesting and informative -- thanks for sharing.
The rest of your comment is a misunderstanding of my position.
Economic growth happens when people make voluntary exchanges for mutual benefit. Both sides
are better off after the exchange. The sum of millions of these exchanges is economic growth.
Therefore, supply and demand must grow together. And, as lots of economic analyses have shown,
the impetus for these exchanges can come from either the supply or demand side.
And holding all of these exchanges together is the pricing system. Prices bring suppy and
demand together in a way that is most efficient for them both. But when government distorts
the pricing mechanism, we get exchanges that aren't economically efficient, and therefore, far
less growth.
SimplyNaive > Stewart
Your analysis may have worked if we have the closed economy. There is no such thing now as
the US economy. It is global now. Corporations don't have nationality or national preferences.
Profit only. All history lessons from 30s, 40s etc are irrelevant now. They may become relevant
if you apply them to the globe as whole. In general, the corporations with free trade and free
capital movement look for the most profitable combinations to max profits. Low cost is China
and similar. Buying power is the West. Buy low, sell high. Till our living standards meet Chinese
we will continue to slide down, regardless of politicians. The question is when we meet them
when we meet them whether we will have a 0.1% and 99.9% like society or more balanced, egalitarian
wealth and income distribution.
Guest > SimplyNaive
I think the answer is obvious on that last question of yours. Low income wages are coming
closer to intersecting wages in other countries (which not only include the wages, but costs
of doing business on another continent). Wages on the upper classes have not budged, and
if anything have gotten better.
Inequality has gotten worse and expect it to get worse unless we change the way politics
is approached in this country.
RobertSF
We're adding lots of jobs in industries with stagnant wages, and a few jobs in industries
with rising wages
As stated and without further elaboration, theory #1 contradicts the laws of supply and demand.
There is no such thing as an industry with stagnant wage because, if you're adding lots of jobs,
workers get harder to find, unless... the supply of workers so overwhelms the demand that no
amount of growth can absorb them all. In other words, unless unemployment is really much higher
than what we're told it is.
And it's not that the government is lying to us or making numbers up. It's that the statistics
themselves -- whose meaning is documented in great detail by the BLS -- don't mean what we think
they mean. The unemployment figure released every month is such a qualified number that it does
not mean what it implies.
People hear "six percent unemployment" and think, "that's not so bad... 94% of the people
have jobs," but that's not what the number means at all. If you baby-sat for your cousin last
week, and she gave you $20 out of pity, the BLS considers you employed. If you ran some errands
on Task Rabbit, the BLS considers you employed, even though you won't see your check until your
earnings reach a certain point. And when the BLS considers you employed, it considers you employed
for the whole month.
Once you correct for all long-term unemployed, and the part-timers who need full-time jobs,
and the people limping along while exhausting their savings, the real unemployment figure is
more like 23% and rising. See
Alternate Unemployment
Charts http://www.shadowstats.com
NoldorElf
Things are a lot worse for Americans than any politician wants to admit.
The issue is not just unemployment. It's underemployment. What happens when university graduates
cannot find jobs that require a degree. Also, what about all of those that lost jobs that paid
much more than their current job? The economy is rapidly becoming a place where there are the
people that are super wealthy and those that have nothing.
I think it's pretty obvious that the real rate of unemployment is much higher than the official
statistics are suggesting. The percentage of people in the labor force has dropped a great deal
since the recession - much faster than one would suspect if only the aging population was the
cause.
It is appalling because we know the cause. The very wealthy have taken most of the productivity
gains. Likewise, the pursuit of short-term profits has led to the destruction of America's manufacturing
base, the de-regulation of the financial sector, and less investment in things like research.
JonF311 > NoldorElf
See my comment above. There's no way "real" unemployment can be hidden without a conspiracy
embracing the entire political spectrum as well as the media and all economists across the board.
At that point you are well into Birther and Truth territory.
RobertSF > JonF311
But no conspiracy is needed. It's all done in plain sight. Statistics are derived using sound
statistical principles and methodologies that are fully documented. The problem is that the
statistics don't really mean what people infer they mean, and people are just not up to pouring
over page after page of dry BLS material to find out that the statistics don't really mean what
they infer they do.
How many times haven't we heard say, "Six percent unemployment isn't so bad... it means 94%
of the people have jobs." No, it doesn't mean that at all! But if you charged the BLS with
fraud, they could honestly say, "We never said it meant that."
Digital Scribe
It will be interesting when Americans actually wake up and realize they can't afford most
of the stuff they buy with their stagnant wages. That should result in a nice pullback in spending
that should make things even worse. Most of our economy has been built on irrational spending
anyway.
julianpenrod
Among other things, this article perpetuates a dangerous deception.
The idea that the economy is an independent, self operating entity and that the behavior
observed represents some sort of system of "rules" and "laws" by which the "process" operates.
In fact, the "economy" is a single large manipulated system. There is no legitimacy in the
concept that it operates on its own, that what is seen is a manifestation of immutable, independent
and universal laws.
If only to prove that the "economy" is not a natural, independent system consider, for example,
the sheer case of the innumerably many cases of market manipulation by artificially manufactured
"demands" and "sell offs". Massive buys of stock or commodities were used to convince the gullible
that a sudden "demand" arose, they bought into the market. The "rules" by which stocks are prices
automatically rose the price of stock that nobody wanted really, then the crook manufacturing
the non existent "demand" cashed in their holdings and walked away with massive profits.
And that demonstrates the falseness behind the stock market. Initially, stock was intended
to raise money for expansion and improvement of a business. With its new offerings, the business
would then be more profitable and their stock would be more valuable. But the key to that making
any sense was money remaining in long enough for the business to improve and profits to increase.
But the crooks simply defined the rise in price as based not on the actual worth of the company,
but in perceived or engineered demand for the stock! As a result, stock that had the same value
as the day before suddenly could have a price many times that! That was a large part of the
swindle behind "day trading". "Day trading" was just a minimalized version of engineered market
manipulation. People bought blocks of stock, giving the impression that it was in demand. A
few seconds later, before the money for the stock could even be seen by the company and used
to improve it, others saw the rise in demand and the automatically calculated rise in price,
they paid more, that caused others to pay more. Then the "day trader" cashed in for a small
but definite profit. And the company that was the center of the action never saw a dime added
to its coffers for an instant!
Include dummy corporations masquerading as parts of the "economy" but not doing anything
at all. "Creative bookkeeping", which, among other things, makes profits look like losses. Offshore
banks for profits.
And, on the mercantile side, such things as programmed obsolescence intended to reap profits
for companies that they don't deserve.
Including sleazy tactics like computer companies automatically suspending all support for
software the day new software is introduced, forcing purchase of the new software. Or software
engineers deliberately writing software for larger and larger systems, requiring the purchase
of new computers for all new software.
Or, throw this in, auto "mechanics" repairing the damage the car is brought in with, but
making sure to damage something else to force them to come back.
Or "doctors" prescribing unnecessary surgery, relying on the fact that so many trust "doctors"
even when treatments go wrong, which they do more than the "news" admits, then, when the patient
ends up in pain from the unnecessary surgery, the "doctor" tells then "that's the best that
could be expected", and dopes them into oblivion with expensive "pain killers and anti depressants".
... ... ...
berkeleykev
The "invisible" supply of illegal labor has distorted the supply/demand equation.
Here is a study on construction jobs in CA which shows that 1/5 building construction jobs is
"informal", i.e. "off-the-books" or improperly classified:
http://www.economicrt.org/summ...
The study says that the "informal" construction economy has increased 400% in the last 40 years.
Here is another study by Workers' Defense Project of construction jobs in Texas which shows
that at least half of those employed are illegal immigrants:
"Build a Better Nation found that 50% of surveyed construction workers in the industry were
undocumented."
Their conclusion is that illegal workers have lowered wages to the point that many contractors
simply cannot afford to pay legal wages:
"Now that undocumented immigrants comprise significant portions of industries like construction,
more employers are left with few choices other then to hire unauthorized workers, or risk going
out of business."
http://workersdefense.org/IMMI...
Incidentally, Workers Defense Project is a Latino workers' rights group headed by a latina woman,
Cristina Tzitzun, not some john birch cultural war organization.
Why are the laws of supply and demand at odds with the official picture of employment? Because
the official picture of employment ignores the "informal" economy of illegal workers.
smedley
Invisible unemployment because these are the people who want to work but are denied work
by the insane policies of Obama. These people are irrelevant because they aren't the useless
slugs and wastrels who demand their free housing, free food, free education, free phones, free
condoms, that is who the government looks after.
karmashock
Unemployment was redefined such that anyone that is out of work for a long time ceases to
be unemployed.
The old statistic looked at all able bodied people in a given age range and assumed anyone not
working was unemployed.
The old system while having problems was less susceptible to political manipulation.
If you want to understand unemployment in the US, run the numbers using the old system.
And after you've done that... factor for under employment if you can.
Then you'll see what a farce the recovery has always been.
JonF311 > karmashock
This is not true. Anyone who is still actively looking for work (but is not working) is counted
as unemployed.
Also, there is no "old system". The way unemployment is calculated is the same as it has been
for decades (assuming we are not talking about computers replacing adding machines and the like).
If you are not workking but claim to be looking for work, you count as unemployed-- that's been
true since the Depression.
RobertSF > disqusplaya
Filtering out your moral outrage, it's true that many people won't find jobs because there
are always better people available. But why is that?
You mentioned a half-century of American Exceptionalism, but why would that affect employment?
Why would that reduce the number of jobs available while simultaneously raising the level of
skill needed to get a "good job?"
The truth is that American Exceptionalism had nothing to do with it. After all, this unemployment
phenomenon is affecting European countries and even China. Yes, China saw its manufacturing
employment fall by 15% over the decade 2000-2009 even though its manufacturing output grew.
Why? At the root of it is technological advance.
It was technological advance that enabled the offshoring of jobs. You need powerful computers,
sophisticated software, and instant communications to manage a global supply chain. Curiously,
500,000 jobs were lost just in the offshoring transition. The US lost 2.9 million manufacturing
jobs, and China gained 2.4 million. What happened? What happened is that China's factories were
new, and thus more efficient than US factories, which were older.
We've seen technology eliminate jobs even in the white-collar world. Many white-collar jobs
consisted of taking the output of some system, perhaps transforming that output, and then entering
that output as input into another system. For example, a paymaster would take the employee's
time cards, enter their totals into a form, and send the form to the people who cut the checks.
With a computerized time system, however, the system keeps track of the employee's time and
automatically cuts the checks. No need for a paymaster anymore. You see this over and over in
the white-collar world. One person with QuickBooks can now handle the bookkeeping that used
to take a department of five or six. Countless people whose job was once to create reports are
no longer needed.
Futurists cheerfully told us not to worry because technology would create more jobs and better
jobs. Well, technology didn't create more jobs than it eliminated. A paymaster might learn Microsoft's
dotNet and get a job developing software for a company that produces time-keeping systems, but
there simply aren't enough such jobs to employ all paymasters. After all, you need the same
number of programmers to create one copy of a software application as you need to create a million
copies. It's not like manufacturing, where producing more requires more workers.
Kilpatrick Kirksimmons
Why aren't wages rising? It's the "Free Trade", stupid. We've swallowed without a peep for
the last 2+ decades that we just HAVE to compete with low wage workers toiling for pennies a
day in this glorious, global economy. Nobody wanted to touch industrial policy, and God-help
the citizen who mentioned "protectionism." Instead, we just gulped down the nonsense that we
aren't as prosperous because the post-war era was just a magical anomaly, not brought about
by any policies or choices on our part whatsoever. It was just a fairy-tale destined to end,
you see. The richest joke in the pamphlet is that economic specialization theory they taught
us in school (and I only graduated high school a couple years ago). Every nation should play
to their strengths, the nonsense goes, and then import the rest of it. What if the U.S. had
stuck to exporting commodities in the early 1800's because that's what we were "good at," and
let Britain hog the advanced, industrialized stuff? Where do you think we'd be today? Advanced
nations that decided to be intelligent about it, are humming along relatively fine. Advanced
nations like us, who refused to raise even a modicum of protection for themselves, are muddling
along with Wal-Mart low prices (ain't globalization great?) and wages to match. And then we
go around like idiots, dumbfounded as to what the hell happened.
And since technology doesn't stop advancing, the number of jobs will continue to shrink, and
more and more of us will find ourselves always the least desirable of the applicants. This may
not affect us who are well established and already old enough, but it will affect today's younger
generation. It's already said that Millenials won't live as well as their parents, and it has
nothing to do with the US itself. It's a global phenomenon. And they won't live less well because
there's less wealth.
It's not a wealth creation problem. Technology allows more wealth than ever to be created. The
problem is that the wealth goes to those who own the technology, and their share is further
boosted by the fact that they have to share that wealth with fewer and fewer workers.
The stopgap solution in the US has been disability, but that's not a long-term solution. The
only long-term solution is to take the additional wealth that is concentrating in the hands
of a few and use it to fund a guaranteed basic income. Technology, after all, should belong
to humanity, not just to a few.
cosmopolite,
Permalink
The distinction between being "unemployed" and "out of the labour force" is hopelessly subjective
and hence meaningless. Focus instead on the "employment rate." I prefer to focus on the rates
for each gender between the 25th and 55th birthdays. Before the 25th birthday, some people don't
work because they are pursuing university educations. After the 55th birthday, long term unemployment
is hard to distinguish from early retirement.
Here is the rate for American men:
http://research.stlouisfed.org...
This rate has been in secular decline, because the falls in recessions are larger than the rise
in subsequent booms. The GFC led to the largest decline since the data began in 1955, to the
all time low of 80% in early 2010. The current value is 84.3%. The rise has been brisker than
in other recessions. But the current level is still lower than all pre-2009 value but one (1983:1).
One in six prime age American men is out of work. We do not know how many of these men are unemployable.
Here is the employment rate for American women:
http://research.stlouisfed.org...
This rate is much less sensitive to recessions than the rate for men. The rate for women rose
from 30% at the end of WWII, to 75% at the turn of the century. It declined to a bit below 70%
in 2010, and has since been stable. The current value is 69.5%. 30% of prime age American women
are either unemployable, or SAHMs.
lolexecs
I'm not sure why there wasn't a mention of Yellen's pent-up wage deflation hypothesis:
http://www.federalreserve.gov/...
TheRadicalModerate
"Globalization and technology is [sic] allowing corporations to expand productivity..."
There's a misconception that globalization and technology are two different things. Without
the technology to coordinate workers who are largely ignorant of the business in which they're
working, to produce high-quality parts with extremely low-skill workers, to implement international
logistical pipelines for both input materials and finished goods, and to ship the finished goods
back to the US for a fraction of what it would have cost forty years ago, globalization wouldn't
exist.
Technology is driving everything. Where possible, it completely replaces labor, in which
case the technology stays on-shore. Beyond that, it replaces skilled and semi-skilled domestic
labor with unskilled foreign labor. But the inevitable trend is to do almost everything--including
service jobs--by machine.
Iowaclass
Expecting government policy to substantially improve our employment situation is like expecting
government policy to bring back work for draft animals. We have cars. So carriage horses are
out of work. End of discussion. Ditto for humans. We have a glut of CNC machines and networked
computers.
So growth in full-time well-paid employement is over.
Done.
Kaput.
Finished.
Dead.
Busted.
Gone.
We only need so many paper pushers and sales clerks, and the overseas factories can underprice
our industrial labor, structurally and permanently.
We have exploited a few sink-holes for the surplus American workers, which we have made increasing
use of over the last few decades (mass incarceration, excessive college, bloated military/police
forces), but those labor-sponges are now saturated.
This is going to be a brutal, ugly, zero-sum reckoning.
John Douglas > iowaclass
Due to a number of factors, the demand for labor is going to decrease. These factors include
improved technologies of robotization, automation, artificial intelligence, big data analysis,
and sensor collection and analysis. Not to mention international competition and immigration.
If you've got a job that can be done by a robot, computer program, or foreign worker for less
money, you're in trouble. While you've got your job, you'll be paid less, and eventually replaced.
Immigrants who are currently in this country illegally tend to work in "shadow" career fields
where people turn an eye away for their cheap labor. But once given legal status, they are going
to want to move up in the world.
Millennials who burdened themselves with $50K student loans to get advanced degrees in gender
studies and now live with their parents while working at Starbucks will be displaced at work
by newly legalized immigrants. Why not, they're better motivated, harder working and less expensive.
tuhaybey
25 days ago
This is an interesting and thoughtful piece, but IMO, it still misrepresents the participation
rate somewhat-
http://politicsthatwork.com/bl...But, it is absolutely true that wages are not rising.
Employers are keeping a bigger and bigger share of their employee's productivity for themselves-
http://politicsthatwork.com/gr...
Ultimately, though, that has been an increasingly big problem for generations now, through
both rises and falls in the economy and in unemployment, so the belief that we can solve that
fundamental disconnect just through further fluctuations in those indicators seems flawed to
me. At this point, we need policy measures. More progressive taxation, more effective taxation
of corporations, shifting payroll taxes entirely to the employer side, more subsidies for healthcare,
everything we can do to counteract the out of control concentration of wealth that is going
on.
WK
Seriously, I should get credentials and post an article like this. Talk about writing about
something that is not new.
I am a victim of the Great Recession, laid off in 2009 but the process stared in 2003. Corporations
have planned for this outsourcing for at least 20 years now overall, with the onset of GATT
and NAFTA.
Until CEO and senior management pay incentives are changed, nothing will change on this situation.
CEOs are rewarded precisely for this formula as it improves amounts returned to investors, either
in the form of dividends, stock buybacks or share price appreciation. CEOs will be punished
if they do any changes that harm these metrics to the investors, and their competition will
continue the policies to retain earnings and contain labor costs, even if the CEO himself grows
a brain and does something that would look better from an Americans view..
In short, investors are at cross purposes now with American labor in all respects. Simply put,
that is the largest indictment of capitalism one can cite. I am not a socialist, but why is
capitalism such a great system when the 1% hold record amounts of wealth and the rest of the
country is poor and destitute. The fact that the rich bastards are so incompassionate about
what is going on suggests a future class warfare if present trends continue. Why should slave
labor only exist to support the rich and wealthy? Didn't we already fight a Civil War for this
type of injustice? What a poor country we live in any more, with its faults I much more enjoyed
the USA in the 70s and 80s than I do today.
Mike Green
the main reason this is a weak, jobless economy is that we have allowed all key sectors of
the economy to turn into Crony capitalistic cartels or actual monopolies. when your company
has no true competition there is no need to raise wages, find the best and the brightest, raid
your competitor for brainpower, or advertise and expand when things pick up. For 50 years now
media, banking, health care and others have consolidated into few players either by acquiring
the competition or running them out of town, then used their new found wealth and clout to buy
the relaxation or elimination of anti trust laws.
Bleeding heart? hardly I am a dyed in the wool conservative, and I find the current lack
of a level playing field, real competition horrifying. look at the big five banks - they get
a special rate from the Fed, they have run most of the retail, main street bank branches out
of business, were too big to fail when they went into the crapper in 08, and all are bigger
now than then.
Media? there is no competition in cable, the networks dictate to Comcast, Verizon, Dish etc
whatever they want per household. just try and NOT pay for ESPN./Disney/Cap Cities/ABC/Pixar/Lucasfilm
has a guaranteed cash flow.
And the laws regarding station ownership and networks not owning the shows they air have
gone the way of the Carrier Pigeon. just watch how many shows say "ABC Studios production" in
the credits.
We have allowed the big to get bigger with special exemptions which stifles new wealth and
job creation, holds down innovation and wage growth and magnifies the income inequality. read
"Cornered" by Barry Lynn. we need a new Teddy R (republican) to break up the monopolies and
restore the marketplace. last time we did that was the breakup of AT&T, which, oh by the way,
ushered in a generation of new technology, new companies, wealth and millions of jobs
Jeffrey678
"Bottom Line: Generally positive US data leave the Fed on track for a rate hike in the middle
of next year."CNBC has a different bottom line this morning. Low interest rates in the US
as Europe/Asia lower their interest rates next year to fight deflationary pressures.
bakho -> Jeffrey678...
CNBC is mostly for entertainment value.
If investors took their advice consistently they would shortly be bankrupt.
The economies of the rich democracies today resemble patients in a persistent vegetative state
where full employment is a rare bubble condition, rather than the norm. Demand is too modest for
a full recovery. The prescription with fewest side effects is to raise wages.
The issue of slowing growth in the West (even after the global financial crisis had passed) was
perhaps first explored by Robert Gordon,
who warned in August 2012 that longer term U.S. growth was ebbing to the slowest trend in a century.
Viewed initially as purely a supply-side phenomenon, it has lately come to be perceived as a
demand side phenomenon
by Martin Wolf, Daniel
Stelter in The Globalist,
Lawrence Summers
and others. Summers and Stephen King, for example, wonder how the rich democracies can escape from
what has become a Japanese-style lost decades.
The new macroeconomic normal features exaggerated trade imbalances and in the West, inadequate
demand portending slow growth and thus inadequate progress on public and private debts. Weak demand
coupled with excessive debt has unduly raised the odds of destabilizing restructurings and defaults
at both the household and national levels.
... ... ...
What to do?
The most promising option is to raise real wages. That proposition won't puzzle European scholars
familiar with the Australian and northern Europe wage determination mechanisms. For decades, these
countries have effectively and providentially linked real wages there to productivity growth.
For example,
wages in the German retail sector rose 1% adjusted for inflation this year, and French wages
next year are also
forecast to rise about 1% in real terms. That's why wages in those nations, assessed in
purchase power parity terms, are $10/hour or so above the United States and inch higher every year.
In contrast, American real wages, as reviewed in my book
"What Went Wrong", have been flat or worse for over a generation. The 180 million or so
working- and middle-class employees constitute an enormously and doubtless eager cohort for addressing
secular stagnation.
Of all people, the CEO of Goldman Sachs, Lloyd Blankfein recently stated: "This country does
a great job of creating wealth, but not a great [job] of distributing it."
The relatively high marginal spending propensities of lower income Americans suggest the demand
impact would be maximized by raising the minimum wage.
... ... ...
Parallels from peers
Germany will soon be imposing a nationwide minimum wage of €8.50 an hour ($10.50 or so), which
will spur domestic demand. The latter would be
a step in the right direction
of moderating its
hot-button
current account surplus.
In Australia, the minimum wage exceeds U.S. $11 adjusted for purchasing power. Yet, its growth
in GDP has exceeded the United States for years and Australia has an unemployment rate of 5.8%,
below that of the United States. Labor participation is also higher than in the United States. Clearly,
a high minimum wage has not destroyed jobs or crippled growth.
The United States should similarly support demand by raising its nationwide minimum wage, now
set at $7.25 per hour, which is well below rates abroad.
Federal Reserve Bank of Chicago economists have concluded that a $1 increase in minimum
wages would raise incomes in affected households by $250 per quarter and spending even more the
following year.
Raising the minimum wage floor will ratchet up wages for
as many as 30 million
other employees. Moreover, research by economists
such as Arindrajit
Dube is concluding that raising minimum wages can even have a tiny positive impact on employment,
with employer costs ameliorated by reduced labor force turnover.
Importantly, both Germany and the U.S. should adopt the Australian and French policy of indexing
minimum wages to productivity growth as well as inflation.
Stop subsidizing low-wage employers
That step would also see the bizarre American taxpayer subsidy to low-wage employers like McDonalds
or Walmart wither away.
A Democratic Congressional study found that last year public healthcare subsidies alone
averaged $3,015 for each Walmart employee in the typical state of Wisconsin. Other subsides raise
the total to as much as $5,800 per employee.
Indexing the minimum wage would also end the spectacle of such profitable firms organizing volunteer
donation food drives to supplement employee wages. Along the same lines, rather than raise wages,
McDonalds recently suggested that its employees should take second jobs and split dinner
into two sittings, several hours apart.
A second step is establishing a sweeping American facsimile of the Australian and northern Europe
wage determination mechanism. Labor compensation for almost every American has become structurally
decoupled from productivity, and utilizing these proven, effective mechanisms to reconnect will
address the secular stagnation conundrum.
Raising labor costs will slow job creation, but
an extensive analysis by economists at the International Labor Organization recently concluded
that the impact on aggregate demand in the European Union (EU) of a broad one percentage point real
wage increase was nonetheless sufficient to raise employment on balance.
Decades of evidence
Above all, the weight of decades of evidence in Australia and northern Europe document that linking
wages to productivity growth in this fashion will not jeopardize U.S. competitiveness or engender
wage drift.
Addressing the new normal of secular stagnation should not be restricted to macroeconomic tool
refinements. The American economy offers opportunities drawn from traditional, proven practice in
other rich democracies involving wages to considerably enhance aggregate demand.
Raising minimum wages and indexing all U.S. real wages to productivity growth is an efficient
solution. If secular stagnation proves to be the new paradigm as economists fear, it can best be
addressed by a new American wage paradigm drawn from decades of practice in other rich nations.
Prior to the recession, I never would have dreamed that Congress would all but turn its back on
the unemployed, let alone turn to austerity, but that's exactly what happened
t's the time of year when analysts and pundits begin "marking their beliefs to market" – telling
us what they got right or wrong in the previous year. In that spirit, here are some of the things
I got wrong about the Great Recession:
It's Hard to Change the Inflation Rate in a Deep Recession: Prior to the Great Recession, I thought
central banks could create inflation pretty much at will, even in a deep recession. All that was
needed was to crank up the printing press, get the money into the hands of people who will spend
it, and the extra demand will drive up the prices of goods and services. At the same time, inflationary
expectations would increase driving down the real interest rate, and that would increase demand
even more. If the increase in the money supply is sufficiently large, inflation would be the inevitable
result.
But the Fed doesn't create money directly, it increases bank reserves and it's possible for those
reserves to get stuck in bank vaults or in deposits held at the Fed. When that happens, the money
supply doesn't increase – balances held within the Federal Reserve System are not part of the money
supply – and the desired increase in demand doesn't occur.
The lesson for me is that if you want the inflation rate to increase, demand has to increase.
That requires more than simply creating a bunch of reserves that sit idle in banks.
Don't Depend upon Fiscal Policy: Which brings me to the second lesson. If monetary policy alone
cannot turn things around when the economy is spiraling downward, it's up to fiscal policy to come
to the rescue. Increases in spending combined with targeted tax cuts can make a big difference in
how quickly the economy recovers.
Prior to the recession, I never would have dreamed that Congress would all but turn its back
on the unemployed, let alone turn to austerity, but that's exactly what happened. Yes, there
was a stimulus package just after Obama was first elected, but it was far from sufficient and more
was needed to help the millions and millions of households struggling to make ends meet in the face
of unemployment or reduced hours. Instead, we got budget cuts that made the problem even worse.
Recessions Affect Long-Run Growth: Prior to the Great Recession, many economists – myself included
– believed that monetary and fiscal policy would have no impact on the full employment or natural
level of output in the long-run. Policy could change the severity and duration of a recession; these
actions were thought to be completely independent of our long-run productive potential.
The experience of the Great Recession shows that this is wrong. First, long-term unemployment
has been a huge and persistent problem, and many workers have responded by dropping out of the labor
force permanently. The decrease in the workforce lowers our potential output level. Second,
public investment in infrastructure has fallen behind, and that hurts our long-run growth potential.
Third, teachers and social services have been cut, and to the extent that our children are less
educated, less healthy, less well-adjusted because of these cuts in the name of austerity, our long-run
potential will fall.
The lesson is an important one, and it was emphasized recently by researchers at the Federal
Reserve. As they note, "For policymakers, the results also point to the cost of recessions, especially
deep and long ones, and provide a rationale for strong and rapid policy responses to economic downturns."
The next time a recession hits, we should err on the side of doing too much, and do it as soon
as possible, instead of dragging our feet and not doing enough like we did this time, and in some
cases making the recession even worse.
The Cure Depends upon the Disease: When teaching monetary and fiscal policy in a classroom setting,
the policies are generic. If demand falls, policymakers should cut interest rates, increase government
spending, and/or cut taxes and the problem is solved instantly. Exactly what the money is spent
on and whose taxes are cut is left unspecified. But in real world applications, it's much more complicated,
something I didn't fully understand when the recession hit.
Recessions have a variety of causes, for example spikes in oil prices as in the 1970s, Fed induced
increases in the interest rate to fight inflation as in the Volcker era, housing price bubbles and
financial meltdowns as in the Great Recession, and so on. The Great Recession was a "balance sheet
recession" meaning that one of the big problems was that bank and financial balance sheets were
wiped out as housing and asset prices plunged.
One of the biggest mistakes we made in fighting the recession was the failure to target and repair
household balance sheets. Bank balance sheets were restored, but household balance sheets were left
in shambles. The result is that the economy has suffered as households have used their paychecks
to restore what has been lost, and pay off debt instead of consuming goods and services.
In the future, we must do a better job of targeting the problem that is causing the economy to
function poorly.
It isn't easy to admit mistakes, especially when they look so obvious in retrospect. But the
alternative to admitting and learning from mistakes is to cling to incorrect beliefs and risk repeating
the errors. After all, there are plenty of new mistakes to be made, and I'm sure I'll make my share.
This Real News Network interview with Bill Barry, who has organized documented and undocumented
workers in the textile industry, makes an argument at a high level that many will find hard to dispute:
that the fight over immigration reform and the status of undocumented immigrants diverts energy
and attention from the ways in which a super-rich class is taking more and more out of the economy,
to the detriment of laborers. Barry also argues that getting rid of undocumented immigrants would
not produce much in the way of wage increases. The experience of Alabama, which implemented an extremely
aggressive immigration law, would tend to confirm Barry's argument. Farmers, for instance, weren't
able to find substitutes for migrant workers, even when they offered higher wages. What it would
take to get US natives to take those jobs was more than what those employers were willing to pay.
The same is likely true for many of the other backbreaking jobs performed by undocumented workers,
such as working in meatpacking plants.
TG, November 29, 2014 at 2:40 am
'Amnesty' is misdirection.
Giving legal status to a paltry few million foreign nationals who are already working here
will have negligible impact on the labor market, which is why the rich don't care about that,
which is why it is being hyped by the media, to distract us.
The big deal is a totally open-borders allow the entire third world to come here, unlimited
H1Bs, unlimited refugees, unlimited open borders. Cheap labor people, cheap labor.
'Divide and conquer'? Excuse me. That Americans should be biased against FOREIGN NATIONALS
is completely reasonable. That's the entire point of a nation! You don't believe me? Open the
doors of your own house/apartment, and let anyone just wander in from off the street and help
themselves to all you have. I dare you. Then you can talk about 'divide and conquer', not before.
Thomas Williams, November 29, 2014 at 4:39 am
RE: Illegals
Yves, you can do better than that. Your arguments do not hold water.
Having spent most of my career in the construction field, I've been witness to this slow
moving train wreck.
Illegals are here for the purpose of driving down wages and working conditions. Before
they came the conditions in the meat packing plants were tough but much better than today. Wages
were livable.
The Alabama farmer issue was not fairly tested. If they'd recruited from ghettos, they could
have found workers who would take any opportunity to move to a better life.
Not too far from Fergueson, MO there are a number of meat packing plants. All full of illegals.
If our disenfranchised young men had a way out of the ghetto, then perhaps our police
would quit using them for target practice.
Connecting these dots is not rocket science.
John Zelnicker, November 29, 2014 at 7:57 am
TW – The farmers here in Alabama did try to recruit in the "ghettos" and were still unable
to find people to work the fields. Farms are not normally close to the bigger cities where the
poor, particularly the non-white poor, tend to live which means that transportation is another
issue. Working Class Nero (comment below, 11/29/14, 5:13 am) mentions one of the problems in
that farmers in Alabama could not raise wages and pay for transportation without limit or they
would price themselves out of the market for their crops.
And "mov[ing] for a better life" takes a lot more than a decent wage. The seasonal nature
of the work is a big part of the problem. Why uproot oneself and possibly one's family to go
work for a few weeks harvesting crops? Most people, especially the poor in my experience, live
within a network of friends and relatives who make survival possible and would need a much bigger
incentive to become migrant labor and leave that network behind.
Working Class Nero, November 29, 2014 at 5:13 am
The famous saying:
"It is difficult to get a man to understand something, when his salary depends on his not
understanding it."
Can be slightly updated and generalized to:
"It is difficult to get a man to understand something, when his class interests are advanced
by his not understanding it."
And so the biggest "tell" in the immigration debate is when bourgeois commentators – those
people in the top two social economic quintiles – admit that H1-B visa, high skill immigration
is a plot to lower wages, but insist that the same is not true for low-skill immigration. They
often tiredly trot out the oligarchs favorite two pro-immigration tropes about "crops rotting
in the fields" and "jobs Americans will not do".
Personally I am "bi-class-ual", I grew up working class but am now firmly enmeshed in the
bourgeoisie and so I am convinced my split social class personality helps me understand these
issues.
The fact is, if all else is held constant – high skill immigration helps poor people (assuming
no additional low-skill immigration) by lowering costs of high skill workers and increasing
employment opportunities for low-skill workers since high-skill workers typically also employ
low-skill labor. But the reverse is obviously also true, low-skill immigration helps the rich
by lowering salaries but hurts the poor because of these salary decreases.
Here is a portion of what Harvard immigration economist George Borjas has to say about the
impact of immigration on the poor. You can read the whole thing here:
http://cis.org/immigration-and-the-american-worker-review-academic-literature
The immigration surplus of $35 billion comes from reducing the wages of natives in competition
with immigrants by an estimated $402 billion a year, while increasing profits or the incomes
of users of immigrants by an estimated $437 billion.
Economists have long known that immigration redistributes income in the receiving society.
Although immigration makes the aggregate economy larger, the actual net benefit accruing
to natives is small, equal to an estimated two-tenths of 1 percent of GDP. There is little
evidence indicating that immigration (legal and/or illegal) creates large net gains for
native-born Americans.
Even though the overall net impact on natives is small, this does not mean that the wage
losses suffered by some natives or the income gains accruing to other natives are not substantial.
Some groups of workers face a great deal of competition from immigrants. These workers are
primarily, but by no means exclusively, at the bottom end of the skill distribution, doing
low-wage jobs that require modest levels of education. Such workers make up a significant
share of the nation's working poor. The biggest winners from immigration are owners
of businesses that employ a lot of immigrant labor and other users of immigrant labor. The
other big winners are the immigrants themselves.
Illegal immigration continues to vex the public and policymakers. Illegal immigrants
have clearly benefited by living and working in the United States. Many business owners
and users of immigrant labor have also benefited by having access to their labor. But some
native-born Americans have also lost, and these losers likely include a disproportionate
number of the poorest Americans.
And of course none of this includes the phenomenon of Friendly FIRE urban elites using Latin
immigrants as an avant-garde force in displacing their unwanted poor black urban populations.
Look at Oakland, Compton, or Harlem for examples of how this works. Some elite elements have
tried to get open immigration into Detroit from anywhere else in the world in an effort to displace
the poor blacks concentrated there, an effort that Glenn Ford of BAR calls "afro-dilution".
All the failures of the Alabama experiment only prove that such a solution as to be implemented
on a NATIONAL scale. The problem in Alabama is that they compete with farmers in similar states
that CAN use cheaper semi-slave illegal immigrant labor. The same thing would have happened
back a hundred a sixty years ago if Alabama had all alone tried to stop slavery only to find
out their farms were uncompetitive against farms in neighbouring states that were still allowed
to use slave labor. Not only does the national level have to act on immigration, they also have
to set up reasonable protection from competition from just across the border.
Another factor is that it is the beginning of the end of a society if the citizens become
too good to perform certain jobs and instead this work is restricted to ethnic minorities who
do not enjoy full citizen rights. Also the use of semi-slave immigrant labor allows the farmers
to avoid pressure to ameliorate the working conditions especially concerning poisonous pesticides.
What is true is that tight labor conditions will not only increase wages but will lead to
labor saving technological solutions. But in an environment where labor supply is limited, this
should be seen as a good thing. The answer is fairly simple - enforce existing labor laws and
the semi-slaves will voluntarily go back to the countries of origin - where they enjoy full
citizen rights.. And it would be well worth the pittance it would cost to assist these people
financially in their journey back home.
Carolinian, November 29, 2014 at 7:51 am
Great comment. Your arguments make a lot of common sense to me. And thanks to Yves for taking
an open minded approach to this issue. In some ways it is similar to the free trade debate where
economic orthodoxy is relentlessly in favor of free trade but reality is much more complicated.
The simple minded pro immigration stance of many on the left reflects just such a comfortable
middle class indifference to the problems of the working poor.
That said, I do believe what used to be called the "melting pot," the polyglot nature of
American society has always been its great strength. It's probably not a coincidence that the
"American Century" began with a wave of immigration that brought in new people and ideas, enlarging
the "gene pool" as it were. One problem with inequality is that it entrenches a limited group
in power and their ideas are played out.
So there are arguments on both sides. However the conventional left position on this is much
too limited.
Doug Terpstra, November 29, 2014 at 8:39 am
I strongly suspect cheap cannon fodder military service is key component
of the regime's decree, as it was in the 'Dream' Act, which fizzled. Admitttedly, I pay too
little attention anymore to the Naked Nero's edict, but in addition to wage suppression and
electoral strategy,
I imagine the imminent Ukrainian and Syrian campaigns are part of the Machiavellian machinations.
MartyH, November 29, 2014 at 9:17 am
Of course, when your plutocracy is living large off the income from holding the skim creamed
off the economies of the poor and filtered through Nick Shaxton's "Offshore" into the City of
London, New York, and their subsidiaries, the poor might feel some entitlement to some of the
trickle down ;-) …
Of Course every body wants to be Warren Buffet and live in garden spots like Omaha or Seattle.
The trick is to figure out to climb out of the middle rung of a Mexico or a Haiti or a Honduras
and onto the bottom rung of a US or UK or … so your kids have a shot at something better among
the Norte Americanos. …
It's an aspiration we might want to respect and think about as our roads and bridges in the
fly-over regions are allowed to continue to rot along with the local economies.
Dino Reno
November 29, 2014 at 9:41 am
This study supports your conclusions on immigration and social mobility:
http://www.foreignaffairs.com/articles/141932/gregory-clark/the-american-dream-is-an-illusion
The MSM must crank out an endless stream of one off rags-to-riches stories keep the dream
alive. Despite the propaganda, the number of small businesses are at an all time low.
http://theeconomiccollapseblog.com/archives/small-business-ownership-in-america-is-at-an-all-time-low
McWatt November 29, 2014 at 10:07 am
As a landlord I have had various problems over the years, none more so than foreign nationals
with great jobs, including one couple with an H-1b visa, skipping out on leases and leaving
the country. Recently a couple working for the Mexican embassy skipped six months in to a year
long lease. This is how I feed my family. To go without income is not fun! I am completely sympathetic
to those who are harmed by legal as well as illegal immigration.
I want to live in Switzerland but I can't. And for a very good reason! Because the rest of
the entire world would love to live in a well ordered wealthy society. Open borders is a prescription
for a disaster. Those who are wealthy enough to be able to believe this nonsense would be the
first to leave when their town became something totally different from what they envisioned.
Sorry for the rant, but there is the "theory": wouldn't it be nice if there were no borders?
and then there is the "reality": real world hurt and extreme societal change. You choose.
"Catch-22 says they can do anything we can't stop them from doing." Heller
OIFVet, November 29, 2014 at 10:16 am
The problem with immigration is that the causes and the solutions are far more complex than
the overwhelming majority of commentators ever acknowledge. The causes are both local and global,
and so are the solutions. Unfortunately I doubt that a workable solution will ever be implemented
since it would go against the interests of the transnational PTB. And then there are seeming
solutions that are anything but. Take legalization of illegal immigrants: the "left" insists
that it would improve the illegal immigrants' lot by preventing abuse and exploitation. That
it does. The "left" also insists that legalization would improve native workers' lot by preventing
a wage race to the bottom. It doesn't. See the EU: the whole point of the round of expansion,
other than opening new markets, was to legalize cheap Eastern European labor. The results are
evident: decreased wages across the board and continued dismantling of the welfare state. I
may be overly cynical but I don't believe that this is the result of good intentions resulting
in unintended consequences.
Then there is the problem of what drives immigration in the first place. The dismantling
of the British Empire was supposed to usher in the end of colonialism. What we have instead
is neocolonialism that manages to hide itself behind such things as "free trade" and "making
the world safe for democracy". It is just as brutal and far more efficient than the old -style
colonialism it replaced. It now enlists hand-picked local elites to administer the colonial
territories, and relies on immigration as a safety valve to both decrease tensions in the colonies
and to export it to the colonial power whose uppity workers need to be taught a lesson and to
be brought to heel. Will Obama's executive order address these processes? Not bloody likely.
Its not like it is something that is being discussed in the first place.
As a naturalized US-ian, I just want to urge those who would demonize immigrants, both legal
and illegal, to consider one thing before they do: the vast majority would rather be home than
in the US. They leave families and a way of life behind because they are driven by need that
most Americans could never imagine. Blaming them is tantamount to blaming the victim.
Don't be that person, direct the blame where it truly belongs: the transnational elites.
sm_landlord wrote
on Fri, 11/28/2014 - 12:31 pm
josap wrote:
Seriously.
There are how many more people of working age today than in 1999?
And wages are what????
How many are part time jobs? How many people hold more than one job (but each job counted
separately)
And education levels have increased as well.
I wonder if the Great Recession will end up being better described as the Great Reset?
Reset wages, reset expectations, reset savings, reset wealth, etc.
Next up, a Hard Reboot?
Firemane
wrote on Fri, 11/28/2014 - 12:31 pm
(in reply to...)
josap wrote:
There are how many more people of working age today than in 1999?
And wages are what????
How many are part time jobs? How many people hold more than one job (but each job counted
separately)
And education levels have increased as well.
Good questions all.
Per the St. Louis Fred the working age (15-64) population from '63 to '13 has gone:
1963 - 105.4m -
1973 - 126.7 -- +21m
1983 - 148.3 -- +22m
1993 - 164.2 -- +16m
2003 - 186.9 -- +22m
2013 - 202.2 -- +16m
Of course, all the data prior to 2000 included the shift of females from out of the labor
force into it. The peaked in 2000.
In regards to the "shouldn't we be gaining jobs faster?" question - I would counter with
--- why was this not anywhere near the concern during the "W" administration, which has but
a single year that shows up on the previous chart (2005)?
As for the Part-Time question, there was a story in today, basically saying - except for
4 months back in 2010/2011, the jobs gained have been overwhelmingly (95%) Full-time.
Why the job market is better than it looks - CBS News
dirty_juheesus wrote on Fri, 11/28/2014 - 12:33 pm
Wage levels are at 1990's after inflation adjustment? No.
With the generic rentier class response: "It's your fault you are poor. Just be glad us wealth
creators are giving you the opportunity to 'work real hard' anyway."
The game is rigged.
dirty_juheesus wrote on Fri, 11/28/2014 - 12:39 pm (in reply to...)
Reset wages, reset expectations, reset savings, reset wealth, etc.
I would say voters with less than 1m in the bank got a taste of the iron fist in the American
Capitalism velvet glove. 4+m in the bank and the downturn was momentary.
Firemane wrote on Fri, 11/28/2014 - 12:39 pm (in reply to...)
josap wrote:
How many people hold more than one job (but each job counted separately)
BLS has tracked multiple job holders (as a percentage of employed) since 1994.
The shock of all shocks is the long-term (20-year) trend is steadily downward.
Some annual rate highlights:
1994 - 5.9
1995 - 6.2 * peak - tied with 1996
1999 - 5.9 * first time under 6.0 since first year item was tracked.
2005 - 5.3 * peak year of the "W" era NFP increase
2007 - 5.2 * year before financial crash
2009 - 5.2 * year immediately after financial crash
2010 - 4.9 * first year metric fell below 5%.
2013 - 4.9 * the same rate as every year since 2010.
Since I'm using annual totals none of the data is seasonally adjusted.
Stagflationary Mark
wrote on Fri, 11/28/2014 - 12:40 pm
Here's another possible headline: Employment Growth: 15 Years of Nothing Burger
Nonfarm Payrolls
October 1984: 95,630,000
October 1999: 130,192,000
October 2014: 139,680,000
Average Annual Growth Rates
October 1984 to October 1999: 2.1%
October 1999 to October 2014: 0.5%
What the temporary expansions giveth, the temporary recessions taketh away.
Just a thought.
sm_landlord wrote on Fri, 11/28/2014 - 12:40 pm (in reply to...)
Firemane wrote:
As for the Part-Time question, there was a story in today, basically saying - except
for 4 months back in 2010/2011, the jobs gained have been overwhelmingly (95%) Full-time.
Why the job market is better than it looks - CBS News
The precise nature of the question(s) asked in the survey are not clearly stated, which leave
open the possibility that people are working multiple jobs to assemble 35+ hours/week of work.
That would comport what I see quite frequently. And some of the single 35+ hour jobs are temporary,
for periods of one to three months.
dilbert dogbert wrote on Fri, 11/28/2014 - 12:40 pm
The weed tax cuts are finally showing results. Lags can be long and variable.
sporkfed
wrote on Fri, 11/28/2014 - 12:44 pm
As I understand it, as long as a worker works 35 hours a week, no matter
the number of jobs it akes to gt there, they are classified as full time.
Stagflationary Mark
wrote on Fri, 11/28/2014 - 12:44 pm
Here's another possible headline.
Illusion of Prosperity: A Well-Seasoned Labor Force of Future Prosperity
The following chart shows the 12-month moving average of the employment level of those
aged 55 and over divided by the employment level of those aged 16 to 19.
dirty_juheesus
wrote on Fri, 11/28/2014 - 12:45 pm
(in reply to...)
..some of the single 35+ hour jobs are temporary, for periods of one to three months.
That's what I see too.
Plumbers and gardeners in my neighborhood are busy again. But, different customers. Dealing
with foreign residential owners stiffing them on services by proxy through a property manager
who proxy the service order, then wash their hands. Classy.
dirty_juheesus wrote on Fri, 11/28/2014 - 12:52 pm (in reply to...)
As I understand it, as long as a worker works 35 hours a week, no matter
the number of jobs it akes to gt there, they are classified as full time.
Nice benefits dodge to keeping the part time employee below a certain number of hours depending
on the State. Not a full time job in the worker's regulations sense.
Firemane
wrote on Fri, 11/28/2014 - 1:04 pm
(in reply to...)
sm_landlord wrote:
Firemane wrote:
As for the Part-Time question, there was a story in today, basically saying - except
for 4 months back in 2010/2011, the jobs gained have been overwhelmingly (95%) Full-time.
Why the job market is better than it looks - CBS News
The precise nature of the question(s) asked in the survey are not clearly stated, which
leave open the possibility that people are working multiple jobs to assemble 35+ hours/week
of work. That would comport what I see quite frequently. And some of the single 35+ hour
jobs are temporary, for periods of one to three months.
And this is why paying attention to trend more than raw number is important,
IMHO.
Regardless of who is doing the survey - there are always issues with wording and respondent
understanding. But, if they've been asking the same questions the same ways - then whatever
the bias is - it's constant.
And while I don't have the exact wording of the BLS questions - the multi-job holder data
is actually subdivided with the following tracked sub-classes:
Primary job FT:
Primary and secondary jobs both PT:
Primary and secondary jobs both full time
Hours vary on primary or secondary job
I'm inclined to believe that on the Household survey side - with THAT much detail - they
are probably capturing enough detail to be counting PT/FT reasonably well.
That said - in looking at the actually 20-year trends - the both jobs part-time is the only
one that is trending upward. But, that uptrend actually began about 2003. It's a really noisy
line (none of that data is seasonally adjusted). But, after bottoming in 2001 at 1.5 million
-- it has slowly been edging up to about 1.9 million.
It's at least eyebrow raising that of all the breakdowns only the 2-PT count is rising while
all of the other breakdowns are either trending down or sideways. But, then again, as mentioned
above - the size of the working age population is climbing, too.
I think the data suggests several things. One is bifurcation. There's an increasing number
of people forced to work 2-jobs. But, at the same time, the number of people supplementing
a FT with a PT is dropping - which is at least suggestive that some slice of the population
either no longer needs a supplemental job - or that previously they were working the
second job by choice and no longer want to.
I suppose my biggest complaint of most of the employment rhetoric is (regardless of which
side its coming from), there is a tendency to fixate on one item of a complex system - and apply
it universally across the masses - as if everyone (that is not in the 1%) is experiencing the
same thing. The reality is vastly more complex.
I think we have groups on the bottom (no-skill) that used to run FT + PT ... but business
is no longer offering them the FT.
But, I also think we have former 2-income couples (college educated - upper two quintiles)
- that have made a CHOICE to either drop the second FT job completely - ('50s model) - or if
one spouse has benefits - the second works part-time - not by necessity, but by choice.
But, neither of those slices is representative of the whole. And there's precious little
data on the size of those slices.
BarleyReturns wrote on Fri, 11/28/2014 - 1:07 pm
sm wrote
It appeared to me at the time that the "company man" era was already history
I honestly dont think any company understands the lack or negative loyalty most employees
now have. As the job picture britens, I forsee huge job jumping and moving on. In the last month
my neighbors company lost three directors in one week.
That is three out of 5 directors. Wage pressures might move up. But I think some just feel
used for the last 5-7 years and will move on.
yuan wrote on Fri, 11/28/2014 - 1:16 pm
meanwhile we jail the poor for being poor:
ACLU Challenges Debtors' Prisons Across Michigan | American Civil Liberties Union
Supreme Court Ruling Not Enough To Prevent Debtors Prisons : NPR
gridlock, polarization, dysfunction, corruption, and angrier proles.
wa8dzp:
Nichole Gracely has a master's degree and was one of Amazon's best order pickers. Now, after
protesting the company, she's homeless.
I am homeless. My worst days now are better than my best days working at Amazon.
According to Amazon's metrics, I was one of their most productive order pickers -- I was a machine,
and my pace would accelerate throughout the course of a shift. What they didn't know was that
I stayed fast because if I slowed down for even a minute, I'd collapse from boredom and exhaustion.
During peak season, I trained incoming temps regularly. When that was over, I'd be an ordinary
order picker once again, toiling in some remote corner of the warehouse, alone for 10 hours,
with my every move being monitored by management on a computer screen.
Superb performance did not guarantee job security. ISS is the temp agency that provides warehouse
labor for Amazon and they are at the center of the SCOTUS case Integrity Staffing Solutions
vs. Busk. ISS could simply deactivate a worker's badge and they would suddenly be out of work.
They treated us like beggars because we needed their jobs. Even worse, more than two years later,
all I see is: Jeff Bezos is hiring.
I have never felt more alone than when I was working there. I worked in isolation and lived
under constant surveillance. Amazon could mandate overtime and I would have to comply with any
schedule change they deemed necessary, and if there was not any work, they would send us home
early without pay. I started to fall behind on my bills.
At some point, I lost all fear. I had already been through hell. I protested Amazon. The
gag order was lifted and I was free to speak. I spent my last days in a lovely apartment constructing
arguments on discussion boards, writing articles and talking to reporters. That was 2012 and
Amazon's labor and business practices were only beginning to fall under scrutiny. I walked away
from Amazon's warehouse and didn't have any other source of income lined up.
I cashed in on my excellent credit, took out cards, and used them to pay rent and buy food
because it would be six months before I could receive my first unemployment compensation check.
I received $200 a week for the following six months and I haven't had any source of regular
income since those benefits lapsed. I sold everything in my apartment and left Pennsylvania
as fast as I could. I didn't know how to ask for help. I didn't even know that I qualified for
food stamps.
I furthered my Amazon protest while homeless in Seattle. When the Hachette dispute flared
up I "flew a sign," street parlance for panhandling with a piece of cardboard: "I was an order
picker at amazon.com. Earned degrees. Been published. Now,
I'm homeless, writing and doing this. Anything helps."
I have made more money per word with my signs than I will probably ever earn writing, and
I make more money per hour than I will probably ever be paid for my work. People give me money
and offer well wishes and I walk away with a restored faith in humanity.
I flew my protest sign outside Whole Foods while Amazon corporate employees were on lunch
break, and they gawked. I went to my usual flying spots around Seattle and made more money per
hour protesting Amazon with my sign than I did while I worked with them. And that was in Seattle.
One woman asked, "What are you writing?" I told her about the descent from working poor to homeless,
income inequality, my personal experience. She mentioned Thomas Piketty's book, we chatted a
little, she handed me $10 and wished me luck. Another guy said, "Damn, that's a great story!
I'd read it," and handed me a few bucks.
[snip]
America's job growth is based on part-time, low-paid work, often in retail, forcing workers to rely
on food banks. Here are four of the faces behind Black Friday
Earlier this month, Americans got some good news: the US unemployment rate had fallen to the lowest
level since 2008.
At 5.8%, the low unemployment rate has been lauded as a sign of recovery.
Yet the jobs being created were disposable ones: part-time work, often at low pay, boosted job
creation in the food and drink industry and retail. These jobs, while providing employment to those
who need it, do little to improve the overall economy.
As a result, an increasing number of Americans – 800,000 more than last year – have taken on
a second or third job, according to the Bureau of Labor Statistics.
This is the story of America doing jobs it doesn't really want, insecure about its wages, relying
on food banks and welfare to make it all work.
The problem is growing. In October, about 7 million Americans had part-time jobs but wanted to
work full time. Over 2.1 million Americans rely on two part-time jobs to see them through. Another
4 million have one full-time job and one part-time job, a number that increased by 444,000 since
last year.
These workers earn minimum or near-minimum wage, bringing home less than $1,000 a month. In 2013,
468,000 retail workers earned minimum wage or lower. According to Pew Research Center, 1.4 million
cashiers – the most common part-time job – earn less than $10.10 an hour. Previous interviews with
part-time Walmart workers have shown that often they bring anywhere between $200 to $400 home every
two weeks.
As an economic contribution, this is thin. The workers, despite being employed, end up relying
on government assistance in the form of food stamps and housing subsidies. And when the food stamps
run out, they turn to their communities and the local food banks.
Their faces remain nearly invisible to lawmakers. To get a good look at the part-time workforce,
and how people are making it work, the Guardian spoke to four part-time workers. Here are their
stories, edited for length and clarity.
Europe, he declared, has lost its way, its energies sapped by economic crisis and a remote, technocratic
bureaucracy. It is increasingly a bystander in a world that has become "less and less Eurocentric,"
and that frequently looks at the Continent "with aloofness, mistrust and even, at times, suspicion."
Gently delivered, it was nevertheless a failing grade.
"In many quarters we encounter a general impression of weariness and aging, of a Europe which
is now a 'grandmother,' no longer fertile and vibrant," the pope, an Argentine, told the Parliament,
where speeches usually trade in platitudes or mind-numbing technicalities.
... ... ...
John Thavis, an American writer on the Catholic Church and the author of "The
Vatican Diaries," said
Pope Francis had a very different take on Europe than his two immediate predecessors, a Pole
and then a German, for whom "Europe was the center of the universe."
By contrast, Francis gave little direct encouragement to calls for "more Europe," and instead echoed
some of the complaints from surging populist politicians who view the European Union as a meddlesome
force that inhibits rather than promotes ambition and economic growth.
"In recent years, as the European Union has expanded, there has been growing mistrust on the part
of citizens toward institutions considered to be aloof, engaged in laying down rules perceived as
insensitive to individual peoples, if not downright harmful," Francis said, dressed in white clerical
robes as he addressed the packed hall.
Public discontent with the European Union's bureaucracy, widely seen as wasteful, elitist and self-serving,
helped propel France's far-right National Front party and several other once-fringe nationalist
groups to strong gains in May elections for the
European Parliament. In France, the National Front came ahead of all other parties.
... ... ...
The pope won particularly loud applause on Tuesday with remarks that seemed to challenge a largely
German-scripted policy rooted in austerity as the cure to Europe's economic ills.
"The time has come to promote policies which create employment," he said, "but above all, there
is a need to restore dignity to labor by ensuring proper working conditions."
In a second speech Tuesday to the Council of Europe, another Strasbourg assembly with a palatial
building but little resonance among ordinary people, Francis said, "It is my profound hope that
the foundations will be laid for a new social and economic cooperation."
He noted that the Catholic Church had played an important role over centuries in providing charity
for Europe's poor but added: "How many of them there are in our streets! They ask not only for the
food they need for survival, which is the most elementary of rights, but also for a renewed appreciation
of the value of their own life, which poverty obscures, and a rediscovery of the dignity conferred
by work."
It also needs to be kept in mind that apart from the pursuit of truth, each individual becomes
the criterion for measuring himself and his own actions. The way is thus opened to a subjectivistic
assertion of rights, so that the concept of human rights, which has an intrinsically universal import,
is replaced by an individualistic conception of rights. This leads to an effective lack of concern
for others and favours that globalization of indifference born of selfishness, the result
of a conception of man incapable of embracing the truth and living an authentic social dimension.
This kind of individualism leads to human impoverishment and cultural aridity, since it effectively
cuts off the nourishing roots on which the tree grows. Indifferent individualism leads to the
cult of opulence reflected in the throwaway culture all around us. We have a surfeit of unnecessary
things, but we no longer have the capacity to build authentic human relationships marked by truth
and mutual respect. And so today we are presented with the image of a Europe which is hurt, not
only by its many past ordeals, but also by present-day crises which it no longer seems capable of
facing with its former vitality and energy; a Europe which is a bit tired and pessimistic, which
feels besieged by events and winds of change coming from other continents.
... ... ...
Similarly, the contemporary world offers a number of other challenges requiring careful study
and a common commitment, beginning with the welcoming of migrants, who immediately require the essentials
of subsistence, but more importantly a recognition of their dignity as persons. Then too, there
is the grave problem of labour, chiefly because of the high rate of young adults unemployed
in many countries – a veritable mortgage on the future – but also for the issue of the dignity of
work.
It is my profound hope that the foundations will be laid for a new social and economic cooperation,
free of ideological pressures, capable of confronting a globalized world while at the same time
encouraging that sense of solidarity and mutual charity which has been a distinctive feature of
Europe, thanks to the generous efforts of hundreds of men and women – some of whom the Catholic
Church considers saints – who over the centuries have worked to develop the continent, both by entrepreneurial
activity and by works of education, welfare, and human promotion. These works, above all, represent
an important point of reference for the many poor people living in Europe. How many of them
there are in our streets! They ask not only for the food they need for survival, which is the most
elementary of rights, but also for a renewed appreciation of the value of their own life, which
poverty obscures, and a rediscovery of the dignity conferred by work.
"There are no jobs," is the first reason Denzil Dean, a 57-year-old landscaper and small
business owner in the St Louis area, gives me when I ask him why he has joined in protests in Ferguson.
"You see a lot of frustration."
Racial profiling and police brutality are tightly intertwined with a lack of equal access to
jobs, say African Americans from all corners of the country who have congregated in and around St
Louis, Missouri, for #FergusonOctober.
To protest the death of Michael Brown and stand up against police brutality, 22-year-old Tyler
Edwards, a graduate law student, turned up to demonstrations in St Louis on Saturday in full professional
attire: yellow and blue striped tie, navy blazer and suede shoes.
"I wanted to show people another side of us. Too often people forget black men can look like
this too."
A lack of jobs may not be the issue that first comes to mind when you think about Brown's death
at the hands of police officer Darren Wilson in August. But many people at demonstrations last weekend
– dubbed a "weekend of resistance" – spoke of the connection they see between police violence and
a lack of economic opportunity.
"We want to get treated equally," says Jerry Chapple, a 17-year-old high school student and Wendy's
fast food restaurant worker.
And that means treated equally at work and on the street, Chapple says. He says he is a regular
target of racial profiling by police and harassment.
In 2012, the St Louis County unemployment rate was three times higher for black people than it
was for white people. Nationally, it is double.
Marquis Jackson, a 26-year-old activist from Chicago, says the jobs that exist are more difficult
to get if you are black.
He and his friends are acutely aware that being black will be a disadvantage to them when applying
for a job, he says, no matter how good their qualifications.
The kind of basic racial discrimination in accessing the labor market described by Jackson has actually
been the subject of academic studies.
In a landmark study published in 2002 named "Are Emily and Brendan More Employable than Lakisha
and Jamal?" Marianne Bertrand at the University of Chicago and Sendhil Mullainathan at MIT found
that when sending in job applications to openings with very similar qualifications, white candidates
were 50% more likely to get their calls returned than their black counterparts.
Feeling little recognition and diminished opportunities in the workplace, young people of color
are feeling doubly antagonized by a system they feel is out to get them.
"[Black] youth are trying to develop some kind of community pride and they just can't do that
with the police force harassing them," said Dean the landscaper, who carried a hand-written sign
on Saturday, which read "stop human rights violations."
Pedro Hall, a 33-year-old fine arts painter from Davenport, Iowa, has been trying hard to keep
prejudice and negative expectations from defining him, but he suggests it has been a road full of
obstacles.
"I did not want to give them the luxury of making me a statistic," Hall says, referring to the
disproportionately high number of black and brown people behind bars or with a criminal record.
"But I have become one anyway."
Pedro Hall
Hall, a military veteran suffering from PTSD, says there are many instances when police officers
have drawn guns on him for "petty things".
"I feel like Mike Brown," Hall says. "That could have been me."
Once, Hall says, he was driving to a gas station when a police car started following him. Hall
had a warrant for his arrest associated with his number plate after he missed a court date for driving
without a license – a misdemeanor offense.
By the time he reached the gas station and got out of his car, the police officer tailing him
had drawn his gun and ordered him to the ground, ready to shoot.
After his gas station encounter, Hall was later stopped by police as he walked down the street
and accused of minor drug possession, something he disputes. But he was forced into a plea bargain
by his appointed lawyer who told him an all-white jury in Iowa would be unsympathetic to his case.
Hall spent 32 days in jail.
"Now I am stopped all the time and I am treated like a drug dealer," he says.
According to the American Civil Liberties Union, black people are 10 times more likely of being
incarcerated on a drug charge, despite being less likely than white people to engage in such offenses.
Today, although Hall no longer has any warrants against him, he says he is now afraid of the
police and his PTSD has only gotten worse. With a criminal record, Hall's employment opportunities
have been severely compromised.
Rhonda Wren, a 50-year-old software implementation specialist who lives outside St Louis says
she sees cases like Hall's all around her.
"[The police] will strap you with anything," Wren says. "If they see a black person driving,
they will run your plate."
Wren says she avoids certain towns and areas – including Ferguson – because she knows police
will target her as a black woman driving through: "It's a way of making money for them."
"They know we don't have as much money, as much power. That's why it's happening in lower class
communities," said Lakeisha Garner, a retail manager based in Ferguson. "They don't answer to anybody."
They know we don't have as much money, as much power. That's why it's happening in lower
class communities
Lakeisha Garner
Garner says she has been marching in protest of Brown's death ever since his shooting on 9 August.
"I go before work, I go after work."
While income disparities place white families as earning roughly 50% more than black families
in America, wealth disparities along racial lines are far greater. According to a study released
last year by the Urban Institute, black families possess one sixth of the wealth white families
do, a disparity that has gotten worse over time.
Think14 16m ago
What a difficult subject to address.
Sometimes I feel as though the media (Guardian, NYT, etc) is from a wealthy, liberal, white
perspective and written mainly by people who have little first hand experience with these issues,
who just takes everything they hear for granted and regurgitate broad statistics. Imagine that.
I come from a modest background. My siblings and I went to college, and as a result, my parents
endured crushing payments that limited their ability to save for retirement. If it had not been
them, it would have been us kids. I can't tell you how many young black people I encountered
and was friends with who told me some variation about their lack of opportunity, discrimination,
etc. Meanwhile they were getting a completely free education while people of very similar incomes
were paying in full for theirs. (My wife for instance, had a single mother who made under 25k
a year and 7 siblings, got good grades, and received only working financial aid -- she had to
work 10 hours a week to even receive financial assistance). It after awhile, became pretty frustrating.
Especially when the same people doing the complaining were regularly late for class, turning
in late papers, etc. I was also regularly told that no poor white people exist. Especially insulting
given that most of the rural population where I come from is completely destitute. Another population
that was severely damaged by government programs such as welfare, but no one talks about that
simply because of the color of their skin.
I get tired when I hear white wealthy people talking about issues such as class or race with
little clue as to how things function in poor communities. A lot of people blindly supporting
this kind of thing have never actually lived near or with really poor populations, never mind
have friends and family belonging to the demographic. Yes, there are people who can't get a
break. But there are a damn lot of people who put in absolutely no effort, have no motivation,
and sit around and expect money and cars to fall into their lap. If they are lucky enough to
get it, they never save it.
As a quick example, my wife works in affordable housing. She regularly interacts with applicants
for housing loans. There are a lot of refugees, primarily from Burma, who speak little English
and are non-white. Most are lucky if they are not in the fast food industry, but realistically
the best jobs they get are janitorial services. They regularly apply for loans with over 30,
40k in savings, while supporting a family. Americans come in making more money, with access
to far greater opportunities over the course of their lives, with literally a hundred dollars
in their savings accounts. They are often enraged when they discover they do not qualify for
a loan, to boot.
Things are a lot more complicated than simple statistics. Unfortunately, a lot of the media
we get presented is written by people who walk around protests like this, ask a few people what
they think, and assume that that is the story.
I acknowledge that there are a lot of issues with poverty in the country, but I have to say
based on personal experience, there is far too much dependence on the government (both voluntarily
and involuntarily), that develops a culture of dependence.
Last week John Boehner, the speaker of the House, explained to an audience at the American Enterprise
Institute what's holding back employment in America: laziness. People, he said, have "this idea"
that "I really don't have to work. I don't really want to do this. I think I'd rather just sit around."
Holy 47 percent, Batman!
It's hardly the first time a prominent conservative has said something along these lines. Ever since
a financial crisis plunged us into recession it has been a nonstop refrain on the right that the
unemployed aren't trying hard enough, that they are taking it easy thanks to generous unemployment
benefits, which are constantly characterized as "paying people not to work." And the urge to blame
the victims of a depressed economy has proved impervious to logic and evidence.
But it's still amazing - and revealing - to hear this line being repeated now. For the blame-the-victim
crowd has gotten everything it wanted: Benefits, especially for the long-term unemployed, have been
slashed or eliminated. So now we have rants against the bums on welfare when they aren't bums -
they never were - and there's no welfare. Why?
First things first: I don't know how many people realize just how successful the campaign against
any kind of relief for those who can't find jobs has been. But it's a striking picture. The job
market has improved lately, but there are still almost three million Americans who have been out
of work for more than six months, the usual maximum duration of unemployment insurance. That's nearly
three times the pre-recession total. Yet extended benefits for the long-term unemployed have been
eliminated - and in some states the duration of benefits has been slashed even further.
The result is that most of the unemployed have been cut off. Only 26 percent of jobless Americans
are receiving any kind of unemployment benefit, the lowest level in many decades. The total value
of unemployment benefits is less than 0.25 percent of G.D.P., half what it was in 2003, when the
unemployment rate was roughly the same as it is now. It's not hyperbole to say that America has
abandoned its out-of-work citizens.
Strange to say, this outbreak of anti-compassionate conservatism hasn't produced a job surge. In
fact, the whole proposition that cruelty is the key to prosperity hasn't been faring too well lately.
Last week Nathan Deal, the Republican governor of Georgia, complained that many states with Republican
governors have seen a rise in unemployment and suggested that the feds were cooking the books. But
maybe the right's preferred policies don't work?
That is, however, a topic for another column. My question for today is instead one of psychology
and politics: Why is there so much animus against the unemployed, such a strong conviction that
they're getting away with something, at a time when they're actually being treated with unprecedented
harshness?
Now, as anyone who has studied British policy during the Irish famine knows, self-righteous cruelty
toward the victims of disaster, especially when the disaster goes on for an extended period, is
common in history. Still, Republicans haven't always been like this. In the 1930s they denounced
the New Deal and called for free-market solutions - but when Alf Landon accepted the 1936 presidential
nomination, he also emphasized the "plain duty" of "caring for the unemployed until recovery is
attained." Can you imagine hearing anything similar from today's G.O.P.?
Is it race? That's always a hypothesis worth considering in American politics. It's true that
most of the unemployed are white, and they make up an even larger share of those receiving unemployment
benefits. But conservatives may not know this, treating the unemployed as part of a vaguely defined,
dark-skinned crowd of "takers."
My guess, however, is that it's mainly about the closed information loop of the modern right. In
a nation where the Republican base gets what it thinks are facts from Fox News and Rush Limbaugh,
where the party's elite gets what it imagines to be policy analysis from the American Enterprise
Institute or the Heritage Foundation, the right lives in its own intellectual universe, aware of
neither the reality of unemployment nor what life is like for the jobless. You might think that
personal experience - almost everyone has acquaintances or relatives who can't find work - would
still break through, but apparently not.
Whatever the explanation, Mr. Boehner was clearly saying what he and everyone around him really
thinks, what they say to each other when they don't expect others to hear. Some conservatives have
been trying to reinvent their image, professing sympathy for the less fortunate. But what their
party really believes is that if you're poor or unemployed, it's your own fault.
Frank. United States
But what their party really believes is that if you're poor or unemployed, it's your own
fault.
No, what people on the right believe is that if you are poor and unemployed than it is your
personal responsibility to fix that situation. It is not the governments responsibility.
By now, the extended unemployment benefits have been discontinued. I have not heard of any
large pockets, or even isolated cases of people starving to death because their unemployment
benefits ended. They figured something else out. Some other way to survive.
Which is how it should be. That very old saying: give a person a fish, he will eat for a day;
give him a net he will eat indefinitely.
david. is a trusted commenter New York 19 hours ago
"The modern conservative is engaged in one of man's oldest excuses in moral philosophy; that
is, the search for a superior moral justification for selfishness."
--John Kenneth Galbraith
Mary Scott, is a trusted commenter NY
I finished watching Ken Burns' PBS series, "The Roosevelts" on Saturday night. It was wonderfuI.
I was struck by many things but the most shocking of all was how Republicans worked with Democrats
in the first years of the "New Deal" in trying to put our country back together again. As the
years wore on, it was politics as usual but initially, there was no obstruction in the Senate
and no hint that the GOP was working day and night to engineer the failure of the new Democratic
President and thus, the country, itself. They wanted a successful recovery, too.
Since 2008, Congressional Republicans and the RNC have taken the exact opposite approach. Failure
has been what they've sought. The greater good has been derailed in favor of political gain
for their party. The poor, the jobless, the shrinking and economically stretched middle class
are not victims of The Great Recession in the eyes of the GOP but the cause of it, as John Boehner
and his cohorts have always professed. Blame the victims and then, trample them has been their
constant mantra. Make the government fail has been their relentless goal.
Their linability to put politics aside when we faced complete economic collapse will be poorly
judged by future historians, as will their constant march toward greater inequality and defunding
the federal government to an extent not seen in over a century. Their behavior has been and
continues to be contemptible.
David, Palo Alto, Calif.
What about those lazy earners of passive income?
I see people in the City on a street corner asking for money when I go to work at 7. It doesn't
seem like the lazy life to me, dressed in rags on the street asking for money in the wee hours.
I don't think I would like to trade places with them, nor would I like to live in subsidized
housing with SNAP benefits of $100 a week.
But I would trade places with those Walmart heirs. They are worth an estimated $148 billion.
The workers who send them their dividends every quarter receive $6.2 billion in food stamps
and health care subsidies from the US taxpayer every year.
And those Walmart heirs pay a lower marginal tax rate on their dividends and capital gains than
I do for going to work, not to mention outright tax avoidance through myriad trusts established
for them.
In fact, 55,000 millionaires pay lower tax rates than most people do in the middle class.
http://www.whitehouse.gov/economy/buffett-rule
Why on God's green Earth do the wealthiest .01% pay less than labor for the income they receive?
Because they buy politicians like John Boehner cheaply. Pennies on the dollar for their savings.
Pennies on the dollar.
vashon9720, Seattle, WA 18 hours ago
I work with these so called "lazy" folks in a social services context every day. Here's the
numbers I see. A woman on TANF (welfare program) with 2 kids, gets $400 a month from TANF, lives
in subsidized housing so rent is %30 ($120). She gets a food voucher, uses the Food Bank, and
she and the kids get medical care through Medicaid. Can she work?
Yes it's possible. Here's what would happen. In our low paying service economy she would
be lucky to find a service job for $11/hour at 32 hours/week. Lucky! She would take home about
$1130, have to pay market rent of at least $850/month here in Seattle. $200 for food, $200 or
more for Health Insurance, $100 for power, $70 for phone. At this point she has $300 LESS than
she needs coming in, and this before even considering day care for the children.
Say she finds a partner. After years of abuse, this is unlikely, but say she finds someone
who also makes $11/hour. They break even every month but still can't pay for day -care while
they work. This is the arithmetic I deal with consistently.
These people aren't lazy! Their higher paying jobs went to Mexico, China, India, etc.. We
live in a McDonald's/Walmart economy.
I do believe that Professor Krugman's assertion that a stronger, broader, stimulus for new
technology, infrastructure, etc. would make a difference, but Republicans don't see the logic
in that. They would rather kick people while they are down. And find someone to blame.
Jack Archer, is a trusted commenter California 19 hours ago
One might well ask, how hard does Boehner work? He presides over the least productive House
of Representatives in history. At best, he's on deck for only three or four days a week, and
that's what, 30-40 weeks a year at most? Having worked in the Congress, I know that his staff
does whatever work originates in his office (and that's not much these days). He takes every
holiday there is, plus some. He draws a whopping big salary, paid for by us. He is the quintessential
"taker" who makes nothing and gives nothing back.
And he complains about folks who are unemployed. I believe the word for all this is chutzpah.
Shameful.
Katy, New York, NY 13 hours ago
Democrats have to find a better way to communicate to the voters - no more lecturing, no
more congratulating each other for being on the right side. Speak to the voters they need to
get, tell it to them straight, no long-winded lectures, just the up-front real deal.
Conservative voters vote republican, but live like uber-liberals. They and their communities
rely heavily on government tax revenues, they don't just want their social security, they NEED
it. They NEED tax dollars for their schools, their hospitals, their roads. There has to be a
positive way to talk with these voters that makes them recognize that saying one thing, and
then living another is harming everyone including themselves and their families.
Bill Benton San Francisco
link
He and his group believe that unearned income is bad for people. It allows them to just sit
around. Therefore, we should eliminate inheritance. Heirs presumably just sit around. If unearned
money makes people lazy and stupid, we would be saving those heirs from a lot of negative consequences.
Maybe the first $1 million of inheritance should be taxed as ordinary income. And capital gains
should no longer received the much lower tax rate than earned income. But the key is inheritance,
and inherited property is not taxed at all. The accountants call it step up basis, which is
accountingese for no taxes on inherited property. This is an outrage and a scandal.
Thomas Jefferson outlawed extreme inheritance when he was Governor of Virginia, and we should
do the same. Some societies destroy the possessions of their wealthiest people upon death, to
avoid giving the heirs undue political power. We should do something similar.
We fought a revolution to rid ourselves of hereditary rule. Inheritance increases the wealth
of the top 1% and reduces the wealth of the rest of us. That is the short version of Thomas
Piketty's recent book. And huge inherited fortunes are equivalent to hereditary rule because
the heirs bribe congress.
To see more good ideas go to YouTube and watch Comedy Party Platform (2 min 9 sec). Then
support Elizabeth Warren.
Common Sense, Chester County PA 19 hours ago
Unemployment benefits started out as a form of insurance, with employers paying premiums
into a central fund. Today's heavy government underwrite is due both to the recession and to
failure to raise the premiums to match costs of the program.
To characterize the benefits paid to those recently laid off as "paying people not to work"
is like saying that health benefits are "paying people to be sick" or that life insurance benefits
are "paying people just to die". Yeah, those greedy sick, injured, and recently deceased!
R. Law, is a trusted commenter Texas 20 hours ago
Dr. PK says:
" The result is that most of the unemployed have been cut off. Only 26 percent of jobless
Americans are receiving any kind of unemployment benefit, the lowest level in many decades.
The total value of unemployment benefits is less than 0.25 percent of G.D.P., half what it was
in 2003, when the unemployment rate was roughly the same as it is now. It's not hyperbole to
say that America has abandoned its out-of-work citizens. "
which is the key paragraph, since it shows the handiwork of GOP'ers and their budget work,
which has nothing to do with running an economy, and everything to do with blind austerity.
Too bad all the unemployed didn't manage to secure sacrosanct pay contracts for themselves,
else they would have been like bankers, with nothing to worry about, supported directly by the
federal treasury:
http://www.nytimes.com/2009/03/15/business/15AIG.html
with retention payments and other bonuses to boot.
All of which are things Boehner and gang hope to erase each time they blame the victims.
We like a suggestion we heard the other day " If GOP'ers think there are so many lazy people
sitting around while good jobs go un-filled, why doesn't Boehner have any examples of same ?
A simple test would be for his office to post some positions for job openings and see how many
millions of resumes from qualified unemployed workers his office receives for just a few postings.
"
We like that - if Boehner won't do it, the Democratic National Committee should.
Ann, is a trusted commenter Berkeley 19 hours ago
Suggest that Boehner be strapped to a chair in a screening room and be forced to watch all
of Ken Burns's new documentary, "The Roosevelts." Then make him take a "fill in the blanks"
test after he watches what the program specifically relates what FDR did during the Great Depression.
How is it that this man, raised in wealth but cruelly disabled from polio, could understand
so easily the problems normal citizens suffered and wanted the very best for them. Boehner's
cruel comments are so very much nastier by comparison.
Larry, London 8 hours ago
The Job Offers and Labor Turnover Survey (JOLTS) said that there were 4.872mn job openings
in the US in July. The household survey said there were 9.671mn unemployed people that month.
So even if every unemployed person were busy as a beaver looking for work, you couldn't fit
9.7 people into 4.9 jobs. These Republicans are simply ignoring the facts. Lenin said, "facts
are stubborn things," but he didn't live long enough to see the Republican Party at work.
betaneptune, Somerset, NJ 9 hours ago
I can't believe anyone takes this "laziness" theory seriously. During the Great Depression
the unemployment rate peaked at 25%. Was there a plague of laziness at the time? Do financial
crises breed laziness? Or _maybe_ there aren't enough jobs to go around.
Larry Figdill, Charlottesville 20 hours ago
And if their unemployment resulted from a financial crisis that was caused by irresponsible
wealthy bankers, then it's their tough luck, correct?
No-one ever takes responsibility for the situation that they caused or contributed to? Only
the individual who got hurt by it?
Mark Thomason, is a trusted commenter Clawson, MI 20 hours ago
For 40 years, productivity has gone steadily up, to the highest in the world, and the GDP
has grown significantly. ALL of that went to the wealthy few, plus a big more. Those who have
been producing more actually take home less than they did 40 years ago.
They are harsh? They have gotten away with it for 40 years. They've just gotten worse as
time passes, and there seems to be no limit to stop them.
So what's next? Social Security? They want that, they've tried to take it for decades
now, Bush tried again.
What Dr K reports in this column is bad, but it is only the latest in a long line, and there
is no end to it in sight yet. This is a waypoint on the Republican voyage to the 19th Century.
Cindy Allen, Gainesville, FL 8 hours ago
It's one thing to complain about people who exploit welfare and food stamps. But to collect
unemployment, one has to have held a full-time job for six months or more. To call these people
slackers or lazy is unconscionable. They deserve help, not disrespect.
Marv Raps, NYC 7 hours ago
Figure out some other way to survive, you say. Like the Banks did as they were facing disastrous
losses from mortgages they recklessly issued? They had no trouble accepting government bailouts
or would you call them handouts. Nor did huge financial services companies like AIG or Goldman
Sachs. Nor do the numerous corporations who receive depletion allowances or tax breaks from
the government. Why do human beings facing a very tough economy deserve less?
M.M., Austin, TX 19 hours ago
Sociopaths find a natural home in conservative ideology and in today's Republican Party.
I haven't met a single hardcore conservative capable of feeling compassion for any other living
being, human or otherwise.
Sociopaths are evil, nasty and mean-spirited. Too bad there's a political party that welcomes
them with open arms.
Karen Garcia, is a trusted commenter New Paltz, NY 20 hours ago
Poor-shaming by Republicans always ratchets up during election season. The likely aim of
Boehner and his ruling class racketeers is to get the unemployed and poor to feel so bad about
themselves that they won't even bother voting. Because it is only through the apathy and despair
of the masses that the party of Ayn Rand can hope to win, by default.
Conversely, such sadistic rhetoric against the downtrodden serves to ease the vestigial consciences
of the ultra-wealthy who might otherwise be swayed toward altruism... especially if they watched
the documentary on the Roosevelts. And conservative icon George Will appearing on the series
to praise the New Deal? Priceless. No wonder Boehner went off the rails.
Shockingly, though, he didn't diss the disabled (28.4% of the nation's 45 million "officially"
poor people), or children (14.7 million in poverty) when he hurled his Dickension invective.
But stay tuned. If Kanye West can yell at a person in a wheelchair for not standing up, can
the GOP be far behind?
This cruelty is uniquely American. The new Gilded Age has its ideological genetic memory
in that grand-daddy of all plutocrats, John D. Rockefeller. You could say that the spirit of
the son of a Baptist fundamentalist mother and a snake oil salesman father just keeps on giving
-- except that in reality, it just keeps on taking and taking... and taking.
Immiseration and disenfranchisement of regular people are two sides of the same terroristic
GOP coin.
Ponderer, Mexico City 19 hours ago
People want to work, but our vaunted "job creators" have failed to deliver. Despite record
productivity and record profits, wages are stagnant and new jobs are not coming online.
Why is this? Corporations have gone from reinvesting about 90 percent of their profits into
their business in the 1970s, to about 10 percent today, William Lazonick wrote in this recent
Harvard Business Review article.
Profits are instead being used to pay dividends to investors and to buy back stock to boost
its price, benefiting the company's executives.
http://hbr.org/2014/09/profits-without-prosperity/ar/1
This New Yorker article cites a recent study that found that 52% of fast-food workers are
on some form of public assistance. That's a multi-billion dollar taxpayer subsidy for the fast-food
industry:
http://www.newyorker.com/magazine/2014/09/15/dignity-4
Don Duval, North Carolina 18 hours ago
Living in the state of North Carolina (where the Republican-controlled state government slashed
the maximum benefit for unemployment to just 12 weeks -- a level so brief, the state no longer
qualifies for federal assistance) I have a front row seat to the reality the right wing imagines
-- in the form of advertising that attacks Senator Hagan and supports her challenger, Thom Tillis.
For weeks, the Koch brothers-backed AFP has been running at ad featuring some woman in Wilmington,
sitting in her kitchen complaining that the "middle class" is being squeezed because "everything
costs more" and lays the blame for it on "runaway spending in Washington" and urges viewers
to "call Senator Hagan" and tell her to stop supporting "Obama's spending."
Pay no nevermind to the fact inflation is non-existent, that the middle class is being squeezed
because wages aren't rising, the federal spending is down and the deficit is falling.
Then tonight, the NRA rolled out their broadside--insisting that Speaker Tillis will go to
Washington and "oppose Obama's extreme anti-Second Amendment agenda."
That's their story and their sticking to it.
At least until reality intervenes.
Byron Johnson, DC 6 hours ago
I'm not sure why this is a "NYT pick" - there is nothing here but right-wing tropes and talking
points unsubstantiated by any facts.
The hope seems to be that if we do everything like we did in the '50's, then the widespread
prosperity of the 50's will return. The world has changed; with increased productivity and off-shoring
of production, and less forced redistribution via union contracts, taxation, and social programs,
the 47% are forced to accept any job and scramble for their daily needs. It's crazy to expect
everyone to be an entrepreneur, and it's crazy for full time employees to fall below the poverty
level and qualify for food stamps.
We need structural changes to the policy on wealth accumulation and distribution, so that
every person can get a decent job at a living wage. Incentive for personal initiative is also
important; but the current system is rigged to favor the investment class, and the country will
continue to decline until it is changed to face new realities.
In Reply to Richard Luettgen
stu freeman, is a trusted commenter brooklyn NY 18 hours ago
Hey, Frank, you're just one pink slip away from joining the unemployed. How are you going
to "fix that situation" when you become part of it? What's your secret for locating a job when
there aren't enough of them to go around? If people aren't starving to death en masse it's likely
that they're receiving assistance from friends and relatives. Not a great way to live, Frank-
especially once those friends and relatives either lose their own jobs or develop the sort of
hard-shelled personality that you've managed to adopt. In any case, a good net is somewhat costlier
than a single fish. Are you sure the government can spring for it?
In Reply to Frank
Jamie, NYC 6 hours ago
By what measure has the "trial passed" for the millions unemployed? At least Dr. Kurgan cited
statistics for his argument. You prefer to tell the jobless their problems are over because,
well, because you say so.
And you trot out the old, consistently disproved argument that if we just allow corporations
and the rich to keep more money, jobs will be created. The "job creators" have more money than
ever. Where are the jobs? They're neither here nor in the corporate tax havens to which the
companies are fleeing.
Chris, Arizona 19 hours ago
It is also easier for conservatives to blame the unemployed than admit their conservative
ideology the country has favored since Reagan has been a failure except for the very rich.
Quote: "Although they rarely mention it in the history books, it is ironic that around this
time the moneyed interests and neo-cons of Roosevelt's day were
fomenting a domestic revolution, and investing
heavily in European fascists whom they hoped would be obedient gangsters for crony capitalism."
"A man must always live by his work, and his wages must at least be sufficient to maintain him."
Adam Smith
"The issue isn't just jobs. Even slaves had jobs. The issue is wages."
Jim Hightower
Some analysts are confusing higher wages with monetary stimulus. Nothing could be further from
the truth, at least in the real world of today.
Monetary stimulus is what the Federal Reserve does, that is, increasing the money supply by expanding
the monetary base. It is a non-organic growth of money.
I think it is a well-noted and oft-remarked upon feature that the monetary stimulus that the
Fed is providing is being given directly and almost exclusive to the Banks, in order to shore up
their damaged balance sheets and provide them an artificial stream of profits.
And of that stimulus, the bulk of it seems to be finding its way into financial speculation and
a new bubble in paper assets, and the acquisition of more companies to build even greater monopolies.
Wage increases, that are not merely a secondary effect of a general monetary inflation, are indeed
not useful, except that the workers at least keep pace with the rate of price inflation. But
I don't think that this is what anyone is recommending who talks about higher wages. The Fed
is not an actor on that stage.
The currently imbalanced and distorted financial system is taking the lion's share of all new
growth, and continues to do so as it has been doing for the past twenty years. This cannot
last.
When consumers purchase things, they must either use cash or credit. And to obtain the cash they
can work more hours, or have more family members working. To obtain more credit, they can mortgage
their house, and increase their debts.
We have seen the explosion of a consumer credit bubble in housing debt, facilitated and engineered
by historic levels of financial fraud by the very Banks who are now taking their subsidies of monetary
stimulus from the Fed. It happened almost six years ago, but the economy remains in 'the new
noe-feudal normal.'
At some point the long abused consumer says 'enough' and cuts back their purchasing to the barest
of essentials. And the economy grows stagnant at home, which gives the moneyed interests a
strong incentive to seek captive markets overseas. And so a new round of neo-colonialism is
born. Which in turn creates its own sets of problems, lies, and economic distortions.
The data indicates that we are now, at long last, finally at that point.
And
corporate
profit margins are at new highs.
And the one percent has never been richer, or had more influence with the political class.
How much is enough for them? When will they be content? With them it is with
wealth as it is with power.
'Wir haben keine Hemmungen, und einen großen Magen.'
I think that the solution is rather obvious. We have been here before.
"After many requests on my part the Congress passed a Fair Labor Standards Act, what we call
the Wages and Hours Bill. That Act --applying to products in
interstate commerce -- ends child labor, sets a floor below wages, and a ceiling over hours
of labor.
Except perhaps for the Social Security Act, it is the most far-reaching, the most far-sighted
program for the benefit of workers ever adopted here or in any other country. Without question
it starts us toward a better standard of living and increases purchasing power to buy the products
of farm and factory.
Do not let any calamity-howling executive with an income of $1,000.00 a day, who has been
turning his employees over to the Government relief rolls in order to preserve his company's
undistributed reserves, tell you -- using his stockholders' money to pay the postage for his
personal opinions -- tell you that a wage of $11.00 a week is going to have a disastrous effect
on all American industry.
Fortunately for business as a whole, and therefore for the Nation, that type of executive
is a rarity with whom most business executives most heartily disagree...
Some of my opponents and some of my associates have considered that I have a mistakenly sentimental
judgment as to the tenacity of purpose and the general level of intelligence of the American
people.
I am still convinced that the American people, since 1932, continue to insist on two requisites
of private enterprise, and the relationship of Government to it. The first is a complete honesty,
a complete honesty at the top in looking after the use of other people's money, and in apportioning
and paying individual and corporate taxes (according to) in accordance with ability to pay.
And the second is sincere respect for the need of all people who are at the bottom, all people
at the bottom who need to get work -- and through work to get a (really) fair share of the good
things of life, and a chance to save and a chance to rise.
After the election of 1936 I was told, and the Congress was told, by an increasing number
of politically -- and worldly-- wise people that I should coast along, enjoy an easy Presidency
for four years, and not take the Democratic platform too seriously. They told me that people
were getting weary of reform through political effort and would no longer oppose that small
minority which, in spite of its own disastrous leadership in 1929, is always eager to resume
its control over the Government of the United States.
Never in our lifetime has such a concerted campaign of defeatism been thrown at the heads
of the President and the Senators and Congressmen as in the case of this Seventy-Fifth Congress.
Never before have we had so many Copperheads among us -- and you will remember that it was the
Copperheads who, in the days of the Civil War, the War between the States, tried their best
to make President Lincoln and his Congress give up the fight in the middle of the fight, to
let the Nation remain split in two and return to peace -- yes, peace at any price.
This Congress has ended on the side of the people. My faith in the American people -- and
their faith in themselves -- have been justified. I congratulate the Congress and the leadership
thereof and I congratulate the American people on their own staying power...
You will remember that from March 4, 1933 down to date, not a single week has passed without
a cry from the opposition, a small opposition, a cry 'to do something, to say something, to
restore confidence.' There is a very articulate group of people in this country, with plenty
of ability to procure publicity for their views, who have consistently refused to cooperate
with the mass of the people, whether things were going well or going badly, on the ground that
they required more concessions to their point of view before they would admit having what they
called "confidence."
These people demanded 'restoration of confidence' when the banks were closed -- and demanded
it again when the banks were reopened.
They demanded 'restoration of confidence' when hungry people were thronging (the) our streets
-- and demanded it again now when the hungry people were fed and put to work.
They demanded 'restoration of confidence' when droughts hit the country -- and demanded it
again now when our fields are laden with bounteous yields and excessive crops.
They demanded 'restoration of confidence' last year when the automobile industry was running
three shifts day and night, turning out more cars than the country could buy -- and they are
demanding it again this year when the industry is trying to get rid of an automobile surplus
and has shut down its factories as a result.
But, my friends, it is my belief that many of these people who have been crying aloud for
'confidence' are beginning today to realize that that hand has been overplayed..."
Franklin D. Roosevelt,
Fireside Chat June 24, 1937
Although they rarely mention it in the history books, it is ironic that around this time the
moneyed interests and neo-cons of Roosevelt's day were
fomenting a domestic revolution, and investing
heavily in European fascists whom they hoped would be obedient gangsters for crony capitalism.
Tomorrow is the Big Jobs Day.
I am sure that The Recovery™ proceeds, at least for some.
Yves had a good piece on
the labor situation in the US. I like her work quite a bit and always take the time to
hear what she has to say.
As for tomorrow, let's see what happens. Your guess is as good as mine.
Have a pleasant evening.
A
new Wall Street Journal story on how many men aged 25 to 54 can't find work, fails to mention
but nevertheless shellacks
an embarrassing New York Fed paper released earlier this week. The Fed's propagandists tried
to argue that labor markets are tighter than is widely believed. The basis for the authors' sunny
view? Changing demographics. Their proof? An absurd "normalized, demographically adjusted," seasonally
adjusted, business-cycle free employment to population ratio, to wit:
For each of the 10.2 million individuals in our sample, based on their decade of birth, sex,
race/ethnicity, and education, we select one of our 280 estimated career employment rate profiles.
Using the worker's age, we calculate the predicted employment rate for that individual based
on their selected employment rate profile. We then calculate the weighted average of these predicted
employment rates across all individuals in a given time period to generate an estimated E/P
ratio for that time period. We repeat this exercise for each time period covered by our data.
Oh, and after that they seasonally adjusted and then "normalized" the data.
They might instead have looked out the window, say at the long lines any time a big employer
opens a new facility, or
readily-available information like this:
ERE reports that "Although it varies with the company and the job, on average 250 resumes
are received for each corporate job opening." In addition, out of every 1000 people who view
an online job posting, 100 people will apply, 4 – 6 will be selected for an interview, 1 – 3
will be invited for a final interview, 1 will be offered the job, and 80% of those who get a
job offer accept it.
Admittedly, the Internet makes it vastly easier to apply for jobs than the old-fashioned written
submission, but this sort of bid to cover ratio isn't consistent with a strong employment market.
January 02, 2014 | Global Research
While in previous crises shorter work hours were discussed as a measure to combat growing unemployment,
an astonishing feature of the current economic downturn from 2007 on was that work time reductions
were nowhere on the political agenda. Not even in France and Germany, the champions of shorter work
hours, both introducing a partial 35-hour week in the face of high unemployment in the 1980s and
1990s, was this the case. This is the more remarkable as temporary short-time working applied during
the crisis in several European countries actually proved that shorter hours are a viable tool to
prevent unemployment (even if still leaving mounting inequalities from capitalism still in place).[1]
While European capital welcomed short-time work during the initial phase of the crisis, employers
quickly reinstated their demand for longer hours and more flexibility when growth started to pick
up again in 2010. In a number of countries, governments even announced an extension of the retirement
age as part of a series of austerity measures adopted to limit the budget deficits caused by the
crisis.
A lower retirement age and the introduction of early retirement were used in the 1980s to create
employment opportunities for younger workers. In a complete reversal of earlier arguments, workers
are now expected to work longer and more years to keep their jobs and receive a pension.
The Increase in Work-time
In the U.S., the average workweek in 2000 was, quite astonishingly, 1.6 hours longer than it
was in 1970.[2] By the end of the
1990s, American workers were putting in more than an additional week per year than in the early
1980s.
In manufacturing, where the part-time rate is traditionally low, the difference between 1975
and 2000 amounted to more than two weeks. Sweden also shows a strong upward trend in yearly work
hours, especially in the 1980s.
The difference between 1990 and 2000 is 80 hours. Yet, in Sweden the growth can partly be explained
by a growing number of women changing from part-time to full-time hours.
In Britain, yearly hours increased substantially in the 1980s (by 70 hours between 1981 and 1989),
but fell back in the 1990s. Average yearly hours in 2001 were virtually the same as in 1981.
Canada, too, experienced a surge in work hours in the 1990s with the effect that in 1999, workers
put in 13 hours more per year than in 1991. In contrast to Britain, Canadian work hours fell back
only slightly after 2000. In Germany and France average yearly hours were still falling in the 1980s
and 90s, but either stagnated or slightly increased between 2003 and 2008.
"The move to insecure, irregular jobs represents the most profound economic change
of the past four decades... At the rate things are going, tens of millions of us could end up as temps,
contract employees, call-center operators, and the like. "
TaskRabbit.com markets itself as a Web service that matches clients seeking someone to do odd
jobs with "college students, recent retirees, stay-at-home moms, [and] young professionals" looking
for extra income. The company website calls it "a marketplace dedicated to empowering people to
do what they love." The name Task Rabbit doesn't exactly suggest the dignity of work, and the love
often takes humble forms. Customers hire Task Rabbits to clean garages, haul clothes to the laundry,
paint apartments, assemble Ikea products, buy groceries, or do almost anything else that's legal.
The San Francisco–based company, which has raised $38 million in venture capital since it was
founded in 2008, makes its money by tacking on a 20 percent surcharge to the fees paid by clients.
The firm performs criminal background checks on aspiring Rabbits, who then get access to chore requests
posted by customers. Using the familiar metrics of the Internet, the more than 10,000 approved Rabbits
are rated by past users. Early this year, Patricia Marx wrote a witty New Yorker piece titled "Outsource
Yourself" on her experience hiring a Task Rabbit to purchase and deliver hors d'oeuvres for her
book group. When Marx fell behind in her reading, she hired a second Rabbit to summarize the book
for her (Proust's Remembrance of Things Past, no less) and to ghostwrite some clever comments. She
then retained a third Rabbit to bake madeleines.
Marx's adventure reads like a cross between Woody Allen's famous short story, "The Whore of Mensa"
(in which a character hires a young Brandeis graduate to talk pseudo-intellectual to him), and a
labor-market fantasy by Friedrich Hayek. But Task Rabbit is more than a hip, Web-based temp agency.
It's the reserve army of the unemployed made flesh. What's diabolically brilliant and emblematic
about the company is that prospective errand-runners bid against one another for jobs. To get an
assignment, an aspiring Rabbit offers to do the chore for less money than he or she thinks other
prospective Rabbits are bidding. That's what makes it a metaphor for the new economy, a dystopia
where regular careers are vanishing, every worker is a freelancer, every labor transaction is a
one-night stand, and we collude with one another to cut our wages.
At the rate things are going, tens of millions of us could end up in the role of Task Rabbits.
Not actual Task Rabbits, mind you. But temps, contract employees, casual day laborers, baristas,
warehouse pickers at Amazon, fast-food workers, call-center operators, nurse's aides, underemployed
"consultants," and adjunct professors all have one core trait in common with freelance errand-runners:
They have lost bargaining power. Even people with regular paychecks are less likely than their parents
to have decent pay, benefits, and job security. In its technology, the Task Rabbit economy is very
21st-century, but it brings back the 19th, an era when most people who didn't farm or own property
were casual labor.
The precarious labor market raises a host of questions. Is this trend economically efficient?
Is it technologically inevitable? Must workers lacking advanced skills necessarily be relegated
to a virtual hiring hall of low-paid day labor?
Further, in a relentlessly competitive global economy of intensified creative destruction, is
job security no longer possible for employers to provide? Is a stable career a foolish aspiration?
We hear that with lifetime employment defunct, workers should not only adjust to the need to pursue
multiple jobs, skills, and careers but welcome the challenge. Do Task Rabbits love the freelance
life, or are they quietly desperate people internalizing the new norms of job insecurity?
Finally comes the political question. To the extent that at least some of this erosion of decent
work is optional, what will it take to restore an economy of living-wage jobs?
As we try to figure out why the United States is becoming an economy of ever more casual employment
and how to reverse this trend, we had better get the answers to these questions right.
Somehow, despite the claims for efficiency, a hyper-competitive labor market has not yielded
superior overall economic performance. On the contrary, the era of more-stable employment in the
quarter-century after World War II had almost double the recent rate of economic growth. Even the
postwar era had its Task Rabbits, of course. My mother, widowed with a small child, took a temp
job selling classified ads from home. Young people baby-sat, delivered newspapers, and fetched groceries
for old folks at subprime wages. Minorities were relegated to insecure domestic, janitorial, and
farm labor. But the norm for prime-age (white, male) breadwinners was regular payroll employment.
Katherine Stone, a professor of labor law at the University of California, Los Angeles, studies
the erosion of what she terms the "standard contract of employment." She doesn't mean a
literal contract, though some workers had one, but a set of norms and assumptions. That contract
included a regularized workweek and paycheck and the expectation of continued employment assuming
satisfactory job performance. The social protections that were added throughout the 20th century-wage
and hour laws, unemployment insurance, workers' comp for injuries, apprenticeship programs, regulated
fringe benefits, anti-discrimination rules, Social Security, the right to bargain collectively,
health and safety standards-were predicated on the assumption of a standard workweek. To use Stone's
term, they were "layered" on top of the normal employment contract.
As Stone notes, regular employment promoted solidarity: "By giving workers the actual or
potential experience of working together over extended periods of time, the standard employment
contract taught them how to organize for industrial and political action." None of this happened
spontaneously or was an artifact of a particular stage of capitalism. It took political struggle
and victories in Congress and on the shop floor.
As the standard contract of employment has eroded, the added protections of labor regulation
have eroded along with it. What economists call "contingent" workers-casual labor-generally don't
get unemployment insurance, workers' comp, or fringe benefits; they pay their own Social Security
and can't organize unions. The move to insecure, irregular jobs represents the most profound economic
change of the past four decades. The $64 trillion question is whether this collapse in what used
to be standard reflects a shift in fundamentals-or merely a shift in political power from labor
to capital.
BIorch:
It's hard to understand why policymakers haven't done more to try to alleviate the unemployment
crisis.
[God! Are you dense or something? Here's a theory for ya. (Its just a theory)
Policymakers policymakers haven't done more to try to alleviate the unemployment crisis because
they DON'T GIVE A RATS ASS!!!
Dr NRL
Probably because they think unemployment (as a buffer stock) is the way to control inflation,
and that giving preferential treatment to the rich in honour of the non-existent 'trickle down'
effect is a better idea. Sounds like a trade in human misery to me.
Ignacio -> The BIorch...
There is another way to say it. Policymakers care/interest on unemployment is very limited
and well behind other "state reasons". Unemployment is probably seen as collateral damage of
those. The point of the studies mentioned above is that they show how policymakers have completely
lost their awareness.
BIorch -> Ignacio...
collateral damage
[I quite agree. The Government is too busy hunting terrorists with their drones to be bothered
with serially unemployed.]
bakho -> The BIorch...
They are elitist jerks.
They are so High School.
They burnish their credentials as "elites" by bullying the poor.
They are not nice people.
save_the_rustbelt -> The BIorch...
Both parties regularly have fund raisers on Wall Street.
Depressed wages keep workers in check.
mrrunangun -> save_the_rustbelt...
Agree with you as usual. Geithner, Summers, Lew are all Rubinites as are the leading Democratic
policy makers in the current administration. The Fed is bank centric by its nature. So policy
is made on Wall Street because that is where the campaign dough comes from and where the cushy
jobs come from for the Rubinites when they can take a few years off of serving the public to
make millions per year.
When the unemployed make big contributions to the DNC or hire the Orszags, Emanuels, and
Geithners of the world to put political fixes in for them, then the unemployed will get some
attention. Until then, Bob Rubin and his friends will continue to run the Party. Hubert Humphrey
and his friends are long gone.
Over the next 30 years, 1975-2005, the standard of living still seemed to rise, but if we look
behind the numbers and between the lines, we see that much of the wealth increase over that period
is illusional, because it was increasingly based on credit, i.e. it was borrowed from the future,
while at the same time, the costs of "really big ticket" items such as education and health care
were moved away from governments and towards citizens, where they began an unstoppable ascent (and
we paid for them with credit).
There are umpteen different ways to define standard of living, but it seems quite reasonable
to say that, as societies, we hit the top of our wealth in the mid to late 1970′s, although valid
arguments can be made for an even earlier date.
And then from about 2005 onwards, we have entered payback time. A fast increasing part of our
budgets started to go towards continually rising costs for education, health care etc., AND interest
payments on what we borrowed in the previous three decades AND interest payments on what we borrowed
to both make those payments and keep the illusion of (increasing) wealth alive. In a glaring example,
housing prices went up not because people got richer, but because they could borrow more.
In another example, across the western world, coming out of WWII, many if not most countries
were dedicated to providing equal (and therefore necessarily free) access for everyone to the best
health care and education available. And look at us now …
Today, in 2013, debt numbers all over are at levels that nobody would have believed possible
only 30 years ago. Household debt, national debt and corporate debt hang around our necks like so
many nooses, and all we can do to prevent ourselves from suffocating is to borrow more. And so,
inevitably, debt levels rise further. And just as inevitably, more and more people fall by the wayside;
they can't keep up anymore. They are either too much in debt already, or they can't find a job that
pays enough – provided they find a job at all – or both. In the process, we have become, the vast
majority of us, entire societies of debt slaves, living in constant fear of losing a job and/or
a home, and/or contracting a disease.
And it's not just paying back their own debt which people find ever harder: much of the debt
from the financial – and overall corporate – sector has been transferred to the public sector, first
becoming national debt and then trickling down into household debt through taxes and cuts to services.
This is a choice we make as – members of our – societies. It may be advertised to us as some
kind of law of nature, but there's no such law, it's simply a choice. The only possible way to improve
our societies, so we are told, is through economic growth. In the same vein, we are told that we
actually do have economic growth again today, just not enough. That's not really credible either,
although some growth faithful might claim that it all depends on which data you use. The S&P hit
another record, so all must be well.
It is a choice, and it is an ongoing trend that is far from being finished. Those who do have
wealth today are not going to voluntarily take a step back and say I have enough. A few individuals
may, but the vast majority will continue to look for more. In the absence of actual growth, and
in the presence of increasing debt, they can and will only achieve that by pushing the poor deeper
into poverty. That is the real choice, even as faith in eternal growth makes it easy, if not necessary,
to deny that such a choice exists.
Or to put it in different words: we continue to live with the idea of recovery, which in our
minds equals a return to what we had, plus added growth. For some of us that may come true, but
for a very rapidly increasing number amongst us, it will not. Because, and it's high time we acknowledge
this, at this point in time, the only way the upper echelons of our societies can achieve some level
of growth is to take it away from everyone else. And those upper echelons, mind you, demand exponential
growth, which means, in a society that cannot grow, that the numbers of poor people will rise exponentially
as well.
The incessant repetition of the "recovery is just around the corner" mantra has a hugely distorting
effect on people's behavior in that even those who would be inclined to listen to appeals for redistribution
of wealth and income will tend to turn a deaf ear if they are convinced no such redistribution is
needed because those who are poor today will soon, any moment now, be made rich(er) by the recovery.
This also makes it much easier to label redistribution of wealth as, just to name a term, communist.
And that's a very twisted picture that can exist only because we have such poor memories, especially
when it suits us. Because in reality, we are of course already seeing a huge redistribution of wealth
today, only this one increases inequality instead of decreasing it. Which means all those dreams
about equal access for everyone to the best health care and education available are long gone. If
we would only redistribute wealth in such a way that it would see us return to the level of inequality
that existed when those dreams were relevant, 60-odd years ago, much of our poverty conundrum would
be solved. It is really as simple as that.
It's ironic that one of the undoubtedly most capitalist countries on the planet, Switzerland,
appears to take wealth redistribution more serious than any other, with a slew of referendums (yes,
they have actual democracy) aimed at decreasing income inequality. In March, one such referendum
forced public companies to give shareholders a binding vote on executive compensation. In November,
there's a vote on the 1:12 initiative, which stipulates that executives can't make more than 12
times the salary of the lowest-paid employee. Which somewhat perversely means executives have a
very good reason to raise that lowest salary: they themselves can get 12 dollars for every single
dollar they give the employee, so an extra $1000 per month for the latter translates into $144,000
extra per year for the bosses.
Another referendum, to be held at an as yet unspecified date, calls for everyone in Switzerland
to receive an unconditional income of 2,500 Swiss francs ($2,800) per month from the state. That
initiative, though it may have many great – liberating – consequences, will probably not make it,
because it makes people think that it induces laziness.
The Swiss are not the only people considering a basic income rather than a minimum wage (Beppe
Grillo wants it in Italy), and it's a bit of a shame that no-one actually tries it for their country,
just so we can see what happens. For one thing, those who want to see a smaller government apparatus
should jump on the basic income idea; much of what governments do these days is linked to all sorts
of benefit programs, and these could disappear almost entirely. Isn't it just absolutely hilarious
in that light to realize that those most opposed to big government are also most opposed to a basic
income? Talk about having your cake and eating it too…..
Meanwhile, the growth mantra is so deeply imbedded in our minds that no-one deems it necessary
to answer a question I've long been asking: What Do We Want To Grow Into? . The need for eternal
growth is simply accepted as a given. That is as much a pity as it is definitely not smart.
Still, if nobody wants to answer that particular question, maybe we should turn it around a little,
and ask slightly different questions, like:
1) Given the numbers on poverty and unemployment cited below in this article, how likely do you
think it is that your economy – as a whole – is actually growing (i.e. expanding)?
and:
2) Do you feel it's desirable to live in a society where, even if there would be growth, it can
apparently only be achieved by throwing ever more of your fellow citizens off and under the bus?
not to mention:
3) How long do you think such a society can last?
Questions like these will easily be thrown upon the commie heap, and even be labeled unpatriotic,
but they're really just a bunch of simple questions, which seamlessly lead to yet another question:
what kind of society is unable and unwilling to answer such questions about itself?
Why don't I inundate you with some random data, and when you feel it gets a bit much please realize
that this is only a small sample, and on any given day I could make it 10 times more:
Herald Extra:
Poverty stuck at 15% – record 46.5 million Americans
The nation's poverty rate remained stuck at 15% last year despite America's slowly reviving
economy …
More than 1 in 7 Americans were living in poverty, [up from the] 46.2 million of 2011 …
[..] For the past year, the official poverty line was an annual income of $23,492 for a family
of four.
Poverty remained largely unchanged across race and ethnic groups. Blacks had the highest
rate at 27.2%, compared to 25.6% for Hispanics and 11.7% for Asian-Americans. Whites had a rate
of 9.7%.
Child poverty stood at 21.8%.
CNS News:
Census on Obama's 1st Term: Real Median Income Down $2,627; People in Poverty Up 6,667,000;
Record 46,496,000 Now Poor
In 2008, according to the Census Bureau, there were approximately 39,829,000 people living
in poverty in this country. In 2012, there were 46,496,000. That is an increase of approximately
6,667,000-of 16.73% – from 2008 to 2012.
In 2008, the year Obama was elected, people in poverty represented 13.2% of the national
population. In 2012, they represented 15.0% of the population.
Economic Collapse Blog:
They Denied That We Were In A Depression In 1933 And They Are Doing It Again
90.5 million working age Americans are considered to be "not in the labor force".
The labor force participation rate is the lowest it has been in 35 years.
516,000 Americans "left the labor force" . That was a brand new all-time record high.
The number of private sector jobs dropped by 278,000 [in august 2013].
77% of the jobs that have been "created" so far this year have been part-time jobs.
Approximately one out of every four part-time workers in America is living below the poverty
line.
New American:
The Real Unemployment Rate
The nominal unemployment rate is still high, but the real jaw-dropping fact is the number
of working-age Americans who are not working. Today that is 100,000,000 Americans out of a total
population of about 310,000,000. Demographically, about 80,000,000 Americans are minors and
about 40,000,000 are age 65 or older. That leaves approximately 190,000,000 Americans who are
adults of working age. About half of those do not have a full-time job.
When those "Not in the labor force" are added to those "Unemployed," then those who are not
working is growing: 99.5 million in April 2011, 100.3 million in February 2012, 100.5 million
in March 2012, and 100.9 million in April 2012. When counting both those "Not in the labor force"
(though in the age in which most Americans work) and "Unemployed" as a single group, then those
who are not working, but are in the age group in which Americans normally work, has remained
steady and high: 41.6% in April 2011, 41.5% in February 2012, 41.5% in March 2012, and 41.6%
in April 2012.
Zero Hedge:
While the Establishment survey data was ugly due to both the miss and the prior downward
revisions in the NFP print, the real action was in the Household survey, where we find that
the number of people not in the labor force rose by a whopping 516,000 in one month, which in
turn increased the total number of people outside the labor force to a record 90.5 million Americans.
Michael Snyder:
In America today, only 47% of adults have a full-time job.
According to one recent survey, 76% of all Americans are living paycheck to paycheck.
At this point, one out of every four American workers has a job that pays $10 an hour or
less.
The U.S. economy continues to trade good paying jobs for low paying jobs. 60% of the jobs
lost during the last recession were mid-wage jobs, but 58% of the jobs created since then have
been low wage jobs.
Back in 1980, less than 30% of all jobs in the United States were low income jobs. Today,
more than 40% of all jobs in the United States are low income jobs.
At this point, an astounding 53% of all American workers make less than $30,000 a year.
According to a study that was released by the Center for Economic and Policy Research, only
24.6% of all jobs in the United States qualify as "good jobs" at this point. [..]
… the three criteria used to define what a "good job" is are:
1 The job must pay at least $18.50 an hour. According to the authors, that is the equivalent
of the median hourly pay for American workers back in 1979 after you adjust for inflation.
2 The job must provide access to employer-sponsored health insurance [..]
3 The job must provide access to an employer-sponsored retirement plan. [..]
The St. Louis Fed:
A record 28 million Americans have part-time jobs …
Washington Post:
Low fast-food wages come at high public cost
[US] taxpayers are spending nearly $7 billion a year to supplement the wages of fast-food
workers, even as the leading fast-food companies earn billions of dollars in annual profits,
according to a pair of reports released Tuesday.
More than half of the nation's 1.8 million "core" fast-food workers rely on the federal safety
net to make ends meet, the reports said. Together, they collect nearly $1.9 billion through
the earned income tax credit, $1 billion in food stamps and $3.9 billion through Medicaid and
the Children's Health Insurance Program … [..]
Even among the 28% of fast-food workers who were on the job 40 hours a week, the report said,
more than half relied on the federal safety net to get by.
Those workers are left to rely on the public safety net even though the nations seven largest
publicly traded fast-food companies netted a combined $7.4 billion in profits last year, while
paying out $53 million in salaries to their top executives and distributing $7.7 billion to
shareholders …
LA Times:
Most Americans expect to work during 'retirement'
More than 4 in 5 older Americans expect to keep working during their latter years, a sign
that traditional retirement is out of reach for vast swaths of society, according to a new survey.
Among Americans ages 50 and older who currently have jobs, 82% expect to work in some form
during retirement, according to the poll by the Associated Press-NORC Center for Public Affairs
Research. In other words, "retirement" is increasingly becoming a misnomer. The still-sluggish
economy, battered 401(k) retirement plans and inadequate savings are upending traditional notions
of retirement.
Add in an expected increase in lifespans and the result is a generation of workers facing
dim financial prospects for what used to be known as the golden years. Excluding pensions and
homes, 39% of survey respondents said they have $100,000 or less saved for retirement. Nearly
one-quarter have less than $10,000.
And despite conventional wisdom, people can't count on simply working until they drop. One-third
of retirees say they didn't have a choice in the decision to leave the workforce, the survey
found. In other words, many were pushed out by ill health or layoffs. Among retirees younger
than 65, the figure is 54%.
Pittsburgh Post Gazette:
Extreme poverty on the rise for older women
An alarming number of women over the age of 65 joined the ranks of the extreme poor last
year, according to a new report by the National Women's Law Center titled "Insecure & Unequal,"
which analyzed recently released data from the Census Bureau.
The retirement picture for nearly 1 million older women in America whose income fell below
extreme poverty levels last year - $5,500 or less in annual income - is anything but golden.
They never have enough to cover the cost of food, medicine and housing, and are forced to make
tough choices each day on what sacrifices they must make to survive. [..]
The number of aging women struggling to make ends meet on $500 or less each month increased
by 18% last year, according to the law center's analysis of U.S. Census data, which means an
additional 135,000 elderly people slid into extreme poverty in 2012. The total number of women
65 and older in this country living on $5,500 a year or less now totals 733,000.
Other key findings in the report were that the poverty rate - $11,720 or less in annual income
for single adults - among adult women was 14.5% in 2012, compared to 11% for adult men. The
poverty rate for single-mother families with children was 40.9% compared to 22.6% for single
fathers with children and 8.9% for families with children headed by a married couple.
Pro Publica:
The Expendables: How the Temps Who Power Corporate Giants Are Getting Crushed
In cities all across the country, workers stand on street corners, line up in alleys or wait
in a neon-lit beauty salon for rickety vans to whisk them off to warehouses miles away. Some
vans are so packed that to get to work, people must squat on milk crates, sit on the laps of
passengers they do not know or sometimes lie on the floor, the other workers' feet on top of
them. This is not Mexico. It is not Guatemala or Honduras. This is Chicago, New Jersey, Boston.
The people here are not day laborers looking for an odd job from a passing contractor. They
are regular employees of temp agencies working in the supply chain of many of America's largest
companies – Walmart, Macy's, Nike, Frito-Lay. They make our frozen pizzas, sort the recycling
from our trash, cut our vegetables and clean our imported fish. They unload clothing and toys
made overseas and pack them to fill our store shelves. They are as important to the global economy
as shipping containers and Asian garment workers.
Many get by on minimum wage, renting rooms in rundown houses, eating dinners of beans and
potatoes, and surviving on food banks and taxpayer-funded health care. They almost never get
benefits and have little opportunity for advancement.
Across America, temporary work has become a mainstay of the economy, leading to the proliferation
of what researchers have begun to call "temp towns." They are often dense Latino neighborhoods
teeming with temp agencies. Or they are cities where it has become nearly impossible even for
whites and African-Americans with vocational training to find factory and warehouse work without
first being directed to a temp firm.
In June, the Labor Department reported that the nation had more temp workers than ever before:
2.7 million. Overall, almost one-fifth of the total job growth since the recession ended in
mid-2009 has been in the temp sector, federal data shows. But according to the American Staffing
Association, the temp industry's trade group, the pool is even larger: Every year, a tenth of
all U.S. workers finds a job at a staffing agency.
[..] The temp system insulates the host companies from workers' compensation claims, unemployment
taxes, union drives and the duty to ensure that their workers are citizens or legal immigrants.
In turn, the temps suffer high injury rates, according to federal officials and academic studies,
and many of them endure hours of unpaid waiting and face fees that depress their pay below minimum
wage.
The rise of the blue-collar permatemp helps explain one of the most troubling aspects of
the phlegmatic recovery. [..] … many workers are returning to temporary or part-time jobs. This
trend is intensifying America's decades-long rise in income inequality …
[..] The day after Thanksgiving 1960, Edward R. Murrow broadcast a report called "Harvest
of Shame," documenting the plight of migrant farmworkers. Temp workers today face many similar
conditions in how they get hired, how they get to work, how they live and what they can afford
to eat. Adjusted for inflation, those farmworkers earned roughly the same 50 years ago as many
of today's temp workers, including Rosa. In fact, some of the same farm towns featured in Murrow's
report have now been built up with warehouses filled with temps.
[..] The temp industry boomed in the 1990s, as the rise of just-in-time manufacturing drove
just-in-time labor. But it also gained by promoting itself as the antidote to bad publicity
over layoffs. If a company laid off a large portion of its workforce, it could make big news
and leave customers feeling sour. But if a company simply cut its temps, it was easy to write
it off as seasonal - and the host company could often avoid the federal requirement that it
notify workers of mass layoffs in advance.
More recently, temp firms have successfully lobbied to change laws or regulatory interpretations
in 31 states, so that workers who lose their assignments and are out of work cannot get unemployment
benefits unless they check back in with the temp firm for another assignment.
Christian Science Monitor:
Suburban poverty across the country grew 53% between 2000 and 2010, more than twice the rate
of urban poverty, according to a recent report by the Brookings Institution. For the first time,
more poor people live in the suburbs than in cities. "I think suburban poverty is here to stay,"
says Alan Berube, one of the authors. "It's not going to revert back to the cities."
CNBC:
… the 400 wealthiest Americans now have more money [over $2 trillion] than the poorest 50%
of all Americans combined.
US News:
A Different Type of Poverty
Even though we don't have starvation, we do have an amount of poverty that leads to malnutrition,
that leads to a series of diseases that we don't tend to associate with First World countries,
that leads to massively truncated life expectancy, and all but guarantees that from one generation
to the next, poverty is going to be transmitted.
There are a lot of people with an awful lot of money, but there are an awful lot of people
with absolutely nothing. And then there's a lot of people in the middle who, as the economic
recession deepened in 2008-10, experienced downward mobility. Maybe that's one of the differences.
In the 1960s, the country was clearly on an upward trajectory.
The bottom 20% of the workforce has seen a real income decline by double-digit amounts since
the Nixon years. The 1% at the top, or the 0.1% – or if you go even higher, the 0.01%, the billionaires
– have seen their income increase by not just 1, 2 or 3%, but by thousands of%[s]. What it means
is political access is concentrated at the top, and as soon as that happens you end up with
a political class that doesn't respond to the needs of ordinary people.
Everybody who is poor is overlooked because everybody who is poor in America is reduced to
a set of stereotypes.
America is the wealthiest nation in the world, yet it has higher levels of poverty than any
other western democracy. Its poverty rates compare more with a country like Romania than with
countries like Canada, France or Germany.
New York Times:
House Republicans Pass Deep Cuts in Food Stamps
House Republicans narrowly pushed through a bill on Thursday [Sep 19] that slashes billions
of dollars from the food stamp program, over the objections of Democrats and a veto threat from
President Obama.
[..] Republican leaders, under pressure from Tea Party-backed conservatives, said the bill
was needed because the food stamp program, which costs nearly $80 billion a year, had grown
out of control. They said the program had expanded even as jobless rates had declined with the
easing recession.
[..] even with the cuts, the food stamp program would cost more than $700 billion over the
next 10 years.
[..]The bill, written under the direction of the House majority leader, Eric Cantor, Republican
of Virginia, would cut $40 billion from the food stamp program over the next 10 years. It would
also require adults between 18 and 50 without minor children to find a job or to enroll in a
work-training program in order to receive benefits.
[..] According to the Congressional Budget Office, nearly four million people would be removed
from the food stamp program under the House bill starting next year. The budget office said
after that, about three million a year would be cut off from the program.
The budget office said that, left unchanged, the number of food stamp recipients would decline
by about 14 million people - or 30% - over the next 10 years as the economy improves. A Census
Bureau report released on Tuesday found that the program had kept about four million people
above the poverty level and had prevented millions more from sinking further into poverty. The
census data also showed nearly 47 million people living in poverty - close to the highest level
in two decades.
Washington Times:
One in four kids in poverty, despite U.S. gains
The White House may be touting a message of an improved economy - and claiming on its website
that President Obama is all about helping those of lesser financial means - but meanwhile, nearly
one-quarter of America's youth are struggling in poverty, a new report reveals.
Nearly one in four children lived in poverty in 2012 [..]
New Hampshire's childhood poverty numbers rose significantly in just a year's time - and
what's worse, the state bragged on the lowest child poverty rate in the entire nation for a
full decade. In 2011, the rate of poverty for that age group was 12%. A year later, it rose
to 15.6%. And in all the years from 2007 to 2012, that figure jumped more than 75% …
Meanwhile, around the nation, 16.4 million children were reported to be living in poverty
in 2012. Of that, six million are aged 6 and younger. That comes in comparison to 2007 numbers,
when the national poverty rate for youth stood at 18%, or 13.1 million children, UPI reported.
The researchers used the federal definition of poverty - a family of four with less than
$23,283 a year.
On the White House website, Mr. Obama is described as a "lifelong advocate for the poor"
…
And it's not as if America is the only place where the inequality process plays out. Even if
we leave southern Europe alone for the moment, a country like Britain is pretty bad, for example,
with a government that invites rich foreigners to buy up the nation's assets while it leaves its
own citizens in the cold, often literally, as the Guardian reported yesterday:
British Gas raises energy prices by 9.2%
British Gas will raise energy prices by an average of 9.2% next month, piling further financial
pressure on 7.8 million households and reigniting the political row over soaring gas and electricity
prices. Parent company Centrica became the second of the big six energy firms to announce a
price rise after SSE raised prices last week. The average annual dual-fuel bill with British
Gas will increase by £107 to £1,297 ($2,100).
Centrica blamed the above-inflation hike on higher costs for wholesale energy and delivering
gas and electricity to homes, and government's "social and environmental programmes" which are
paid for through customers' bills.
Also from The Guardian this week:
Food poverty is an attack on society
[UK] food banks are now helping three times as many people as they were a year ago. Oxfam and
the Red Cross are both supporting food programmes. Another British charity, Save the Children,
has launched a UK campaign expressly to raise awareness of the issues behind the steep rise
in numbers of young people caught up in poverty. This cannot be what David Cameron's "big society"
was supposed to look like.
The government is in denial. Ministers talk of chaotic families, of individuals making bad
choices. They suggest the underlying reason for the trebling of the numbers receiving food parcels
from the Trussell Trust in the six months to September – to an astonishing 355,000 people –
was a spread in the number of food banks. Of course, each of these is a factor. But even taken
together, they don't begin to account for the surge of desperation represented by the figures.
People on the ground tell a different story. Roughly a third of their clients are driven
to desperation by delays in benefit – no change in proportion, only in the numbers. The new
factor is the impact of changes in benefit, as the bedroom tax and sanctions bite, and councils
get to grips with ever tighter budgets and smaller crisis funds. That now accounts for a fifth
of those entitled to food parcels (which are only available to those with a formal referral).
Politicians cannot simply dismiss the evidence of spreading poverty, or treat it as some
kind of macho proof of the success of their policies. Nor can they, in all conscience, go on
talking about cutting back on benefits without understanding what it actually means. They need
to know that this is what George Osborne's tough love looks like on the ground.
There was a time when to see a rough sleeper was unusual. Now it is impossible to ignore
the number of people who have no other option but to huddle in a doorway. There are a lot of
explanations for that, not all of them instantly fixable – family breakdown, mental illness
– but that is no excuse for the normalisation of homelessness as part of the pattern of urban
life. How much worse if the kind of extreme poverty that means relying on food handouts were
also to become normal.
… it's wider than the individual or the family. Every hungry person is an attack on society.
KarmaPolice :
Mook wrote:
opening to our office didn't get an inch wider or narrower last month.
Hospitals, Chairs, Buses, Toilets Redesigned for Obese - ABC News
Money quote:
"Studies estimate the total cost of obesity to U.S. employers at $73 billion a year."
Elvis:
Jobs are for little people. Like elves and hobbits. Careers are for big people. Who cares
about elves and hobbits? I don't.
Tom Stone
aClem wrote:
The question that bothers me is, what do we do with the lumpen proletariat now that
we don't need much in the way of sweat labor? What are the HS grads and dropouts supposed
to do?
Die, somewhere it won't bother "Real People".
Elvis
aClem wrote:
What are the HS grads and dropouts supposed to do?
Strip mining. Mine for gold and be strippers.
ResistanceIsFeudal
aClem wrote:
The question that bothers me is, what do we do with the lumpen proletariat now that
we don't need much in the way of sweat labor? What are the HS grads and dropouts supposed
to do?
Load them down with debt, turn them into dependent, sick and unhealthy consumers with
a variety of psychological and physical problems, then process them through fully monetized
extraction apparatus run by private-public partnerships. They'll even thank us.
some investor guy
aClem wrote:
What are the HS grads and dropouts supposed to do?
One of the things which strikes me as odd is how a number of jobs moved from requiring
no particular education to people having degrees. Much of computers are this way. Many
universities took a long time to have clearly related degrees. Another example I see is nanny.
People have degrees in early childhood development and the like. This might be in part because
some of them wanted to be teachers, and there was a job squeeze from 2009 to now.
some investor guy
aClem wrote:
What are the HS grads and dropouts supposed to do?
The rich neighborhoods are covered with them during daytime. They clean houses and pools,
do gardening, plumbing, construction. You also see them as cashiers at fast food restaurants.
They change the tires on your cars.
They deliver your packages and mail. Sell things to you at retail. If you go to the doctor,
they are probably there as some sort of nursing assistant. And, in an indication of how job
status can change over many decades, bank tellers.
vtcodger
What are the HS grads and dropouts supposed to do?
Take out a student loan and acquire another unmarketable skill?
some investor guy
Elvis wrote:
A nanny should be pretty.
So you have been on the nanny search sites? It's better than match.com. Well, if
you happen to be a single father who can afford a nanny. If you are married and your selection
is primarily attractive would be nannies, I'm trying to think of the term here. I'm sure someone
can help.
ResistanceIsFeudal
vtcodger wrote:
Take out a student loan and acquire another unmarketable skill?
pro-tip: "they" don't care about the unmarketable skill, just the student loan debt. Or any
other debt.
Elvis
some investor guy wrote:
If you are married and your selection is primarily attractive would be nannies, I'm trying
to think of the term here. I'm sure someone can help.
A return to a single income family.
.arthur_dent
some investor guy wrote:
If you are married
speaking of marriage, Saw Starbuck last night. A very funny movie. Recommend it if
you get the chance.
aClem
Lots of witty and/or thoughtful answers. The red team answer seems to be let them eat cake,
the blue team's answer is let them eat welfare cheese.
The lumpen still seem to be willing to take the blame for their failure to 'compete.'
Still, they continue to multiply and automation makes them less and less needed. The question
in my mind is how big the tent cities will have to get before the shit hits the fan?
Are we headed for a situation where the Morlocks are either all in prison or prison guards?
bearly
some investor guy wrote:
If you are married and your selection is primarily attractive would be nannies, I'm trying
to think of the term here.
Future divorce attorney client ?
Tom Stone
aClem wrote:
The question in my mind is how big the tent cities will have to get before the shit hits
the fan? Are we headed for a situation where the Morlocks are either all in prison or prison
guards?
I wasn't kidding. We are way overdue for a pandemic. And even absent that the increase in
drug resistance is going to have a substantial effect.
aleister perdurabo
Bloomberg urges action on pension and healthcare costs in the wake of Detroit bankruptcy | SILive.com
In the wake of Detroit's filing for bankruptcy, Mayor Michael Bloomberg called on the city
-- and its next to mayor -- to tackle the rising burdens of pensions and healthcare to keep
New York City from traveling down the same path.
In particular, labor costs, Bloomberg said, were one reason Detroit couldn't "stop its downward
spiral."
And the risk of the "explosion in pension and health care costs" derailing New York City
is real, he said. In 2002, pension costs in New York City were $1.4 billion. By 2009, they were
$6.3 billion - and today, they are $8 billion a year.
"It was the result of a benefit structure that promises retirees too much too soon, and requires
them to contribute too little to pay for it," he said.
azurite
aleister perdurabo wrote:
And the risk of the "explosion in pension and health care costs" derailing New York City
is real, he said. In 2002, pension costs in New York City were $1.4 billion. By 2009, they
were $6.3 billion - and today, they are $8 billion a year.
"It was the result of a benefit structure that promises retirees too much too soon, and
requires them to contribute too little to pay for it," he said.
He's not of course, talking about the burden the entire US population has borne of ensuring
that the TBTF bankster CEOs, AIG & other upper management continue to receive their bloated
compensation packages (including retirement) for the past 5 years of course.
Every problem is just another reason to cut the wages & benefits of workers.
Tommy Vu
Labor force participation rate is no longer attributed to the retiring baby boomers per the
Fed Reserve economists.
Now seen as a false positive affecting official UE rate. More money needs to be printed
Shrunken workforce gives Fed added policy headroom
Comrade Kristina
IBM Furloughs U.S. Hardware Employees to Reduce Costs - Bloomberg
In the second quarter, Armonk, New York-based IBM spent $1 billion to restructure its
workforce, cutting more than 3,300 employees in the U.S. and Canada, according to Alliance@IBM,
an employee group. IBM doesn't disclose the number of employees by country or by division.
The company's total workforce was 434,246 as of Dec. 31. Hardware accounted for 16 percent
of IBM's $104.5 billion in 2012 revenue.
"IBM continues to punish workers with job cuts, furloughs and pay cuts while the company
spends billions to buy back stock and inflate the price," said Lee Conrad, coordinator of
Alliance@IBM. "There appears to be no sacrifice at the top."
IBM spent $3.6 billion on share repurchases last quarter. Its shares are up 2.1 percent
this year, closing yesterday little changed at $195.50. The company raised its forecast
last month for 2013 profits to at least $16.90 a share, up from $16.70, excluding the $1
billion restructuring charge.
That's because there isn't. Thanks for playing.
ResistanceIsFeudal
azurite wrote:
Some will. I'd expect the gangs to become much more powerful.
We'll be seeing more and more cartel presence too... but hopefully our 'legal' cartels can
help protect us from their 'illegal' ones for a while.
Blackhalo
Comrade Kristina wrote:
That's because there isn't. Thanks for playing.
I, Cringely The New IBM -- vampires in our midst - I, Cringely
Mary
Because "51% of Americans think that bad weather affects cloud computing." Next poll: 64%
of Americans think the Cloud cuts their cable service.
Bubblisimo Gerkinov
Blackhalo wrote:
I, Cringely The New IBM -- vampires in our midst - I, Cringely
FTL:
I say it is Wall Street happily accepting the idea that IBM is eating itself and has
decided to eventually die.
Funny, we didn't used to reward decisions like that.
Mary:
UPDATE
"The legal action against Chevron on Friday, followed by direct action over the weekend,
marked the first anniversary of the fire and explosion that created a towering plume of toxic
smoke on August 6, 2012. Refinery workers who responded to this emergency narrowly escaped death
in the now much-investigated accident. More than 15,000 people in the Richmond area sought emergency
room care after being showered with fall-out from the blast. The U.S. Chemical Safety Board
uncovered evidence that, more than a decade ago, Chevron's own engineers recommended repair
work on the corroded pipe at fault. Cal/OSHA cited Chevron for eleven "willful" safety violations.
Then the agency imposed the largest fine in its history, a one million dollar penalty that the
company is now contesting.
[...]
"Retired Richmond teacher and RPA activist Eduardo Martinez spoke about the price paid by
those down-wind from Chevron. At the school where he once taught, students with breathing problems
formed an after-school group known as "the asthma club" because they couldn't participate in
regular sports activity. When Martinez got fed up and ran for a city council seat last year,
Chevron spent nearly $200,000 to smear and defeat him. ("I never knew I was worth that much,"
he told the rally.) For the health of the city and its children, "Chevron must stop polluting
the democratic process," he declared."
ResistanceIsFeudal
Comrade Kristina wrote:
Mhm, or political titles.
You shut that mouth! I'm the sheriff in this town! And did I mention the judge is my step-brother?
And two of the councilmen are married to my cousins.
Japan this year joined other leading economies in adopting the desperate measure of quantitative
easing (QE) to stimulate its economy. Yet unless QE money is targeted directly on creating new employment
to restore consumer demand, it is merely a monetarist maneuver. - Henry C K Liu
Obama:
"...the economy is far stronger now than it was four and a half years ago."
...as long as one ignores the reality of the following chart...
We've seen macro
"Hope"and
micro "Reality", but for the man in the street, it would appear from the chart above that the
trajectory for 'recovery' green shoots is decidedly down and getting worse... even as the President
tells the American public they are so much better off...
El Oregonian
Obama ~ "I've often thought about playing with your golf club"..
Fixed
AlaricBalth
I sometimes wonder if POTUS actually believes some of the swill he is spewing. Or does
he ever turn to his handlers and say, "Now come on Valerie. Seriously? Have you actually read
these talking points Ben and Lew gave me? Holy shit!"
Or does he say, " Just give me the damn script and let's get this over with. I've got
a tee time at 2. And make sure there are enough Titleists in my bag this time. Last week that
dumbass Biden was busting my nuts when I ran out of balls on 15."
Pain Train
Imagine the irony here... Americans now turning to Russia for the truth of what's going
on in America:
http://rt.com/usa/carter-comment-nsa-snowden-261/
Not to say Russia is a bastion of veritas...Putin is a cold, calculating, Machiaveliian player
himself. We'll see what he does with Snowden...
A fun couple of charts plotting the history of robotics innovation from a
new report by the Atlantic Council, with our thoughts below (click to enlarge).
... ... ...
The report is a concise overview of both optimistic and pessimistic views of what the robotics technology
will mean for the economy, and also of the societal issues that we discussed in
last week's podcast with Illah Nourbakhsh.Robert Shapiro, citing the report, writes in
a piece for the Daily Beast about some of the jobs that could soon be under threat from expected
advances in robotics technology, and of course don't forget about
Izzy's
extensive coverage of same.
But trying to cover these trends from a macro perspective can be frustrating.
The anecdotal evidence that robotics will soon have a persistent, deleterious impact on even
skilled middle-class jobs is both powerfully suggestive and plausible, perhaps best presented in
the much-discussed Race Against the Machine. But it's tough to address, in real time, questions
about the importance of, say, robotics (and other) technology, versus a straightforward shortfall
in demand vs sectoral shifts generally vs trade rebalancing issues vs Other Miscellaneous Stuff.
We can look at a graph of the diverging capital vs labour share of income, but we're still left
to wonder at the relative effects of cyclical vs secular forces, and even at the distinction between
the two, which isn't always meaningful. And then there are second-order effects.
If the robots do displace middle class jobs, then presumably the capitalist robot owners
will have a lot of extra change lying around. The immediate impact is yet another surge in inequality.
But presumably they'll be looking around to spend their surplus on something, and that
something might be the goods and services of an industry that will hire the newly jobless to produce
them. This is traditionally how technological displacement goes. Reasons for pessimism notwithstanding,
it can't be entirely discounted that things will turn out this way again.
We've also encountered similar problems
trying to cover the earlier-hyped rebound in manufacturing jobs and the potential "reshoring"
of jobs as productivity-adjusted wage differentials between the US and China become narrower. Consider
that even classically cyclical sectors such as housing, in which productivity accelerations are
historically rare, can be easy to misunderstand. Predictions about the future, etc…
Anyways, just because we'll have to wait a while to know anything for sure is no reason to ignore
the anecdotal evidence, or for that matter to refrain from speculating about the potential consequences
of a big economic transformation. Best to be prepared and so forth.
beepbop
actually no, the newly rich will pile their money into private schools and trophy property
in atherton, park ave, etc. Things that are zero-sum and extremely scarce, driving their value
into the stratrosphere, see bay area real estate.
Bricky
But presumably they'll be looking around to spend their surplus on something, and that something
might be the goods and services of an industry that will hire the newly jobless to produce them.
Newly created jobs could include 1) punkhawallah 2) prostitute 3) Latrine cleaner 4) Dog
pooper scooper 5) Pedicurist
fiatsceptic
Not bad for unpaywalled work, CG, but it could use a cautionary note or two acknowledging
the government menace feeding parasitically on the software eating the world, and remotely extracting
freedom for the privilege. Horowitz doesn't seem to have realized we might already be hitting
the major adoption wave of another big technology cycle: that of ubiquitous government surveillance.
Here's some black cloud computing on the horizon: http://www.nationa...anch-nsa-john-fund
As it's tangential to CG's piece, I'll resist excerpting that link and won't go on much further,
but ubiquitous software, particularly when consolidated, ENABLES EASILY-INTERMEDIATED TYRANNY.
Some – importantly including a renewed right-left alliance in the (continuing) wake of Snowden
-- would say an associated collapse down to a generic low standard of technological behavior
integrity by governments with recently higher standards is quite advanced.
It's time to tighten down Warzel's "broad, loose conception of "freedom"" and defend its
irreducible core as to online behavior.
wtpayne
It troubles me that we still think of software as something special, as if it belongs in
it's own special domain. Most of the so-called "software" companies that you talk about are
not "software" companies at all - they are just companies that happen to use software.
Compilers and interpreters are the type-writers of the modern age. The only difference is
that business procedures and plans are written in Python and stored in servers rather than written
in English and stored in ring-binders.
Writing software is not (just) about automation - although of course the cost savings that
result from automation provide the main motivation for the activity. It is also about defining
and understanding the detail of the operation of the business.
It is a simple truism that you do not really understand a problem until you have written
a piece of software that solves it. In the same way, the people who really understand the details
of a business are the developers who design the business' systems and "business logic".
Software is all about details:- knowing the details and understanding their implications.
By the same token: writing software is all about making decisions; decisions which are individually
small, but collectively consequential.
However, just because you use software does not mean that you will automatically have a good
business. The same logic, the same skills, and the same instincts that supported the successful
businesses of the past will still be required by the successful businesses of the future: but
the lingua franca that the people managing the businesses of the future will need to speak is
going to be precise, algorithmic and executable... and not English.
Markey
You're confusing data, software, communication protocols, and Paul Krugman-like 'The Robots
are coming! The Robots are coming!!' hysteria.
If you can drop it on your foot and it hurts its hardware; otherwise its software.
Charlie Warzel writes at
Buzzfeed...
That era - let's call it the internet's free trial period - is coming to an end. In the 12
years since courts shut down Napster, the internet has taken its hatchet to every other branch
of the media industry, deftly pruning ad dollars, jobs, and shaving away bottom lines. Now the
reaction, opposite but never quite equal, and always late, is starting to take effect. The untamed
and lawless expanses of web content are quickly being replaced by paywalls and monthly fees.
And, surprisingly, we don't really seem to mind all that much. Most of us don't even seem to
notice.
The rest of the article supports the thesis, including a summary of recent surveys showing both
that newspapers are increasingly moving towards digital pay plans and that readers are increasingly
tolerant of paywalls.
We recommend
the whole piece.
It reminded us of something Ben Horowitz explained in
a debate sponsored by
The Economist two years ago - that the widespread monetisation of the internet on a much bigger
scale, if not quite inevitable, at least would be consistent with previous computing cycles. Just
as the earlier "Internet is free" era, when the technology was promising but had yet to realise
its ability to make money for its owners, was consistent with those earlier cycles.The debate
was about whether technology companies were in a new bubble, with Horowitz making the case against.
An excerpt of what he wrote:
History shows that major technology cycles tend to be around 25 years long with the bulk
of the purchases occurring in the last five-to-ten years. This has to do with adoption rates;
this period seems about right for the oldest cohorts (less likely to adopt new technologies)
to die off and for younger cohorts (quickest to use new technologies) to enter the market.
Let us look at examples of the last two major computing cycles (prior to the Internet).
... ... ...
Thirdly, the market is far bigger. In 1998, I was working at Netscape, which owned well over
half of the browser market. We had about 50 million users, more than half of them on dialup
connections which could not run many interesting applications. Today, there are over 2.1 billion
people on the internet, most of them using broadband connections. The true market for internet
businesses is about 50 times larger than during the actual technology bubble.
With costs 100 times lower, programmer productivity ten times higher, and the market 50 times
larger, it stands to reason that many more internet businesses will work today than did the
last time around. …
Software is eating the world
Back in 1994, very few people would have predicted that the largest bookseller in the world
would be a software company. Today, not only is it a software company, but all of Amazon's most
important competitors are also software companies.
Books were just the first of many industries to be eaten by software. Some other examples:
- Magazines and newspapers-really requires no explanation.
- Music distribution - the largest music distributor in the world is a technology
company, Apple; its largest potential threat, Spotify, is a software company.
- Radio - the most valuable radio company in the world is Pandora, a software company.
- Animated film - in order for Disney to remain relevant in the animated film industry,
they had to buy Pixar, a software company.
- Direct marketing - the largest direct marketing company in the world is a software
company, Google.
What is next?
- Oil and gas-new finds are increasingly software driven.
- Financial services-many of which would be far better served by an integrated
software platform.
- Local business - increasingly present in the online world via offerings from
new companies like Groupon, Foursquare and Square.
As software eats one industry after another, the market for technology business expands,
rendering previous market size estimates obsolete. That is not to say that no price is too high
for a technology company, but there is a fine case that the old prices are too low.
Obviously we're familiar with what's been happening in the journalistic realm, which has moved
towards silos and paywalls much more quickly than we had expected just a few years ago. It's lamentable
for those of us who ply our trade as bloggers, and who thus have benefitted acutely from an open
web. But it's
not all bad, and at any rate it's happening and unlikely to reverse any time soon.
As for another industry mentioned by Horowitz, see also
this piece with the latest updates on banking in the cloud.
Appeals to history when the sample size is so small should always be accepted with appropriate
caution. But thus far it seems as if the basic contours of Horowitz's argument were right.
Wazoo
It may be helpful to nail down what software really is...It is embodied knowledge that is
based on expertise, then placed into software source code so as to automate and make faster
the work that formerly an expert would do either with manual calculations or using huntches
or rules of thumb.
Lots of software simulators are based on not just calculations, but often, the basis for
their output are heuristics because they don't (or can't explain) why the values work.
Oh... the article is greatly underestimating the importance of software if it is measured
in terms of dollars invested.
I did some recent work that concluded that software is now typically over 50% the value of
most major programs, and in some cases, it exceeded 100% the value of the program if the software
is fully priced.
The corrupt edifice that has propped up the US big banks and financial system is beginning to
crumble before our very eyes.
First and foremost, the former head of the Bureau of Labor Statistics (the group in charge of
calculating the "official" unemployment numbers and inflation measures) has stepped forward and
stated, point blank, that the unemployment numbers in the US are a joke.
Keith Hall believes the US economy is a lot sicker than the 7.6 percent unemployment
rate would lead you to believe.
And he should know.
Hall was, from 2008 until last year, the guy in charge of Washington's Bureau
of Labor Statistics, the agency that compiles that rate.
"Right now [it's] misleadingly low," says Hall, who believes a truer reading
of those now wanting a job but without one to be more than 10 percent.
Source: NY Post
The Government claims we're in recovery because the unemployment rate is falling. But we
have the former head of the BLS stating that real unemployment is greater than 10%.
uhb
So what - this is precisely what U-6 unemployment is for:
http://www.bls.gov/news.release/empsit.t15.htm
By the way, U-6 is near 15% ... and the percentage of ppl on foodstamps in the US is
also 15%.
StarTed
Correct me if I'm wrong, but the engine of economic recovery is usually lower energy
prices, at least in the last 5 or 6 economic cycles.
I've written frequently about the participation rate (the percent of the civilian noninstitutional
population in the labor force). A few posts: Understanding the Decline in the Participation Rate,
Update: Further Discussion on Labor Force Participation Rate, Merrill Lynch on Labor Force Participation
Rate, Labor Force Participation Rate Research
The participation rate was expected to decline for structural reasons even before the great recession
started (baby boomers retiring, younger Americans staying in school longer, etc.). A key question
is how much of the recent decline in the participation rate was due to long term trends, and how
much was cyclical (economic weakness)?
Here is some research from Macroeconomic Advisers:
Where's Labor Force Participation Heading?
- Fifty-five percent of the recent decline in the participation rate is due to structural
factors that, on balance, will continue to exert downward pressure on participation through
2015.
- The other forty-five percent is cyclical and will gradually abate. However, the cyclical
decline in participation has been larger and more persistent than in past cycles due to the
unusually large increase in the average duration of unemployment during this cyclical episode.
- Going forward, the cyclical rebound in participation will roughly offset the continuing
downward push of structural forces. Consequently, we project that in 2015, when the FOMC
will be contemplating the first increase in the federal funds rate, the participation rate will
be 63.4%, the same as in the second quarter of this year.
- That projection for the participation rate implies that monthly changes in household
employment averaging about 114,000 will be sufficient to stabilize the unemployment rate through
2015. Anything faster will push the unemployment rate down. To reach the FOMC's threshold
unemployment rate of 6.5% in the second quarter of 2015, as shown in our forecast, requires
monthly changes in household employment averaging roughly 170,000 over the next 24 months, consistent
with our forecast that monthly changes in establishment employment will average roughly 190,000
over that same period. CR Note: A significant portion of the decline in the unemployment rate
from 10.0% in October 2009 to 7.6% in June 2013 was related to a decline in the participation
rate from 65.0% in Oct 2009 to 63.5% in June 2013. If the participation rate had held steady,
the unemployment rate would be 9.7% (assuming an increase in the participation rate with the
same employment level).
Comrade Troyski wrote on Thu, 7/18/2013 - 5:00 pm
Graph: Households and Nonprofit Organizations; Credit Market Instruments; Liability (CMDEBT)/Compensation
of Employees: Wages & Salary Accruals (WASCUR) - FRED - St. Louis Fed
I've got your cycle right here
Comrade Troyski
Civilian Noninstitutional Population - 55 years and over (LNU00024230) - FRED - St. Louis Fed
"catch the wave"
1 currency now -yogi
Aggregate, circular macroeconomic garbage is still garbage.
sum luk
from:
Labor Force Participation Is Not Coming Back - NYTimes.com
... the model suggests that the Fed is right to focus on the unemployment rate as it
decides how long to pursue its various stimulus campaigns.
If the model is right, further declines in unemployment will reflect job growth, not
declines in participation. It will mean that things are actually getting better.
merchants of fear
Elmo! labor force participation... participating in labor... interesting conceptual description
US unemployment statists sometimes looks like a happy person, who is actually on drugs ;-).
Firemane:
Mook wrote:
Four words: Not in labor force.
Except the number of people COVERED by unemployment is steadily marching upward.
2011 – Q1 - 125,560,066
2011 – Q2 – 125,572,661
2011 – Q3 -- 125,807,389
2011 – Q4 -- 126,188,733
2012 – Q1 - 126,579,970
2012 – Q2 - 127,048,587
2012 – Q3 - 127,495,952
2012 – Q4 - 128,066,082
2013 – Q1 - 128,613,913 -- +547,831
2013 – Q2 - 129,204,324 -- +590,411
2013 - Q3 - 129,827,178 -- +622,854
Mary:
"The final release of Mass Layoffs Statistics data will occur on June 21st, with |publication
of the May 2013 data."
Mass
Layoffs (Monthly) News Release(April) Released 22 May, 2013
Mike in Long
arthur_dent wrote:
this article indicates that Chase Manhattan is leveraged about 15:1.
Bank of America Estimates Leverage Ratio Was 4.9% to 5% - Bloomberg
Licks finger, sticks it in the air. Hmmn. Yeah 4.9% sounds about right. CFO trundles back
to office to logout and hop in his towncar to head for the Hamptons.
- You must meet specific requirements for wages earned or time worked during an established
period of time referred to as a
base period, including having wages in at least two quarters of the
base period.
- To qualify for benefits, you must have worked for an employer who paid unemployment
tax and you must have earned (the following criteria applies to new UI claims that were
made effective August 5, 2012 or later):
- At least 390 times the Arizona minimum wage in your highest earning quarter and
the total of the other three quarters must equal at least one half of the amount in your
high quarter. (For example, if you made $5000 in your highest quarter you need to have earned
a total of $2500 within the remaining three quarters combined,) or
- At least $7000 in total wages in at least two quarters of the base period, with wages
in one quarter equal to $5987.50 or more.
- The following criteria applies to new UI claims that were made effective prior
to August 5, 2012:
- At least $1,500 in one of the four quarters of the base period and your total
base period wages must be at least 1-1/2 times your high quarter, or
- At least $7,000 in total wages in at least two quarters of the base period,
with wages in one quarter equal to $5,987.50 or more.
- You must be determined to be unemployed through no fault of your own (determined
under state law), and meet other eligibility requirements of state law.
- If you have Arizona wages and also worked in another state, or currently reside in
Arizona and have earnings from employers in two or more other states (within the base period),
you may choose to combine these wages to establish monetary eligibility. If you were employed
in more than one state at any time during the current base period, you may have the option of:
- Filing a claim against any state in which you were employed using only the wages
from that state, or
- Filing a claim against any state in which you were employed, using the wages from
all states in which you earned wages.
State unemployment laws, weekly benefit amounts and eligibility requirements vary between
states. Which option is best for you will depend upon the laws in each state that you worked.
Information regarding eligibility and award calculations in other states is found on the
Web sites of most states.
- If all of your employment during the base period has been in a state other than Arizona,
you must file a claim for benefits against that state. Visit
America's Service Locator Web site for contact information for
other states.
- If you have recently separated from the military and have not yet filed an unemployment
insurance claim, you must be residing in Arizona for assignment of the wages to an Arizona claim.
If you are not residing in Arizona, your claim must be filed against the state in which you
are residing. Visit
America's Service Locator Web site for contact information for
other states.
In some cases, wages earned by aliens, employees of educational institutions or private
school bus contractors and employees of transient lodging establishments may not be used to establish
monetary eligibility.
Learn more.
If you are determined monetarily ineligible for benefits and all of the wages on your
Wage Statement (UB-107) are correct, you may file again when the quarter changes.
If the wages on your
Wage Statement (UB-107) are incorrect or missing, you may file a
Wage Protest. You must continue to file your weekly claims while a wage investigation
is in progress.
Table A. Six-digit NAICS industries with the largest number of mass layoff initial claims in April
2013, private nonfarm, not seasonally adjusted
Industry April peak
Initial claims Year Initial claims
School and employee bus transportation .... 10,210 2011 23,573
Temporary help services (1) ............... 8,778 2001 17,507
Motion picture and video production ....... 7,632 1997 15,908
Tax preparation services .................. 3,997 2010 6,514
Food service contractors .................. 3,723 2011 10,948
Hotels and motels, except casino hotels ... 2,580 2010 4,130
Discount department stores ................ 2,253 2009 4,462
Skiing facilities ......................... 2,077 2010 2,640
Payroll services .......................... 1,980 2000 5,165
Warehouse clubs and supercenters .......... 1,885 2010 2,466
Tim Duy: The June employment report came in ahead of expectations with generally solid
numbers, but was hardly a blow-out report. Still, bond market participants were apparently positioned
for a much weaker number. Bonds tumbled on the news, spiking the yield on 10-year Treasuries by
almost 20bp as everyone forgot - or simply didn't believe - the Fed's promise to hold to the zero
lower bound into 2015. Expect dovish talk as policymakers try to rein in expectations, but I suspect
the damage is done, the genie is out of the bottle. If the Fed wants to regain credibility, they
will need to stop talking and start doing by making clear the taper is not going to happen this
year. That however, is not going to happen. At this point, it is pretty unlikely the data will come
in sufficiently weak to postpone a September cut in the pace of asset purchases.
Nonfarm payrolls gained 195k compared to expectations of 161k rise. The previous two months were
revised up, tacking on another 70k jobs. The 12-month moving average is now just below 200k jobs/month:
... ... ...
Wage growth is holding near 2% year-over-year. Nothing inflationary about that, and
consistent with substantial slack in labor markets. Aggregate weekly hours continues to track its
upward trend, while labor force participation and employment to population ratio both ticked up
0.1%. Underemployment indicators also still reveal substantial slack in labor markets:
anne
http://www.guardian.co.uk/commentisfree/2013/jul/05/june-jobs-report-us-economy
July 5, 2013
Upbeat June Jobs Report Still Leaves U.S. Economy in a Deep Hole By Dean Baker - Guardian
The 195,000 new jobs reported for June was somewhat better than most economists had expected.
The job gains, together with upward revisions to the prior two months' data, raised average
growth for the last three months to 196,000. While this may lead some to be dancing in the streets,
those who actually care about the economy may want to hold off.
First, it is important to remember the size of the hole the economy is in. We are down roughly
8.5 million jobs from our trend growth path. We also need close to 100,000 jobs a month to keep
pace with the underlying growth rate of the labor market. This means that even with the relatively
good growth of the last few months, we were only closing the gap at the rate of 96,000 a month.
At this pace, it will take up more than seven years to fill the jobs gap.
It is easy to miss the size of the jobs gap since the current 7.6% unemployment rate doesn't
seem that high. However, the main reason that the unemployment rate has fallen from its
peak of 10% in the fall of 2009 is that millions of people have dropped out of the labor force
and stopped looking for jobs. These people are no longer counted as being unemployed.
If we look at the employment to population ratio – the percentage of people who have jobs
– this has risen just 0.5 percentage points from the low-point of the downturn. It is still
down by more than 4.0 percentage points from its pre-recession level, and by 6.0 full percentage
points from the peak hit in the boom of 2000.
After severe downturns in the 1970s and 1980s, we had months in which the economy created
over 400,000 jobs. And this was in a labor market that was more than one-third smaller. That
is the sort of job growth that we should be seeing after a recession like the one we saw in
2008-2009. Unfortunately, such growth is nowhere in sight.
Of course, the weakness of the job market is not a surprise. The economy has been growing
at less than a 2% annual rate for the last three years. In this context, it is surprising
that we are seeing job growth of even 100,000 a month. Most analysts put the economy's trend
rate of growth in the range of 2.2-2.5%. This means that the economy has to grow at this pace
just to keep the unemployment rate from rising.
The reason that we have been able to able to achieve above-trend growth in employment in
an economy growing much slower than its trend path is that the rate of productivity growth has
fallen through the floor. Productivity growth has averaged less than 1% in the last three years,
as opposed to 2.5% in the decade preceding the downturn.
This gets to the type of jobs that have been created in the upturn. Over the last three months,
three sectors – restaurants, retail trade, and temporary help – have accounted for more than
half of the jobs created. These sectors offer the lowest-paying jobs, with few benefits and
little job security.
The fact that these sectors are growing rapidly speaks to the state of the job market. These
sectors always generate lots of jobs, but in a good economy, no one will take them. Workers
take these jobs when there are no better alternatives available.
The poor quality of jobs shows up in the wage data. The most recent data did show an uptick
in the average hourly wage, which has been rising at a nominal rate of 2.1% over the last three
months. This is somewhat better than the rate of inflation, which is around 1.5%. But a closer
inspection of the data shows that the uptick was all among supervisory workers, who saw nominal
age growth at a 3.0% annual rate over the last three months, compared to just 1.7% for production
and non-supervisory workers.
In short, the June jobs data falls into the "it could have been worse" category – which is
fast becoming the official slogan of the recovery. We are seeing an economy that is likely to
be well below its potential level of output for more than a decade. This means that tens of
millions of people will needlessly be unemployed or underemployed.
Furthermore, high levels of unemployment will put downward pressure on the wages of most
of the workforce. This means that businesses and higher-end workers will continue to see the
bulk of the gains of economic growth.
This would be a bad situation in any case, but it is made worse by the fact that it is 100%
preventable. We know how to make the economy grow more rapidly and generate jobs. But politicians
are using old superstitions and deliberate lies to scare people aware from the sort of fiscal
stimulus that would get the economy back on track.
They will try to pass off the June numbers as good news. They deserve our contempt.
anne
In reply to anne...
Multifactor productivity growth for the private nonfarm business sector, 1948-2011
Average annual percent change
1948-2011 ( 1.2)
1948-1973 ( 1.9) 1973-1990 ( 0.3)
1990-1995 ( 0.5) 1995-2000 ( 1.3)
2000-2007 ( 1.4) 2007-2011 ( 0.4)
anne
In reply to anne...
Dean Baker points to the important slowing of productivity growth since 2007, which while
adding to demand for workers as the economy gradually recovers represents an important problem
in limiting growth.
The Blorch
In reply to anne...
You know there is such a thing as thermodynamics which disallow the perpetual motion
machine. In other words, you can only wring so much efficiency out of the system before retentive
forces push back with equal velocity.
anne
In reply to The Blorch...
I would argue that economists often misjudged the extent to which information technology
advances could increase productivity for the economy as a whole, at least whether this
would be possible for years and years without significant investment in soft and hard infrastructure
development.
A failure to build sufficient infrastructure I would argue is limiting productivity growth
for the economy as a whole.
D
In reply to anne...
Thanks to Dean Baker for mentioning the monthly growth rate in population. Once that is factored
in, none of the 8.5 Million jobs lost in the Great Recession have been recovered since its official
end exactly four years ago.
Another interesting commentary along these lines was in The Atlantic ...
http://www.theatlantic.com/business/archive/2013/07/please-dont-be-satisfied-with-this-jobs-report/277547/
The Jobs Gap impact calculator from the Hamilton Project at Brookings (n.b., not Cato, not
Heritage), cited in the Atlantic piece, is pretty interesting.
anne
In reply to D...
July 5, 2013
Employment Loss & Growth Summary
December 2007 - June 2013
Total Nonfarm Private Employment Loss = (- 1,615,000) Total Nonfarm Government Employment
Loss = (- 525,000)
Total Employment Loss = (- 2,140,000)
Where we should have created 8.97 million jobs these last 66 months simply to keep up with
population growth, we lost 2.14 million jobs. This leaves us short an astonishing 11.11 million
jobs.
anne:
http://www.bls.gov/webapps/legacy/cesbtab1.htm
July 5, 2013
The Bush-Obama experience in monthly job created has been,
22,147 x 150 months = 3.32 million jobs created in all;
enough job creation to keep up with civilian work force growth would have meant,
135,940 x 150 = 20.39 million jobs created in 150 months;
the Clinton experience was,
241,040 x 96 = 23.14 million jobs created in 96 months.
anne:
http://www.bls.gov/webapps/legacy/cesbtab1.htm
July 5, 2013
The Bush-Obama experience in monthly private job creation has been,
15,170 x 150 months = 2.28 million jobs created in all;
the Clinton experience was,
220,980 x 96 = 21.21 million private jobs created in 96 months.
The Bush-Obama experience in monthly government job creation has been,
6,980 x 150 months = 1.05 million jobs created in all;
the Clinton experience was,
20,060 x 96 = 1.93 million government jobs created in 96 months.
anne:
July 5, 2013
Employment Loss & Growth Summary
December 2007 - June 2013
Total Nonfarm Private Employment Loss = (- 1,615,000) Total Nonfarm Government Employment
Loss = (- 525,000)
Total Employment Loss = (- 2,140,000)
Where the severe Reagan recession of 1981-1982 had given way to complete employment recovery
in 28 months from the beginning of the recession, we are 66 months from the beginning of the
recession in December 2007 and there are 2.14 million fewer jobs now than there were at that
time.
Where we should have created 20.39 million jobs these last 150 months simply to keep up with
population growth, we created 3.32 million jobs. This leaves us short an astonishing 17.07 million
jobs.
anne:
http://data.bls.gov/pdq/querytool.jsp?survey=ln
January 4, 2013
Employment-Population Ratio, 1992-2013
1992 ( 63.0) * 1993 ( 63.3) Clinton 1994 ( 64.0)
1995 ( 64.4) 1996 ( 64.7) 1997 ( 65.5) 1998 ( 65.6) 1999 ( 65.9)
2000 ( 66.0) (High) 2001 ( 65.4) Bush 2002 ( 64.6) 2003 ( 64.3) 2004 ( 64.4)
2005 ( 64.7) 2006 ( 65.2) 2007 ( 65.2) 2008 ( 64.5) 2009 ( 61.7) Obama
2010 ( 61.0) 2011 ( 60.8) 2012 ( 61.0)
June
2013 ( 61.0)
* Employment age 20 and over
anne:
http://data.bls.gov/pdq/querytool.jsp?survey=ln
January 4, 2013
Employment-Population Ratio, 1992-2013
1992 ( 62.4) * 1993 ( 62.6) Clinton 1994 ( 63.4)
1995 ( 63.8) 1996 ( 64.2) 1997 ( 64.9) 1998 ( 65.0) 1999 ( 65.3) (High)
2000 ( 65.3) 2001 ( 64.8) Bush 2002 ( 64.1) 2003 ( 63.9) 2004 ( 64.0)
2005 ( 64.4) 2006 ( 64.8) 2007 ( 64.9) 2008 ( 64.3) 2009 ( 61.7) Obama
2010 ( 61.0) 2011 ( 60.8) 2012 ( 60.9)
June
2013 ( 60.9)
* Employment age 25 and over
anne:
http://www.bls.gov/webapps/legacy/cpsatab4.htm
January 4, 2013
Employment-Population Ratio, Bachelor's Degree and Higher, 2000-2013
2000 ( 78.1) * (High) 2001 ( 77.1) Bush 2002 ( 76.3) 2003 ( 75.8) 2004 ( 75.8)
2005 ( 76.1) 2006 ( 76.3) 2007 ( 76.3) 2008 ( 75.8) 2009 ( 73.9) Obama
2010 ( 73.1) 2011 ( 73.1) 2012 ( 72.9)
June
2013 ( 72.7)
* Employment age 25 and over
John Cummings:
The fact is, the US economy probably has been pumping out jobs at 225,000-250,000 rate since
last July aka the Feds target.
The market realized this today (and the coming yearly revisions which will cement this in).
Hence, Boomers selling bonds and pushing the reinflation effect.
The UE rate is also bothered by the number of "temp" employees being used who really are
fulltime employees. Yet, the BLS does not count them in the U-3 or U-6 stats. This is a major
major problem. Besides being a lagging indicator, it is also imo, one "key" behind the so called
"tepid" recoveries in the 90's and 00's. In otherwords, they weren't so tepid. I think the BLS
should go and count them full time employees(of the agency). Go back to 1948 then and fix this.
It explains jobless claims in a nutshell. What unemployment crisis? bah. It is a employment
crisis.
cm
In reply to John Cummings...
I'm not sure I'm getting your point. When the temps work full time (or more to the point,
are paid for full time), then they are not involuntary part-timers who seek additional work
- or how else would U-6 come into the picture here? (Maybe you mean they are full-timers on
a monthly basis, but part-timers on an annual basis?)
Mark A. Sadowski
In reply to cm...
"The UE rate is also bothered by the number of "temp" employees being used who really
are fulltime employees. Yet, the BLS does not count them in the U-3 or U-6 stats."
I agree, what John Cummings says with respect to U-6 is nonsensical. And what he says about
U-3 doesn't make any sense either.
The BLS classifies persons as unemployed (U-3) if they do not have a job, have actively looked
for work in the prior 4 weeks, and are currently available for work. Thus if you are a full-time
temp you are counted as employed. If your temp assignment ends, and you satisfy the BLS conditions
listed above, you are classified as unemployed.
"It explains jobless claims in a nutshell."
This also doesn't make any sense.
Whether or not you are collecting Unemployment Insurance is largely independent of whether
you are counted as employed or unemployed by the BLS.
There are in fact people who work full time and yet collect Unemployment Insurance because
the pay from their current employment is so much less than their previous employment. Likewise
there are unemployed people who have exhausted their Unemployment Insurance who are classified
as unemployed as long as they satisfy the BLS definition. And this is largely independent of
whether you are, or were, a temp.
The employment and unemployment, numbers and rates, are produced by the BLS. Data on Unemployment
Insurance claims ("initial claims" and "continued claims") are produced by the Employment and
Training Administration (ETA) which is a totally different agency.
cm
In reply to Mark A. Sadowski...
Good and crisp summary, but I was surprised about this:
"There are in fact people who work full time and yet collect Unemployment Insurance because
the pay from their current employment is so much less than their previous employment."
Is this how it works? When you get a new job, your benefits don't (generally) stop but some
deduction formula is applied?
"Likewise there are unemployed people who have exhausted their Unemployment Insurance who
are classified as unemployed as long as they satisfy the BLS definition."
This is correct, but they are not independent factors - when benefits run out yet job searches
remain unsuccessful, at some point people will become discouraged and dial down futile but resource
consuming and stressful job searches, i.e. go from U-3 to U-6.
Mark A. Sadowski
In reply to cm...
"Is this how it works? When you get a new job, your benefits don't (generally) stop but
some deduction formula is applied?"
The rules vary by state of course. In my state (Delaware) you can earn up to 50% of your
benefit level without any reduction in benefits at all, but anything earned beyond that reduces
your benefits dollar for dollar. However there is no limit on how many hours you may work.
Some states have explicit limits on the number of hours you may work and there are wildly
different formulas for how earnings reduce benefits.
The Blorch
In reply to John Cummings...
Actually, what I would like to see, is a move, at the societal level, away from jobs towards
some other means of resource distribution. I strongly favor payment of reparations to the resource
challenged but am open to any other suggest except if includes jobs. Jobs are a passe remnant
of a bygone era firmly ensconced on the ash heap of history. This is what Marx would have wanted.
cm
In reply to The Blorch...
What is anachronistic is the concept of, paraphrasing, "s/he who cannot secure paid employment
shall not eat". It was only ever time-appropriate in low-productivity societies where it took
everybody's considerable effort to provide a basic living standard for all.
The concept of jobs is not outdated, and never will be. Most work will always require a bilateral
commitment to do the particular work over some time, and to provide certain conditions under
which the work is to be done. Some work can be either automated or structured as day/short term
contract labor or farmed out to willing takers, but most of it cannot.
bakho:
This is an admission that the FED alone cannot fix unemployment. Why should the FED keep
long term rates low if Congress is going to piss away their opportunity to create jobs?
At some point, Congress must step up and do their part, but there is no pressure on them
to do so. In fact, the gerrymandering has put pressure on Congress to pull the fiscal rug from
under the job market and keep unemployment high. The Malefactors of Great Wealth desire High
Unemployment =Cheap Labor. The Malefactors are getting the policy they purchased.
The Blorch
In reply to bakho...
That's what I've been saying all along. Tether easy money to fiscal policy. No dough, no
show!
anne:
https://personal.vanguard.com/us/funds/vanguard/all?sort=name&sortorder=asc#hist=upperTB%3ApyldTBI%3A%3AlowerTB%3AdailyTBI
July 5, 2013
- The 3 month Treasury interest rate is at 0.04%, the 2 year Treasury rate is 0.39%, the
5 year rate is 1.60%, while the 10 year is 2.73%.
- The Vanguard A rated short-term investment grade bond fund, with a maturity of 3.2
years and a duration of 2.5 years, has a yield of 1.35%.
- The Vanguard A rated intermediate-term investment grade bond fund, with a maturity of
6.5 years and a duration of 5.5 years, is yielding 2.65%.
- The Vanguard A rated long-term investment grade bond fund, with a maturity of 24.0 years
and a duration of 13.5 years, is yielding 4.61%. *
- The Vanguard Ba rated high yield corporate bond fund, with a maturity of 5.3 years and
a duration of 4.6 years, is yielding 5.08%.
- The Vanguard convertible bond fund, with a maturity of 6.2 years and a duration of 5.4
years, is yielding 2.27%.
- The Vanguard A rated high yield tax exempt bond fund, with a maturity of 6.9 years and
a duration of 6.4 years, is yielding 3.13%.
- The Vanguard A rated intermediate-term tax exempt bond fund, with a maturity of 5.4
years and a duration of 5.2 years, is yielding 2.11%.
- The Vanguard GNMA bond fund, with a maturity of 7.3 years and a duration of 5.0 years,
is yielding 2.20%.
- The Vanguard inflation protected Treasury bond fund, with a maturity of 9.1 years and
a duration of 8.5 years, is yielding - 0.37%.
* Remember, the Vanguard yields are after cost. The Federal Funds rate is no more than 0.25%.
at 02:42 PM
anne
In reply to anne...
We are in a bear market in bonds, and if the Federal Reserve has acted too quickly in suggesting
to investors that longer term interest rates will be rising in coming months as quantitative
easing is limited the Fed will have made a mistake that cannot be easily undone. No reasonable
investor is going to be buying relatively long term bonds for quite a while.
at 02:47 PM
The Blorch
In reply to anne...
The trick is to make bonds look like the sportiest equine in the glue factory. So, equities
valuations need to appear top heavy. Housing must appear ready for a bust. And something must
be done about currency.
at 03:51 PM
anne
In reply to The Blorch...
January, 2013
Ten Year Cyclically Adjusted Price Earnings Ratio, 1881-2013
(Standard and Poors Composite Stock Index)
July 5 PE Ratio ( 23.86) May PE Ratio ( 23.68)
Annual Mean ( 16.47) Annual Median ( 15.88)
-- Robert Shiller
at 04:13 PM
anne
In reply to The Blorch...
January, 2013
Dividend Yield, 1881-2013
(Standard and Poors Composite Stock Index)
July 5 Dividend Yield ( 1.97) May Dividend Yield ( 1.97) *
Annual Mean ( 4.44) Annual Median ( 4.38)
* Vanguard yield after costs
-- Robert Shiller
anne
In reply to anne...
Stocks are historically expensive, if the work of Robert Shiller is telling, however
even if it was recently argued that stocks are not expensive because interest rates are low,
well, interest rates have risen significantly now.
Similarly real home prices according to the work of Shiller are on the expensive side and
mortgage costs have been rapidly increasing.
anne
In reply to anne...
As for saving accounts or certificates of deposit, selected bond funds or relatively constant
duration bond funds are always but always a better investment. However many people never understand
why, and analysts seldom explain why coherently.
Mark A. Sadowski:
Tax change multipliers used used by private forecasting firms and by government models such
as the Federal Reserve's FRB/US suggest that about half of the ultimate level economic effect
of the payroll and income tax increase will be felt by the second quarter. Similarly government
purchase multipliers suggest that two thirds of the ultimate level economic effect will be felt
during the first quarter of the sequestration. See Appendix A for example:
http://otrans.3cdn.net/45593e8ecbd339d074_l3m6bt1te.pdf
In November 2012 the CBO estimated that the maximum level employment effect would be a decrease
of about 200,000 jobs, 640,000 jobs (80% of the combined payroll and Unemployment Insurance
effect of 800,000 jobs lost) and 800,000 jobs for the high income tax increase, payroll tax
increase, and sequestration respectively:
http://www.cbo.gov/sites/default/files/cbofiles/attachments/11-08-12-FiscalTightening.pdf
So employment, in the second quarter should be down by about 400,000 jobs just due to the
tax increases alone. The sequestration went into effect on March 1 but let's assume that for
various reasons any economic effect attributable to it was delayed by a month. Then employment
should be down by about 500,000 jobs in the second quarter due to the sequestration. That's
a total of 900,000 jobs less in the second quarter than would have existed otherwise.
The latest employment report shows that employment was up 1.244 million in 2013Q2 relative
to 2012Q4. That's the largest increase this recovery in any two quarter period with the sole
exception of 2011Q4/2012Q1. That's also up from the 954,000 jobs created between 2012Q2 and
2012Q4.
Assuming the major model type estimates are correct, then in the absence of the tax increase
and the sequestration 2.144 million jobs would have been created which is over 60% more than
in any other two quarter period this recovery and well over double what was created in the previous
two quarters. It would also have been the most jobs created in any two quarter period since
the 2.251 million created in 1984Q1/1984Q2.
So if one believes in the effectiveness of fiscal policy one is stuck with the inescapable
conclusion that monetary policy just offsetted a major Federal fiscal contraction. (Either that
or fiscal policy works with unusually long and variable lags.) This means that we are not in
a liquidity trap, and in which case a key to a more robust economic recovery is in fact better
monetary policy.
You could see this as being a half-full or half-empty glass. That is, the job growth in the
first half of the year would have been much better if fiscal policy had not been contractionary,
or job growth could have been even worse if the Fed had not stepped in with QE3 in September,
and augmented it and added foreward guidance thresholds in December as the threat of the "fiscal
cliff" approached. But in my opinion there are serious problems with either of these scenarios.
Given the House Republicans I seriously doubt that fiscal policy would have been less contractionary
than it was. But had it been less contractionary I also have serious doubts that last year's
FOMC would have pursued as expansionary a monetary policy as they did, especially given this
year's FOMC's apparent and unjustified eagerness to taper QE (and this year's FOMC is actually
one of the most dovish FOMCs in a very very long time).
Thus the biggest obstacle to a more robust recovery is not really the House Republicans at
all but in fact the FOMC. And this is of importance right now because Ben Bernanke's term as
Fed Chair is over at the end of January. The President needs to make a decision about the next
Fed Chair soon. Moreover, if the President does in fact decide not to renominate Bernanke, as
he has already indicated, there is the possibility that Bernanke may resign from the Board of
Governors (his term as a Board Governor is not up until January 31, 2020) which means a seat
on the Board of Governors may open up. And furthermore, Federal Reserve Governor Elizabeth Duke's
term (she also was a nominee of President Bush's) expired at the end of January 2012, so there
may actually be two nominations to the seven seat Board of Governors that the President will
be able to make soon.
Of course there is always the problem of getting these nominations through or around the
Senate. But at least that is much more likely than counting on the House Republicans to change
the current course of U.S. fiscal policy, and which, evidently, will end up being offset by
the FOMC anyway.
Mark A. Sadowski
In reply to The Blorch...
"The first, cogent argument for austerity I've heard. I can be reduced to:
Austerity = quantitative easing = asset prices go up and up and up."
That was obviously not my intention.
Moreover the correlation between expansionary monetary policy and equities has only been
this strong since 2008, that is, since a shortfall of aggregate demand became a critical problem.
In fact there may already be evidence that this relationship is beginning to break down as the
economy gradually approaches a more normal condition (I can go into this at greater length if
you are interested).
With the institution of interest on reserves in October 2008 the FOMC effectively adopted
a system of monetary policy which had already been in use by most of the advanced world's central
banks (e.g. ECB, BOJ, BOE and the central banks of Canada, Australia, New Zealand, Sweden and
Norway). There is no evidence that the FOMC plans to undo this change and moreover one of the
newest Fed Governors, Jeremy Stein, has written a paper on the impact of interest on reserves
on financial stability. With an interest on reserves system the policy rate and the level of
reserves are effectively independent. Thus, all of the talk about "exit plans" is absolute falderal
because there is simply is no need to exit at all.
When asked about the exit strategy during his biannual testimony before Congress in February,
Bernanke said the Fed may decide to hold the bonds on its balance sheet to maturity. In March,
Janet Yellen, who is Vice Chair and the leading candidate to replace Bernanke, reiterated that
the Fed would raise the interest on reserves first and sell assets later. Thus in my opinion
it looks increasingly likely that the Fed will sell few if any assets.
Also, this is not the first time the U.S. monetary base has been this large. The following
graph shows the monetary base (St. Louis Source Base) and reserves (not adjusted for changes
in reserve requirements) as a percent of GDP/GNP from 1919 to present:
http://research.stlouisfed.org/fred2/graph/?graph_id=123169&category_id=0
The monetary base was 17.7% of GDP as of 2013Q1. But it reached 22.8% of GNP in 1946Q1 and
was greater than its current level during 1939-1941 and again from 1945-47. Reserves peaked
at 10.7% of GDP in 2011Q3. But they reached 13.6% of GNP in 1940Q2 and 1940Q3. They were above
10.7% of GNP during much of 1939-41. And the return to the levels they had been before the Great
Depression took many years. Reserves did not fall to the 2.2% of GDP/GNP level they had been
in 1929Q3 until 1972Q3, and the monetary base did not fall to 6.5% of GDP until 1975Q4.
Moreover there was never any need to exit from the more than six-fold increase in the monetary
base that took place in 1932-48. The most that the monetary base decreased was from $48.413
billion in December 1948 to $42.960 billion in April 1950, or by 11.3%. And even that decrease
probably had only minimal negative consequences because of the expected decline in real output
following World War II. And from January 1929 to January 1954 CPI inflation only averaged 1.8%.
So given the history of the last time the Federal Reserve greatly enlarged the monetary base,
as well as the availability of newer monetary policy tools (e.g. interest on reserves), I seriously
doubt that an exit from QE will be necessary, much less desirable.
Peter K.
In reply to Mark A. Sadowski...
"So if one believes in the effectiveness of fiscal policy one is stuck with the inescapable
conclusion that monetary policy just offsetted a major Federal fiscal contraction. (Either
that or fiscal policy works with unusually long and variable lags.) This means that we are not
in a liquidity trap, and in which case a key to a more robust economic recovery is in fact better
monetary policy."
Yes looks like monetary policy offset fiscal austerity to some degree. A liquidity trap could
simply mean that the Fed has to resort to unconventional policies which create political and
communication problems.
Charlie Baker
In reply to Mark A. Sadowski...
Mark Sadowski, your comment here has much to offer, but I feel that you are sometimes more
interested in promoting the effectiveness of monetary policy than noting its shortcomings. I
have been saying for a while that it appears that the effect of the most recent round of QE
was to offset fiscal austerity rather than a true move to full employment and target inflation.
Are you arguing that the current outcome is better because the idiots in the House forced
the Fed to increase QE? I don't see a whole lot of better going on these days. Again, with the
two most important indicators, I can't see that it made much of a difference.
Here's U3 since the onset of the recession: http://research.stlouisfed.org/fred2/graph/?g=jBv
And here's core CPI since the onset of the recession: http://research.stlouisfed.org/fred2/graph/?g=jBw
I don't see any change in trend, of either the snail-pace improvement of unemployment, or
the more recent slide into disinflation. In fact, the continued slide of inflation seems more
worrying now, as the "taper talk" seems to be increasing the prospect of low inflation going
lower.
I'm not saying that monetary policy cannot be effective at all. I'm saying that the actually
existing Fed will never back a true full recovery, but only just take off the rough edges. My
glass-half-empty counter-argument is that taking the edge off of the bite of austerity is enabling
bad behavior in Congress. They reason that they can cut social spending all they want, because
the Fed will keep things from going south. To my mind, it would be better for people to see
the impact of fiscal austerity, rather than have the Fed keep a sluggish recovery in low gear.
Mark A. Sadowski
In reply to Charlie Baker...
"Mark Sadowski, your comment here has much to offer, but I feel that you are sometimes more
interested in promoting the effectiveness of monetary policy than noting its shortcomings."
Unfortunately there are still a great many people even five years into this recovery that
question the effectiveness of monetary policy at the zero lower bound. So in my opinion it is
still an important question to argue. Once we can agree that monetary policy is effective at
the zero lower bound then maybe we can spend more time discussing how to improve it.
"I have been saying for a while that it appears that the effect of the most recent round
of QE was to offset fiscal austerity rather than a true move to full employment and target inflation."
Although there were important changes in the conduct in policy, such as the addition of interest
rate policy thresholds in December, I mostly agree, almost everything which was done in September
and December was done with a view to maintaining or only very modestly enhancing the pre-existing
pace of recovery.
I think you can see that most clearly when you look at the graphs from San Francisco FRB
President John Williams' speech in May:
http://www.frbsf.org/our-district/press/presidents-speeches/williams-speeches/2013/may/williams-economic-outlook-monetary-policy-moving-right-direction/john-williams-0516.pdf
Specifically, prior to September, he considered the pace of job creation to be inadequate
and the rate at which the FOMC projected unemployment to fall to be discouraging. In contrast
he considers the current rate of job creation and the more recent FOMC projections on unemployment
to be satisfactory. Recall that in April he mentioned the possibility of tapering QE as early
as June.
Incidentally Williams is an important litmus of the median FOMC member's stance on monetary
policy. Kathy Lien classifies him as a centrist with views similar to BOG members Bernanke,
Duke and Powell. Last year he was a voting member of the FOMC and more or less in the middle.
This year he is not and is somewhat right of center of this year's voting members of the FOMC,
which is unusually dovish.
"Are you arguing that the current outcome is better because the idiots in the House forced
the Fed to increase QE? I don't see a whole lot of better going on these days. Again, with the
two most important indicators, I can't see that it made much of a difference."
I'm arguing that the current outcome is almost exactly what the median FOMC member thinks
is appropriate. The six month rate of nonfarm payroll employment increased from 130,000 in September
to 202,000 currently. In June 2012 the central tendency of the FOMC projection was for the unemployment
rate to be 7.75% in 2013Q4 and instead it has already fallen to 7.6%. From their point of view
the January tax increases and the March 1 sequestration have been successfully offset.
"I don't see any change in trend, of either the snail-pace improvement of unemployment, or
the more recent slide into disinflation. In fact, the continued slide of inflation seems more
worrying now, as the "taper talk" seems to be increasing the prospect of low inflation going
lower."
Interestingly I'm not at all worried about inflation. I've always felt inflation is a distraction
from the real issue which is aggregate demand (AD) which by definition is nominal GDP (NGDP).
Inflation is subject to shifts in aggregate supply (AS) and consequently is less "nominal",
and less directly affected by monetary policy than even NGDP. So in my opinion inflation is
a distraction. On the other hand if you want to complain about the low rate of change in NGDP
then I'm all ears.
"I'm not saying that monetary policy cannot be effective at all. I'm saying that the actually
existing Fed will never back a true full recovery, but only just take off the rough edges."
Yes, but one of the points of my comment is that the Board of Governors of the Fed can be
changed by the President. Through the President's ability to nominate BOG members he has an
unparalleled ability to determine the course of the economy.
Ben Bernanke is a Republican and a centrist and despite perceptions is actually to the right
of this year's FOMC. Replacing him as Chair with someone on the far left of the dove-hawk scale
such as Janet Yellen could make an important difference. Furthermore if he resigns from the
BOG entirely that opens up a seat on the BOG and given Republican and centrist Elizabeth Duke's
term expired nearly a year and a half ago there may be two vacancies on the seven seat BOG opening
up. And never forget that the BOG also has the power to approve the Presidents of the 12 regional
Federal Reserve Banks who in rotation are the remaining voting members of the FOMC.
"My glass-half-empty counter-argument is that taking the edge off of the bite of austerity
is enabling bad behavior in Congress. They reason that they can cut social spending all they
want, because the Fed will keep things from going south."
The real motivation for spending cuts has been the trillion dollar deficits and the resulting
growth in Federal debt. If you reduce the deficits by increasing the pace of the economic recovery
and thus raising Federal revenue you remove the justification for the spending cuts. If you
want to prevent Federal, state and local governments from being pared down to a slender nub
that would make only the conservatives, libertarians and anarchists in Washington and the various
Republican controlled statehouses happy then you should want the Federal Reserve to do more,
not less.
"To my mind, it would be better for people to see the impact of fiscal austerity, rather
than have the Fed keep a sluggish recovery in low gear."
In my mind that would be a disaster because it would increase the perception that the FOMC
is not centrally responsible for the tepid pace of this recovery, and decrease the pressure
on it to change its policies as well as on the President to take charge of the membership of
the Board of Governors of the Federal Reserve as has always been his perogative.
Charlie Baker
In reply to Mark A. Sadowski...
As always, you make strong arguments in favor of active monetary policy, but I don't know
about some of these points.
"if you want to complain about the low rate of change in NGDP then I'm all ears"
I'm not arguing for the Phillips Curve, but I cannot see a robust recovery at 1% core inflation.
If anything, NGDP had been flat going into the end of 2012, and it's still only moving at a
walking pace now.
"The real motivation for spending cuts has been the trillion dollar deficits and the resulting
growth in Federal debt. ... you should want the Federal Reserve to do more, not less."
I must strongly disagree here. The GOP is "all-weather" budget cutters. In bad times, it's
"cut out the food stamp deadbeats;" in good times, it's "give your tax dollars back." Flip sides
of the same record, a number called Starve The Beast. It doesn't matter what is happening in
the actual economy. They have their own patronage system: it's called the Military Industrial
Complex. Even with the sequester it's a bloated welfare system for red states and MNCs.
"In my mind that would be a disaster because it would increase the perception that the FOMC
is not centrally responsible for the tepid pace of this recovery, and decrease the pressure
on it to change its policies as well as on the President to take charge of the membership of
the Board of Governors of the Federal Reserve as has always been his perogative."
Increase whose perception? I'd say the masses blame Obama, Congress and the Fed equally for
the non-recovery. The VSPs want Bernanke to scale down the purchases now; hence his infamous
"taper talk" debacle. Obama is the most orthodox of all; he wants deficit reduction more than
he wants a robust recovery. You don't need to convince me that a recovering economy is the best
way to reduce the deficit, you need to convince Obama.
Who is the constituency for central bank activism? Is the austerity offset of the recent
QE building support for central bank activism? It seems to me that the current Fed stance doesn't
change the game for anyone.
I take it that you are looking to see Obama name Yellen as Bernanke's replacement, and perhaps
another one or two doves to the FOMC. The reason I don't see any great prospect for this is
because all of the institutional & DC players don't want it. They just want the Fed to buy up
enough debt to keep our dysfunctional status quo going, no more.
Mark A. Sadowski
In reply to Charlie Baker...
"I'm not arguing for the Phillips Curve, but I cannot see a robust recovery at 1% core inflation.
If anything, NGDP had been flat going into the end of 2012, and it's still only moving at a
walking pace now."
From 2010Q2-2012Q4 year on year headline PCEPI has varied from a low of 1.5% to a high of
2.8% reflecting the waxing and waning of commodity prices. On the other hand year on year NGDP
stayed in a relatively narrow band of 3.5% to 4.5%. But then it fell to 3.3% in 2013Q1 (and
PCEPI inflation fell to 1.2%). This in my opinion is much more worrying.
"I must strongly disagree here. The GOP is "all-weather" budget cutters. In bad times, it's
"cut out the food stamp deadbeats;" in good times, it's "give your tax dollars back." Flip sides
of the same record, a number called Starve The Beast. It doesn't matter what is happening in
the actual economy. They have their own patronage system: it's called the Military Industrial
Complex. Even with the sequester it's a bloated welfare system for red states and MNCs."
Yes, I agree with all of this, but then what's the point of having people see the the economy
negatively impacted by fiscal austerity? The Republicans will simply continue unflappably on
with their fiscal policies unimpeded. It would be much better to have a snail's pace recovery
than no recovery at all.
"Who is the constituency for central bank activism? Is the austerity offset of the recent
QE building support for central bank activism? It seems to me that the current Fed stance doesn't
change the game for anyone."
Perhaps it is wishful thinking on my part but a number of recent developments seem to have
markedly transformed the econoblogoshere's general perception of the efficacy of monetary policy
at the zero lower bound. Will this have an impact on actual policy? Based on events of the past
year (e.g. last year's Jackson Hole) I would say that it is more likely than many realize.
Charlie Baker
In reply to Mark A. Sadowski...
Thanks for these responses. I think I have a clearer idea of what you are seeing. I'll offer
a few more responses.
"what's the point of having people see the the economy negatively impacted by fiscal austerity?
The Republicans will simply continue unflappably on with their fiscal policies unimpeded."
To me, the 2011 debt ceiling face-off hurt the GOP a lot, and helped kick off a round of
popular discontent that forced them to push some of the more Tea-flavored elements off to the
side. It showed that Boehner is not in control of his caucus, and demonstrated to moderates
that the GOP was willing to risk the US credit rating for no good reason. Similarly, if the
sequester cuts had been seen to impact the economy adversely, it might move more moderates away
from the GOP. The Fed's offset makes austerity seem less painful, so there is not a mass of
discontent around cuts; more like an anesthetic than a serum.
"Perhaps it is wishful thinking on my part but a number of recent developments seem to have
markedly transformed the econoblogoshere's general perception of the efficacy of monetary policy
at the zero lower bound. Will this have an impact on actual policy? Based on events of the past
year (e.g. last year's Jackson Hole) I would say that it is more likely than many realize."
This is the key insight here on your perspective. At this point, I'm in the "might as well
try monetary stimulus" camp, as there is no other game in town. But it seems to me that Bernanke's
recent guidance did a lot of damage. 10-yr yields and mortgage rates shot up, undermining the
efficacy of the QE round. Where Martin famously remarked that the Fed should "to take away the
punch bowl just as the party gets going," Bernanke seems to want to put the punch bowl away
before the party even starts. Is the economy at any risk of overheating anytime soon?
But I do see your point, I think. The 2012 Jackson Hole conference did change perspectives,
leading the Fed to adopt a soft version of the Evans Rule, which seems to have had some tonic
effect. But to me, all the signs now are that since the worst of the sequester impacts to GDP
have passed, it's back to inflation fighting, and forget about that stupid old full employment
mandate. Nonetheless, I hope you're right. Relying on monetary policy alone is not my first
choice, but given the fact that gridlock is the best we can hope for from the Congress, it's
the only chance for improvement likely in the near term.
Mark A. Sadowski
In reply to Charlie Baker...
"But it seems to me that Bernanke's recent guidance did a lot of damage. 10-yr yields and
mortgage rates shot up, undermining the efficacy of the QE round."
That was actually one of the events I was thinking about. Here's why I think that was actually
a good thing.
For about a whole week there was widespread acceptance that it was the Federal Reserve that
was driving the markets. That isn't supposed to happen when an economy is in a liquidity trap.
As a result I think a lot of people who fervently believed the economy was in a liquidity
trap are now seriously questioning those beliefs.
The level of underemployed workers looks bad on its face but even worse when it's not the government
doing the counting.
When the Labor Department released its monthly nonfarm jobs report Friday, it was all sunshine
and roses except for one glaring weakness: A big jump in the underemployment rate that includes
those who have quit working as well as those who have had to take part-time jobs even though they'd
rather work full-time.
That rate, which economists call the U-6, jumped from 13.8 percent in May to 14.3 percent in
June-a 3.6 percent increase and indicative that the 195,000 new jobs created in the month weren't
exactly of the highest caliber
But what often doesn't get as much attention is the monthly labor count that the experts at Gallup
conduct. Play Video'Wake Up and Smell the Taper': Economist Michael Feroli, JPMorgan Bank, explains
why he believes June's employment report will likely lead to the Fed slowing its asset-buying program
in September.According to the pollster's results, the underemployment situation is even worse.
Gallup reports that 17.2 percent of the workforce is underemployed, a startling number compounded
by its divergence from the government's count. While the rate is down from the 20.3 percent
peak in March 2010, it has remained maddeningly high over the past three years even as economists
tout the strength of the U.S. economic recovery.
From a broader perspective, the Gallup measure actually has increased from its 15.9 percent multi-year
low in October 2012.
The potential significance of the recent trough is that it came a month before the Federal Reserve
launched the third round of quantitative easing, the $85 billion a month bond-buying program that
is supposed to help the central bank achieve its dual objectives of price stability-and full employment.
Amid questions of whether QE3 is about to come to end, and if it has been as effective as its
predecessors, the underemployment rate will be one important metric to watch.
Aside from the Gallup numbers, the government's report was discouraging in its own right:
A jump from 28.5 percent to 29.3 percent for the percentage of those working part-time for economic
reasons in the labor force, and a year-over-year surge of 25.1 percent-1.027 million total-for those
"discouraged workers" who have quit searching for jobs.
"It's a big deal. The labor market is far from healthy, so I don't want to minimize the fact"
that underemployment is on the rise, said Joe LaVorgna, chief U.S. economist at Deutsche Bank.
... ... ...
"We expect labor market pressure from the spending sequester in Washington to spread from reduced
hours to job cuts," Ethan Harris, global economist at Bank of America Merrill Lynch, said in a report
for clients.
For now, though, LaVorgna said he is attributing the data point discrepancies to an unusual jobs
climate that will out the kinks in the months ahead.
"The labor market is so far from normal that it wouldn't surprise me that all these metrics are
not necessarily moving in the same direction," he said. "There's going to be some incongruity between
these two series. When things normalize, you would expect these things to rectify themselves."
-By CNBC's Jeff Cox. Follow him @JeffCoxCNBCcom on Twitter.
Posted by Gail the Actuary on March 22, 2013 - 11:44am
Topic: Economics/Finance
Tags: employment,
high oil prices,
limits to growth,
per capita wages,
list
all tags]
In my view, wages are the backbone an economy. If workers have difficulty finding a job, or have
difficulty earning sufficient wages, the lack of wages will be a problem, not just for the workers,
but for governments and businesses. Governments will have a hard time collecting enough taxes, and
businesses will have a hard time finding enough customers. There can be business-to-business transactions,
but ultimately somewhere "downstream," businesses need wage-earning customers who can afford to
pay for goods and services. Even if a business produces a resource that is in very high demand,
such as oil, it still needs wage-earning customers either to buy the resource directly (for example,
as gasoline), or to buy the resource indirectly (for example, as food which uses oil in production
and transport).
It is not just any wages that are important. It is the wages paid by private companies
(rather than governments) that are important, as the backbone to the economy. Governments tend to
get their revenues from private citizens and from businesses, both of which are dependent on wages
of private citizens. There are a few pieces outside of this loop, such as taxes on imports from
foreign countries. With the advent of free international trade, this source is disappearing. Another
piece outside the US wage-loop is taxes on resource extraction, if these resources are exported.
Instead of using the analogy of a backbone, perhaps I should say that wages are the base that
ultimately determines the quantity of goods and services an economy can afford.
Figure 1. Author's view of structure of the economy. Non-governmental wages form the
base of the entire economy.
Obviously there are other kinds of income, such as "rents," but these, too, ultimately come from
wage earners. Furthermore, businesses cannot earn money to pay dividends unless some consumer, somewhere,
can afford to buy the goods and services their business is selling.
I have
written recently about how the proportion of Americans with jobs rose to a peak, and since has
been declining.
Figure 2. US Number Employed / Population, where US Number Employed is Total Non_Farm
Workers from Current Employment Statistics of the Bureau of Labor Statistics and Population is US
Resident Population from the
US Census.
2012 is partial year estimate.
I decided in this post to look at the dollars these workers are earning. In particular, I decided
to look at wages, other than government wages, adjusted to today's cost level using the "CPI-
Urban," cost index of the Bureau of Labor Statistics. I discovered that these wages are doing
very poorly. I also discovered a disturbing connection between high oil prices and flattening or
declining wages. Putting all of these pieces together suggests a connection to "Limits to Growth."
Per Capita Non-Government Wages
If we take inflation-adjusted non-government wages, and divide by the total US population (not
just employed workers), we get a measure of the extent to which wages have been growing or shrinking.
Some of this growth will be from a second wage-earner in a family joining the workforce. Some of
this growth will be from families in recent years having fewer children, so that adults make up
a larger portion of the population. If some jobs move overseas and are not replaced, this will act
to reduce wages.
Figure 3. US per capita non-governmental wages, in 2012 dollars. Non-governmental wages
and population from Bureau of Economic Analysis; Adjusted to 2012 cost level using CPI-Urban from
Bureau of Labor Statistics.
Comparing Figure 2 and Figure 3, we can see that they follow generally the same shape. A major
portion of the increase in wages in Figure 3 is thus driven by a higher proportion of the population
having jobs, at least up until the year 2000.
Figure 3 emphasizes how poorly wages have performed since the year 2000. Average wages on a Figure
3 basis hit a high point of $$19,112 in 2000. They then dropped back to $18,145 in 2003. In 2007,
they briefly surpassed the year 2000 high point, hitting $19,573. More recently they dipped again
and (with government deficit spending) have recovered a bit, rising to $18,053 in 2012. This is
very low by historical standards; it is between the level they were in 1998 and 1999.
Looking at Figure 3, the other time when wages were flat was the period between 1973 and 1983.
The thing that is striking is that both the current period and the previous "flat" period took place
during periods of high oil prices (Figure 4, below). The vast majority of the rise in non-government
per capita wages that has taken place has happened when the inflation-adjusted price of oil was
less than $30 barrel.
Figure 4. Per capita non-government wages, as in Figure 3, together with historical
oil prices in 2012$, based on BP 2012 Statistical Review of World Energy data, updated with 2012
IEA Brent oil price data.
We have
discussed previously why high oil prices can be expected to have an adverse impact on wages.
There are multiple ways this can happen. For example, oil plays a very direct role in growing and
transporting food and in making gasoline. Thus, the cost of food and of commuting increases. This
causes people to cut back on discretionary expenditures, leading to layoffs in discretionary sectors.
Lay-offs in discretionary sectors means fewer jobs.
Another thing that happens is a change in the competitive situation that indirectly leads to
layoffs. Oil is used in transporting many types of goods, and is used in producing a wide variety
of products, such as asphalt shingles and synthetic cloth. Wages don't rise at the same time as
oil prices rise. The result is a mismatch between what citizens can afford, and the cost to manufacture
and transport products. Some customers are "priced out" of the market. Businesses find that they
must scale back the size of their operations to produce only the amount customers can afford. For
example, a delivery service will operate fewer vehicles, if demand is lower, laying off workers.
Also playing a role in reduced employment is
increased competition from China, India, and other low wage countries. These countries typically
use a lot of coal in their energy mix, so are less affected by high oil prices. As a result, their
prices become more competitive as oil prices rise.
Changes in trade agreements can also be expected to play a role in the competitive situation.
China started growing rapidly immediately after it
joined the
World Trade Organization in December, 2001. The big drop-off in US employment coincides very
closely in time to the time China started growing quickly.
Figure 5. China's energy consumption by source, based on BP's Statistical Review of
World Energy data.
Another factor in reduced wages is increased automation, in an attempt to compete with low-wage
countries. An employer may replace several workers with a single worker, using a new high-tech machine.
The worker with the new machine may earn more, but the others are left to find jobs elsewhere.
Going forward, increased retirement of "baby boomers" is likely to add further challenges. Retirees
will need to be fed and cared for, mostly from taxes on current workers. In theory, the retirement
of baby boomers should leave more jobs for unemployed young people, but this will depend on whether
such jobs are really available.
One important point is that the impact of high oil prices on wages doesn't "go away" to any significant
extent over time. This is clear from Figure 4, and is
a point I have made previously. Increased fuel efficiency helps a bit, as do adaptations like
finding a job closer to where a person lives. But high oil prices continue to make goods that are
made using oil less competitive on a world market. High oil prices also continue to make increased
automation attractive, and continue to keep the cost of transport of high. Individuals find they
need to permanently cut back on discretionary spending to balance their budgets.
Oil prices are likely to remain high, and in fact, rise in the future. When we started extracting
oil, we began with the easy (and cheap) to extract oil first. Now, the inexpensive to extract oil
is mostly gone; what is left is high-priced oil. Over time, the price becomes even higher, as diminishing
returns set in. The recent publicity about the possibility of more tight oil in the United States
doesn't change this dynamic. What the press releases don't say is that this oil will only be
available if it is sufficiently high-priced. A
recent survey by Barclays indicates that North American oil and gas companies are anticipating
less than a one per cent increase in "exploration and production" expenses in 2013; current North
American oil and gas prices are not high enough to justify much increase in investment.
Per Capita Real GDP
In recent years, the economy as a whole has tended to fare better than wage earners. This happens
partly because deficit spending is being used to provide income to the many unemployed people, and
partly because businesses are able to "bounce back" from an earnings point of view better than wage-earners,
because they can cut back the size of their operations to keep profits high. Sometimes they can
even substitute low overseas labor costs, or automation.
If we compare per capita real (that is, inflation-adjusted) GDP with oil prices (both in 2012$),
this is what we see:
Figure 6. Per capita real GDP (based on US Bureau of Economic Analysis data) compared
to oil prices in 2012$, based on BP's 2012 Statistical Review of World Energy data.
There is some stalling in the rise of real GDP per capita, with high oil prices, but it is not
nearly as pronounced as the stalling of wage growth. Nevertheless, Economist James Hamilton found
that
10
out of the last 11 US recessions were associated with oil price spikes.
On a per capita basis, real GDP per capita in 2012 is between the 2005 and the 2006 level. This
is far better than the situation with non-government wages. In Figure 4, we saw that in 2012, non-government
wages were only between the 1998 to 1999 level. Ouch!
Hitting "Limits to Growth?"
I wonder if the situation we are reaching now isn't "Limits
to Growth," as described by the book by that name by Meadows et al. written in 1972. The way
we seem to be reaching Limits to Growth is through high oil prices, and the impacts these high oil
prices have both on wages and on competitiveness with other countries. I explained some of these
issues earlier in this post. There are also impacts on governments:
- Low wages in total mean less tax revenue for governments;
- Fewer employed means more government outlays for unemployment benefits;
- Low wages lead to more problems with debt defaults, and more need for bank bailouts;
- Governments can't raise taxes fast enough or reduce benefits quickly enough, so they find
themselves with rapidly rising deficits. If governments do raise taxes, workers are even worse
off. If they reduce expenditures (less unemployment payments or allowing banks to fail), citizens
are also unhappy.
Over the last several thousand years, many civilizations have grown up, reached limits of one
sort or another, and eventually collapsed. Based on the work of Peter Turchin and Sergey Nefedov
in the book
Secular Cycles, there were financial issues not too different from the ones we are seeing now
involved in these collapses. I showed in my post
2013: Beginning of Long-Term Recession? that there seem to be significant parallels to our current
situation. These collapses often took 20 years or more, but the situation is still concerning.
While the situation we are looking at is unpleasant, if we understand the source of our problems,
we can at least look at our situation a bit more rationally. We may not be able to find solutions,
but we can at least eliminate some approaches as being unrealistic. We may be able to find partial
solutions, such as making survival possible for a subset of humanity, if not everyone. If we don't
understand our predicament, there is no way we can rationally address it.
This post originally appeared on
Our Finite World.
DelusionaL
Good article. The 'oil tax' is sucking wealth out of the economy, causing all sorts of
reactions that you describe. It seems to me that while politicians are not clueless they
are held by their constituents to maintain BAU in one form or another. The most drastic reaction
being Cyprus and direct taxing(taking) of bank deposits.
I believe your comments are spot on in regards to hitting the limits of growth, the glass
ceiling imposed by oil price. 'Seeing' is hard to do, even harder to discuss, because you,
I ,we are battling psychological defense mechanisms.
Wiki -"mechanisms (or defense mechanisms) are psychological strategies brought into play
by the unconscious mind[1] to manipulate, deny, or distort reality (through processes including,
but not limited to, repression, identification, or rationalization),[2] and to maintain a socially
acceptable self-image or self-schema.[3]"
"...to manipulate, deny, or distort reality...to maintain a socially acceptable self-image
or self-schema."
Man, does this sound familiar; governments, individuals, leaders, etc.. The likely hood of
overcoming these defense mechanisms I think is very very small. For the most part I believe
we are collectively intelligent enough to understand or able to figure it out, but this is fundamentally
an emotional issue, which we are not evolved enough to tackle. My 2 cents.
Gail the Actuary:
Part of the problem is that companies' profits are hit when oil prices go up. Their natural
instinct is to fix those profits.
Wages tend to be the largest source of outgo for most corporations. Almost any way of fixing
the reduction in profits will affect wages. This includes outsourcing manufacturing to a lower-wage
country, automation, or "making a smaller batch" (closing unprofitable locations, or cutting
back unprofitable flights, or downsizing in some other way, to match lower demand for a now
higher-priced product.) I made the following illustration to show this situation. I don't think
it is in any TOD post. It is in a newer post Our Energy Predicament in Charts.
These changes fix corporate profits, so GDP doesn't look too terrible, after a time.
But wages/employment still tends to remain low, as long as oil prices remain high.
jcb chengdu, china June 19, 2013
Globalization poses a threat to specifically *nationally focused* macroeconomic policy that
only coincides with national political power, or to transnational economic policy that is divorced
from national political power. The U.S. is discovering the former, the EEU the latter, both
to their great chagrin.
The globalization of U.S. labor supply, corporations, and monetary flows means that long-ignored
macroeconomic factors -- especially population, natural resources, and technology -- can no
longer be minimized as "exogenous" to U.S. macroeconomic policy. They now play a greater
role in economic policy considerations, but (like the EEU) are less and less within the control
of U.S. policy makers who are obviously more concerned with the growth and welfare of the American
people than with the welfare of Humanity.
The Keynes quotation is especially apt, but there's an even more apt one in the paragraph
just before the one you quote:
"That happy age [pre-1914] lost sight of a view of the world which filled with deep-seated
melancholy the founders of our Political Economy. Before the eighteenth century mankind
entertained no false hopes. To lay the illusions which grew popular at that age's latter
end, Malthus disclosed a Devil. For half a century all serious economical writings held
that Devil in clear prospect. For the next half century he was chained up and out of sight.
Now perhaps we have loosed him again.".....
In the pre-WW1 years, globalization mostly meant new products for developed countries from
underdeveloped countries. Today, however, it means global competition for the same products,
labor and capital flows. That Malthusian "Devil," which Keynes fully acknowledged when thinking
globally in 1919, again fell by the wayside after he wrote the little book that invented national
macroeconomic policy. The Devil was not the specter of OMG-we're-all-gonna-die because-of-excess-population-and-inadequate-resources,
but an appreciation of the causes (and limits) of growth that exist outside the realm of human
effort (or, at least, change slowly with maximum human effort or restraint).
Bud I, Bloomington, IL
By any standard, trade in manufactured goods has skyrocketed. That trade has affected some
workers much more than others. Because 70% of workers in the U.S. do not have college degrees,
those workers have been forced into the low end (services) of the wage continuum. Those workers
have become a burden to the government as well as a drag on domestic demand.
As long as we accept as imports products which, according to American values, are produced
under sub-standard conditions, we will have declining standards of living as well as deteriorating
quality in our natural environment.
There's a reason that in sports all the teams play by the same rules. It insures fairness
and equality. Competition in manufacturing works the same way. We're losing because we allow
other players into our market who don't play by our rules. And our economy and, more importantly,
our people are suffering for it.
Jim Hansen CA
"...does this change macroeconomics in a fundamental way?"
In one way globalization does affect macroeconomics. Foreign competition, especially
cheap foreign labor, suppresses the inflation that can result from overstimulation of the economy.
So, globalization is a justification for more monetary and fiscal stimulus (due to less fear
of excessive inflation), rather than a justification for austerity.
Grumpy old man United States
Deja vu. PK, in your link I see the real Lord Keynes in 1919: "... The only safeguard against
Revolution in Central Europe is indeed the fact that, even to the minds of men who are desperate,
Revolution offers no prospect of improvement whatever. There may, therefore, be ahead of us
a long, silent process of semi-starvation, and of a gradual, steady lowering of the standards
of life and comfort. The bankruptcy and decay of Europe, if we allow it to proceed, will affect
every one in the long-run, but perhaps not in a way that is striking or immediate.
This has one fortunate side. We may still have time to reconsider our courses and to view
the world with new eyes. For the immediate future events are taking charge, and the near destiny
of Europe is no longer in the hands of any man. The events of the coming year will not be shaped
by the deliberate acts of statesmen, but by the hidden currents, flowing continually beneath
the surface of political history, of which no one can predict the outcome. In one way only can
we influence these hidden currents,â€"by setting in motion those forces of instruction and imagination
which change opinion. The assertion of truth, the unveiling of illusion, the dissipation of
hate, the enlargement and instruction of men's hearts and minds, must be the means." http://www.gutenberg.org/files/15776/15776-h/15776-h.htm
And then came the Axis versus the Allies.
martin weiss mexico, mo
And, revealingly, WWII was precipitated by interests which rejected Keynes' view on modest
punitive fines on Germany, seeing money to be made from forcing Germany to accept loans, with
which it built it's military. Twenty million combatants and eleven million victims died to profit
a few banking establishments. This is an irrational way to manage enduring life on earth. It
is not our lowest motives, but our loftiest which can sustain us. How many times must we cycle
the hamster wheel of greed and war before we get wise to the game?
jcb chengdu, china
Good quotation from Keynes. The Economic Consequences of the Peace finds Keynes deep in Malthusian
despair (see my comments above).
I'm a great admirer of Keynes (and Malthus), but it is odd that after the slaughter of WW1
-- the greatest Malthusian "positive check" in population history up to that time -- Keynes
was unhappy for Malthusian reasons. The awful Allies' reparations policy was reason enough....
WW2 was worse, and that, too, postponed a Malthusian crisis by killing so many people. But
post-war economic policy in the West was a lot better than that in the East, so economic growth
quickly resumed.
Sixty-five years or so of re-population later, we may now better understand both Keynes'
and Malthus' concerns.
Cassandra Central Jersey
No discussion of "globalization" is complete without mentioning the deleterious effects of
"tax havens", which are havens from taxes, regulation, and transparency.
The damage wrought by tax havens seems to be increasing. There would not have been a financial
crisis in 2007-8 without tax havens. Dictators and thieves would not be able to loot countries
in Africa without them. The drug cartels would not be able to operate without them. And the
U.S. Treasury is deprived of about $200 Billion every year because of tax havens.
Try to imagine how the missing revenue might have taken the wind out of the sails of the
deficit hawks.
For every dollar in aid going into Africa, ten dollars comes out, and ends up in tax
havens.
We almost ended up with a President whose financial life was existentially dependent on tax
havens.
Robert Baesemann Los Angeles CA
People have been looting countries for a very long time often without tax havens. Tax havens
are difficult to define because they are the banking systems of small third party countries
like Cypress. When the Bad Guys decide to use such a country's banks they are initially depositors.
Then a line is crossed and they become tax havens. But almost any country's banking system can
be labeled a tax haven by some other country. As far as the PRC is concerned Taiwan is a tax
haven. As far as Cuba is concerned the US is a tax haven.
The most important remarks in this post concern the numbers. Please expand and document the
$200 Billion and 10 to 1 numbers. Those point to things our government and others should pursue.
Cassandra Central Jersey
@Robert Baesemann: The United States is one of the biggest tax havens. The City of London
is the other big player. The degree of "tax haven" of course depends on how this is measured.
My source is the book "Treasure Islands: Uncovering the Damage of Offshore Banking and Tax
Havens" by Nicholas Shaxson.
The main idea is this: the first destination of illicit money is typically one of the islands
that you read a lot about, such as the Cayman Islands, the Bahamas, Bermuda, the Isle of Jersey,
etc. Often, shell banks are involved. Then, the money is transferred to other nodes in the network,
but it eventually reaches havens such as Switzerland, Wall Street, or the City of London.
Our government has tried many times to address this, but there are so many politicians fighting
for "tax jurisdiction competition" that it has never made any real progress.
Look up Daniel Mitchell and "The Center for Freedom and Prosperity". (I would rename it "The
Center to Make the Rich Richer".)
eco-accountant eugene, or.
And to the billions our un-patriotic, "Randian" plutocrats stash away in tax havens, we need
to add the billions of tax dollars lost because we've let WTO-style globalization facilitate
the off-shoring of more than 50,000 tax paying factories, along with the tax revenues from family-wage
jobs that migrated to China, Vietnam, and Bangladesh where compensation immediately shrunk to
a small fraction of its former self.
Without those tax dollars our schools and public universities have shriveled, our public
services have withered away, gangs of unemployed youth roam the streets, and those 'green shoots"
show no signs of sprouting any time soon. But damn, we are getting smaller government, profits
and stocks are up (thanks to the Princeton gush), and the rich and their corporations are paying
less tax. Worst of times/best of times, but not in equal proportions.
Garlic Toast Kansas
One possible effect of globalized trade is in how recovery from a recession occurs. Instead
of somehow stimulating a national economy back to normal, recovery now probably involves restoring
normal business and employment among one's trading partners too, which seems like a larger and
slower process.
Statistics Rule Savannah
I think you are largely correct, Mr. Garlic Toast.
It's not that one of our larger trading partners--Europe--is in Depression, however. I think,
economically speaking (thus ignoring those sandbox kids in our coin-operated congress), the
greatest barrier to our recovery is wage suppression in the US. Simply put, labor is highly
undervalued whereas capital is perversely overvalued.
In other words, the Powers that Be have forgotten that it makes absolutely no sense to attempt
to sell products/services few people can afford to buy ... without resort to debt. Let's face
it: Americans learned a hard lesson the day so many woke up to find their homes were *underwater*
thanks to using second mortgages to fuel personal consumption. Notably, nine million homes still
remain underwater today.
As pointed out by PK, Americans need to look to the recent past to find solutions to our
current problems. We need to bring back Eisenhower's Tax Code, with fewer loopholes, immediately.
Given that Germany's largely unionized economy remained robust even after the Crash, we Americans
need to remember that Unions give power to us "little people:" collective bargaining gives us
the power to force corporations to revalue labor and pay us decent, living wages. We also need
to look for the Union Label as that puts our neighbors back to work.
It's really simple, people: your neighbors spending is your income.
Charley James Minneapolis MN
There is one significant difference between international trade in the past and what it involves
now.
Far too often over the past 20 or 30 years, corporate globalization has meant chasing cheap
labor. Along with government-sanctioned union busting, this policy has crippled - if not destroyed
- the middle class in America and Europe. While corporate profits skyrocketed, less and less
"trickled down" to the people still lucky enough to have jobs. Voila! A massive explosion of
wealth inequality.
Few people I know set out after school or university to become wealthy, but they all wanted
to live a comfortable life, raise their children and have them get a good education, plan for
a retirement and be able to see a doctor if they became ill.
Instead, my generation and those behind us have trouble living a survivable life - "comfortable"
simply means having a extra few dollars at the end of the month - with no job security, a cash-starved
public school system (unless one lives in a wealthy area, as the Times demonstrated yesterday),
no pension plans and our own retirement savings stolen from under us, and it's still so expensive
to get medical help that many forego it.
Neither politicians nor policy makers nor enough academics bothered to "read the old books."
Rather, they allowed charlatans such as R-R and A-A to use junk economics to push an ideological
agenda that favors too few at the expense of the very many. They should have to
live the life they condemned us all to living.
It's more line workforce is disappearing from men...
Jun 19, 2013 | CNNMoney.com
Men have been steadily disappearing from the workforce for more than half a century.
In the 1950s, nearly every man in his prime working years was in the labor force, a category
that includes both those who are employed and those actively applying for jobs. The "participation
rate" for men ages 25 to 54 stood at 97.7% in early 1956, but drifted downward to a post-war record
low of 88.4% at the end of 2012. (It ticked up very slightly at the start of this year to 88.6%.)
So where have all the men workers gone?
Some went into prison. Others are on disability. And still
others can't find jobs and have simply given up looking.
The trend is particularly pronounced among the less educated. As the job market shifted
away from blue-collar positions that required only a high-school degree to more skilled labor, many
men were left behind, labor analysts say. It's harder these days to find well-paying jobs in manufacturing,
production and other fields traditionally dominated by men without college diplomas.
But college men are leaving, too. The participation rate of those older than 25 and holding at
least bachelor's degree fell to 80.2% in May, down from 87.2% in May 1992.
"The proportion of guys doing nothing has risen," said Gary Burtless, a senior fellow at the
Brookings Institution.
The cycles of national economic prosperity since World War II have done little to stem this downward
slide. In fact, even when the unemployment rate hit a 30-year low in the early 2000s, the share
of men in the workforce continued its steady decline.
The Great Recession accelerated the trend, pushing the participation rate for men in their prime
working years below 90% for the first time. It has yet to recover, even as the general economy improves.
Here's a closer look at the reasons why men are dropping out of the labor force.
- Incarceration: A growing number of men have spent time in prison, which makes it
much harder to find a job once they complete their sentences.
Looking at those born just after World War II, some 1.2% of white men and 9% of black men
had been to prison by 2004, according to Bruce Western, a Harvard sociology professor. But looking
at those born 30 years later, some 3.3% of white men and 20.7% of black men had been to prison.
- Disability: More men have been pouring into the
federal disability system, especially in recent years, when the Great Recession and its
aftermath pushed up the national unemployment rate. Men who might have found a job in a better
labor market were instead turning to this safety net system, according to David Autor, a Massachusetts
Institute of Technology economics professor and co-author of Wayward Sons, which looks at the
growing gender gap in education and the workforce.
In 1982, around 1.9% of working-age men were receiving disability benefits. By 2012, that
number had climbed to 3.1%, according to data crunched by the National Academy of Social Insurance.
Once on the
disability rolls, few people get off. Only 2.2% left the program in the first quarter of
2013.
- Lack of education: A few decades ago, men could graduate
high school and make a decent living on a factory floor or at a construction job. As the
labor market becomes more skilled, those guys are being left behind.
In the 1960s, more men than women were enrolling in and completing college. "That's completely
reversed itself," Burtless said. "Women's persistence and enrollment rates have given them a
real edge over men."
Women born in 1975 were roughly 17% more likely than their male counterparts to attend
college and nearly 23% more likely to complete a four-year degree, according to data in
Wayward Sons.
"A lot of non-college men have chosen not to work rather than participate in jobs that don't
pay that well and are not very satisfying," Autor said.
Related: College degrees with the best bang for your buck
The decline of men in the labor force has broad implications for families, taxpayers and the
economy. Fewer employed men means more people on the dole and fewer taxpayers to contribute to the
nation's economic growth.
Also, fewer of these men are in stable family relationships, contributing to growth of single-parent
households. That fuels the widening income inequality gap and stunts the upward economic mobility
of the next generation.
New class of oligarchs are rising, which represent a new threat to US democracy
(if something left from it). They are not necessary more moral people then financial oligarchs.
When Steve Jobs died, Occupy Wall Street was in full effect. Yet those who were fighting for
wealth equality and the end of the banking oligarchy held a moment of silence in honor of the Apple
co-founder, who had a net worth of $7 billion.
Jobs "didn't believe in charity," writes Joel Kotkin in
The Daily Beast. Apple (AAPL)
was a company that "had more cash in hand than the U.S. Treasury while doing everything in its power
to avoid paying taxes...Jobs was being celebrated by those who should have been fighting against
him."
Kotkin believes that tech gurus are America's newest set of oligarchs. They hurt competition
and hold great influence with government officials. They don't create many U.S. jobs, they don't
pay much in taxes, and yet 72% of Americans express positive feelings for their industry.
Auto executives flying in private jets set the American public into a rage in 2008 and yet no
one complains about Google's (GOOG)
fleet of private jets in San Jose or the tech giant's proposal to build a private $85 million flight
center, Kotkin argues. Tech oligarchs are also taking jobs away from Americans, he says.
"Perversely, the small number of jobs -- mostly clustered in Silicon Valley and created by tech
companies -- has helped its moguls avoid public scrutiny," Kotkin points out in the accompanying
clip.
Kotkin compares the domestic workforce of major Silicon Valley companies to other Fortune 500
U.S. corporations: 50,000 Google employees versus 200,000 U.S. workers at General Motors (GM).
Facebook's (FB) 4,600 workers
to Ford's (F) 164,000. Exxon's
(XOM) 100,000+ staff to Twitter's
1,000.
Google, with a market cap of $215 billion, is about five times larger than GM yet has just one
fourth as many workers.
"This is an equation that defines inequality: more and more wealth concentrated in fewer hands
and benefiting fewer workers," Kotkin says. "If you look at the wealthiest people in the country,
particularly the wealthiest people under the age of 40, they're heavily tilted towards the Silicon
Valley."
The youngest billionaire in the U.S. is Mark Zuckerberg of Facebook whose net worth totals $12.4
billion. He's followed by Sergey Brin of Google, the 21st richest person in America, with $25.5
billion.
"Ten of the world's 29 billionaires under 40 come from the tech sector, with four from Facebook
and two from Google. The rest of the list is mostly inheritors and Russian oligarchs," writes Kotkin.
Facebook paid no taxes last year, despite making a profit of more than $1 billion.
Apple's Tim Cook testified in front of Congress this week about how his company manages to pay
so little in taxes.
These companies are also trying to use their influence to sway politics. Facebook's lobbying
budget grew from $351,000 in 2010 to $2.45 million in the first quarter of 2013. Google spent $18
million on lobbying in 2012.
So why do these companies get a free pass when it comes to public opinion?
"In our era we have grown up to love our toys," Kotkin tells The Daily Ticker. "I think it has
a kind of halo effect. People don't realize that this is not as clean and carefree as we tend to
think."
"These are industrialists, these are capitalists and we should celebrate their successes but
we should be very careful," he adds.
"The employment rate for young adults who are college graduates is 87 percent, compared with 64
percent for those with only a high-school diploma"
Eleven percent of student loans were seriously delinquent -- at least 90 days past due -- in
the third quarter of 2012, compared with 6 percent in the first quarter of 2003, according to the
report by the U.S. Education Department. Almost 30 percent of 20- to 24-year-olds aren't employed
or in school, the study found.
The research is being released amid concern in Congress and President Barack Obama's administration
about rising college costs and $1 trillion in outstanding student loans, the largest category
of consumer debt besides mortgages. Borrowers say the burden is affecting their choice of jobs
and their ability to buy homes and get married.
"Today's economy puts young graduates in a difficult position," Jack Buckley, commissioner of
the National Center for Education Statistics, which published the report, said in a statement. "A
college diploma no longer guarantees a direct pathway to the middle class, making it harder to justify
the expense of a degree."
Still, college graduates have an edge in the job market, showing the need for higher education,
Buckley said. The employment rate for young adults who are college graduates is 87 percent,
compared with 64 percent for those with only a high-school diploma, the report found.
The large increase since 2007 in the unemployment and underemployment rate of young college grads,
along with the large increase in the share of employed young college graduates working in jobs that
do not require a college degree, underscores that today's unemployment crisis did not arise because
workers lack the right education or skills. Rather, it stems from weak demand for goods and services,
which makes it unnecessary for employers to significantly ramp up hiring.
The figure below, from
this report on the labor market prospects of the Class of 2013, gives unemployment and underemployment
rates for college graduates under age 25 who are not enrolled in further schooling. The unemployment
rate of this group over the last year averaged 8.8 percent, but the underemployment rate
was more than twice that, at 18.3 percent. In other words, in addition to the substantial share
who are officially unemployed, a large swath of these young, highly educated workers either have
a job but cannot attain the hours they need, or want a job but have given up looking for work.
Digital technology has brought society many benefits: faster, more efficient ways to share ideas,
do business, communicate with government and much, more more. But along with those gains come the
losses in jobs where less labor is needed now as more activities get automated.
"The Internet is killing more jobs than it creates," writes computer scientist
Jaron Lanier, in his new book,
Who Owns the Future?
Digital technology is shrinking our overall economy rather than expanding it, unlike past technological
breakthroughs, says Lanier.
At the root of the problem, Lanier tells The Daily Ticker, is the idea that "information has
to be free." For example, he says companies don't pay individuals for the data they collect in order
to sell products to those individuals and others, and online translation systems don't pay the translators
whose individual translations actually contributed to the final product.
Related:
Jim Chanos: Stay Away From U.S. Tech Firms
"We are not paying ourselves when we're actually contributing the work that makes the machines
work," says Lanier, adding that more and more things will be done automatically. "If we don't find
a way to pay for people who are contributing the information that actually makes the whole thing
work, then the jobs start going way and we're already seeing that."
He suggests something "radically new" be done, namely paying people for the use of their data
or labor via a "a universal royalty system." Translators would get paid every time their works is
used; so would people whose pictures are taken by street cameras as part of a government safety
measures.
If no such payments are made, the middle class will be destroyed in the long run, says Lanier,
and then businesses will suffer as well because they'll have less customers using and buying their
technologies and other products.
Related:
Former AMD CEO Forecasts 'Intelligence Revolution'
Lanier admits his idea is unusual, but says it's possible.
"When the Internet was starting up it seemed crazy that it could ever work and then it worked,"
he says.
He likens his proposal to the settling of a new frontier, like the American West, more than a
hundred years ago.
"At first the land was free…but then eventually a real estate system took hold and people could
buy and sell land. Something like that's going to have to happen with the information economy. It's
free at first…but you can't sustain a civilization on that."
The Daily Ticker Presents: Generation I.O.U.
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[May 12, 2013]
How Austerity
Kills By DAVID STUCKLER and SANJAY BASU
EARLY last month, a triple suicide was reported in the seaside town of Civitanova Marche, Italy.
A married couple, Anna Maria Sopranzi, 68, and Romeo Dionisi, 62, had been struggling to live on
her monthly pension of around 500 euros (about $650), and had fallen behind on rent.
Because the Italian government's austerity budget had raised the retirement age, Mr. Dionisi,
a former construction worker, became one of Italy's esodati (exiled ones) - older workers plunged
into poverty without a safety net. On April 5, he and his wife left a note on a neighbor's car asking
for forgiveness, then hanged themselves in a storage closet at home. When Ms. Sopranzi's brother,
Giuseppe Sopranzi, 73, heard the news, he drowned himself in the Adriatic.
The correlation between unemployment and suicide has been observed since the 19th century. People
looking for work are about twice as likely to end their lives as those who have jobs.
In the United States, the suicide rate, which had slowly risen since 2000, jumped during and
after the 2007-9 recession. In a new book, we estimate that 4,750 "excess" suicides - that is, deaths
above what pre-existing trends would predict - occurred from 2007 to 2010. Rates of such suicides
were significantly greater in the states that experienced the greatest job losses. Deaths from suicide
overtook deaths from car crashes in 2009.
If suicides were an unavoidable consequence of economic downturns, this would just be another
story about the human toll of the Great Recession. But it isn't so. Countries that slashed health
and social protection budgets, like Greece, Italy and Spain, have seen starkly worse health outcomes
than nations like Germany, Iceland and Sweden, which maintained their social safety nets and opted
for stimulus over austerity. (Germany preaches the virtues of austerity - for others.) ...
The current unemployment has one interesting property that is not covered by statistics: most of
new jobs are service sector McJobs, while many eliminated jobs were providing holder of the job middle
class status.
The second half of 2012 saw a significant shift in US monetary policy from calendar-based guidance
to outcome-based guidance and the adoption of a 6.5% unemployment rate as a threshold for 'tapering'.
With Friday's better-than-expected payrolls data and another tick lower in the critical-to-liquidity
unemployment rate, it seems Goldman Sachs (and others) are waking up to the facts that we have been
vociferous about: the shift of jobless individuals from unemployment into inactivity (the
participation rate dilemma) is making the unemployment rate a less appropriate measure of broad
labor market conditions. This has important implications for Fed policy because it implies
that the committee might still be quite far from reaching the jobs side of its mandate even once
the unemployment rate is back at 6%.
After all, the Federal Reserve Act calls for 'maximum employment', not 'minimum unemployment'.
This distinction did not matter much in the past, but it is becoming increasingly important. The
'participation gap' remains as big a drag on growth as 'unemployment' and we, like Goldman, would
expect the Fed to 'change' its target for their outcome-based guidance (to enable
moar printing).
Via Goldman Sachs,
The second half of 2012 saw a decisive shift in US monetary policy. One aspect
was the move to open-ended asset purchases of $85 billion per month.
The other aspect - and our focus today - was the adoption of a 6.5% unemployment rate
as a threshold for the first hike in the federal funds rate. The motivation for the move
from calendar-based guidance to outcome-based guidance is simple and compelling. It is much more
sensible for a central bank to guide expectations about future policy actions in terms of an economic
criterion than in terms of a particular date.
...
But the 6.5% threshold for the unemployment rate is not an ideal outcome-based target.
...
The reason is that the unemployment rate is increasingly distorted by the decline in
labor force participation.
...
Labor force participation has fallen by 2.7 percentage points since the start of the
2007-2009 recession.
...
Some of this decline is clearly related to the aging of the US population. Population
aging shifts the composition of the over-16 population - which forms the denominator of the participation
rate. The chart below shows that changes in the composition of the population account for 1.2 percentage
points of the decline in labor force participation.
Gavyn Davies
argues the Fed is targeting the wrong thing (unemployment instead of employment):
...the Fed has a headache. Its forward guidance on unemployment is in danger of giving misleading
signals about the need for tightening, and it probably needs to be changed. ...
The difficulty is that unemployment is declining towards the announced threshold in part because
large numbers of people have left the labour force altogether as the recession has dragged on,
and this probably means that the official unemployment rate is no longer acting as a consistent
measuring rod for the amount of slack in the labour market.
The upshot is that the Fed will probably want to keep short rates at zero until unemployment
has dropped a long way below 6.5 per cent...
[I]t is a distortion which the Fed cannot afford to ignore. Its mandate requires that it should
aim for "maximum employment", not "minimum unemployment on the official statistics", which is
what it risks doing under its current forward guidance. ...
If the Fed is going to make a mistake -- ease too long or tighten too soon -- you can probably
guess which mistake I think is worse.
This tweet from Andy Harless caught my eye:
HIres-to-openings ratio looking uglier & uglier
bls.gov/news.release/j…
Looks like rising structural unemployment
- Andy Harless (@AndyHarless)
May 7, 2013
Dave Kranzler of Golden Returns Capital declares the April payroll jobs report that was released
on May 3 by the Bureau of Labor Statistics to be "fictitious."
Statistician John Williams, of shadowstats.com, says
both the jobs report and unemployment rate are "nonsense."
I agree with both. But don't expect the financial press to report the facts.
Let's take a walk through the BLS report
and you can arrive at your own conclusion.
The BLS report says that the private sector created 185,000 service jobs in April. Even if this
report were true, it would have negligible effect on the unemployment rate as about 127,000 new
jobs are needed each month just to stay even with population growth and current unemployment rate.
But is the BLS report true?
We can answer that question by examining the areas where the jobs reportedly materialized: 29,300
in retail trade with general merchandise stores accounting for about half of that number, 73,000
in professional and business services with temporary help services accounting for 42 percent of
that number, 26,100 in health care and social assistance with ambulatory health care services accounting
for 52 percent of that number, 45,100 in accommodation and food services with waitresses and bartenders
accounting for 84 percent of the jobs, and 8,600 jobs created for bill collectors.
That's it. The federal government lost 8,000 jobs, the postal service
lost 4,900 jobs, state government lost 1,000 jobs and local government lost 2,000 jobs.
There were zero jobs created in manufacturing.
Considering the credit-restrained and hard pressed consumer, the jobs figure for bill collectors
is likely correct. But why would there be 29,000 new jobs in retail trade when real retail sales
are falling? Why would there be new professional
service
jobs when large consulting companies such as IBM are reducing the hours of their contract employees?
How can 38,000 waitress and bartenders be hired in one month when consumers have so little discretionary
income?
Notice, too, that the BLS reports that 6,000 construction jobs were lost in April. Yet, the financial
press is full of reports of "housing recovery."
You know those thousands and thousands of fracking jobs that the fracking industry has been hyping
so that communities, desperate for jobs, ignore the destruction of their surface and ground waters?
Well the BLS report shows that oil and gas extraction jobs, which includes normal oil and gas recovery,
peaked in February. Only 900 jobs were created in April, a small reward for destroyed aquifers and
surface streams. People who live in fracking areas have been warned to open their windows when showering
to avoid being asphyxiated because of the methane in the water...
Andrew McAfee, co-author of the book Race Against the Machine, thinks that when
it comes to the disruption of labor markets because of technology, "we ain't seen nothin' yet."
At the MIT Sloan School of Management, McAfee studies the impact that information technologies have
on industry, and I recently heard a presentation of his research at Singularity University's Graduate
Studies Program. McAfee contends that we could now be entering a world where automation will
cause wages to fall and jobs to dry up.
McAfee's argument isn't wholly new, and he explains how fears surrounding unemployment due to
technology have been around for 200 years. Famed economist, John Maynard Keynes, voiced concerns
regarding automation in the 1930's and coined the term "technological unemployment." In
the early days of the industrial revolution, many worried that the automation of agriculture would
leave everyone unemployed. Of course, Keynes' vision of a world with little work left for humans
never transpired, and his argument has been widely regarded as a fallacy. McAfee, however, tells
a convincing story as to why it may finally be time to worry.
To articulate the core of his argument, McAfee draws from the concept of exponential growth patterns.
The numbers at the beginning of any exponential curve (1+2+4+8+16….etc) are easy to comprehend.
It isn't until later in the progression that intuition breaks down and human imagination is outstripped
by the explosive growth in the doubling pattern. With regards to the digitization of labor,
McAfee argues that we may have just entered the "knee" of the curve; the portion of the growth pattern
characterized by massive acceleration.
The encroachment of digitized labor into the economic system is now accelerating, and the scope
of the phenomenon is as of yet unknown. McAfee admits that much of today's economic pain is probably
caused by the hangover left from the 2008 crisis in the U.S., and the current crisis in Europe.
McAfee points out, however, that corporate profits in the U.S. have never been higher and that companies
are back to spending; especially on things like IT. What companies are not doing is hiring new employees.
McAfee shows BLS data showing that the 2000s were the first decade since World War II in which there
were fewer people working at the end than at the beginning. Hiring hasn't returned, suggests McAfee,
in part because technology is being injected into the economy at such a staggering rate that there
is a decreasing need for human workers.
The Lost Decade for Job Growth
If the computer era for business purposes has been around since the 60's, then why is it now
in 2012 that we should be concerned? McAfee argues that we are now in an age of unprecedented acceleration,
where our experience of the past is no longer a good guide for the future. The comparative advantage
of human labor over machines is washing away before our eyes and to illustrate this point, McAfee
references the work of Narrative Science, a company out of Northwestern University, which uses algorithms
to write stories around simple pieces of data. Forbes now uses this technology to generate the earnings
announcements around a company's stock price, and can even tailor the story to cater to specific
audiences. How many journalists could lose their jobs? McAfee thinks it could be more than just
a few. McAfee also points to Google's self-driving car, and IBM's Watson as good examples of pivotal
applications being developed today, that could digitize a sizeable chunk of human labor in the future.
So what are we to do, as more and more jobs are lost to this entirely new species of highly skilled
machine? During Q&A some of the students at Singularity University argued that we should re-frame
the issue into one of education rather than unemployment. They argued that not all of the jobs in
the future are for the robots, but these jobs also haven't been created yet. We'll need to find
ways to retrain those rendered obsolete. This is no easy task, and one that McAfee argues could
cause serious heartache for the economy. For McAfee we are at the cusp of a transition period that
will be far more profound than America's shift from agriculture to industry. Though the future of
work is highly unknown, one thing is certain. If you are looking for a forecast of clear skies and
sunny days ahead for the industrial labor market, then don't hire Andrew McAfee as your weatherman.
This story produced in cooperation with SU partner site Singularity Hub
... ... ...
As the cost of living increases around the globe fueled by the Central Banks money printing,
wage protests and strikes have become commonplace:
South Africa - A total of 26 people were arrested overnight in connection
with farmworkers' protests for higher wages, Western Cape police said on Wednesday.
At least 180 people had been arrested in connection with the protests since Wednesday last
week…
http://www.iol.co.za/business/business-news/more-arrests-in-farm-wage-protests-1.1453090#.UQbnCo7pRgM
Indonesia: Thousands of workers took to the city's main thoroughfares
on Wednesday to protest delays in the increased minimum wage and hikes in electricity rates.
The workers from industrial areas in Bekasi, Bogor, Depok, Jakarta and Karawang belonging
to the Indonesian Metal Workers Federation (FSPMI), the All-Indonesia Workers Union (KSPSI) and
the Indonesian Workers Assembly (MPBI), demanded that Governor Joko "Jokowi" Widodo instruct companies
to immediately comply with the 44 percent raise of the provincial minimum wage to Rp 2.2 million
(US$228) for 2013.
http://www.thejakartapost.com/news/2013/01/17/workers-protest-against-minimum-wage-delays.html
China-Sanitation workers' salaries will be increased by 10 percent this year
in
Guangzhou, the capital of South China's Guangdong province, following
recent protests demanding higher pay…
"The salary of sanitation workers will be increased by 10 percent this year
and the government will also boost other subsidies, for example, housing allowances," Huang
said…
Guangzhou has an estimated 38,840 sanitation workers, who earn an average of about 1,300
yuan ($209) a month, almost equal to the city's minimum wage.
http://www.china.org.cn/china/2013-01/22/content_27756710.htm
Germany-Germany's major public services trade union Verdi had called for
a daylong strike on Friday at Hamburg Airport, impeding security operations and delaying flights
as passengers struggled to get to their gates.
The union is calling for an hourly wage of 14.50 euros for its members, who currently earn
11.80 euros per hour.
Only one of 20 security checkpoints had opened, with approximately 95 percent of the passenger
security-check staff walking off the job.
http://www.presstv.ir/detail/2013/01/20/284554/german-airport-workers-go-on-strike/
These wage protests and the political instability they create have dramatically changed the investment
landscape
....
From comments: "Austerity and welfare cuts represent a two-pronged offensive
by the ruling elite to drive down wages and living standards and fundamentally restructure social relations
in its class interests. "
ResistanceIsFeudal wrote:
work without benefits is likely also a growth area for the economy.
the Brit way of doing it is called zero-hour contracts
Almost a quarter of Britain's major employers now recruit staff on zero-hours contracts
that keep workers on standby and deny them regular hours....Labour MPs and unions have branded
the contracts as a throwback to the Victorian era and say they are being used by employers trying
to avoid agency-worker regulations, which entitle agency staff to the same basic terms and conditions
as permanent employees after 12 weeks.
The 2011 Workplace Employment Relations Study found that the proportion of firms with
some workers on zero-hours contracts rose from 11% in 2004 to 23% in 2011.
The contracts have long been popular with companies including McDonald's and Abercrombie
& Fitch. Large charities and public sector organisations have also adopted the arrangements.
adornosghost:
Outsider wrote:
The good news didn't last very long. Question is, is this a temporary lull or a new
trend.
Growth is oven, and, most of us need to make other plans, as
if 2% is not achieved the ponzi collapses. If this happens now, or is merely
plateauing for a while is the question.
When energy decent fully kicks in (we peaked in per capita energy in 1979), no one will
be asking questions.
http://gailtheactuary.files.wordpress.com/2012/03/decade-pct-increase-in-energy-vs-population-change.png
Rob Dawg:
Hot weather, high unemployment, austerity, unfavorable exchange rates. Time to visit Southern
Europe.
Tommy Vu:
Rajesh:
The FOMC projections imply no recession before 2016. Anyone want to put money on that
idea?
Have to think on it more but maybe. Continued and enhanced ZIRP, LSAP's, further plunging
participation rate and concentration of wealth to the top 1% thus skewering the wage growth
minus transfer payments metric and our dear leaders may be able
to assure another recession defined by the NBER never occurs.
Mary:
"Austerity and welfare cuts represent a two-pronged offensive by the ruling elite
to drive down wages and living standards and fundamentally restructure social relations
in its class interests.
This statement gave me pause, too, although I for one have for many months ridiculed the
Tory-LibDem coalition and reproduced UK "economic" and "financial" stats propaganda since BoE
began QE. I for one no longer identify "austerity" with ex post facto industrial policy, designed
by a "ruling elite."
"Austerity" is a yella press euphemism for Depression (which must not be evoked) market conditions
which always result from market failure (e.g. Panic '08): No or less free cash flow. Austerity
precedes so-called industrial policy prescriptions of the state. Thus, what regulation that
"global trade" dependent regimes adopt in order to conserve and discriminate disbursements of
reliable cash and credit, that is unequivocally identifiable, is necessarily remedial.
Unless your the sort of bureaucrat willing and able to restore fiduciary and commercial responsibility
for disbursements to the very same actors (firms) whose officers (people) defrauded the world:
one may be a Krugman acolyte in principle.
Merican press has spent a few years denying "austerity" directly related to the Panic
of '08, persisting legislative maxims that permit capital market failure, and even the conceptualization
of "austerity" that originated in the UK press, where "ruling elite" (castes of peerage inclusive)
most certainly anticipated subsequent FIRE illiquidity and has executed a strategy to relieve
Brits of what paltry "social safety net" that the City "global" ponzi somewhat financed.
UK's so-called welfare state has never been exemplary, one to emulate.
Tim Duy:
A Solid Employment Report, by Tim Duy: The February employment report was solid - not a
blockbuster report, but definitely solid. And three of the last four employment reports have
been solid as well, with payroll growth about 200k per month.
This will undoubtedly raise some chatter that the Federal Reserve's large scale asset purchase
program will be tapered back soon than later. I suspect such talk would be premature. While
the labor market currently has some momentum, we have seen such momentum fade in the past.
Moreover, we are still deep in the labor market hole, so to speak. The Fed has time to see this
play out, and, even if labor markets continue to improve at this pace, will most likely take
that time, delaying any reduction of the pace of asset purchases until late this year.
Lots of yahoos! out there about this report, so let me offer a few cautions
from Phil Izzo at the WSJ:
... The number of people who say they are working increased by 170,000, solid increase from
the prior month. Meanwhile, the number of people counted as unemployed tumbled by an even larger
300,000. That sparks some concern. It means that all of those unemployed didn't find jobs. Many
of them are likely retirees or people who leave the labor force to go to school. But there also
are large numbers of discouraged workers dropping out of the labor force. The number of discouraged
workers jumped in February.
The issue can be seen in the smaller drop in the broader unemployment rate, known as the
"U-6"... That includes everyone in the official rate plus [discouraged workers and part-time
workers who would rather be working full-time.] ... In February,... the number of part-time
workers who would like full-time jobs increased and the ranks of those marginally attached to
the labor force climbed.
The disparity highlights the plight of the long-term unemployed, whose ranks increased in
February even as those without a job for a shorter time had an easier time finding a new position.
The longer someone is out of a job, the harder it is for them to find work.
We should also recognize that these numbers are often revised substantially, e.g. last month's
number was revised downward from 157,000 to 119,000. With that said, again
from the WSJ (Ben Casselman):
Jobs reports are often a mishmash of good news and bad, with no clear signal of the direction
of the labor market. Not this month. Virtually all of the major indicators were pointing in the
right direction: Payrolls were up, the unemployment rate was down and every major piece of the private
sector posted job gains. The consumer sector appears to have shrugged off higher taxes and rising
gas prices; retailers and restaurants added jobs. Perhaps the only significant negative was a downward
revision to January's job growth, which could suggest the Fiscal Cliff had a bigger impact on employment
than initially thought.
Update: See also Dean Baker:
Job
Growth Picks Up Steam in February, by Dean Baker: The Labor Department reported that the
economy added 236,000 jobs in February. With a small downward revision to job growth over the
prior two months, this brings the average growth rate over the last three months to 191,000.
The unemployment rate fell to 7.7 percent, but this drop was largely attributable to a decline
in labor force participation. The employment-to-population ratio (EPOP) was unchanged at 58.6
percent, exactly the same as the rate in February of 2012 and just 0.4 percentage points above
the low hit in the summer of 2011. This compares with an EPOP of 63.0 percent in 2007. The 54.8
percent employment-to-population ratio for women is just 0.2 percentage points above the low
hit last month.
The decline in labor force participation in this cycle has been
striking. While the unemployment rate has dropped more than 40 percent of the way back to its
pre-recession level, the employment-to-population ratio is still far closer to its trough than
its pre-recession peak. ...
By education attainment there is the striking anomaly: The EPOP for those with less than
a high school degree is almost back to its pre-recession level. It rose by 1.9 percentage points
in February to 41.9 percent. This compares with a 43.3 percent average for 2007. Insofar as
the aging of the population is a factor depressing EPOPs, the decline should show up most clearly
among those with less than a high school degree since these are disproportionately older workers.
The fact that EPOPs have not fallen much for this group suggests that the aging of the population
is not an important factor behind declining EPOPs. ...
There was some modest good news on the wage front with the average hourly wage increasing
at a 2.85 percent rate in the last three months compared to the prior three. This would indicate
some acceleration and actual real wage growth, but it is way too early to assume the pattern
will continue.
The 236,000 new jobs reported for February are a good sign and better than generally expected,
but there is the risk that this is being driven by unusually good winter weather. This could
lead to a situation like we saw last year with very weak job growth in the spring as the result
of hiring being pulled forward. This is basically a picture of an economy that is showing modest
growth, but has not yet felt the impact of the end of the payroll tax cut and the sequester.
The current elite just don't care...
These charts courtesy of chartmaster Gary at
NowAndFutures.com
Tyler Durden
on 01/29/2013
The
quest for cheap energy and cheap labor is a conquering human urge, one that has played out with
notable ferocity starting with the Industrial Revolution. The introduction of coal into British
manufacturing, and the more recent outsourcing of Western manufacturing to Asia, have marked key
thresholds in this ongoing progression. But despite the harvesting of additional productivity gains
from the more recent revolution in information technology, the suite of macro data suggests that
the rate of advancement in physical production has slowed, notably, in the past thirty
years. Seen in this light, the greatest gains to global industrial production were probably
enjoyed from the late 18th century (when coal extraction and use began in earnest) into the mid-20th
century (when oil reached broad distribution). In contrast, computers, the Internet, and
the leveraging of developing world labor might eventually be seen as the finishing touches on this
great industrial wave.
The explanation is very simple. You say, "As I say, I'm afraid I just don't see it. And what worries
me about that is that the people on the other side are vastly more intelligent than I am but I keep
thinking that they're not seeing something that I am. Which is this obvious point: if everything's
made by the machines then everything becomes revoltingly cheap." - The flaw is the word "everything".
Not everything becomes cheap. Medical care, for example, actually gets more expensive every year
- it looks like it's on an exponential growth curve. Housing isn't going down - it went down a bit
after the housing bubble burst, but isn't on a long-term downward curve. Food looks like it's bottomed
out and is slowly crawling back up in price. For food it looks like it's fairly impossible to get
the price much lower, due to fundamental resource constraints (agricultural land, fertilizer, oil
energy for harvesting, food transport & refrigeration, etc) - I suppose you could argue a revolution
in robotic vertical hydroponic/aeroponic farming might get it to go lower. For housing, I suppose
you could argue someday houses might be made by robotic 3D printing, but housing can already be
built more cheaply but politics and zoning and building codes and concern over property values and
all sorts of political stuff seems to prevent it. Medical care seems also prevented by going down
in price by politics - lobbying on the part of financial/insurance firms, and so on, that prevent
the current financial arrangement from changing. Robots might not be able to lower the prices of
things where the price is actually controlled by politics and not free markets. So the catch is,
if your income goes down exponentially but some of your expenses stay constant or go up, you become
poor.Another catch is that jobs tend to be all-or-nothing - either
you have a job or you don't. If you lose your job at a car factory and don't get
a new one, it doesn't matter if the price of cars goes down to $5000. You need an income higher
than $0. And that's one thing robots might do: they create the possibility for people who lack the
advanced educations, skills, intelligence and creativity to get the new jobs created in the roboticized
economy to have incomes of $0.
Submitted by Tyler Durden
on 02/01/2013 - 08:10
With today's jobs number due out shortly, it is worth pointing out some of the key trends that
we have observed in the underlying data stripped of month-to-month seasonal variance, which expose
the "quality" side of the US non-recovery, instead of the far more manageable "quantity" side. First
and foremost, as we showed over
two years ago, and as the mainstream is
gradually picking up, the US labor force is increasingly transitioning to one of part-time,
and temp workers, which has key implications for wages, worker leverage, and overall job prospects,
all of which logically are negative. But perhaps an even more disturbing trends is the conversion
of America into a gerontocratic worker society, where the bulk of jobs are
handed
out to those 55 and over, which puts all young workers, not to mention college graduates, at
a major disadvantage relative to far more experienced older workers, who are willing to work for
less as they scramble to compensate for retirement shortfalls, and which prevents the natural rotation
of the US labor force from older to younger.
...Economist William Lazonick, director of the University of Massachusetts Center for Industrial
Competitiveness, thinks that economists have gotten a lot of the labor-technology issue wrong. He
reminds us that it was 19th-century economist David Ricardo, author of the
theory of comparative
advantage, who is largely responsible for the modern notion that technology depresses wages
and displaces workers. He wrote a famous book in 1817, during the world's first very first industrial
revolution, in which he argued that machinery would not hurt workers. Then, in a third edition,
Ricardo famously changed his mind. That recantation had enormous impact.
Nineteenth-century thinkers were influenced by Ricardo, and also by Friedrich Engels, whose dad
owned a textile factory in Germany which had some outlets in England. Engels was deeply disturbed
by what he saw in these factories, and at the age of 24 he wrote a treatise called "Condition
of the Working Class in 1844."
Engels saw textile workers treated badly and being replaced by machines as weaving was moving
into factories. He was right about what he saw. A machine known as the "self-acting mule"
which spun cotton was indeed taking over work done by humans. But Engels was also basing his theories
on a moment in time that happened to be the worst economic downturn of the century. That would be
like judging 20th-century factory conditions in the U.S. by visiting Chicago meat-packing plants
in 1933. The problems faced by the workers Engels saw were not a permanent set of conditions, but
partly the result of a cyclical downturn. Technology wasn't really the issue. Many weavers were
forced to move from their homes, where they had traditionally labored, into factories, where conditions
were difficult and where women, who had traditionally worked as weavers, were excluded. In the long
run, factory owners saw that they needed the skills of workers to run the new machines. Britain
became the workshop of the world, workers did pretty well, and the country enjoyed a long economic
boom.
But Karl Marx looked at Engels' work and concluded that automation was decreasing the power of
workers. Marx got many things right, but he may have gotten it very wrong on technology and labor.
It's undeniable that mechanization can sometimes leave workers behind, like makers of Swiss watches,
or, to use a more recent example, compositors who have been replaced by digital printing. But displacement
doesn't have to be inevitable or permanent. Countries can respond with national policies that help
those valuable, highly trained workers acquire new training. They can use local, state, and federal
taxes to help foot the bill. The kinds of policies used by companies makes a huge difference in
how workers experience automation. Japan is the world leader in robots, but it's also a place where
permanent employment is much more common than in the U.S. In 1990, Japan had many times more robots
than factories. But it turns out that in order to make those robots work, companies needed people
for programming, maintenance and repair. Because they didn't lay off employees, firms simply retrained
them. Workers observed the robots and learned how to do new things to work alongside them.
In Lazonick's view, economists have not thought enough about how workers can gain from technological
change. When companies automate, he argues, you can expect more jobs, not fewer. Just look at a
company like Apple, which automates rigorously and yet provides new possibilities for jobs. It produces
software that does things humans used to do, for example, but it employs engineers, designers, and
people who package, market, and sell new products.
Automation increases profits for companies, but for Lazonick the real question is, how are those
profits distributed? Are they being distributed to shareholders for short-term profits? Or are they
being invested back into the company to do vital things like retraining workers, which helps the
long-term economic outlook? The problem is not automation, but greedy CEOs who pay themselves gigantic,
disproportionate sums and follow the dangerous and misguided principle of "maximizing
shareholder value" to distribute profits to themselves, often caring little whether the company
even survives 10 years down the road. What's it to them? They'll have their pay packages and can
move on. The perverse misuse corporate profits is the real culprit, not Rosie the Robot.
Why should we expect companies to spend their money retraining workers? Aren't they around to
make a buck? Certainly many of them are doing quite well in that department, making record-breaking
profits. The truth is that companies are also supposed to have a social purpose. That's why we,
as taxpayers, invest in all kinds of things that allow them to do business, from constructing roads
and airports to basic research. (And why we confer on them the extraordinary privilege of limited
liability and other legal advantages.) Apple would not be able to make its wondrous gadgets if the
government had not invested heavily in the development of the Internet and things like touchscreen
technology. So Apple owes something back to those who have footed the bill for its success. That
includes not only sharing profits with workers, but investing in retraining them when new advances
in technology change the workplace. It's not just altruism, it's about fairness. And smart economics.
Workers aren't vulnerable because of robots. Investment in automation is a good thing that can
produce more, and better jobs. People are vulnerable because of misguided policies that depress
economic growth, reward short-term profit-making, and leave workers with nothing left in their pockets
to buy goods and services – not even robot vacuum cleaners, now endowed with human-like emotive
responses so we won't be mad when they break down -- which they very frequently do. And guess what?
They need a human to fix them.
Tyler Durden
on 01/29/2013 - 10:45
It is impossible to understand job creation without understanding value creation and labor/overhead
costs.
People hire other people when their labor creates more value than it costs to hire them. When
labor costs are high, the value created must also be high; it makes no sense to hire someone if
doing so generates a loss. When labor is cheap, the bar of value creation is lowered, and so the
risk of hiring a worker is also lower: they don't have to add much value to be worth their wage.
This is why you see many low-value jobs in developing-world countries.
If overhead costs - the cost-basis of doing business in the U.S. - keep rising faster than gross
profits (out of which overhead is paid), then the owners have little choice: they can either close
the business before they are personally bankrupted, cut everyone's pay or lay off some employees
and somehow raise the productivity of the remaining workers to maintain enough value creation to
survive. This is the U.S. economy in a nutshell.
Submitted by Tyler
Durden on 01/27/2013 - 19:51
Employment is dead in the water because opportunities for organic expansion are few and the
cost basis of doing business in the U.S. keep rising. That vise forces businesses large and
small to reduce labor costs while boosting productivity. There is no other way to stay solvent in
a post-bubble, over-capacity, over-indebted consumerist economy awash in too much of everything
but energy, common sense and fiscal prudence.
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