President Biden has presided over a huge employment boom that, according to Friday’s employment report, is still in progress. That’s simply a fact, although stating it (like pointing out that we aren’t in a recession at the moment) guarantees that I will receive a truckload of hate mail. By Biden’s second Labor Day, the U.S. economy had added substantially more jobs on his watch than it did in the Trump administration’s first 37 months — that is, before Covid-19 put the economy into a temporary coma.
To be fair, many of the job gains under Biden probably reflected a natural recovery from lockdowns, and in general it’s easier to add many jobs when you start, as Biden did, from a position of depressed employment. On the other hand, employment has recovered faster than almost anyone expected. In late 2020, professional forecasters expected average unemployment in 2022 to be 5.2 percent; so far, it has averaged only 3.7 percent.
But while the Biden boom was and is real, has it been good for U.S. workers? Ask many American workers, and they’d probably answer in the negative. After all, hasn’t inflation eaten up all their wage gains and then some? (Although their answers might be a bit different now that gas is back under $4 a gallon.)
Well, inflation has definitely been a big problem. And if controlling inflation ends up requiring a long period of high unemployment — I don’t think it will, but I could be wrong — workers could end up worse off, despite the current employment boom. …
So far, however, Bidenomics has been good for American workers, whether they know it or not.
There are two big conceptual issues you need to deal with when assessing the impacts of rising employment on American workers.
First, do we look at the wages of only fully employed workers, or do we consider the gains to Americans who would have been unemployed or working reduced hours but for the Biden boom? Second, how much of the inflation the U.S. economy has suffered since Biden took office do we attribute to the boom, as opposed to things that would have happened whatever his policies had been?
If we include wage gains due to the rising share of Americans with jobs and the rising number of hours for those employed, the Biden boom has, unambiguously, been good for workers’ incomes. Thomas Blanchet, Emmanuel Saez and Gabriel Zucman of the University of California at Berkeley have a new website, Real Time Inequality, that tracks American incomes by source on a monthly basis. They found that overall labor income per working-age adult, adjusted for inflation, rose 3.5 percent from January 2021 to July 2022.
Furthermore, the biggest gains went to the lowest-paid workers. So the Biden boom didn’t just increase overall incomes; it reduced inequality.
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But what about workers who already had jobs when Biden took office? Haven’t they seen the purchasing power of their wages fall, thanks to inflation? The answer is yes, but. …
so then the typical worker is staying ahead of inflation and is getting a better life each week. it is the unemployed who are hurt most by our inflation. some workers are unemployed because they do not pick up employment skills they need in high school. teachers are not allowed to teach what entry level employees need.
As a stopgap we should utilize employees from NATO Nations, employees that could fill our 11 million unfilled employment slots then spend their paychecks on our economy as both Investors and consumers. Such a stopgap could give our educators time to tweak the high school curriculum.
Taiwanese and NATOnians could help us in our time of need, help us to make America great again.
You can speak German and I will understand it. If you do Russian, I will not understand and will have to delete you. Only because you could be hijacked.
Remember the Trump trade wars? Actually, many of the tariffs Donald Trump imposed are still in place — less, I suspect, because Joe Biden thinks they were justified than because giving Republicans an excuse to accuse his administration of being soft on China doesn’t seem like a good idea. But in any case, trade issues are currently being overshadowed by everything from inflation to the war in Ukraine.
Under the radar, however, some of what Trump wanted but failed to achieve — a return of manufacturing to the United States, for instance — may actually be happening under his successor. A recent Bloomberg review of C.E.O. business presentations finds a huge surge in buzzwords like onshoring, reshoring and nearshoring, all indicators of plans to produce in the United States (or possibly nearby countries) rather than in Asia.
There has also been a flurry of news reports, backed by some flaky data, suggesting that companies really are building new manufacturing facilities in the United States and other high-income countries.
So we may be seeing early indications of a partial retreat from globalization. This isn’t necessarily a good thing, but that’s a topic for another day. For now, let’s talk about why this may be happening. …
The first thing you need to know is that if we see some decline in world trade in the years ahead, it won’t be the first time that’s happened. It’s common to assume that the world is always getting smaller, that rising international interdependence is an ineluctable trend. But history says otherwise.
In fact, the world economy was surprisingly integrated on the eve of World War I. In “The Economic Consequences of the Peace,” John Maynard Keynes wrote of the “extraordinary episode” that he claimed ended in August 1914 — an era in which “the inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep.”
And that first age of globalization did in fact go into reverse after the Great War. Here are estimates of total world trade — exports plus imports — as a percentage of gross domestic product for selected years since 1913…
… hyperglobalization stalled out around 2008; international trade as a share of the world economy has been more or less, um, flat for 14 years. And there are three reasons to believe that globalization will actually retreat in the years ahead, though probably not to the extent it did in the interwar years.
The first, most benign reason is the rise of the robots — by which I mean labor-saving technology in general. People often assume that improvements in transportation technology necessarily mean more trade. But that’s only true if progress in transportation is faster than progress in the technology of production. I wrote a little model about this a few years back, but here’s a reductio ad absurdum: Imagine that we all had access to the replicators on “Star Trek” — machines that would synthesize anything you wanted on the spot. If all you had to do was say “Tea, Earl Grey, hot” and a steaming cup materialized, you wouldn’t need to import the stuff from Sri Lanka.
Indeed, companies talking about reshoring production often make the point that modern techniques in some cases allow them to produce with relatively few workers, in which case the cost savings from outsourcing to low-wage countries are minimal — and are outweighed by the logistical advantages of producing close to home.
A second, less benign reason for declining globalization is the growing realization that the world is a dangerous place. It’s especially dangerous to allow yourself to rely economically on countries with authoritarian regimes, which may suddenly cut you off either as a power play or simply because dictators tend to behave erratically. Europe is now realizing that becoming dependent on Russian natural gas was a terrible mistake. China hasn’t engaged in economic blackmail — not yet, anyway — but both the Russian example and the arbitrariness of Xi Jinping’s Covid lockdowns have made businesses newly nervous about relying on Chinese suppliers. …
The threat to Europe’s industrial might and living standards is particularly acute as policymakers race to decouple the continent from Russia’s power sources.
Russia’s invasion of Ukraine and the continuing effects of the pandemic have hobbled countries around the globe, but the relentless series of crises has hit Europe the hardest, causing the steepest jump in energy prices, some of the highest inflation rates and the biggest risk of recession.
The fallout from the war is menacing the continent with what some fear could become its most challenging economic and financial crisis in decades.
While growth is slowing worldwide, “in Europe it’s altogether more serious because it’s driven by a more fundamental deterioration,” said Neil Shearing, group chief economist at Capital Economics. Real incomes and living standards are falling, he added. “Europe and Britain are just worse off.”
Several countries, including Germany, the region’s largest economy, built up a decades-long dependence on Russian energy. The eightfold increase in natural gas prices since the war began presents a historic threat to Europe’s industrial might, living standards, and social peace and cohesion. Plans for factory closings, rolling blackouts and rationing are being drawn up in case of severe shortages this winter. …
The risk of sinking incomes, growing inequality and rising social tensions could lead “not only to a fractured society but a fractured world,” said Ian Goldin, a professor of globalization and development at Oxford University. “We haven’t faced anything like this since the 1970s, and it’s not ending soon.”
Other regions of the world are also being squeezed, although some of the causes — and prospects — differ.
Higher interest rates, which are being deployed aggressively to quell inflation, are trimming consumer spending and growth in the United States. Still, the American labor market remains strong, and the economy is moving forward.
China, a powerful engine of global growth and a major market for European exports like cars, machinery and food, is facing its own set of problems. Beijing’s policy of continuing to freeze all activity during Covid-19 outbreaks has repeatedly paralyzed large swaths of the economy and added to worldwide supply chain disruptions. In the last few weeks alone, dozens of cities and more than 300 million people have been under full or partial lockdowns. Extreme heat and drought have hamstrung hydropower generation, forcing additional factory closings and rolling blackouts. …
Has Bidenomics Been Good for Workers?
NY Times – Paul Krugman – Sep 5
so then the typical worker is staying ahead of inflation and is getting a better life each week. it is the unemployed who are hurt most by our inflation. some workers are unemployed because they do not pick up employment skills they need in high school. teachers are not allowed to teach what entry level employees need.
As a stopgap we should utilize employees from NATO Nations, employees that could fill our 11 million unfilled employment slots then spend their paychecks on our economy as both Investors and consumers. Such a stopgap could give our educators time to tweak the high school curriculum.
Taiwanese and NATOnians could help us in our time of need, help us to make America great again.
MAGA
Justin:
You can speak German and I will understand it. If you do Russian, I will not understand and will have to delete you. Only because you could be hijacked.
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