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

A Day in the Life of the jobs market, May 2017

A Day in the Life of the jobs market, May 2017
Fifty years ago, when I was a little teenybopper,  his album came out and blew me away:

Why bore you with this ancient Boomer reminiscence?
Because the unemployment rate has only been lower than last month’s 4.3% in only six of the last 50 years, and only two of them in the last 46 years:


Since February 1970, the only time the unemployment rate has been less than it is now is from 1999 into 2001.
That’s not trivial.  If you are under retirement age, then if you are unemployed, your odds of finding a job now are better than almost 90% of the entire time since you reached working age — or better.

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“It Depends on How We They Value Time”

Peter Dorman calls attention to a NYT Upshot column by Neil Irwin about the cost of climate change. For Irwin, the question can be framed as a matter of discounting, “A dollar today is worth more than a dollar tomorrow and a lot more than a dollar in 100 years. But what discount rate you set determines how much more.”

As Irwin admits, the discount rate is a “business concept.” His conclusion, then, follows exclusively from a business concept of “how, as a society, we count the value of time.” Why are we compelled, as a society, to count the value of time in accordance with the business concept of discounting? Because there is no other concept of time? No, there are other concepts of time. More specifically, there is a concept of time directly opposed to and critical of the business concept of time. Labor time.

What discounting is to the business concept of time, alienation is to the labor concept of time. Alienation refers not to “feelings” of alienation but to the sale of one’s own time — and consequently autonomy — to another.

For every human being — as for the wage worker — there are 24 hours in a day,  168 hours in a week, 8760 or 8784 hours in a year. These are fixed amounts. You can’t put it in a bank and get it back in 20 years with interest. You can’t take it with you and you can’t convey it to your heirs in a will. Today is here today and gone tomorrow.

The discount rate concept has nothing to do with the qualitative experience of time by humans and everything to do with the quantitative accumulation of money by property owners. Framing the cost of climate change as a contest between different discount rates is totalitarian. We live in a totalitarian society in which the non-business concept of time is invisible. Neil Irwin sounds like a thoughtful person. It simply didn’t occur to him that there was any other relevant concept of time than the business concept.

That is why the climate is changing. And that is why not enough will be done about it. Because it all depends on how capital values time.

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The Cost of Climate Change: It’s Not About Psychology

by Peter Dorman   (originally published at Econospeak)

The Cost of Climate Change: It’s Not About Psychology


You know there are problems with economics when things that are perfectly reasonable in the context of economic theory are clearly absurd once you step out of it.  Case in point: the claim in today’s New York Times piece by Neil Irwin that the economic cost of climate change vs the actions we’d need to mitigate it depends on “how, as a society, we count the value of time.”

In economics?  Yes.  The present value of climate and climate mitigation costs depends on the discount rate, the extent to which we devalue something a year from now because it’s a year away.  That’s how you do a cost-benefit analysis.  It really matters for climate policy because the costs tend to be upfront and the benefits decades or even centuries down the road.  Economists wrack their brains over how to select exactly the “right” discount rate to perform these calculations.

But think about it for a moment.  While there’s a “technical” aspect to time preference—investing today can result in measurable returns over time—the discount rate also depends on psychology: how present-oriented are we?

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May jobs report: nothing more nor less than a decent late cycle report

May jobs report: nothing more nor less than a decent late cycle report

HEADLINES:

  • +138,000 jobs added
  • U3 unemployment rate down -0.1% from 4.4% to 4.3%
  • U6 underemployment rate down -0.2% from 8.6% to 8.4%

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

Wages and participation rates

  • Not in Labor Force, but Want a Job Now: down -146,000 from 5.707 million to 5.561 million
  • Part time for economic reasons: down -53,000 from 5.272 million to 5.219 million
  • Employment/population ratio ages 25-54: down -0.2% from 78.6% to 78.4%
  • Average Weekly Earnings for Production and Nonsupervisory Personnel: up $.03 from $21.97 to $22.00,  up +2.5% 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.)

Holding Trump accountable on manufacturing and mining jobs

Trump specifically campaigned on bringing back manufacturing and mining jobs.  Is he keeping this promise?

  • Manufacturing jobs fell by -1,000 for an average of +2500 vs. the last severn years of Obama’s presidency in which an average of 10,300 manufacturing jobs were added each month.
  • Coal mining jobs rose by +400 for an average of +300 vs. the last severn years of Obama’s presidency in which an average of -300 jobs were lost each month

March was revised downward by -29,000. April was also revised downward by -37,000, for a net change of -66,000.

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Gas prices on verge of turning negative YoY

Gas prices on verge of turning negative YoY

There are two important aspects to the inflation rate right now. One, as Dean Baker reminds us today, is that most of core inflation has been caused by housing, via “owners equivalent rent.”  Take that out, and inflation is only 1%:


The second important aspect is that almost all the variation in headline inflation is due to the price of gas.
At the beginning of this year, I thought one of the big issues would be whether gas prices would continue to increase off their January 2016 bottom at a similar rate as they did last year, or whether the increase would be more subdued. We have a pretty definitive answer at least for now, and it is the latter.

Here’s the graph of gas prices since the beginning of 2014:

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Trump Administration’s Infrastructure Plan

Via International Business Times (via RSN):

Trump Administration’s Infrastructure Plan Involves Privatizing America’s Assets and Selling Them to Goldman Sachs>/a>

President Donald Trump’s administration this week touted an infrastructure plan that would sell off public assets to private financial firms. Left unsaid in the White House promotional materials was any mention that the Trump aide who is overseeing the initiative comes from a Wall Street firm that says it is seeking to buy up the very same kind of assets the Trump administration plans to sell off.

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Ted Cruz failed to properly disclose Goldman Sachs loans: FEC

Via Salon, another Goldman Sachs story:

Ted Cruz failed to properly disclose Goldman Sachs loans: FEC

This has not been a good week for Republican Sen. Ted Cruz of Texas. First he is the butt of a cutting joke by Democratic Sen. Al Franken of Minnesota (who told “USA Today” that “I like Ted Cruz probably more than my colleagues like Ted Cruz, and I hate Ted Cruz”), and now the Federal Election Commission has ruled against him — unanimously, no less.

The three Republican FEC members joined the two Democrats to find that Cruz failed to properly account for loans he had received from two banks, Goldman Sachs and Citigroup, during the 2012 election, according to a report by Bloomberg. Cruz borrowed $1.1 million worth of loans from the banks during his Senate campaign in Texas, with the FEC determining that Cruz had loaned his campaign $800,000 from Goldman Sachs (where his wife Heidi works) and $264,000 from Citigroup.

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Fighting Zombies with Zombies

Fighting Zombies with Zombies

Larry Mishel and Josh Bivens enlist zombie government policy ponies in their battle against “the zombie robot argument“:

Technological change and automation absolutely can, and have, displaced particular workers in particular economic sectors. But technology and automation also create dynamics (for example, falling relative prices of goods and services produced with fewer workers) that help create jobs in other sectors. And even when automation’s job-generating and job-displacing forces don’t balance out, government policy can largely ensure that automation does not lead to rising overall unemployment.

The catch here is that the displacement of workers by technology and the investment that re-absorbs workers displaced by technology are largely, but not entirely, independent factors. “Government policy” in the quoted paragraph is just another name for investment. Hans Neisser observed in his 1942 article on technological unemployment that “it is impossible to predict the outcome of the race between the two [investment and displacement] on purely theoretical grounds.”

The conclusion is inevitable: there is no mechanism within the framework of rational economic analysis that, in any situation, would secure the full absorption of displaced workers and render “permanent” technological unemployment in any sense impossible.

The “robot apocalypse” is neither impossible nor inevitable. It is probably unlikely, but unlikely things do happen, especially when people become complacent about the impossibility of unlikely things happening.

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Trucking And Blue-Collar Woes

Paul Krugman talks unions:

Trucking And Blue-Collar Woes

MAY 23, 2017 5:11 PM May 23, 2017

What with everything else going on, this Trip Gabriel essay on truckers hasn’t gotten as much attention as it should. But it’s awesome — and says a lot about what is and isn’t behind the decline of blue-collar wages.

Trucking used to be a well-paying occupation. Here are wages of transportation and warehousing workers in today’s dollars, which have fallen by a third since the early 1970s:

Photo


Why? This is neither a trade nor a technology story. We’re not importing Chinese trucking services; robot truck drivers are a possible future, but not here yet. The article mentions workers displaced from manufacturing, but that’s a pretty thin reed. What it doesn’t mention is the obvious thing: unions.

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A thought for Sunday: no, Trump approval *still* isn’t imploding. BUT …

A thought for Sunday: no, Trump approval *still* isn’t imploding. BUT …

Democrats continue to delude themselves about Presidential approval polls — with one very big possible exception.

In the first place, can we all agree that Trump has had a particularly nasty last several weeks? Including firing Comey, blabbing secrets to the Russian ambassador, blabbing about our submarines to the Philippines’ now-dictator, compromising the intelligence sources of Israel (and then confirming it!) and later Britain, and reports of multiple occasions with multiple officials in which he blatantly appeared to be attempting to shut down a criminal investigation?

Can you imagine what the public opinion polling would look like after several weeks like that, for virtually any past US President, let alone if the president were Hillary Clinton?

Well, here is what Trump’s looks like as of today:


His approval stands at 41%, right in the middle of where it has been since he assumed office in January.

A variation of the Trump-support-is-imploding mantra showed up later in the week when FiveThirtyEight wrote that “Trump’s Base is Shrinking” based on strong vs. weak approval. Typically this is the graph that was shown:

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