Jesse Taylor reads Edmund Andrews quoting Greg Mankiw on the quality of jobs, and falls off his chair in hapless laughter:
Posted by DeLong at August 9, 2004 09:16 AM | TrackBack | | Other weblogs commenting on this postPandagon: Meet the New Job, Same As The Old Job (Sorta): I'm always a little bit annoyed when "average" becomes a part of the conversation over personal income, mainly because "averages" combine so many disparate levels that it's a picture reflective of nothing. I do, however, have to admire this defense in light of recent (obvious) news that new jobs in the Bush boom tend to pay less than the old ones.
"McDonald's has C.E.O.'s and accountants, and investment banks hire janitors,'' said N. Gregory Mankiw, chairman of the president's Council of Economic Advisers. "Simply knowing what broad categories are rising and falling doesn't tell you anything about the jobs people are getting.''
The problem is, unless McDonald's is creating - and filling - as many CEO and accountant-style positions as they are burger-flipper and cashier positions, it's really not relevant. Given how the categories are separated, it actually does let you know what kind of jobs people are getting in the aggregate. But even if that doesn't work, maybe Mankiw could check the Labor Department's figures.
Adjusted for inflation, average hourly wages have fallen slightly in the last year. And for many who have lost their jobs as a result of plant closings and layoffs, the impact has been more acute: a recent survey of displaced workers by the Labor Department found that 57 percent of those who had found work were earning less than they did in their old jobs. As of December, when the survey was taken, 4 of 10 displaced factory workers had yet to start a new job.
Not for McDonald's 1.3 million CEOs, though.
It's Not Just the Jobs Lost, but the Pay in the New Ones
By EDMUND L. ANDREWS - New York Times
August 9, 2004
WASHINGTON - The stunningly slow pace of job creation, which sank to growth of just 32,000 in July, has provided new ammunition in an intense political debate over job quality.
For months, Democrats have said that the long-delayed employment recovery was concentrated in low-wage jobs that paid far less than those that were lost. White House officials replied that the available data failed to settle the matter one way or the other.
The data is still inconclusive. But the weakness in job creation and the apparent weakness in high-paying jobs may be opposite sides of a coin. Companies still seem cautious, relying on temporary workers and anxious about rising health care costs associated with full-time workers. Many economists say that over the long term, the most vulnerable positions are those at the low end of the wage scale that require fewer skills and are easily replicated.
We can surely hope there will be no interest rate increase by the Federal Reserve. The economy is sluggish, labor is beset, wages and benefits are all too constrained. There seems no reason for higher interest rates.
Posted by: Anne on August 9, 2004 09:56 AMAdmit We Have a Problem
By BOB HERBERT - New York Times
August 9, 2004
"The weak job market continues to put downward pressure on wage growth," said Jared Bernstein, a senior economist at the Economic Policy Institute in Washington. He noted that nominal wage growth on a year-over-year basis has been decelerating even as inflation is increasing, which is bad news for an economy so dependent upon consumer spending.
In a report released by the institute on Friday, Mr. Bernstein wrote, "These job and wage dynamics erode workers' buying power, and this has negative implications for the strength of the recovery."
Retail sales in July were disappointing, hampered by high gasoline prices as well as anemic wage growth. And the stock market is in a prolonged swoon.
Despite the rosy rhetoric that comes nonstop from the administration, millions upon millions of American families, including many that consider themselves solidly in the middle class, are in deep economic trouble. Friday's Wall Street Journal featured a page-one article with the ominous headline: "New Group Swells Bankruptcy Court: The Middle-Aged."
Personal bankruptcy filings in the U.S. are at an all-time high. The Journal story focused on "an emerging class of middle-age, white-collar Americans who make the grim odyssey from comfortable circumstances to going broke." Among the villains of this disturbing piece are the unstable job market and staggering amounts of personal debt.
Posted by: Anne on August 9, 2004 10:13 AMMankiw again fails to speak clearly. I feel sorry for his former students.
As for jobs and the economy, job loss was high during the Clinton administration. Fortunately job creation was much higher. Going into the 2001 recession, there was a pattern of high job turnover/replacement. Much of this was fueled by the dot.com. Once dot.com went dot.bust, the great engine of job growth sputtered. Job creation slowed but job loss still occurred.
What was needed in 2001 was a new engine, a new source of job creation. Government spending and research revved up the internet. Similar investment will be required to rev up the next engine. I think Kerry is on the right track with his energy independence and putting government investment into new energy and conservation. The payoff could be enormous because the market is so large. There are a lot of things that are in the pipeline ready to go with a little bit of push.
Kevin Phillips in "Wealth and Democracy" chronicles the booms and busts in America. He observed that the sector leading the recovery out of the bust is never the one that was overinvested before the bust.
Posted by: bakho on August 9, 2004 11:41 AMbakho -- in the stock market I call the point you are making the "echo" effect. In the first stage of a new bull mkt everyone tried to buy the winners in the last cyle. That generates a short run false rally in those stocks before they tank. We probably are in the middle of the tanking phase for tech stock right now.
Given inflation expectations, the unemployment rate & capacity utilization average hourly earnings growth is exactly where you should expect it to be.
Posted by: spencer on August 9, 2004 12:09 PMAnyone with half a clue wants to know the average and the median of a distribution. The magnitude of both and the difference between them tell you quite a lot about the situation. If you can only have one, again, anyone with half a clue asks for the median, the average only being useful if the distribution is normal (of course then, the average equals the median.....). Till we teach this sort of stuff in kindergarden (ok sixth grade) we will get the kind of pull your ears over your nose quotes from the flak catchers that we now get. Manikow is a flak catcher, all be it one with a PhD.
Posted by: Eli Rabett on August 9, 2004 02:35 PMWow, did Mankiw really not know that janitors hired by investment banks would not be categorized as "investment bankers"?
Or was he being slippery?
Posted by: hippocopter on August 9, 2004 06:53 PMAnne wrote:
There seems no reason for higher interest rates.
Inflation is the reason.
Posted by: pat on August 10, 2004 08:11 AMAnne wrote:
There seems no reason for higher interest rates.
Inflation is the reason.
Posted by: pat on August 10, 2004 08:14 AM