http://economix.blogs.nytimes.com/2010/09/03/comparing-this-recession-to-previous-ones-job-changes-6/?emc=eta1
http://www.nytimes.com/2010/09/04/business/economy/04jobs.html?_r=1&emc=eta1
Motoko Rich has an excellent article in today's nytimes.com on the new report that American businesses have added more jobs in the last three months than originally estimated, "... calming fears of a double-dip recession." He goes on to tell us that the "private sector" added 67,000 jobs in August, with some of the strongest gains in health care, food service and temporary help. That was higher than "consensus forecasts."
However; Rich goes on to point that the wind down of the 2010 Census, as well as state and local government layoffs, led to an overall loss of 54,000 jobs in August.
To use an old expression, Rich has done his best to "perfume this pig." Nominally, it takes roughly 125,000 jobs created per month just to stay even with population growth. Do we see that here? No.
Catherine Rampell's chart (attached) from today shows in one "picture" job changes in this recession compared to recent ones - the black line represents the current downturn. We are so far away from "recovering" that the contrast is stark.
Robert Reich, in his article (again, the Times, 9/2/10) posted on our SOM MBA Reading Group Blog, points out that this is a problem that has to do with the "structure of the economy" and not the business cycle. Basically, consumers no longer have the purchasing power to buy the goods and services they produce as workers. So, to Reich's way of thinking, this crisis began decades ago when, "... a new wave of technology - things like satellite communications, container ships, computers, and eventually the Internet - made it cheaper for American employers to use low-wage labor abroad or labor-replacing software here at home than to continue paying the typical worker a middle-class wage. Even though the American economy kept growing, hourly wages flattened. The median male worker earns less today, adjusted for inflation, than he did 30 years ago."
Reich has some concrete suggestions that could help to generate a more widely shared prosperity. Perhaps he should be back in his old job (secretary of labor in the Clinton administration) when times were better and we had a U.S. budget "surplus."
For us, best case, it's a long way back from Catherine Rampell's black line.
Subscribe to:
Post Comments (Atom)
Thank you for your enlightening posts!
ReplyDeleteExcellent analysis from Reich. And it is even better that he proposes some creative solutions to the issue. In a country where tax=evil in people's mind, one has to be creative as to how wealth can be redistributed elsewise.
Here is a link to Piketty's and Saez' research on income inequality: elsa.berkeley.edu/~saez/pikettyqje.pdf
Various graphs on how much of income/capital is detained by the top 10%/1% riches through time in the US, and on pg33 one showing CEO pay vs average salary for the 1970-2000 period.
Yeah the wealth inequality is at the heart of the current economic downturn, in my humble opinion.
ReplyDeleteThe problem, however, is that those it favors have disproportionate power and influence in our government's decision making process.
Those it harms have little to no say in the same process. There will undoubtedly come a time when enough is enough, but based on how well the ruses they've laid out for the middle class to get distracted by are working, that time won't come anytime soon.
http://www.newyorker.com/reporting/2010/08/30/100830fa_fact_mayer
Christine: exceptional input, as always! Your insights are much appreciated and additive to my efforts to put out top flight information in the classroom! Please continue your inputs!!!
ReplyDeleteCraig: Thanks so much for the input and thanks again for your frequent visits which are also additive to what we're trying to get across in the classroom!
Both of you rock!