Jobless Rate: The Truth Bubble?

[Rajiv]

Jobless Rate: The Truth Bubble?

Can you trust national averages? As bad as the jobless data you hear are, you have not been told the whole truth. If you think the terrible impact of America’s Great Recession is shown by an official unemployment rate of about 10 percent, think again.

Economic inequality and the myth of Reagan trickle down logic are shown by new data from the Center for Labor Market Studies at Northeastern University in Boston. The report noted: “What has been missing from the public debate over the labor market crisis is an honest and detailed analysis of which American workers have been most adversely affected by the deep deterioration in labor markets.” The researchers found a correlation between household income and unemployment rate in the last quarter of 2009: Look carefully at these numbers and see how unemployment rises as income drops:

• $150,000 or more, 3.2 percent $100,000 to 149,999, 8 percent
  $75,000 to $99,999, 5 percent
  $60,000 to $75,000, 6.4 percent
  $50,000 to $59,000, 7.8 percent
  $40,000 to $49,000, 9 percent
  $30,000 to $39,999, 12.2 percent
  $20,000 to $29,999, 19.7 percent
  $12,500 to $20,000, 19.1 percent
  $12,499 or less, 30.8 percent

Ten times worse unemployment in the lowest class than in the highest class! Truly amazing and disheartening, don’t you think? And you can also infer that in some hard hit geographical areas the poorest people and people of color are being even more adversely impacted. And don’t think for a minute that things have really improved in 2010.

The report summed up the situation: “A true labor market depression faced those in the bottom…of the income distribution; a deep labor market recession prevailed among those in the middle of the distribution, and close to a full employment environment prevailed at the top.”
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The report referenced above here - Labor Underutilization Problems of U.S. Workers Across Household Income Groups at the End of the Great Recession.pdf

[Aetius Romulous]

Re: Jobless Rate: The Truth Bubble?

Consider also that the soul crushing indignity of that oxymoron "job satisfaction" is clustered at the bottom where the true wage slaves are. Unhappy, unfulfilled, completely expendable people.

Supply and demand I guess.

[Sharky]

Re: Jobless Rate: The Truth Bubble?

Ten times worse unemployment in the lowest class than in the highest class! Truly amazing and disheartening, don’t you think?

It seems obvious and predictable to me.

People are generally paid more because their skills are more valuable and harder to find. It therefore seems perfectly logical to me that unemployment rates would be higher in lower-paid workers, where skills are easier to find. Also, as unemployment rates go up for a certain type of employee, it becomes less risky for an employer to layoff those types of people, because the risk of not being able to re-hire them when they're really needed also declines (less competition among employers).

Also, low-wage jobs are often easier to offshore, which becomes increasingly appealing for employers as their domestic regulatory burden increases, as unions become more demanding, as benefits costs increase, etc, etc. However, after offshoring is complete, higher-paid staff are usually still needed, to manage domestic processes.

BTW, another way to look at this is that the average wage paid by employers will actually increase (at least in the early phases of cutbacks). Doesn't the Left think that's a good thing? It's the same process that's behind the minimum wage, right? (better to be unemployed or starve than to work for a wage that's "too low")

[flintlock]

Re: Jobless Rate: The Truth Bubble?

Agree with Sharky. That chart merely reflects how low skilled workers are more easily replaced than the highly paid, high skilled. I would be shocked if it showed anything different.

[Rajiv]

Re: Jobless Rate: The Truth Bubble?

Agree with Sharky. That chart merely reflects how low skilled workers are more easily replaced than the highly paid, high skilled. I would be shocked if it showed anything different.

Yes, but here is a counterpoint to that - The American Economy: The Wealthy Make The Mistakes But The Hard Working Middle Class Pays The Price

This is how the U.S. economy works much of the time - the wealthy make most of the big economic mistakes but the hard working middle class ends up paying for them. This time around is no exception. The financial crisis of the past several years was caused by Wall Street, but they got bailed out and relatively few of them lost their jobs. However, even though middle class and working class Americans were not the ones who made the mess, they are paying for it dearly. This is especially true when it comes to unemployment. While it is true that jobs are being lost on every level of American society, the reality is that unemployment is hitting Americans on the lowest end of the income scale the hardest.

Just check out the chart below. The ten percent of Americans that have the lowest household incomes have an unemployment rate of over 30 percent, while the ten percent of Americans that have the highest household incomes have an unemployment rate just about 3 percent....

Does this seem right to you?

After all, we were promised that we needed to bail out Wall Street so that they could help "Main Street".

But that didn't happen, did it?

Instead, it appears that previously bailed out corporations are going back to their old ways of paying out ridiculous bonuses.

For example, the CEO of General Motors is in line to get a $9 million pay package.

What in the world?

A company that was so flat broke that it would have likely collapsed without U.S. government intervention is handing out 9 million bucks to the CEO?

Something is very, very wrong.

And the truth is that working class Americans are getting pissed off.
For example, one Ohio man actually decided to bulldoze his own home rather than let the bank take it in foreclosure proceedings.
Now that is an incredibly destructive and vindictive act, but it just shows how angry some people are getting.

Many working class and middle class Americans feel powerless as the politicians and the wealthy recklessly destroy the U.S. economy.
Just consider the following chart. The U.S. government has massively increased spending at a time when revenues are decreasing sharply. Does this look like a "recovery" to you?....

The truth is that the U.S. national debt is wildly out of control. In 2010, the U.S. government is projected to issue almost as much new debt as the rest of the governments of the world combined.

In fact, it is anticipated that the U.S. national debt will climb to an unprecedented 200 percent of GDP by 2038 without a fundamental change in course.

Is this kind of reckless financial mismanagement going to cause an economic collapse?

Of course.

And Americans are starting to wake up and realize this.

In a recent ABC News poll, 87 percent of Americans said that they are concerned about the U.S. national debt.

In a new CNN/Opinion Research Corp. survey, 86 percent of Americans believe that the U.S. system of government is broken.

And it is broken.

So is it still possible to repair it?

[santafe2]

Re: Jobless Rate: The Truth Bubble?

It seems obvious and predictable to me.

People are generally paid more because their skills are more valuable and harder to find.

When, for example, McDonalds is a vending machine with no humans, we will know that those humans who trade on their limited vending skills have no economic value. This issue will work it's way up the skill ladder as humans are replaced at many/most levels of skill over the next 50 years. Skill, has little value in the 21st Century. We'll have to trade on our intellect and creativity if we're to survive the next few hundred years.

[grapejelly]

Re: Jobless Rate: The Truth Bubble?

the only reason unemployment is high is because REAL wages are too high.

Real wages have to fall for unemployment to fall.

This will happen through inflation. Cost of living will continue rising (it has been rising all along) and eventually real wages will have fallen low enough to cut employment down.

[GRG55]

Re: Jobless Rate: The Truth Bubble?

When, for example, McDonalds is a vending machine with no humans, we will know that those humans who trade on their limited vending skills have no economic value. This issue will work it's way up the skill ladder as humans are replaced at many/most levels of skill over the next 50 years. Skill, has little value in the 21st Century. We'll have to trade on our intellect and creativity if we're to survive the next few hundred years.

Not so.

America, and the world, is discovering that it reached the end point of the evolutionary life cycle of the "pure services economy" when the "creative bankers" supported by the "intellectual quants" couldn't sell any more heavily perfumed toxic waste paper.

As America "re-industrializes" [read: re-learns how to earn an income by making more real goods that others want to purchase and will pay for], skills of every sort will come back into fashion and become extraordinarily valuable. They won't be the same skills as our grandparents, they won't even be the same skills that were needed to staple together McMansions out of pressed oatmeal panel product...they will instead be skills that are often more difficult to learn and apply successfully, and that is the reason they will be valuable.

The auto mechanic that maintains your car is far more skilled than the one that fixed your father's Oldsmobile. The one that fixes your grandchildren's fuel cell electric car will be even more so. And I suspect that the success of your solar business today is rather dependent on the skills of the people that design, install and maintain those systems.

Let me illustrate with an analogous recent experience. I hired a "plumber" to install a heating boiler in the Bunker Ag Centre [my avatar pic], which is the size of a small house. It has three separate temperature control zones, each with its own pumps and controls, all supplied by a high-efficiency, stainless steel natural gas fired boiler made in the USA [the pumps and valves are German made]. The whole heating system, including the boiler, fits on a 4 ft square piece of plywood hung on the wall. The "plumber" sized the system, spec'ed the equipment, designed the layout including external ambient temperature compensation, fabricated all the copper piping circuits for the pumps and valves [this engineer thinks it's a work of art, it's that well done], and [hopefully ] has the skills to keep the whole complicated thing working properly in the future. This thing outperforms every furnace/heating system I have ever had on any house I have ever owned and runs on pennies a day. But just as a solar power supply system for your home is quite a bit more complicated than hooking up to the mains, this system is far more complicated than the heating systems of old...and the "plumber" has to be that much more skilled than a plumber needed to be just a decade or two ago.

[btw, for those who think that America "doesn't make anything any more", the boiler is made in New England, fits in a package that is 16"wx18"hX14"d, and heats a building with a contained volume equivalent to a 1650 sq ft bungalow. It's barely audible when operating, even when it lights off the main burner on the ignition cycle.]

[thriftyandboringinohio]

Re: Jobless Rate: The Truth Bubble?

the only reason unemployment is high is because REAL wages are too high.

Real wages have to fall for unemployment to fall.

Although I know you to be very smart, I sincerely hope you are wrong here. Real wages have been falling for a long time now. I don't want to think we all need to continue to race each other to the bottom until every employee lives in a mud hut and eats porridge every day. If we get to that point, will we hear that payrolls can be reduced further by hiring only rapidly starving people, screw the porridge?:eek:

[thriftyandboringinohio]

Re: Jobless Rate: The Truth Bubble?

Not so.

America, and the world, is discovering that it reached the end point of the evolutionary life cycle of the "pure services economy" when the "creative bankers" supported by the "intellectual quants" couldn't sell any more heavily perfumed toxic waste paper.

As America "re-industrializes" [read: re-learns how to earn an income by making more real goods that others want to purchase and will pay for], skills of every sort will come back into fashion and become extraordinarily valuable. They won't be the same skills as our grandparents, they won't even be the same skills that were needed to staple together McMansions out of pressed oatmeal panel product...they will instead be skills that are often more difficult to learn and apply successfully, and that is the reason they will be valuable.

The auto mechanic that maintains your car is far more skilled than the one that fixed your father's Oldsmobile. The one that fixes your grandchildren's fuel cell electric car will be even more so. And I suspect that the success of your solar business today is rather dependent on the skills of the people that design, install and maintain those systems.

Let me illustrate with an analogous recent experience. I hired a "plumber" to install a heating boiler in the Bunker Ag Centre [my avatar pic], which is the size of a small house. It has three separate temperature control zones, each with its own pumps and controls, all supplied by a high-efficiency, stainless steel natural gas fired boiler made in the USA [the pumps and valves are German made]. The whole heating system, including the boiler, fits on a 4 ft square piece of plywood hung on the wall. The "plumber" sized the system, spec'ed the equipment, designed the layout including external ambient temperature compensation, fabricated all the copper piping circuits for the pumps and valves [this engineer thinks it's a work of art, it's that well done], and [hopefully ] has the skills to keep the whole complicated thing working properly in the future. This thing outperforms every furnace/heating system I have ever had on any house I have ever owned and runs on pennies a day. But just as a solar power supply system for your home is quite a bit more complicated than hooking up to the mains, this system is far more complicated than the heating systems of old...and the "plumber" has to be that much more skilled than a plumber needed to be just a decade or two ago.

[btw, for those who think that America "doesn't make anything any more", the boiler is made in New England, fits in a package that is 16"wx18"hX14"d, and heats a building with a contained volume equivalent to a 1650 sq ft bungalow. It's barely audible when operating, even when it lights off the main burner on the ignition cycle.]

If you don't mind me asking, did you pay the artisan/engineer/plumber much for his services? If you figure he had 2 days designing and purchasing plus the days on-site, is he making a decent living with what he charged you for services?

[GRG55]

Re: Jobless Rate: The Truth Bubble?

If you don't mind me asking, did you pay the artisan/engineer/plumber much for his services? If you figure he had 2 days designing and purchasing plus the days on-site, is he making a decent living with what he charged you for services?

I wrote a detailed description of what I needed and got several quotes. His was not the cheapest, however, I felt his was the best value for the following general reasons:

• He runs his own company with only a couple of helpers, and I liked that because it means you are actually getting his services;
• I prefer hiring trades from the local rural area where I am building, instead of from the nearby city, and I am willing to pay a small premium for that because I know they usually can't compete against the big boys on price alone;
• Local people are usually more reliable, depend on word of mouth so are quite conscientious about the quality of their work, and are more likely to be around to service what they install - this person came recommended to me;
• He specified North American and European made components [not components made in Asia by North American or European headquartered companies]. I am a trade advocate, but it is most often extremely difficult to distinguish between a well made Chinese building product and a poorly made Chinese building product - until you put it in service - and therefore I will not knowingly use any Chinese made materials or products in my project.

I had to wait several weeks before he could schedule my job, and I didn't argue with him about the price he wanted to charge, so I would hope he is making a decent living.

Finally, to emphasize one point from the previous post...I hired someone with some pretty decent skills and experience, and this is part of the developing problem. Many people who may have been able to qualify as a perfectly good plumber a generation ago simply can't do the job today; it's just beyond their ability. And that's one reason poorly educated, unskilled workers are unable to find employment [their jobs are disappearing], and we are going to pay more for skilled trades [there's just a smaller pool of real talent].

[raja]

Re: Jobless Rate: The Truth Bubble?

Not so.
Let me illustrate with an analogous recent experience. I hired a "plumber" to install a heating boiler in the Bunker Ag Centre [my avatar pic], which is the size of a small house. It has three separate temperature control zones, each with its own pumps and controls, all supplied by a high-efficiency, stainless steel natural gas fired boiler made in the USA [the pumps and valves are German made]. The whole heating system, including the boiler, fits on a 4 ft square piece of plywood hung on the wall. The "plumber" sized the system, spec'ed the equipment, designed the layout including external ambient temperature compensation, fabricated all the copper piping circuits for the pumps and valves [this engineer thinks it's a work of art, it's that well done], and [hopefully ] has the skills to keep the whole complicated thing working properly in the future. This thing outperforms every furnace/heating system I have ever had on any house I have ever owned and runs on pennies a day. But just as a solar power supply system for your home is quite a bit more complicated than hooking up to the mains, this system is far more complicated than the heating systems of old...and the "plumber" has to be that much more skilled than a plumber needed to be just a decade or two ago.

[btw, for those who think that America "doesn't make anything any more", the boiler is made in New England, fits in a package that is 16"wx18"hX14"d, and heats a building with a contained volume equivalent to a 1650 sq ft bungalow. It's barely audible when operating, even when it lights off the main burner on the ignition cycle.]

You might want to consider buying a wood stove for backup . . . .

I've been looking at all my stuff, and wondering if the manufacturers will be around in 5 years. I've purchased basic replacement parts for everything, in the event that parts are not available in the future. I wouldn't want to throw away a $2000 machine for lack of a $15 part.

I use an exterior wood furnace boiler to heat my house. I have parts for that, too. It would become unusable if the control board went out, for example.
I also have two wood stoves for backup . . . just in case.

[chr5648]

Re: Jobless Rate: The Truth Bubble?

After all, we were promised that we needed to bail out Wall Street so that they could help "Main Street".

You fell for that?

[flintlock]

Re: Jobless Rate: The Truth Bubble?

I wrote a detailed description of what I needed and got several quotes. His was not the cheapest, however, I felt his was the best value for the following general reasons:

• He runs his own company with only a couple of helpers, and I liked that because it means you are actually getting his services;
• I prefer hiring trades from the local rural area where I am building, instead of from the nearby city, and I am willing to pay a small premium for that because I know they usually can't compete against the big boys on price alone;
• Local people are usually more reliable, depend on word of mouth so are quite conscientious about the quality of their work, and are more likely to be around to service what they install - this person came recommended to me;
• He specified North American and European made components [not components made in Asia by North American or European headquartered companies]. I am a trade advocate, but it is most often extremely difficult to distinguish between a well made Chinese building product and a poorly made Chinese building product - until you put it in service - and therefore I will not knowingly use any Chinese made materials or products in my project.

I had to wait several weeks before he could schedule my job, and I didn't argue with him about the price he wanted to charge, so I would hope he is making a decent living.

Finally, to emphasize one point from the previous post...I hired someone with some pretty decent skills and experience, and this is part of the developing problem. Many people who may have been able to qualify as a perfectly good plumber a generation ago simply can't do the job today; it's just beyond their ability. And that's one reason poorly educated, unskilled workers are unable to find employment [their jobs are disappearing], and we are going to pay more for skilled trades [there's just a smaller pool of real talent].

Sounds like you hired a company like mine.

You are exactly right about what was considered skilled years ago may no longer be cutting it. But what has happened around here is, instead of growing skills, I've actually seen an decrease in skills on jobs. A mentality of trying to do things by rote using lower skilled, lower payed workers was prevalent in my area. I say was, because most of those companies have folded with the recession. Leaving companies like mine, battered, but still around. 75% of my business is now re-doing shitty work done by these "low bid" type companies. No one wants to invest in the time it takes to train people. My guess, considering the good job he did, is your plumber didn't just start doing plumbing last year.

[Sharky]

Re: Jobless Rate: The Truth Bubble?

When, for example, McDonalds is a vending machine with no humans, we will know that those humans who trade on their limited vending skills have no economic value. This issue will work it's way up the skill ladder as humans are replaced at many/most levels of skill over the next 50 years. Skill, has little value in the 21st Century. We'll have to trade on our intellect and creativity if we're to survive the next few hundred years.

I look at this somewhat differently.

It seems to me that there are two opposing forces at work. First: employees are pushing to be paid more; they say they feel they are worth more than they're being paid; unions represent them and push for higher wages; government steps in and imposes a minimum wage, they support unions, and adds laws that make it difficult to fire people and that mandate various benefits, working conditions, etc.

The other force is employers: they are required through the laws of economics to make a profit; if they don't, all of the people who work for them will lose their jobs; so, they strive to be more efficient; they replace low-skilled jobs with automation; they use wage-arbitrage to offshore jobs when they can; they eliminate jobs that no longer have an economic benefit.

The problem here is that employees (and their representatives, in the form of unions and government) fail to consider both cause and effect. Yes, they can force an employer to pay them more in the short term. But a reasonable employer will respond and compensate for those cost increases, and part of that process inevitably means fewer jobs--in particular, fewer low-skilled jobs.

In the US, lack of enforcement against illegal immigration just compounds the problem.

One small step forward would be to repeal the minimum wage. The problem today isn't so much that jobs don't exist; as Grape said, it's that wages are too high. Eliminate the pay floor, and I'm sure lots of jobs would appear.