Dean Baker: Auto Manufacturing Gives Big Boost to Jobs Growth
We asked economist Dean Baker, co-director of the Center for Economic and Policy Research (CEPR), to expand upon recent reports that show a marked improvement in the nation’s jobs picture. In January, 243,000 jobs were created and unemployment dropped significantly for some of the hardest-hit workers. Baker’s intepretation of the data presents a still-mixed economic picture, but one bright point stands out clearly: President Obama’s support of the U.S. auto industry has been key to improving job creation for America’s workers. Be sure to pick up a copy of Baker’s latest book, The End of Loser Liberalism: Making Markets Progressive.
Q.: As you’ve noted, the January drop in unemployment was especially sharp for African American and Latino workers. The jobless rate for black workers fell by 2.2 percentage points to 13.6 percent, the lowest level since March 2009. For Latino workers, the jobless rate dropped by 0.5 to 10.5 percent, the lowest since January 2009. What’s behind this good news?
A.: My best guess is that much of this is a statistical quirk. These numbers are always erratic and can and do jump around month to month. However, part of the drop is probably real. I suspect that with the African American population much of the story is related to the increase in manufacturing and construction employment, which is likely clustered in the Midwest. These are sectors that disproportionately employ African American workers.
The improvement for Latinos is less easily explained. Of course, many Latinos are employed in construction, but more in the West and South than Midwest, which has seen the biggest gains.
Anyhow, I suspect that part of the improvement in the employment picture is weather related. We had unusually warm weather across the Northeast/Midwest in December and January, which means that construction and manufacturing were not disrupted as much as usual. That would make it appear that we are adding jobs.
Q.: Employment in manufacturing and construction also showed strong growth in January. You attribute the construction job hike to unseasonably warm weather. But what about manufacturing? It’s been one area of job growth for several months now. What’s behind its resurgence and can it continue? Read the rest of this entry »
Politics Major Factor in Decreased Unionization
Many economists and policymakers say the drop in unionization rates is an inevitable consequence of the changing global economy and advancing technology. But a new report finds that national politics plays a bigger role than globalization or technology in the decline in unionization in the United States and the 20 other nations studied.
The report from the Center for Economic and Policy Research (CEPR) looked at 21 countries with advanced economics facing the same globalization and technology changes. It found that economies with few labor protections such as the United States showed a higher decline in unionization rates than nations with economic and national policies where workers’ rights have a more prominent place in the market.
National politics are a major determinant of national unionization rates and changes in those rates in recent decades. At the same time, the data contradict the view that a decline in unionization rates is an inevitable implication of “globalization” or technological change.
Click here for the full report.
Experts: Let Deficit Grow to Stimulate Economy
The road to economic growth and a full recovery lies in allowing the deficit to grow temporarily and investing in programs that put money in the hands of consumers, two nonpartisan experts said.
Testifying before the congressional supercommittee yesterday, Congressional Budget Office Director Douglas Elmendorf warned that to avoid slowing the economy even further, the deficit must get worse before it gets better:
There is no inherent contradiction between using fiscal policy to support the economy today and imposing fiscal restraint several years from now. If policymakers wanted to achieve both a short-term economic boost and longer-term fiscal sustainability, a combination of policies would be required: changes in taxes and spending that would widen the deficit now but reduce it later in the decade.
Black Unemployment Rises Even as Jobless Rate Drops
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Even though 216,000 jobs were created in March and the nation’s unemployment rate fell to 8.8 percent overall, the jobless rate for blacks rose from 15.3 percent to 15.5 percent.
The employment situation for Hispanics improved with their unemployment rate dropping to 11.3 percent, compared with 11.6 percent in February and 13.2 percent in November.
When the recession began in 2007, black and Latino workers lost their jobs faster than whites, says Roderick Harrison, a demographer at Howard University and senior fellow at the nonpartisan Joint Center for Political and Economic Research. That’s because black and Latino workers were concentrated in industries that lost the most jobs like manufacturing and construction, he says.
Republican Report: Solve Job Crisis by Cutting Wages and Public Employees
Last week, House Speaker John Boehner (R-Ohio) spent a great deal of effort touting an economic report from the Republican staff of the Joint Economic Committee. That should be your first warning to step back, take a deep breath and adjust your skepticism meter.
In a nutshell, it argues—using the examples of several small national economies—that huge spending cuts, massive layoffs of public employees and the weakening of unions will create jobs by lowering wages. As Tim Fernholz and Jim Tankersley at the National Journal write:
The paper predicts that cutting the number of public employees would send highly-skilled workers job hunting in the private sector, which in turn would lead to lower labor costs and increased employment. But “lowering labor costs” is economist-speak for lowering wages—does the GOP want to be in the position of advocating for lower wages for voters who work in the private sector?
Dean Baker, co-founder of the Center for Economic and Policy Research (CEPR), points out that the examples of the nations that followed the Republican economic prescription the report uses to back up its claims have been discredited by the International Monetary Fund (IMF) and the Organization for Economic Co-Operation and Development (OECD).
8.9 Percent Jobless Rate Not ‘Normal’ nor Structural
Put this under the heading of “voodoo economics.” The argument goes that the nation’s 8.9 percent unemployment rate—after nearly two years between 9 and 10 percent—is the new “normal” unemployment rate. Proponents of this absurd claim say it’s workers’ fault because they don’t have the skills to fill the jobs or don’t live near the jobs that are available.
A new study by the Center for Economic and Policy Research (CEPR) takes this theory—also known as “structural unemployment”—and blows it out of the water.
Says CEPR senior Economist John Schmitt:
We are not in a national employment crisis because the available workforce is not well-matched with the available jobs. We are in a crisis because the economy is not producing enough jobs. Read the rest of this entry »
Washington Wrecks the Economy: More Evidence
This a cross-post from TPM by Dean Baker, economist and co-director of the Center for Economic and Policy Research.
We now have even more evidence that inept policies from Washington are causing enormous suffering across the country. It is not quite the line that the right-wingers are pushing. The new evidence is that the stimulus worked and was, in fact, more effective than had been predicted.
The new evidence comes in the form of a study by two Dartmouth professors, James Feyrer and Bruce Sacerdote. Past estimates of the impact of the stimulus on jobs and the economy relied on simply plugging the tax breaks and spending into standard macro models and reporting the predicted effect. In this sense, the impact of the stimulus was actually built into the model. However this new study directly measures the impact of stimulus spending on employment across states, comparing the number of jobs created to the amount of spending.
Dean Baker: Debts Should Be Honored, Except for Working People
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If you work for a living, then you expect to be paid what you are owed and on time. But if some members of Congress have their way, public employees will be denied the pensions they worked years to earn.
In a Point of View column at the AFL-CIO website, Dean Baker, co-director of the Center for Economic and Policy Research (CEPR), says certain members of Congress are working overtime to draft a law allowing states to declare bankruptcy.
According to a New York Times article, a main goal of state bankruptcy effort is to allow states to default on their pension obligations. This means that states could tell teachers, highway patrol officers and other government employees that their contracts no longer mean anything and they will not get the pensions they were expecting, Baker says.
Baker says the crowd pushing state bankruptcies is made up of some of the same people who rewrote the personal bankruptcy laws to require working people buried under a mountain of debt to pay their credit card bills, some retroactively. They also argued that homeowners who were under water should pay their mortgages.
State governments are legally obligated to pay retirees the pensions they worked for just like any other debt. What’s different now, Baker says, is that the money from public employee pensions goes to working people, not some big Wall Street bank.
New Social Security Calculator Helps Set Retirement Income Goals
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In his State of the Union address, President Obama insisted on the need to protect Social Security and ensure that future generations can depend on it, and he urged bipartisanship in strengthening Social Security, “without slashing benefits” or privatization.
The Center for Economic and Policy Research (CEPR) has made it easy to determine how much of your retirement income will come from Social Security. The CEPR’s new Social Security Calculator also enables you to compare your Social Security retirement income with other households with similar demographics.
The calculator lets users enter their planned date of retirement, current income, estimated mortgage debt, savings and stocks and pension to calculate their future household retirement income. Users also can enter demographic information such as age, race and marital status and compare their total retirement income to similar households in their area. The data used in the calculator is drawn from the U.S. Census Bureau’s American Community Survey (ACS).
Report: Unions Are Big Advantage for Asian American/Pacific Islander Workers
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Asian American and Pacific Islander workers who belong to unions enjoy a large wage and benefit advantage over their nonunion counterparts, according to a new report by the Center for Economic and Policy Research (CEPR).
The report, ”Unions and Upward Mobility for Asian American and Pacific Islander Workers, ” using the latest data from the U.S. Census Bureau, finds that joining a union increases the pay of Asian American and Pacific Islander workers by about $2.50 per hour. Asian American and Pacific Islanders in unions are 16 percentage points more likely to have employer-provided health insurance and 22 percentage points more likely to have employer-provided pension plans than their nonunion peers.
Latinos make up the only group growing faster as a part of the union workforce than Asian Americans and Pacific Islanders, says Nicole Woo, director of domestic policy at CEPR and an author of the report.
While this is reflective of workforce trends in general, the data show that joining a union makes a big difference in the wages and benefits of [Asian American and Pacific Islander] workers.
