Fresh audio!
Just posted to my Radio archives:
April 15, 2010 Robert Scott of the Economic Policy Institute on how China’s currency manipulation kills American jobs • Matt Taibbi on how Wall Street ripped off Jefferson County, Alabama, and the U.S. government
Links to relevant bios and articles at archive site.
Letter to the editor
Financial Times – April 16, 2010
Republicans are in the White House
From Mr Doug Henwood.
Sir, Clive Crook’s call (April 12) for a revival of an old-style GOP opposition is a little strange, since Barack Obama himself is a liberal Republican. Or maybe not so liberal a Republican.
Consider the healthcare bill. The individual mandate has its origins in the Nixon administration’s response to Teddy Kennedy’s single-payer bill in the early 1970s. The insurance marketplace has its roots in the American Enterprise Institute’s response to Bill Clinton’s healthcare scheme. Speaking of Mr Clinton, wasn’t it he who said “we’re all Eisenhower Republicans here”? And he wasn’t too happy about it.
The not-so-liberal Republican part is most visible in education policy. President Obama has continued George W. Bush’s “No child left behind” emphasis on testing and charter schools, and has even taken up attacking teachers’ unions.
Arne Duncan, his education secretary, has declared in terms indistinguishable from Milton Friedman’s that Hurricane Katrina was the best thing that ever happened to the New Orleans school system because it furthered that quasi-privatisation agenda.
Who needs “moderate” Republicans in opposition when they’re already in power?
Doug Henwood,
Left Business Observer,
Brooklyn, NY, US
Fresh audio
Just posted to my radio archive:
April 8, 2010 Diane Ravitch, former conservative educational reformer turned critic of the privatization agenda and author of The Death and Life of the Great American School System, on the awfulness of the now-bipartisan scheme of testing, charters, union-busting, etc.
April 3, 2010 (KPFA version) Ann Harrison, labor economist at Berkeley, on the effects of the anti-sweatshop campaign on Indonesian footwear workers (paper here) • Steven Hill, author of Europe’s Promise, on the Old World as an economic model for the U.S.
Radio commentary, April 8, 2010
Just one guest up on today’s show, Diane Ravitch, the former conservative educational reformer turned critic of the whole testing and privatization agenda that is now not only the province of the Republican party, but the Obama administration as well.
economic news
Since I want to say a few words about Ravitch and education before playing the interview, only a few brief comments on the economic news. One, it looks like American consumers are going back to their freespending ways. They haven’t yet reached the point of irrational exuberance, but the preliminary reports on shopping in March suggest that it was one of the best months in a decade. How people are funding this is beyond me. The job market is still weak, with poor prospects for serious recovery. Household blaance sheets still stink, with the asset side down for most middle-income families (their principal asset is typically their house, whose price may well still be sinking) and the liability side still high (mortgage and credit card debt, shrinking mildly but from a very elevated level). It’s a little scary, actually. I’ve been sounding off a lot about how our elite has learned nothing from the crisis; now it’s looking like everyone else is in the same boat.
Oh, and Greece is back in trouble again. A couple of weeks ago, the EU announced some sort of rescue package for Greece, but aside from an austerity program to be imposed on the Greek masses, there wasn’t much substance to it. Now the markets are back to selling Greek bonds and making life miserable for that country. It looks like Greece, unlike the USA, doesn’t have the luxury of learning nothing from crisis—though my guess is that the U.S. exemption won’t last forever.
education
Ok, now to Diane Ravitch. Diane Ravitch is a historian of eduation, and an education policy specialist. She got famous for her conservative ties—she served in the George H.W. Bush adminsitration and found herself signing on with the whole Republican schools agenda: choice, testing, and privatization. Several years ago, she had a change of heart and mind of the sort that’s very rare in public life. She realized that the policies she’d been promoting were not only ineffective, they were destructive.
She’s now out with a new book, The Death and Life of the Great American School System: How Testing and Choice Are Undermining Education, published by Basic. It’s a very good book. It’s a detailed, smart, yet very readable analysis of the controversies around public education today, written with a historian’s sense that all this didn’t begin the day before yesterday.
Before playing the interview, recorded earlier in the week, I want to underscore a couple of points. First, while the whole testing and choice agenda, one that ultimately tends towards the privatization of the public school system, was once a Republican obsession, it’s now become a bipartisan affair. The Obama administration hasn’t merely continued the Bush education agenda—in many ways, they’ve intensified it. With the Republicans, it’s all-too-easy to be scandalized by the notion of eduation policy being set by absolute yahoos, who not only don’t read books, but are suspicious of those who do. (And by that I don’t mean to deny that there are serious conservative intellectuals—there are. I’m thinking srrictly of politicians like George W. Bush and his cabinet, and most of the Republican Congressional delegation.) But Obama is far from a yahoo, and so too most of the people who surround him. So why are these non-yahoos pursuing such a yahoo agenda?
Though not yahoos, they are a bunch of centrist technocrats. Technocrats are usually obsessed with what they like to call “metrics,” but they’re pushing policies, like school choice, charter schools, and vouchers, that have absolutely no support in experience. There’s no evidence that they imrpove educational outcomes. The only reasons I can think of for this now bipartisan consensus is that privatizing schools is a way of saving money, and that the whole notion of choice and competition fits in nicely with reigning bourgeois ideology. Note that the business and political elite that is pushing this agenda doesn’t, for the most part, send its own kids to these public schools. They send their kids to private schools, with rigorous traditional curricula, and, in many cases, a “progressive” approach to education. A regime of basic skills and military discipline isn’t good enough for their kids—just for the masses. Maybe that’s another reason for this agenda: producing better cogs for the economic machine. But it’s going to make us dumber.
During the interview, I mention the similarity of Education Secretary Arne Duncan’s comments on Hurricane Katrina’s beneficial effects on the public school system to those of right-wing icon Milton Friedman’s. I’m not exaggerating. In January, Duncan called Katrina “the best thing that happened to the education system in New Orleans.” That’s because it forced charter schools and the rest of the agenda onto the city. And here’s what Milton Friedman wrote in the Wall Street Journal in December 2005: “Most New Orleans schools are in ruins, as are the homes of the children who have attended them. The children are now scattered all over the country. This is a tragedy. It is also an opportunity to radically reform the educational system.” Well, Friedman posthumously got that opportunity. Who could have guessed that a Democratic administration would be so enthusiastically pushing the program. Obama has erased what was one of the surviving major differences between the two parties, education policy.
And second, Ravitch writes and talks about the central role played by a handful of very rich foundations in pushing this agenda. The sinister role of foundations, unaccontable bodies run by rich people and their hired hands, in public life, is rarely talked about. Part of the reason for that is that many of the people who might talk about them, and many of the forums that might publicize their talk, are on the foundation dole, or would like to be. I’m not. And I’ll never miss an opportunity to point out how toxic these things are.
Radio commentary, April 1, 2010
March employment
First, a few words on the U.S. employment report for March, released on Friday morning. While the headline job gain of 162,000 looked pretty decent, especially after the huge declines of 2008 and early 2009, 30% of the gain came from temporary workers hired to conduct the Census, and another 25% came from temp firms in the private sector. So more than half the gain was in jobs designed not to last.
There were a few bright spots. Manufacturing added 17,000 workers, its third consecutive monthly gain—a sterling performance for a sector that lost jobs for 35 months in a row, and was in its own private recession for a dozen years. Manufacturing employment is now below where it was in 1941—not as a percentage of the total workforce, but in absolute numbers, a period when overall employment nearly quadrupled. (Manufacturing was over 30% of total employment then; now, it’s 9%.) Employment in bars and restaurants also grew, good news for the sybarites among us.
The unemployment rate held steady at a very high 9.7%, and the broadest measure of joblessness, the so-called U-6 rate, which takes account of people working part time who want full time work but can’t find it as well as those who’ve given up the job search as hopeless, rose 0.1 point to 16.8%, an extremely high number. The probability of a person unemployed in February finding a job in March fell below 20%, to an all-time low (and these numbers, using a technique borrowed from the economist Robert Shimer, go back to 1948).
Average earnings fell by 0.1%, before adjusting for inflation. Declines in wages are very rare, so despite the vaguely improving tone of the employment stats, the labor market continues to be very weak.
We’re in a deep hole, and it’s going to take a long time to get out of it.
backward glance: employment reality check
And now a bit of statistical arcana. As I point out here from time to time, the monthly employment numbers are based on a survey of employers. It’s a very large effort, about 300,000 establishments, but as with any survey, it’s necessarily incomplete. It covers only about a quarter of the places that people work. You couldn’t canvass the entire universe of employers every month and get the data out with anything approaching timeliness. So the government statisticians—who, I can’t say too many times, are extremely competent and dedicated people, the slurs of conspiracy theorists to the contrary—do their best to turn the survey into an estimate of what’s going on throughout the U.S. economy. Most of the time, the survey is a pretty good. But it’s not good at times of rapid change.
The estimates are reguarly corrected by comparing them to the near-complete coverage of the employment universe, about 99% complete, provided by the unemployment insurance system. Once a year, the Bureau of Labor Statistics makes what are called benchmark revisions, that align the monthly estimates with results of the full coverage. And those yearly exercises are supplemented with quarterly releases from the same source—though a delay of about six months. Six months would be too long to wait for monthly employment numbers, but the quarterly audits provide an excellent reality check.
As I said, most of the time, the monthly survey is pretty close, within a tenth of a percentage point or two, of the full-coverage numbers. But things have been very out of whack in this recession. On Thursday morning, the BLS reported that the employment picture last September was even worse than we realized. The regular monthly numbers told us that 6.4 million jobs were lost between September 2008 and September 2009. The full-coverage version now tells us that the true loss was 7.1 million. Things looked pretty bad before; now they look even worse.
All signs are that the job market is beginning to improve, as the March figures showed. But, like I said, we’re in a deep hole—and now we know it’s an even deeper hole than we thought—and it’s going to take a very long time to climb out of this one. Further evidence of why we need a jobs program, which our president and Congress aren’t about to give us.
hedgies prosper
Oh, but 2009 was a great year for the masters of the universe! The top 25 hedge fund managers pulled in an average of $1 billion last year. The man at the very top, David Tepper, took home $4 billion. Next up was that great liberal humanist, George Soros, at $3.3 billion. The poor relation at #10, Philip Falcone, hauled in $825 million. The $25 billion that this gang collectively earned would be enough to pay the tuition for about one in five college and university students in the USA. That’s only a hair less what the federal government pays in tuition assistance. Twenty-five guys (all men, by the way). What a country.
Radio commentary, March 25, 2010
Not much in the way of economic news since last we spoke. The U.S. economy continues to flatline, which only looks good next to the collapse of 2008 and 2009. The Chicago branch of the Federal Reserve puts out a monthly National Activity Index (CFNAI), a composite of 85 separate indicators, that’s a good a single measure of the state of the economy that we have. When it’s at 0, the economy is expanding at its historical average; below 0, it’s growing below trend; above 0, it’s growing above trend. The CFNAI broke above 0, barely, in January—but fell back below in February. The thing is volatile, so it’s best to average it out over a few months. Such averaging is telling us that while the economy is picking up some, it’s still pretty feeble. The Feburary decline was driven by weakness in the housing market and a slowdown in the factory sector; Some of that manufacturing weakness may have been the result of the bad snowstorms last month. But it’s also the case that the economy—to move from abstraction to personification—is so punch-drunk that it needs to lie on the floor for a while until the room stops spinning.
housing: still sick
The housing market, of course a major culprit in the economic mess we’re in, just can’t get up either. Sales of existing houses fell slightly in Feburary, the third consecutive decline (the previous two were much bigger), bringing the sales pace back to where it was last June. That suggests that the recovery we saw in the second half of last year—nearly a 30% rise, now largely reversed—was the result of the special tax credit granted to first-time house buyers, and not what Wall Street calls organic growth.
Sales of new houses, a much smaller market than already-existing ones, fell for the fourth consecutive month in February, to an all-time low for 47 years of data. Setting five-decade record lows is not what an economic recovery is supposed to look like. Here too, some analysts are blaming February’s bad weather for some of the weakness. Maybe. March has been more lamb-like than lion-like, so we’ll get a test of the weather thesis pretty soon. My guess is that weather depressed things a bit, but that the real problem is the economy and credit markets are still sick.
Housing is important not only because it was so central to both bubble and bust, but also because it’s historically been the first major economic sector to lead a recovery. Certainly the authorities are doing all they can to promote a recovery. Not only was there a federal credit, which I mentioned earlier, they’re also doing them at the state level. California, for example, which is so broke that it’s laying off 30,000 teachers, is nonetheless going to offer up to $10,000 tax credits for people who buy houses, which will cost the state $200 million—twice as much as last year’s similar program. That $200 million is the equivalent of about 4,000 teachers, but goosing the real estate business is apparently more important than teaching kids.
unemployment claims: back in decline
And, in an indicator I haven’t cited in a while, first-time applications for unemployment insurance, a very timely and sensitive indicator of the state of the job market, fell by 14,000 last week, the third decline in four weeks. This measure had declined steadily for most of 2009, portending the stabilization of the labor market that we saw late last year, but had stalled out at the turn of the year. Unemployment claims are still at a pretty high level though, which means that employment is likely to hang just on either side of unchanged for the next few months.
renewables? un-American!
In longer-term news, The Pew Charitable Trusts—a philanthropy, ironically enough, that got its money from an oil fortune—is just out with a report on the global state of investment in clean energy technologies. The sensational soundbite: China is taking the lead, and the U.S. is falling behind. Globally, Pew reports, clean energy investments fell only modestly during the recession, and have since recovered nicely.
But no thanks to the USA. China’s total stock of renewable energy generation is about to surpass the U.S., even though our economy is far bigger. Total U.S. clean energy investment actually fell by 40% in 2009, though it’s picking up some this year. If you rank the world’s nations by clean energy investment as a share of GDP, the U.S. comes in 11th, lagging much poorer countries like Mexico and Turkey. Compared to the leaders, the U.S. performance is shameful: one-sixth the clean energy investment share of Spain, a quarter that of the UK, a third that of China and Brazil.
Although the Obama administration has made a lot of noise about investing in clean energy and other green technologies, they’re really not asking for much in their 2011 budget—yeah, anything ambitious would probably be DOA in Congress, but you’ll never get what you don’t ask for. Bigger numbers could stimulate the economy while saving life on earth, but change we can believe in apparently does not extend to actual change. Maybe we should have read that slogan more carefully: maybe it’s always been more about the believing than actual change.
Radio commentary, March 18, 2010
In U.S. economic news, more signs of modest recovery. Early in the week, we learned that retail sales rose an OK 0.3% in February. Weak auto sales dragged down that headline number; stripping them out, sales rose a pretty healthy 0.8% last month. Sales of electronics and appliances, sporting goods, and at restaurants and bars were pretty strong. The mix was a departure from recent retail bahvior, when spending on necessities predominated. Now we’re seeing more indulgence and frivolity in the mix. And, in another departure from recent behavior, it looks like the upper end is opening up its wallets. Throughout the recession, purveyors of so-called luxury goods lagged the averages, with discounters and wholesale clubs picking up market share. Now, luxury sales are picking up again. But, in a reminder of just what a bifurcated world we’re living in, the discounters and wholesalers are still doing pretty well—it’s the middle that’s lagging.
I doubt that these retail figures announce the beginning of a return to exuberance, or even recreational shopping. They do suggest the effects of what some analysts have called “recession fatigue”: people are tired of bad times and are letting their belts out a notch. If they have belts, that is. The job market, while a lot better than it was a year ago, is still weak, and unemployment, especially the chronic long-term sort, is very high. But it’s looking like people with jobs are spending a little more freely.
over-excited
Jumping off data like this, and the not-bad February employment report, and some excitable Wall Street are talking about a recovery accelerating into something strong. That strikes me as hard to believe. Among their favorite pieces of evidence is the loss of “just” 36,000 jobs in February. Since there was a bad snowstorm in the northeast during the week the employment surveys were taken, which supposedly would depress employment significantly, the enthusiasts are saying that underlying employment trends are now turning strongly upwards. I doubt that the storm effect is anywhere near strong enough to knock a hundred or two hundred thousand workers off the rolls, so I’m really skeptical that this strong upturn was buried under a foot of snow. It’s likely we’re going to start seeing some mildly positive job numbers in the coming months, but not the 300,000 you’d expect in a textbook recovery.
Confirmation of that came with Thursday’s release of the cyclical indicators from The Conference Board. Their coincident index, which is an average of four major economic indicators designed to give a summary picture of the state of the abstraction known as The Economy, rose a modest 0.1% in February. That’s about half the average for an economic recovery, and a third the average for a strong recovery. It’s pretty much in line with what we saw in the weak recoveries of the early 1990s and early 2000s. The Conference Board’s leading index, which is designed to forecast movements in the broad economy three to six months in the future, also rose 0.1%. That’s about a quarter the rate we’d be seeing in an average recovery, and a sixth what we’d see in a strong one.
So, putting all this together, I see no reason to change my prognosis: we’re now about eight months into an economic recovery that’s going to be a grinding, frustrating thing that will feel to many of us like the recession never ended. It’s good news that things aren’t getting worse, but they’re not doing all that much to get better.
indulgence lingers
Earlier in the week, the Federal Reserve announced after its regular policy-setting meeting that it will continue to keep interest rates “exceptionally low” for an extended period of time. The language of their press release suggested slightly more optimism, but not as much as Wall Street’s bulls are exuding; the release pointed to, for example, employers’ continuing reluctance to hire. (In fact, the use of that phrase in conjunction with their description of the labor market as “stabilizing” sounded so much like what I’ve been saying that I almost got worried.)
This is good news. What recovery we’ve seen is largely the result of the Fed’s easy money and Washington’s stimulus program. But that StimPak will start to fade late this year, and it’s not clear whether the economy will have acquired enough of its own internal juice to survive the withdrawal of all that money from Washington. Fiscal policy is going to turn rather dramatically contractionary in 2011 and 2012, a rather scary prospect that almost no one in Washington or in the punditocracy seems worried about. You’re hearing a lot more talk about austerity and budget-cutting than about the risks of tightening fiscal policy in a weak economy.
Wie sagt man <<sadomonetarism>> auf Deutsch?
But our austerity party has nothing on the Germans, who are the current world champs of sadomonetarism. A few weeks ago, the Greek economist Yanis Varoufakis said on this show that a source in the European Central Bank told him that Germans were quite eager to put his country and the other weaklings on the periphery of Europe through the wringer, because they don’t want to fund a bailout. And since they export all their goodies like BMW’s to the elites of those countries, they don’t give a damn about the purchasing power of the masses—a Greek depression won’t harm German industry. The other day, the French finance minister, a far more respectable voice than radical economists interviewed on Behind the News, urged the Germans to loosen up. But so far the Germans will have none of it. They don’t want to set up some sort of intra-European version of the IMF to run bailouts; they think that such a body wouldn’t be as stringent in its demands for austerity as the existing IMF would be. (It’s not clear whether this is true.) Under EU pressure, Greece has already agreed budget cuts and tax hikes of almost 5% of GDP—a very stiff dose of austerity. The EU probably expects more, but that’s about all it can get in a year. The result will almost certainly be a deep recession.
But does austerity actually work? (Work in the sense of restoring economic growth after a period of pain imposed on nonelites, that is.) It doesn’t seem so. In a note to clients earlier this week Citigroup wrote this:
[I]t is interesting at this point to draw some comparisons between the Greek and the Irish consolidating plans. Ireland has been praised as a benchmark to follow in terms of its swift and bold turn in fiscal policy [that] is very close to the total fiscal effort envisaged by Greece now…. However, despite all the belt-tightening over the past year, the Irish budget balance has not yet shown signs of improvement and it still looks remarkably similar to the Greek one. The Irish budgetary position has not managed to improve yet after almost one year since the introduction of the first austerity package, mainly because of the collapse in real and nominal growth which was, in part, induced by the fiscal tightening itself.
Surprise surprise—bloodletting can be hazardous to your health.
Great moments in real estate
Been meaning to post this for a while. These are neighboring buildings at the intersection of Smith St and Atlantic Av in Brooklyn (40 41’19.2″ N, 73 59’21.6″ W, says the iPhone). The building on the left is a “luxury” high-rise, advertising “prime retail” on the ground floor. The building on the right is a city jail. It was out of use from 2003 to 2008, but the city is gradually filling it up again. One can’t say the same of the condo, which is all empty. It’s one of the disastrous properties developed by Shaya Boymelgreen, one of the more spectacular failures from the bubble years. Apparently the hope was that the city would turn the jail into condos too, but that didn’t happen. Maybe they can turn the condos into a jail!
Laura Agustín in NYC, tonight. Go!
Wish I could go, but I can’t. If you can, please do. She’s excellent, and needs support in case NOW sends hecklers.
Trafficking, migration and the sex industry: Framing the questions, Providing the proofs
Wednesday, March 10, 2010
6:45pm – 9:00pm
Rockefeller University, Weiss Building Room 305
York avenue at 66th St: Enter the campus at 66th Street
Subway: Lexington Avenue Local #6 to 68th Street/Lexington Avenue Station; walk east
Buses: M31 (York Avenue/57th St crosstown) and M66 (68th St crosstown)
Laura Agustín is author of Sex at the Margins: Migration, Labour Markets and the Rescue Industry (Zed Books 2007). Laura Agustín studies cultural, sexual and postcolonial issues linking commercial sex, migration, informal economies and feminist theory. Her research amongst migrants and social helpers challenges several contemporary myths: that selling sex is completely different from any other kind of work; that migrants who sell sex are always passive victims; and that the multitude of people out to save them are without self-interest.
Agustín argues that the label ‘trafficked’ does not describe migrants’ lives and that a Rescue Industry disempowers them. Frequently, says Agustín, migrants prefer to work in the sex industry to their other options, and, despite being treated like a marginalised group, they form part of a dynamic global economy. Her blog Border Thinking | Migration | Trafficking | Sex Industry | Prostitution is visited by 1500 people daily.
Tuition piece up
Ok, the promised piece on college inflation is up.
As the wage premium for education has expanded, college has gotten a lot more expensive. Why, and what’s this done to access (and with it, class mobility)?
From LBO #125, just posted to the web: “I’m borrowing my way through college…
Though this sample is free, it costs money to produce LBO. If you don’t already subscribe, please do, and keep this sort of thing alive. It’s not like there’s an excess of critical economic news and analysis, is there? LBO subscriptions. Such a deal! Subscribe now before the price goes up in a couple of months!!
Radio commentary, Feburary 6, 2010
[Sorry for the delay. Better late than never, I hope.]
suburban poverty
In our national imaginary, suburbs are places of affluence, and even a complacent isolation from social problems. As is often the case with received wisdom, this one’s in need of a fact-check. In a new paper, Elizabeth Kneebone and Emily Garr of the Brookings Institution find that suburbs are home to the largest and fastest-growing population of poor people in the U.S. Before continuing, I should note, as I always do when I talk about our official poverty line, that it embodies a very mean-spirited definition of poverty that probably undercounts the poor by at least half. That aside, between 2000 and 2008, the number of people under that official poverty line grew by 25%—five times as fast as the growth in central cities and well ahead of the growth in smaller metropolitan and rural areas. As of 2008, large suburbs housed more poor than their associated cities, and almost a third of the nation’s poor.
That growth in suburban penury was led by the Midwest, mainly because of the collapse of the U.S. auto industry. Among the hardest-hit areas were the suburbs of McAllen and El Paso, Texas; Bakersfield, Fresno, and Modesto, California; Little Rock, Arkansas; and Albuquerque, New Mexico. Among the areas showing the worst increase in impoverishment were Grand Rapids, Michigan; Youngstown, Ohio; Detroit; and the Atlanta suburbs. Poverty in New York City and the Los Angeles area actually declined—though these figures predate the recession, so that’s probably no longer true.
Further to the point of the meanness of our poverty line, a family of four with an income of less than $22,000 is considered poor—even if they live in an expensive place like New York or San Francisco. Most poverty researchers regard an income less than twice the poverty line—so in our example, that’d be $44,000 for a family of four—as low-income. By that definition, almost a third of our population is poor. Remarkable for a country that by any standard is rich, and usually praises itself as a land of plenty.
health inflation
A quick factoid that says a lot. The official annual accounting of U.S. health spending was published earlier this week. It revealed that 17.3% of our GDP now goes to health spending—that’s close to half again as high a share as Germany and France, countries with far better health indicators than ours. Not only that: the public share of that health budget is about to cross 50%. That means that close to 9% of our GDP is taken up by government health spending alone. That’s almost as much as Britain spends on its entire health budget, public and private. And, again, they’ve got better health indicators than we do. What a country.
employment: stabilizing, not recovering
Friday morning brought the release of the January employment report. By recent standards, it wasn’t half bad. By any longer-term standard, it wasn’t so great, but, you know, been down so long, etc.
Employers shed 20,000 jobs in January, driven by steep losses in construction. Manufacturing actually added jobs last month for the first time in three years. Retail employment grew smartly. Other sectors showed mostly modest losses—but the real standout was temp firms. In the past, increases in temp employment have led broader gains. A lot of old relationships have broken down in this recession, so this may no longer hold; maybe we’re in a new regime of permanent impermanence. We shall see. But this does offer some foundation for hope. As does a rise in the average workweek, which is now beginning to look like a trend over the last several months. That too has been a portent of future job gains, though maybe that’s not going to work this time either.
Wage growth was quite weak, which isn’t surprising with the unemployment rate so high. But at least that unemployment rate declined notably last month, falling below the psyschologically important 10% level to 9.7%. Of course it’s still very very high but at least it’s going in the right direction. And hidden unemployment also declined for the month, with the so-called U-6 rate, which accounts for people working part-time even though they’d like full-time work and for people who’ve given up the job search as hopeless and are therefore not counted as officially unemployed, falling 0.8 point for the month. Again, at 16.5%, it’s still very very high, but it too is starting to go in the right direction. Let’s hope it continues.
This month’s report also came with the annual benchmark revisions. The regular monthly reports are based on a survey of employers—a very large one of 300,000 establishments, but it’s still far from complete coverage. But once a year, the Bureau of Labor Statistics totals up the near-complete coverage of the job universe offered by the unemployment insurance system and adjusts their survey results. Normally these adjustments are quite small, a tenth of a percentage point or two. This time it was very large: a downward adjustment of almost a million. That means that total job losses in this recession are almost 8 and a half million. In percentage terms, that’s the worst in modern times, almost three times as bad as the average recession since 1950.
All in all, it looks like the job market is starting to recover, but it’s going to take a long time, and it’s got a lot of ground to make up.
Don’t believe the Manhattan Institute
In a few hours, I’ll be posting the piece on how expensive college has gotten and why to the LBO website. In the meanwhile, a dreadful article, “Why the Student Protesters Are Wrong,” published by a Manhattan Institute front called Minding the Campus needs some correction.
The author, Daniel Bennett, is a policy analyst at a right-wing think tank with a creepy name: The Center for College Affordability & Productivity. The director of the think tank is Richard Vedder, who wrote a book on how great Wal-Mart is, which gives you an idea of what they mean by productivity. In his article, Bennett says that student protesters are wrong to blame steep tuition hikes on “hard-pressed” state and local governments:
State and local subsidies to public colleges and universities increased by 44% in real (inflation-adjusted) dollars during the 25-year period between 1982 and 2007. Had colleges managed to hold their cost increases to the level of inflation over this period, real tuition prices would be slightly less today than they were 25 years ago.
What he doesn’t tell you is that over the same period, real GDP increased by 126% (nearly three times as much as state and local support), and total student enrollment by 47%. So state and local subsidies lagged enrollment slightly and lagged our economic capacity to subsidize education massively.
No one who knows anything about social statistics and cares about careful argument would ever cite a stat like a 44% increase in subsidies in isolation, without putting it in some sort of comparative perspective. So, either Bennett is ignorant of the use of statistics, or is consciously using them in a propagandistic fashion. Since Bennett has a master’s in applied economics, and since he quickly shifts to one of the right-wing’s favorite explanations of tuition inflation, excessively generous federal support, conclusions about the motives for his use of the isolated stat almost draw themselves.
LBO 125 out
Left Business Observer #125 is out! Already emailed to electronic subscribers, and on press for the dead tree contingent.
Contents:
- a risky return to the familiar
- college: best way to make a buck, especially if you’ve already got a few
- contemplating exits; Obama’s stingy budget
- unemployment & GDP: U.S. more savage than usual
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LBO News from Doug Henwood 
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Posted on April 16, 2010 by Doug Henwood
Radio commentary, April 15, 2010
Recession fatigue (cont.)
I said last week that the preliminary reports on March shopping showed Americans rediscovering their lust to buy, following almost two years of born-again prudence. Those early returns, which were based on sales numbers coming from the major chain stores, have now been confirmed by the official word from the Census Bureau, compiler of the monthly retail sales figures. The Census stats are based on a much broader survey of the retail universe, which includes not only big national names like Target and Wet Seal, but also local chains, Mike’s Main Street Housewares, online retailers, and even museum gift shops. And the Census Bureau tells us that sales rose a strong 1.6% in March—or 0.6% if you leave out autos, which had a very good month. Total sales were up 7.6% from a year earlier—or 6.4% excluding autos. This is a very substantial recovery. It may not be sustainable—on which more in a sec—but for now it looks like Americans have now had enough of austerity.
One reason I wonder how sustainable this is is because I can’t figure out where the money is coming from. The job market, while picking up, is still quite weak, and it looks like people continued paying off more on their credit cards than they took out in new credits in March. So if it’s not fattening paychecks or bigger VISA balances that’s funding this little binge, what is it?
Here’s one possibility. I post these opening commentaries to a blog [i.e., here]. When I asked this question last week, after mulling over the preliminary shopping reports, a reader offered this comment: “Regarding the rebound of consumer spending from my own experience — I spent most of 2009 worried about getting laid off and subsequently saving every penny I could. After it became clear that I wasn’t going to get laid off, I let out a little pent-up demand. I suspect that that a lot of still-employed people did the same — redirecting some would-be savings toward spending.” Could be. The savings rate rose, though not as much as it might have, throughout 2009. Let’s see if it starts heading down again.
And then there are rich folks. In the chain store survey, published I should say by the International Council of Shopping Centers, purveyors of luxury goods had been clocking higher-than average gains since last December. They widened their lead in March. That may be a function both of really rich people opening up their wallets further and the would-be rich indulging their aspirations.
Further evidence of economic recovery: the Naitonal Association of Homebuilders’ monthly survey of builder sentiment put in a sharp rise in April, exceeding expectations. All its components—current sales, expected future sales, and foot traffic from prospective buyers—gained. The index is still deep in the basement, and its latest gain just takes it back to where it was last fall, but this is some of the best news coming out of the housing market in ages. We’ve never had an economic recovery without a housing recovery, so it would be nice if this prerequisite finally fell into place.
Claims hiccup
But not such good news coming out of the job market. There’s much debate over whether the rather strong gain in employment in March was a fluke, or the beginning of a new trend. My guess is that the job market is starting to turn around, but it won’t be a smooth or particularly happy path. One disappointing piece of evidence was released on Thursday morning—the weekly jobless claims numbers, filed by people who’ve just lost their jobs and signed up for unemployment benefits. Those rose last week by a surprising 24,000, the second consecutive weekly increase. These numbers are volatile—for example, it’s not easy to adjust for the effects of the Easter holiday. But even if you take the four-week average, which smooths out the volatility, there was also a second consecutive increase—though much smaller in magnitude. I don’t think this is a sign that the labor market is starting to fall apart again—but it is a sign that this won’t be an easy road to recovery.
Finally, in honor of April 15, a few words on some work by the excellent folks at Citizens for Tax Justice. The Tea Partiers are all in a rage by the alleged tax increases imposed by Obama and the Democrats. Aand they’re not the only ones, since over half of Americans think that taxes have gone up over the past year. The truth is exactly the opposite: as CTJ points out, the current regime has cut taxes for 98% of working families and individuals—by an average of $1,158. For a change, those in the top 1% are not the biggest beneficiaries. Fewer than 1 in 3 of them got any cut at all, and their cut was smaller in dollar terms than the next 19% of the income distribution. The tax cuts were skewed towards the middle and bottom of the income distribution. Why does almost no one know that?
Tea, anyone?
Speaking of the Tea Partiers, a couple of polls out this week (one, two) confirm what we already knew: TP activists, meaning people who’ve gone to rallies or donated money, tend to be whiter, righter, better off, more pious, and more male than the rest of the population. One of the things that set them off: they think that Obama is taking their money and giving it to the poor and the black. As we know, he’s not. Theirs is a resentment of the privileged, not an expression of working class anger. In other words, they’re not the good guys, or even reachable by the good guys, as some folks on the left have suggested.
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