Friday, July 2, 2010

PS427: A big day for economic analysis

The latest employment data are out this morning, prompting a binge of analysis.

The NYT's Economix blog is particularly active with some excellent analysis and graphics. Here are the links:

Is job growth being underestimated? Maybe.  This from the day before the new data arrived.

Is the recovery losing steam? Gloom.  Note the focus on employment. There is much more to the economy than just jobs, so this is a rather narrow view. Looking more broadly might be worse or better, but at least look.

Comparing the recession with the previous ones since 1970.  This includes one of the most elegant and clear graphics showing the depth of the current recession in terms of jobs lost.

Long-term unemployment is the distinctive mark of the current recession. Is this due to structural change in the economy, or as some argue the continuing extension of unemployment insurance? Would more have found a (probably lower paying) job if they didn't have continuing unemployment benefits to fall back on? Will the current GOP blockage of yet another extension of unemployment benefits ultimately force some to take a job less good than they would wish? And for bonus points, as a political matter, can GOP candidates successfully campaign on having "stood against more deficit spending" if it means they did so by blocking extended unemployment benefits? Can Dems campaign for extending benefits even if they must therefore take the blame for more deficit spending?

The 1981-82 recession was the worst post-war recession until this one. Is this one worse, even though unemployment rates hit higher peaks in 1982?  And here is the full report that was the basis of the NYT Economix report.

3 comments:

  1. Scott AbromowitzJuly 4, 2010 at 9:32 PM

    There clearly appears to be both a structural change in the economy and people reaping the benefits of unemployment insurance. The government must help those who lost jobs due to structural changes such as clerical workers and some government employees. Many of those jobs are likely never coming back. As such, education programs must be used to help people. Those who reap the benefits of unemployment insurance are likely difficult to find. Though, some state/federal agency should be better utilized to make sure people are actually looking for employment or enrolled in some level of education. Moreover, I am unsure if some would be able to find a job if they were willing to work for lower paying jobs, as their family may not be able to be supported fully on such a job and as such the benefits outweigh a job. I do see the GOP trying to target benefits aas a way to have people look for jobs, though this is only a short-term fix to raise the level of employment that will ultimately not benefit people in the future. This can harm teens who usually may work in such positions.

    I do NOT think the GOP can show that it stood against deficit spending, as many may blame the parties lack of fiscal responsibility with two costly wars and poorly regulated economy. Further, I believe DEMS continuation of extending benefits may have a negative effect with many believing the Party is just giving people fish and not actually teaching people who to fish.

    It is astonishing to see the amount of time some people have been out of work since the recession versus that during the 1980s recession. One must wonder, as one of the article states, if these people skill-set are outdated. I wonder if by going back to school for retraining would have any gain for the long-term unemployed. I wish the article would go into more depth to explain this in detail, if information is available. Furthermore, with technical advances one must wonder if the clerical jobs - i.e. the lady from Florida, skill set are no longer necessary. If so, again, a job retraining program should be used. However, I wonder if this programs are effective if numerous people are too seeking the same form of education. In regards to the 1980s recession, I am quite nervous about the prospects of finding steady work after I graduate college. The fact that this recession appears to be worse than the 1980s is quite daunting. I wonder if I should look elsewhere, temporarily, for work so that I can place items on my resume. The report that job growth is actually better than it actually appears is encouraging, though I will be competing with older people with more experience. Let us hope the recovery regains some steam, though employment is heading back. down.

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  2. The one thing I notice about unemployment rates is that political parties take this economic indicator and twist it to fit the needs of their agenda.

    The big thing I notice about Republicans and unemployment is that party members tend to overstate the impact that unemployment has on the budget. The recent actions to block the unemployment extension benefits are done so on the principle that too much welfare is doled out and that people become dependent on the system. Although in certain cases this is true, the reality of the situation is that people are suffering from being on unemployment. According to MSN, the average weekly unemployment check is $293. Adjusting that number for 52 weeks and the total comes out to $15,236. For a family of 4 that constitutes being below the poverty level. In all fairness to conservatives, the debt caused by unemployment is a problem, but nobody is getting rich off of being on it. People utilize the system to stay afloat while they hope and pray that things will get better.

    No matter the political affiliation, exaggerating the benefits of unemployment is a cheap way for politicos to score points.

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  3. I believe that the trend towards long-term unemployment is due to structural change in the economy, for the most part. The continued extension of unemployment insurance is most likely a factor, but only for a small section of the workforce. There will always be free riders; for some, acquiring unemployment benefits could be an incentive to halt their job search because the benefits decrease the urgency of finding a job. However, I believe that most Americans likely understand the necessity of finding a long-term source of income rather than a short-term fix. As stated in one of the blog posts on economic analysis, a possible factor for long-term unemployment is that the longer a person goes unemployed, the less attractive their resume becomes. Most Americans know this, and paired with the overwhelming desire to live better than unemployment benefits allow, continuing unemployment would not encourage prolonged reliance on the program.

    If my reasoning is correct, the behavior of the majority of those on unemployment will not change as a result of the GOP blockage. As a person's job search becomes longer and longer, they likely are willing to accept (however begrudgingly) a lower paying job. The GOP blockage will heighten the urgency of finding jobs for all of the unemployed, but will only increase the number of people looking for jobs to the extent that there are people content living on unemployment alone.

    Given the intense polarization of our political parties, the GOP can campaign however they wish and likely be successful in arousing support. Most citizens don't understand the finer points of economic policy; if our economy does not improve by the next election, a GOP campaign on having "stood against more deficit spending" will be quite effective. In that case, a successful Democratic campaign for extending benefits would only be plausible to the extent that they are able to explain the rationale behind that policy, and why deficit spending is necessary in this specific case, in a simple and convincing way that Americans could believe, understand, and support.

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