spursncowboys
08-07-2010, 05:06 PM
a cross-section of the jobless recovery
aug 6 2010, 1:30 pm et | http://assets.theatlantic.com/static/front/images/icons/social/comments.gif comment (http://www.theatlantic.com/business/archive/2010/08/a-cross-section-of-the-jobless-recovery/61069/#disqus_thread)
http://graphics8.nytimes.com/images/2010/08/06/business/economy/economix-06government/economix-06government-custom1.jpg
the economy lost 131,000 jobs in july, and most of that came from the federal government slashing 143,000 temporary census positions. The private sector picked up about half that figure, 71,000 jobs. State and local governments cut 48,000. Those are the numbers. Economix brings the charts (http://economix.blogs.nytimes.com/2010/08/06/state-and-local-government-jobs-take-a-beating/).
Hiring by sector gives you a sense of the diverse topography of our jobs picture. The federal jobs picture looks like the andes. The private sector looks like an upside town plateau, or wide river bed. State and local looks like a savanna.
State and local government jobs have stayed remarkably steady through the recession, mostly due to the recovery act, which has sent $140 billion to help states with their entitlement burden, including health care, education and income security measures like unemployment insurance. We've plugged their revenue leak up to now, but congress doesn't have much appetite for more stimulus spending through 2011. The census employment inclined has turned into a vertiginous peak, and the private sector isn't ready the catch the hundreds of thousands of people falling off the federal payroll.
This is what a jobless recovery looks like. So why isn't the private sector powering up? I outlined a couple reasons here (http://www.theatlantic.com/business/archive/2010/07/a-grand-unified-theory-of-the-jobless-recovery/60409/), including: Globalization, executive compensation trends, and the rise of reluctant part-time employment. Businesses are blaming the administration for polluting the air with uncertainty about taxes and regulations, but it's not entirely clear what the white house could do now to make businesses more certain (is there even such a thing as certainty in the world of profit and competition?). The stimulus well has been tapped. The bush tax cuts are creating fissures in both parties. If there is some magic statement the white house could make that would make america's non-financial companies respond, "why didn't you say so before! Now we're all set to fill up our new factories with fresh hires," i would, sincerely, like to hear it.
a grand unified theory of the jobless recovery
jul 26 2010, 1:10 pm et | http://assets.theatlantic.com/static/front/images/icons/social/comments.gif comment (http://www.theatlantic.com/business/archive/2010/07/a-grand-unified-theory-of-the-jobless-recovery/60409/#disqus_thread)
something's not righthttp://media.economist.com/images/images-magazine/2010/16/us/201016usc305.gif.
In most recessions in the last 60 years, jobs recovered soon after the economy healed. But in the last three downturns -- the early 90s, the early 00s, and today -- companies continued to slash jobs and hold off hiring for months, even years, after profits returned. In the current recession, many commentators are perplexed that corporations are sitting on their largest cash pile ever rather than investing in new workers.
who or what can we blame? four things.
Start at the top with executive pay, says robert j. Gordon, a northwestern economist, in a new paper (http://faculty-web.at.northwestern.edu/economics/gordon/aeashort_proofs_100408.pdf). The share of executive compensation taking the form of stock options increased by 55% in the 1990s. That made the big suits particularly sensitive to downturns in the stock market, which has collapsed twice in the last decade, after the tech and housing bubbles burst.
Executive pay depends on high stock prices. High stock prices depend on high quarterly profits. High quarterly profits in a downturn depend on lower costs, and the fastest route to lower costs is to slash workers while the economy suffers. That's why "industries experiencing the steepest declines in profits in 2000-02 had the largest declines in employment and largest increases in productivity," gordon writes.
That's not all. While sacrificing workers for higher profit became de rigeur, a combination of factors also made mass layoffs attractive. Higher immigration and imports, the rising cost of medical care, and lower labor union penetration -- all of these factors encourage firms to reduce hours faster than we might expect.
Third, technology has made many middle tier while-collar jobs "vulnerable to replacement by computers or outsourcing. As gordon writes: "middle-level white collar employees have been turned into mere commodities by the ubiquity of substitution between people and computers."
finally, there's the rise of reluctant part-time employment -- which bls counts as broad unemployment. One way to think of this group is to imagine the economy as a fleet of pick-up trucks. In good times, the truck cabin is big enough to offer plenty of space to almost everybody who wants a seat. But in this downturn, the big employers swapped for cheaper trucks with a smaller cabin and bigger cargo space and stuffed part-timers, contractors, freelancers, and interns in the back. Employers realize that they can get away with more people without benefits in the bed and fewer people with cushy spots in the cab. The part-time economy is here to stay (http://www.google.com/url?sa=t&source=web&cd=3&ved=0cbwqfjac&url=http%3a%2f%2fwww.theatlantic.com%2fbusiness%2f archive%2f2010%2f04%2fthe-recession-is-mainstreaming-the-part-time-economy%2f39229%2f&ei=il5ntodsnot78aat86q2&usg=afqjcneqjohqqcxdyyn9_mkty5xywj9i5a&sig2=3nkdk7osipiimjgudazwoa).
It's common for critics of the administration to blame the jobs crisis on obama's health care plan, or to mock the white house for predicting the recovery act would keep unemployment below 8 percent, when instead it soared above 10 percent with the stimulus. For sure, the white house's economic policy has been stop-start and full of half measures. But studies like this are important reminders that the new millennium has created a new kind of economy and a new kind of recession. Jobless recoveries now appear to be the new normal. We need a menu of economic policies that recognize why, and try to combat the new reality.
His reasoning of how to increase quarterly profits is too simplified even for an op-ed. Not all companies, in downturn, will lower costs to increase profits. Slash workers while the economy is suffering isn't accurate. This is the best chance for companies to increase their market size at a discount. Sure there are companies who have to cut employees to survive, but with him talking about ceo's and ... My wife called me to do something and I left for hours. I have no idea where I was so I'm just going to post it and try and get back to this.
aug 6 2010, 1:30 pm et | http://assets.theatlantic.com/static/front/images/icons/social/comments.gif comment (http://www.theatlantic.com/business/archive/2010/08/a-cross-section-of-the-jobless-recovery/61069/#disqus_thread)
http://graphics8.nytimes.com/images/2010/08/06/business/economy/economix-06government/economix-06government-custom1.jpg
the economy lost 131,000 jobs in july, and most of that came from the federal government slashing 143,000 temporary census positions. The private sector picked up about half that figure, 71,000 jobs. State and local governments cut 48,000. Those are the numbers. Economix brings the charts (http://economix.blogs.nytimes.com/2010/08/06/state-and-local-government-jobs-take-a-beating/).
Hiring by sector gives you a sense of the diverse topography of our jobs picture. The federal jobs picture looks like the andes. The private sector looks like an upside town plateau, or wide river bed. State and local looks like a savanna.
State and local government jobs have stayed remarkably steady through the recession, mostly due to the recovery act, which has sent $140 billion to help states with their entitlement burden, including health care, education and income security measures like unemployment insurance. We've plugged their revenue leak up to now, but congress doesn't have much appetite for more stimulus spending through 2011. The census employment inclined has turned into a vertiginous peak, and the private sector isn't ready the catch the hundreds of thousands of people falling off the federal payroll.
This is what a jobless recovery looks like. So why isn't the private sector powering up? I outlined a couple reasons here (http://www.theatlantic.com/business/archive/2010/07/a-grand-unified-theory-of-the-jobless-recovery/60409/), including: Globalization, executive compensation trends, and the rise of reluctant part-time employment. Businesses are blaming the administration for polluting the air with uncertainty about taxes and regulations, but it's not entirely clear what the white house could do now to make businesses more certain (is there even such a thing as certainty in the world of profit and competition?). The stimulus well has been tapped. The bush tax cuts are creating fissures in both parties. If there is some magic statement the white house could make that would make america's non-financial companies respond, "why didn't you say so before! Now we're all set to fill up our new factories with fresh hires," i would, sincerely, like to hear it.
a grand unified theory of the jobless recovery
jul 26 2010, 1:10 pm et | http://assets.theatlantic.com/static/front/images/icons/social/comments.gif comment (http://www.theatlantic.com/business/archive/2010/07/a-grand-unified-theory-of-the-jobless-recovery/60409/#disqus_thread)
something's not righthttp://media.economist.com/images/images-magazine/2010/16/us/201016usc305.gif.
In most recessions in the last 60 years, jobs recovered soon after the economy healed. But in the last three downturns -- the early 90s, the early 00s, and today -- companies continued to slash jobs and hold off hiring for months, even years, after profits returned. In the current recession, many commentators are perplexed that corporations are sitting on their largest cash pile ever rather than investing in new workers.
who or what can we blame? four things.
Start at the top with executive pay, says robert j. Gordon, a northwestern economist, in a new paper (http://faculty-web.at.northwestern.edu/economics/gordon/aeashort_proofs_100408.pdf). The share of executive compensation taking the form of stock options increased by 55% in the 1990s. That made the big suits particularly sensitive to downturns in the stock market, which has collapsed twice in the last decade, after the tech and housing bubbles burst.
Executive pay depends on high stock prices. High stock prices depend on high quarterly profits. High quarterly profits in a downturn depend on lower costs, and the fastest route to lower costs is to slash workers while the economy suffers. That's why "industries experiencing the steepest declines in profits in 2000-02 had the largest declines in employment and largest increases in productivity," gordon writes.
That's not all. While sacrificing workers for higher profit became de rigeur, a combination of factors also made mass layoffs attractive. Higher immigration and imports, the rising cost of medical care, and lower labor union penetration -- all of these factors encourage firms to reduce hours faster than we might expect.
Third, technology has made many middle tier while-collar jobs "vulnerable to replacement by computers or outsourcing. As gordon writes: "middle-level white collar employees have been turned into mere commodities by the ubiquity of substitution between people and computers."
finally, there's the rise of reluctant part-time employment -- which bls counts as broad unemployment. One way to think of this group is to imagine the economy as a fleet of pick-up trucks. In good times, the truck cabin is big enough to offer plenty of space to almost everybody who wants a seat. But in this downturn, the big employers swapped for cheaper trucks with a smaller cabin and bigger cargo space and stuffed part-timers, contractors, freelancers, and interns in the back. Employers realize that they can get away with more people without benefits in the bed and fewer people with cushy spots in the cab. The part-time economy is here to stay (http://www.google.com/url?sa=t&source=web&cd=3&ved=0cbwqfjac&url=http%3a%2f%2fwww.theatlantic.com%2fbusiness%2f archive%2f2010%2f04%2fthe-recession-is-mainstreaming-the-part-time-economy%2f39229%2f&ei=il5ntodsnot78aat86q2&usg=afqjcneqjohqqcxdyyn9_mkty5xywj9i5a&sig2=3nkdk7osipiimjgudazwoa).
It's common for critics of the administration to blame the jobs crisis on obama's health care plan, or to mock the white house for predicting the recovery act would keep unemployment below 8 percent, when instead it soared above 10 percent with the stimulus. For sure, the white house's economic policy has been stop-start and full of half measures. But studies like this are important reminders that the new millennium has created a new kind of economy and a new kind of recession. Jobless recoveries now appear to be the new normal. We need a menu of economic policies that recognize why, and try to combat the new reality.
His reasoning of how to increase quarterly profits is too simplified even for an op-ed. Not all companies, in downturn, will lower costs to increase profits. Slash workers while the economy is suffering isn't accurate. This is the best chance for companies to increase their market size at a discount. Sure there are companies who have to cut employees to survive, but with him talking about ceo's and ... My wife called me to do something and I left for hours. I have no idea where I was so I'm just going to post it and try and get back to this.