News What exactly is the employment situation in the US?

[russ_watters]

The problem with using an absolute term of reference to determine poverty levels is that you end up with the ridiculous proposition that there has never been anybody living in poverty ever as every generation from our neolithic ancestors onwards has had more than their predecessors.

So we are in agreement that tremendous progress has been and is being made, even for those at the very bottom. That's a good start. Like I said, the fact that standards change with progress is a good thing, but still, it isn't consistent with the dictionary definition of the word. So all poverty statistics must include the caveat that the standards are changing, so even if you choose to define certain people as poor, you must still say they are getting richer because as you pointed out, if you stretch the timeframe enough, "poor" is richer than "rich" used to be. Ironic.

As for the phrase "the poor are getting poorer",this is in relation to their share of the pie that is personal income as the rich keep taking a larger proportion of the pie leaving a smaller proportion for the poor. Poor and poorer are relative terms and as they are getting relatively less of the pie and so the differential between the haves and the have nots is growing it is fair to say the poor are getting poorer.

Yes, I know that's how liberals like to say it, but that doesn't make it a useful thing to say.

It seems to me that people are looking to equate a definition of poverty with being destitute.

No, Art, I'm just saying that the definition liberals like to use is highly misleading, that's all. And word "destitute" is an absolute term just like the word "poverty" is - the line is just in a different place.

 

[russ_watters]

I thought we were talking about short term trends. The OP, for instance, talks only about one, or five-year trends.

The OP was about the short term unemployment trend because I wanted to concentrate on what the employment situation is like now. But that isn't what we're talking about now. You were correct in your first recent post, in looking at long-term trends for income and poverty rates. The economic cycle is a reality, and it is something people liked to ignore when lambasting Bush for the economic situation a year or two ago. People actually were claiming that the two to four year downturn was the start of a long-term trend. As long as you can separate the two issues, we'll be clear...

And if it's long-term trends that you are looking at, an absolute 25 year difference is quite useless. (eg : 1993/94 saw lower inflation adjusted incomes for the bottom two brackets compared to 15 years before; but 5 years later, or in 1998/99, there was a 30% increase compared to 15 years before) Instead, a long term trend should be fit to say, a 25-year moving average.

Picking and chosing to compare the top of a cycle to the bottomis not a valid way to analyze long-term trends, and I wouldn't do that and wasn't doing that. Heck, that isn't what a "trend" is.

But you are allowing for inflation, right ? This isn't really an absolute number in that the inflation rate is calculated off of a consumer price index which changes with vary trends in purchasing.

Not really. The CPI is the value of the dollar, and that's the point: creating an absolute scale in order to make absolute comparisons. What people buy with their money isn't the point, the point is how much it costs.

Now, the products in the CPI are adjusted to match changes in what people spend their money on, but that is just so, well, it can measure the change in the price of what people spend their money on. It isn't a social commentary, its a measure of the absolute value of the dollar.

The weights applied to different goods that make the index are chosen from the ratios of total consumption in an urban location. And the total consumption reflects the consumption by all income groups, and tends to be weighted towards the higher incomes. So, do you consider the distribution in the CPI (or the CPI-U, which is used to calculate inflation) a fair reflection of the needs (ie : food, shelter, clothing, healthcare, education) of the poorest people ?

The CPI isn't a social commentary. It isn't supposed to reflect the needs of anyone.

Or do you think some other index would be better suited to judging poverty ?

The CPI isn't used to judge poverty.

For instance, the CPI index for people 62 years and older (the CPI-E) has been growing faster than the CPI-U. The inflation rate calculated based on their consumption would be higher than the value you use.

It would be interesting to use the CPI-E to index incomes for older Americans and see how they have changed, but the Census Bureau is a little thin on age-based numbers.

In any case, I'm more concerned with the overall picture.

So, short of seeing proof that the CPI-U is a pretty good representation of the consumption of the poor, I can't say I agree that the inflation adjusted income is the relevant indicator or poverty.

You don't have any good reason to assume that it isn't a good index either, but you are going to because you don't want to accept what the data shows? No statistics are perfect - that's kinda inherrent to what statistics are - so using your logic, you could toss out any statistics you choose to just because they lack utter perfection.

No, the CPI isn't perfect, but it is the best statistic available for determining the real value of the dollar.

Anyway, not that I think it'll matter, but across those different CPIs, the changes are relatively consistent. The reason the CPI for older people is different is almost entirely due to the increase in medical costs. See table 2: http://www.aarp.org/research/socialsecurity/reform/aresearch-import-327-DD52.html

The point is, when food gets more expensive for rich people, it gets more expensive for poor people by roughly the same amount. When gas gets more expensive for rich people, it gets more expensive for poor people by roughly the same amount. Etc, etc., etc.

What gets me here is that you seem to accept that the living conditions for people we call "poor" are improving, but you still are looking for ways to avoid accepting statistics that say it.

 

[Art]

So we are in agreement that tremendous progress has been and is being made, even for those at the very bottom. That's a good start. Like I said, the fact that standards change with progress is a good thing, but still, it isn't consistent with the dictionary definition of the word. So all poverty statistics must include the caveat that the standards are changing, so even if you choose to define certain people as poor, you must still say they are getting richer because as you pointed out, if you stretch the timeframe enough, "poor" is richer than "rich" used to be. Ironic.

So now that you have denied the existence of poverty through measuring income against our ancestors what word would you suggest should be used to describe the living conditions of those who cannot afford decent food, healthcare, clothes or education? Any definition of poverty must be related to one's current environment to have any meaning at all.

Yes, I know that's how liberals like to say it, but that doesn't make it a useful thing to say.

Perhaps not in your opinion but then again you would think that as it undermines your argument. Most reasonable people would probably think that it is more germane to adjudge one's economic standing against the mean of today rather than against the mean of the mid 1800s (or whenever) when life expectancy was 39.

No, Art, I'm just saying that the definition liberals like to use is highly misleading, that's all.

Obviously not that misleading as I and I imagine most other people understand what they mean. The distribution of resources is leaning more and more in favour of the rich. More of the pie for those at the top of the ladder and less of the pie for those at the bottom. I really do not see what is misleading about that.

And word "destitute" is an absolute term just like the word "poverty" is - the line is just in a different place

If the terms poverty and destitute are absolutes with lines in different places would you please tell us precisely where you believe the lines for each are drawn and when the baseline for these absolute references were laid down?

 

[Gokul43201]

Russ, I think you've missed the point I'm trying to make. But I'll give it another quick shot :

The point is, when food gets more expensive for rich people, it gets more expensive for poor people by roughly the same amount. When gas gets more expensive for rich people, it gets more expensive for poor people by roughly the same amount. Etc, etc., etc.

When BMWs get more expensive (for rich people) it makes no difference to the poor people. And the really poor people spend a larger fraction of their income on food than the really rich people. Also, the elderly, who live on pensions, make up more of the lower income groups and spend a lot more on healthcare, which as you stated, is going up faster than other stuff.

If you determine a CPI based on income level, and calculated an inflation rate accordingly, you will get different adjustments to the dollar (adjustments that are more elevant to the person spending that dollar). That will give you a better representation of the purchasing power of a particular income group.

What gets me here is that you seem to accept that the living conditions for people we call "poor" are improving, but you still are looking for ways to avoid accepting statistics that say it.

No, I did not accept that (living conditions are improving). For instance, in the major cities, homelessness has gone up by over 25% (up by 40% in New York) in the last 5 years. So, among the poorest folk (those that could just barely afford shelter 5 years ago and can't now), living conditions have worsened. These people are way below the 20 percentile mark and are skipped by your statistics.

And I'm not looking for ways to avoid accepting statistics.

You were the one avoiding the statistics published by the US Census Bureau regarding poverty rates. You think that is not a resonable judge of poverty. You provided an alternative. I accepted your argument but pointed out that your alternative is also not a good representation of poverty, and I suggested a correction that would reduce the error. Yet, somehow, I'm the one that's unwilling to accept the statistics ?

Even accepting your numbers for the approximation that they are, I wonder what the trends are for the lowest 5% and 10%.

 

[Astronuc]

Employment Opportunities for College Graduates Less Abundant

http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=1627413

by Christian E. Weller
May 5, 2006

College graduates can take some solace from today’s release of employment figures by the Bureau of Labor Statistics (BLS), although the employment options for those without a college education are not as abundant as they once were.

College graduates do better than others when overall job creation is lagging. According to today’s release by the BLS, the economy created 138,000 new jobs in April, well below expectations and below long-term average job creation from 1947 to 2001. Moreover, the previous two months’ employment figures were revised downward by a combined 36,000 jobs.

As a result, the current business cycle that started in March 2001 has had the lowest average job growth, at 0.03%, of any business cycle since World War II. Even average job growth during the period since August 2003, when job creation finally became positive again, has only been 0.12% — or 32% below the long-term average job growth before this business cycle. Not surprisingly then, there have only been six months — out of 61 — in this business cycle that had job growth that was above the long-term average.

With weak job growth, it is not hard for college graduates to do better than others. In April, the number of employed college graduates rose by 156,000, while the number of employed high school graduates declined by 201,000, and the number of those employed with some college education dropped by 75,000. Yet, the number of those employed without a high school degree also rose 138,000.

Employment growth in April, then, was fastest among those with the highest educational attainment, but opportunities also grew for those with the lowest educational attainment. Those in the middle educational rungs saw job chances decline. To some degree, these trends are mirrored in the job growth by industries.

Specifically, the largest increases came in: education and health care, particularly doctors’ offices and nursing jobs, with 35,000 jobs; in professional and technical services such as computer consultants, with 28,000 new jobs; in financial services, with 26,000 new jobs; and in restaurants, with 18,800 new jobs in April.

http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=1579981

Executive Summary

This report discusses two aspects of economic mobility in the United States. The first is the question of intergenerational mobility, or the degree to which the economic success of children is independent of the economic status of their parents. A higher level of intergenerational mobility is often interpreted as a sign of greater fairness, or equality of opportunity, in a society.

The second aspect is the short-term question of the amount by which family incomes change from year to year. By studying short-term mobility we can determine whether incomes are rising or falling for families at different points in the income distribution. We can also determine whether the size of these income variations, or the level of annual income volatility, is changing over time. Increased volatility is undesirable to the extent that it represents an increase in economic insecurity.

Foreclosures Up 72 Percent From Last Year (1Q2006)
Georgia, Colorado and Indiana Post Nation’s Highest First-Quarter Foreclosure Rates

National foreclosure filings continued to climb in the first three months of 2006, evidence that more U.S. homeowners are struggling to stay current on their monthly mortgage payments.

A total of 323,102 properties nationwide entered some stage of foreclosure in the first quarter of 2006, a 72 percent year-over-year increase from the first quarter of 2005 and a 38 percent increase from the previous quarter, according to the RealtyTrac™ U.S. Foreclosure Market Report. The nation’s quarterly foreclosure rate of one new foreclosure for every 358 U.S. households was higher than in any quarter of last year.

“The sharp increase in foreclosures in Q1 continues a steady upward trend that we’ve observed since the beginning of last year,” said James J. Saccacio, chief executive officer of RealtyTrac. “Foreclosures have now increased in four consecutive quarters and are on track to go above 1.2 million in 2006, which would push the nation’s annual foreclosure rate to more than 1 percent of U.S. households.”

“With the current market conditions, it’s unlikely that foreclosures will return to the historically low levels they were at in recent years when interest rates hit rock bottom and home price appreciation skyrocketed in many areas of the country,” he said. “But it’s possible that foreclosures will flatten out or even move a bit lower this Spring if more buyers and investors enter the market, giving homeowners in distress a better chance of selling their properties to avoid going into default or foreclosure.”

http://www.realtytrac.com/pub/articles/aol/foreclosure_trends_2006Q1.asp?m=1 Some people are just not earning enough to keep up. Possibly some/many of those who lose their home were not careful with debt, but unemployment maybe a factor.

 

[Astronuc]

Iowa Town Prepares for Maytag Closures
http://www.npr.org/templates/story/story.php?storyId=5403713
by Joyce Russell

Weekend Edition Sunday, May 14, 2006 · Maytag's new owner, Whirlpool, says it will make huge cuts to the white- and blue-collar work force in Newton, Iowa, laying off thousands of workers. Slated to close are Maytag's corporate headquarters and research center in Newton, a town synonymous with Maytag that has seen generations of family members work in the state's most visible Fortune 500 company.

Iowa Town Hit Hard by Whirlpool Job Cuts
http://www.npr.org/templates/story/story.php?storyId=5397930

May 11, 2006 · Whirlpool Corporation says it is eliminating more than 4,000 jobs following the recent purchase of its rival, Maytag Corporation. Many of the cuts will come from the closing of plants in Newton, Iowa. Robert talks with Pete Slings, who has worked at Maytag for 20 years and owns a town sports bar.

 

[Astronuc]

In one recent period, low-wage employers in companies like Wal-Mart (the nation's largest corporate employer) and McDonald's produced 44 percent of the country's new jobs, while high-wage employers generated just 29 percent. Unless we turn things around, we will soon see a steep downward slide in our standard of living.

http://www.usnews.com/usnews/news/articles/060529/29gergen_3.htm

Those kind of statistics suggest a rather dim prospect for the US employment situation.

 

[selfAdjoint]

http://www.usnews.com/usnews/news/articles/060529/29gergen_3.htm

Those kind of statistics suggest a rather dim prospect for the US employment situation.

Not to mention salaries. Was Perot right?

 

[russ_watters]

In one recent period, low-wage employers in companies like Wal-Mart (the nation's largest corporate employer) and McDonald's produced 44 percent of the country's new jobs, while high-wage employers generated just 29 percent. Unless we turn things around, we will soon see a steep downward slide in our standard of living.

Those kind of statistics suggest a rather dim prospect for the US employment situation.

That depends on where the jobs were lost. I don't really know, but it would make sense to me that the low-wage jobs would be the first to get cut in an economic downturn. So it may just be that they're getting back what was lost.

Also, "In one recent period" makes me suspicious. How long was this period? Some job figures come out monthly, & short term fluctuations can provide misleading statistics for random pundits to exploit. The source isn't cited.

We're still awaiting the 2005 income stats, of course...

 

[Astronuc]

The period could have been a recent quarter, but your right, reference isn't cited. On the other hand, Gergen is usually careful.

Yeah, we're still waiting for 2005, which I think will be out soon, or perhaps June time frame.

From what I've seen, the low wage jobs have replaced high wage jobs, and some people who took 'early' retirement (with benefits) have come back into the job market.

 

[Astronuc]

An apparent improvement or positive outlook -

More than 70 percent of hiring managers plan on hiring new grads this year, according to a recent survey. The top jobs by number of offers reported are private-sector accountant and management trainee, each of which pay start at more than $38K per year.

from jobs.aol.com

Top 10 Jobs for 2006 Grads
Laura Morsch, CareerBuilder.com writer

Accounting (private) -- $45,817
Management Trainee -- $38,482
Financial/Treasury Analysis -- $46,335
Sales -- $38,830

New graduates make excellent salespeople because they're high energy, driven to success and undaunted by rejection. They also save their employers training time, Haefner said.

and they are less expensive than experienced professionals.

Project Engineering -- $50,365
Consulting -- $50,120
Design/Construction Engineering -- $48,109
Accounting (Public) -- $44,668
Teaching -- $30,377
Field Engineering -- $50,812

 

[turbo]

That depends on where the jobs were lost. I don't really know, but it would make sense to me that the low-wage jobs would be the first to get cut in an economic downturn. So it may just be that they're getting back what was lost.

Also, "In one recent period" makes me suspicious. How long was this period? Some job figures come out monthly, & short term fluctuations can provide misleading statistics for random pundits to exploit. The source isn't cited.

We're still awaiting the 2005 income stats, of course...

I don't know if other parts of the country are seeing similar trends, but here in Maine, we have lost thousands of high-paying manufacturing jobs in the last decade or so, and the "new" jobs like Wal-Mart come at the expense of other jobs in the private sector that compete with Wal-Mart, hurting mom-and-pop business that used to be the heart of the community.

As for older folks rejoining the work force, rising health-care costs are only part of the problem. Some of these older folks are being forced to take these low-wage jobs so they can keep up with rising property taxes, and not lose their homes. Low-wage jobs attract people to the community that are a drag on the tax base. Young families living in house trailers or rented apartments pay no property taxes, often need community assistance services to get by, their children place extra burdens on our school systems, etc. Here, education costs amount to about 50% of the property taxes, so when the population of a town grows quickly (especially in less-affluent citizens with no taxable property), the burden falls disproportionately on older people with their own homes and fixed incomes.

In the town where we used to live, since WalMart showed up (about 10 years ago), there has been an explosion of fast-food joints (more low-wage jobs!) and two different rent-to-own businesses. When rent-to-own stores start cropping up in your town, and your property taxes jump almost 30% in one year, it's time to find another place to live. We did.

 

[Astronuc]

NYTimes, Editorial, Aug 8, 2006
The Non-Working Man’s Burden

It’s too soon to tell whether the recent jump in unemployment — from 4.6 percent in June to 4.8 percent in July — is the start of a worsening jobless trend. What is clearly disturbing, however, is that for nearly a year the labor market has not been as tight as one might assume from the jobless rate. And now, the ranks of the unemployed have grown.

Contrary to popular belief, a low unemployment rate does not necessarily signify a strong economy. It can be a sign of weakness if it reflects a shrinking labor force, as has been the case throughout much of the Bush-era economic expansion. Today, nearly five years after the end of the last recession, the share of the population at work — the employment rate — is 1.7 percentage points below its peak in April 2000, indicating millions of potential workers who have dropped out of the labor force completely and are thus no longer counted as unemployed.

But the phenomenon is extremely troubling among millions of men in the prime of their working lives, ages 35 to 55. The Times’s Louis Uchitelle and David Leonhardt reported recently that about 13 percent of prime-age American men are not working — more than double the percentage in the brisk employment decades of the 1950’s and 1960’s — and most of them have quit looking for jobs.

It’s easy to dismiss men who aren’t working as lazy bums. It would be more effective to attack the trap of layoffs and the lesser jobs that follow, which many of these men are trying to avoid. A place to start would be to assess the problem forthrightly. The Bush administration has often bragged about the economy’s relatively low unemployment rates rather than admit that they mask economic weakness. Administration officials have also talked up the economy’s job growth record by citing totals without context, thereby masking the fact the job creation during the Bush years has badly trailed historical norms.

Perhaps most damaging is the administration’s insistence that more education and training are a panacea for job loss. Higher levels of learning and skill don’t magically create jobs.

Hmmmm.

Housing starts have slowed and houses for sale are on the market much longer. The housing construction industry, buoyed by reduced interest rates actually produced many of the jobs 'created' during the last 4-5 years.

 

[edward]

NYTimes, Editorial, Aug 8, 2006
The Non-Working Man’s Burden
Hmmmm.

Housing starts have slowed and houses for sale are on the market much longer. The housing construction industry, buoyed by reduced interest rates actually produced many of the jobs 'created' during the last 4-5 years.

Along with the housing boom has been an increase in the commercail building sector. Restaurants, grocery stores, ect.

The housing market is slowly deflating here in the Southwest. There are definite signs that things are slowing down. I noticed one developer is offering a free swimming pool with the purchase of a home, another is offering to pay for the first six months mortgage payments.
Even if the housing bubble slowly deflates there are going to be thousands of people out of work.

Here in AZ, as I suspect in other states, we have a large number of illegals working in construction. Being in an underground economy the illegals are going to present us with a major social/welfare problem if their jobs are lost.

It's a common dilemma in Tucson's $2 billion-a-year home-building industry. At least 34 percent of Arizona's construction workers are here illegally, based on estimates from the Pew Hispanic Center, a nonpartisan research group. Two dozen local legal and illegal workers told the Star that in their experience, the percentage is more than half.

http://www.azstarnet.com/news/133282

 

[Astronuc]

This from a MoJo blog -

As those in the nation's highest income brackets continue to see gains, we now find out that the median hourly wage for American workers (adjusted for inflation) has declined a full 2% since 2003, even as the productivity of those workers has increased. Will the ever-increasing struggles of the average worker have an impact on Republican incumbents facing midterm elections this fall? That remains to be seen, but anyone who thinks the economy's not so bad for the every-man should think again.

http://www.motherjones.com/mojoblog/archives/2006/08/yet_more_eviden.html

Straight Story: Census data

This week, The Census Bureau released its annual report on wages, poverty and health insurance. Chris reads between the lines.

http://marketplacemoney.publicradio.org/display/web/2006/09/01/census_data/

A sign of a downturn?

The government said today that construction spending fell 1.2 percent in July — the biggest drop in five years. The main reason: home building is down. So we're at the point of asking, will housing take down the whole economy?

http://marketplace.publicradio.org/shows/2006/09/01/PM200609011.html

PATRICK NEWPORT: They key thing is that it has been a big driver of the expansion over the past three or four years. So, it's been a contributor to growth. And now we have a swing so that it's now taking away from growth. So, instead of adding to growth half a percent, one percent every year, it's now going to start taking off from growth.

But don't look now, we could be in a recession already -

So, are we in a recession or not?
http://marketplace.publicradio.org/shows/2006/08/31/PM200608311.html

Consumer spending in August jumped to its highest point in six months. But a barometer that's predicted four of the last five recessions says we're firmly in the midst one. What's really going on?

BOB MOON: What caught our attention today was a note of commentary within the so-called "business barometer" put out by the National Association of Purchasing Management in Chicago. Pointing to a slight dip in the reading, the note suggested — quoting here — "the U.S. economy could be in a recession at this time."

Really?

Not too many prominent experts feel that way. In fact, Wachovia's chief economist John Silvia says many of the indicators out just today point to a contrary conclusion:

JOHN SILVIA: "Personal income is growing around 7 percent. Consumer spending up around 5 percent. You're looking at factory orders, shipments, all growing at 8 to 10 percent growth. I mean, that's not the scenario where you have recession."

Silvia says he's not ruling out a recession, but wouldn't put the odds at any more than 1-in-20 in the coming six months.

But there are those who are much less optimistic. Nouriel Roubini is a Turkish-born professor of economics at New York University. He argues that the booming housing market has been the main engine of the country's economic growth over the past several years. And, unlike the bursting of the tech bubble that led to the last, relatively-tame recession, he says a housing downturn will have a much broader and deeper impact:

NOURIEL ROUBINI: "This housing bust is going to have much more severe effects than the bursting of the tech bubble in 2000-2001, so the recession is going to be more severe."

Roubini expects those effects will be felt by sometime next year, in less consumer spending and more lost jobs. And he predicts the recession will last much longer this time around.

 

[Skyhunter]

Not that having a job has not necessarily been such a great thing.

Even while wages have failed to grow, corporate profits have soared. California corporations enjoyed a 368.9 percent increase in income between 2001 and 2004, the report said, while income for personal tax statements (which often excludes very low wage earners) rose 10.7 percent in the same period. Employment grew 1.2 percent from 2001 to 2004.

http://sfgate.com/cgi-bin/article.c...+profits+wages+personal+income&sn=001&sc=1000

The average worker is not a corporation, or someone who owns a lot of corporate stock, therefore the effects of the "good economy" are not being realized by the average worker.

The idea that if the rich get richer, the wealth will trickle down is valid, except that the rich control the plumbing, and through corporate manipulation of the legislatures they have upgraded all the faucets. The only thing that trickles down to the middle and lower classes, seems to be coming from the sewer.

 

[Gokul43201]

Not that having a job has not necessarily been such a great thing.

Reminds me of the now famous NOrthwest Airlines booklet.

http://www.columbusdispatch.com/business-story.php?story=dispatch/2006/08/27/20060827-G3-02.html

Northwest rattled some employees with one section in the handbook. In that section, "Coping with Job Loss," was a list of "101 Ways to Save Money," which was not reviewed by Northwest management, Blahoski said.

This was given to employees, some of whom might be losing their jobs through no fault of their own. Some of what they were told:

• Buy spare parts for your car at the junkyard.

• Get hand-me-down clothes and toys for your kids from family and friends.

• Take a shorter shower.

• Buy old furniture at yard sales and refinish it yourself.

• Volunteer two hours a month through a food-sharing program to get reduced-cost food.

• Hang clothes out to dry.

• Borrow a dress for a big night out, or go to a consignment shop.

• Ask your doctor for samples of prescriptions.

• Don’t be shy about pulling something you like out of the trash.

Was that the stupidest corporate decision of the year or what?

 

[Skyhunter]

Reminds me of the now famous NOrthwest Airlines booklet.

http://www.columbusdispatch.com/business-story.php?story=dispatch/2006/08/27/20060827-G3-02.html


Was that the stupidest corporate decision of the year or what?

No this is an example of compassionate corporatism.