Relevant and even prescient commentary on news, politics and the economy.

When you hear ‘growing our economy’ to pay for services

Via Naked Capitalism is a post by Pavlina R. Tcherneva of Bard College at New Economic Perspectives. Worth reading the whole post…

by Pavlina R. Tcherneva   (originally published at New Economic Perspectives)

Inequality Update: Who Gains When Income Grows?

Growth in the US increasingly brings income inequality.  A striking deterioration in this trend has occurred since the 80s, when economic recoveries delivered the vast majority of income growth to the wealthiest US households.  This note updates my original inequality chart (reproduced below) with the latest data. For earlier discussions, see e.g., here, here, and here.

Figure 2inequality2: bottom 90% vs. top 10%, 1949-2012 expansions (incl. capital gains)   (Figure 2 is a more accurate graph than the previous ‘Figure 1 it replaces)

The chart illustrates that with every postwar expansion, as the economy grew, the bottom 90% of households received a smaller and smaller share of that growth. Even though their share was falling, the majority of families still captured the majority of the income growth until the 70s. Starting in the 80s, the trend reverses sharply: as the economy recovers from recessions, the lion’s share of income growth goes to the wealthiest 10% of families. Notably, the entire 2001-2007 recovery produced almost no income growth for the bottom 90% of households and, in the first years of recovery since the 2008 Great Financial Crisis, their incomes kept falling during the expansion, delivering all benefits from growth to the wealthiest 10%. A similar trend is observed when one considers the bottom 99% and top 1% percent of households (for details, as well as complete business cycle data, see here).

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March jobs report: participation up, unemployment down, wage growth miserly

by New Deal democrat

March jobs report: participation up, unemployment down, wage growth miserly

HEADLINES:

  • +98,000 jobs added
  • U3 unemployment rate down 0.2% from 4.7% to 4.5%
  • U6 underemployment rate down 0.3% from 9.2% to 8.9%

Here are the headlines on wages and the chronic heightened underemployment:

Wages and participation rates

  • Not in Labor Force, but Want a Job Now:  up +284,000 from 5.597 million to 5.781 million
  • Part time for economic reasons: down -151,000 from 5.704 million to 5.553 million
  • Employment/population ratio ages 25-54: up +0.2% from 78.3% to 78.5%
  • Average Weekly Earnings for Production and Nonsupervisory Personnel: up $.04 from $21.86 to $21.90,  up +2.3% YoY.  (Note: you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.)

January was revised downward by -22,000. February was also revised downward by -16,000, for a net change of -38,000.

NOTE: Beginning next month, I will begin keeping track in the headlines of both manufacturing and mining job growth.  Better news in these numbers was a central part of Trump’s campaign, and after a 3 month grace period, I think it is fair to begin to see how well – or poorly – he is keeping that promise.

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The Overseas Cash Grab

NYT Dealbook points to a how the 2 trillion dollar overseas money can come “home” and how money is spent.  2005 comes to mind the last time repatriation of “overseas money” comes to mind.

Linda Beale Repatriation holiday lobbying – Money Speaks and More on repatriation.

Taxprof blog here and Senate report here.

The Overseas Cash Grab (from Dealbook)

Corporate chiefs in the United States have bemoaned for years the taxes that they would face if they brought home more than $2 trillion in cash kept overseas.

They may soon stop complaining. President Trump and the Republican-controlled Congress are widely believed to be open to lowering taxes on funds that companies bring back.

For lawmakers, the idea of a tide of funds coming home creates visions of infrastructure investment and job creation. But on Wall Street, it has set off hopes for another spending priority: mergers and acquisitions. And deals often lead to job losses.

The differing visions come amid a broader debate about whether cutting taxes spurs investment or leads to higher incomes and more jobs.

Among other things, there are questions about the ways people respond to lower taxes. If your tax is lowered, would you strive to be more productive at work? Or would you take advantage of a higher income that came at no extra effort?

Either way, the more pressing issue may be at whether a tax overhaul can happen at all.

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Jamie Dimon on labor force participatioin and disability

by New Deal democrat

Jamie Dimon on labor force participation and disability

First of all, sorry for the light posting this week. I’ve had some urgent business I need to attend to irl.

But I wanted to post this for future reference. Via Business Insider, this is from Jamie Dimon’s letter to stockholders:

If the work participation rate for this group [men ages 25-54] went back to just 93% – the current average for the other developed nations – approximately 10 million more people would be working in the United States. Some other highly disturbing facts include: Fifty-seven percent of these non-working males are on disability ….

I don’t know where he got the 57% statistic from, but if it is true it is potent evidence that the main factor behind the 60 year long decline in prime age labor force participation by men is an increase in those on disability, probably due to both the expansion of the program, and better longevity and diagnostics — and probably also tied in to opiate addiction as well.

cross posted with Bonddadd blog

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Could Incompetence Lead To Reelection?

by Barkley Rosser  (originally published at  Econospeak)

Could Incompetence Lead To Reelection?

I know, I know, it is way too early to talk about the presidential election of 2020, so maybe this is more relevant to midterms, and more likely it is just something merely momentary.  Nevertheless, it occurs to me that the increasingly apparent incompetence of our current president could possibly play into helping him get reelected in 2020.

His incompetence is manifesting itself substantially in his inability to achieve many of the things that he campaigned on most loudly, including repealing and replacing Obamacare, introducing massive trade protectionism, sharply cutting taxes for the rich, and sharply stopping immigration. Of course his new administration, which included probably the most incompetent, insane, and corrupt set of cabinet secretaries and other officials in US history, are doing and will be doing things that will be terribly damaging to American society on many fronts, including the environment, education, womens’ rights, the arts, financial market stability, minority rights, and a long list of others, with many of these very important.  The Trump administration is doing and will do a great deal of damage.  But none of  these were really red meat headline issues in his campaign.  They were not the items that got his angry mobs at rallies chanting and yelling and more generally making public fools of themselves while scaring much of the rest of the population.  Those issues were the ones I mentioned up front, the ones that Trump seems so far not to be actually doing much about after all the ranting and raving.

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Why Economists Are Bad At Economics

by Sandwichman

Why Economists Are Bad At Economics

If you want an informed, thoughtful analysis of the effects of robotization on productivity, investment, employment and wages, ask an art school professor. Jason E. Smith’s two-part series, “Nowhere to Go: Automation, Then and Now,” (part one and part two) at Brooklyn Rail cuts through all the statistical aggregation category errors to highlight the accumulation dilemma that economists just don’t seem capable of either grasping or admitting.

Current speculations on both the promise and threat of automation are confronted with an ongoing crisis of accumulation. In this climate, a fragmentary implementation of automation is unlikely either to liberate large fractions of humanity from work, or produce mass unemployment of the sort envisioned over and again by commentators for the past century.

Smith has a PhD in comparative literature, which perhaps explains why he can tell the difference between an arbitrary catch-all term like “service sector” and the very different and distinctive components that are lumped together in it. Both promise and threat evaporate when the components are dis-aggregated and the jumble untangled. Definitely worth a read.

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How Between-Firm Inequality Drives Economic and Social Inequality

Conversable Economist takes an interesting look at inequality: (worth a look…hat tip Spencer England)

How Between-Firm Inequality Drives Economic and Social Inequality

“The real engine fueling rising income inequality is `firm inequality’: In an increasingly winner-take-all or at least winner-take-most economy, the best-educated and most-skilled employees cluster inside the most successful companies, their incomes rising dramatically compared with those of outsiders. This corporate segregation is accelerated by the relentless outsourcing and automation of noncore activities and by growing investment in technology.”

In contrast, a rise in between-firm inequality suggests that the US and other leading economies are becoming a more economically segregated, in the sense that those with high pay and those with lower pay are becoming less likely to have the same employer. It means that the classic “American dream” success story, of someone being hired in the mailroom or as a secretary or janitor, and then getting promoted up the company ladder, is less likely to occur. Nowadays, those jobs in the mailroom or the secretarial pool or the janitorial work are more likely to involve working for an outside contractor. In that sense, some of the rungs on the bottom of the ladder of success have been sawed off.

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