Thomas Edsall has as interesting piece this morning discussing the changing plight of working class whites in the United States and their increasing estrangement from the Democratic Party. He gets much of the story right. Certainly they can no longer be assured of a comfortable middle class existence. And, if they do manage to get middle class jobs, they certainly cannot guarantee that their children will be as lucky.

However some of the argument is misplaced. Edsall notes the sharp growth in single mothers among women without college degrees. He then refers to research showing worse outcomes for children of single parents, implying that the problems for children stem from the increasing ability of parents to get divorced. This does not follow.

To take the simplest story, imagine a world in which no one is allowed to get divorced. Some children grow up in happy families with two committed parents. These children are likely on average to do well in life. On the other hand, some children grow up in dysfunctional families where parents regularly fight and a father may be abusive, alcoholic, or have other serious issues. These children will probably on average do less well in life.

Now suppose we allow couples to divorce. Presumably the happy couples stay together and the unhappy ones get divorced. If we compare outcomes of the children we would likely find that the children raised by two parents do better than the children raised by single mothers. However, it would be wrong to conclude that the problems for the children of single mothers stemmed from the fact that they are divorced, it would stem from the fact that they had been in bad relationships.

Given that divorce and single parents are a reality, the obvious policy response is to ensure that children get the education and support they need regardless of their family background. Good public child care, access to pre-K education, and affordable college education seem like obvious policy responses to these circumstances, along with laws that guarantee family friendly workplaces (e.g. paid sick days and paid family leave). These are policies that the Democrats have typically advocated.

The other set of policies for the white working class that the Democrats could (and sometimes have) advocate have to do with full employment. As Jared Bernstein and I argued in our book, Getting Back to Full Employment (download is free), full employment disproportionately benefits those at the middle and bottom of the wage distribution. The only period in the last four decades where these workers enjoyed sustained real wage gains was in the period of low unemployment from 1996 to 2000. Barring other changes in the economy, we will have to return to unemployment rates below 5.0 percent before most workers will again see substantial real wage gains.

There are three policies that the Democrats can push to again get the unemployment rate down to these low levels. The first involves additional government spending which would boost demand, growth, and employment. Unfortunately, superstitions about budget deficits makes this unlikely in the foreseeable future.

Dean Baker
PBS NewsHour, December 8, 2014

Sorry, I usually find Matt's stuff interesting, but I couldn't resist the cheap shot. Anyhow, Matt seems to have gotten himself stuck in the mud of a silly debate between Obama haters and Obama apologists.

The haters are saying that all the jobs created under the Obama administration are part-time jobs -- pointing out that full-time employment is still below the pre-recession peak. Meanwhile the apologists are pointing out that most of the jobs created under Obama have been full-time jobs. With the wisdom of someone other than Solomon, Matt pronounces them both right.

Okay, let's step back for a moment and deal with two separate issues. The first is overall employment. We saw a huge fall in employment that began before Obama stepped into the White House and continued for his three months in office. Since that point the economy has gained back more jobs than it initially lost. However since part-time employment (both voluntary and involuntary, a distinction to which we return momentarily) is well above pre-recession levels, full-time employment is still below its pre-recession level.

How should this appear on the Obama scorecard? Well, it's pretty damn silly to blame Obama for the downturn. He walked into an economic disaster that was not of his doing. We can argue that the recovery should have been more robust. I know the Republicans blame Obamacare, taxes, regulations and the Redskins' defense, but none of these explanations can pass the laugh test.

The more obvious explanation, which some of us did say at the time, is that the stimulus was not large enough to fill the hole in demand created by the collapse of the housing bubble. There is a question as to whether Obama could have gotten more stimulus through Congress, either at the time or in subsequent efforts, but the main problem was congressional opposition, not the actions of President Obama.

Last week, the Aspen Institute hosted a discussion on “the future of work in the sharing economy,” which focused on company platforms that facilitate the exchange of property, space, or labor. I consider myself fairly well acquainted with all three sides of this economy, especially when it comes to labor, so I wanted to weigh in here.

Over the years, I have worked a variety of odd jobs to help pay for school and living expenses, such as giving swimming lessons, babysitting, tutoring, and working as a family assistant, where my responsibilities have covered everything from dogwalking, buying groceries, paying bills, to researching preschool admissions processes. Most of these jobs were on-demand, made to accommodate both my schedule and those of my customers/clients. This does not even include my “regular” employment history of working as a university resident assistant, research fellow, lifeguard, security guard, and in various internships. I still laugh when I remember bonding with one of my roommates over always being “on the hustle” (the legal variety, of course). In the months since my graduation, I have also been an avid adopter of Craigslist, having found my apartment, bike, most of my furniture, and even kitchen supplies on the platform.

Andrew Biggs had a column in the Wall Street Journal last week complaining that public pension funds were taking excessive risk by having 70 percent to 80 percent of their holdings in risky assets, such as stocks and various alternative investment vehicles. In a few cases, holdings of risky assets apparently cross 80 percent. Biggs argues that this is far too high and that underfunded pension plans are now taking big gambles in the hope of closing their funding gap.

Bigg's basic argument stems largely from an inappropriate comparison of pension investment patterns to individual investment. Biggs tells readers:

"Many individuals follow a rough '100 minus your age' rule to determine how much risk to take with their retirement savings. A 25-year-old might put 75% of his savings in stocks or other risky assets, the remaining 25% in bonds and other safer investments. A 45-year-old would hold 55% in stocks, and a 65-year-old 35%. Individuals take this risk knowing that the end balance of their IRA or 401(k) account will vary with market returns.

"Now consider the California Public Employees’ Retirement System (Calpers), the largest U.S. public plan and a trendsetter for others. The typical participant is around age 62, so a '100 minus age' rule would recommend that Calpers hold about 38% risky assets."

The logic of an individual following this rule is that some point individuals will retire and basically be dependent on their savings and Social Security for all their income. Retirement is usually a pretty sharp break. If the stock market happens to be down at that point, they will be in trouble if they hold lots ot stock, especially if their intention had been to buy an annuity to support themselves in retirement. They will be forced to sell their stock at a depressed value since they won't have the option to wait for the price to recover.

Mark WeisbrotÚltimas Noticias, 07 de diciembre 2014TruthOut, December 4, 2014En inglés

The November jobs numbers were unambiguously good news. The economy is moving in the right direction and at a faster pace than we had seen in years. But we have to realize how far the labor market has to go before it makes up the ground lost in the recession.

The simplest and best measure is the employment to population ratio (EPOP), which gives the percentage of the adult population which is employed. This stood at 59.2 percent in November (unchanged from October). This is 1.0 percentage points above the low of 58.2 percent last hit in the summer of 2011, but it is still more than four full percentage points below the pre-recession peaks and more than five full percentage points below the all-time highs hit in 2000.

Many people have dismissed these comparisons by pointing to demographic changes, specifically the aging of the baby boomers. With much of the baby boom cohort now in their sixties, we would expect to see more people retiring, but if we look at prime age workers (ages 25-54) we get a similar story. The OECD reports that the EPOP for this group was 76.8 percent in the third quarter of this year, compared to 79.9 percent in 2007 and 81.5 percent in 2000. People in their thirties and forties have not just suddenly decided that they want to retire. This drop in employment is almost certainly due to the weakness of demand in the labor market.

Some other measures of slack are also useful to note. Some reports have noted the upturn in quit rates as reported in the Job Opening and Labor Turnover Survey. The most recent data puts the quit rate at 2.0 percent compared to a low of 1.3 percent at the trough of the recession. This means that more people are prepared to quit a job with which they are unhappy. But this figure is still down from 2.2 percent as a year-round average in 2006. (We should remember that even in the pre-recession period, the labor market was just getting tight enough to see some wage growth.) The quit rate at the end of 2000 and start of 2001, when the survey began, was as high as 2.6 percent. (When considering these numbers it is important to realize that the shift in employment over this period from low quit sectors like manufacturing to high quit sectors like restaurants would have added at least 0.1-0.2 percentage points to the quit rate.)

Okay boys and girls, today we learn about the erratic pattern of wage data. Ideally the Bureau of Labor Statistics (BLS) would tell us exactly how much hourly wages rose each month. Unfortunately, BLS doesn't have that ability. It has a very good survey of establishments that gives a reasonably close estimates of current hourly and weekly wages, but these numbers are not exact. And, since each month's wage estimate includes a component of error, the changes from one month can contain a very large component of error.

To see the logic, imagine that the 95% confidence interval is +/- 0.1 percent. (I haven't checked this, but 0.1 percent would be pretty good.) Suppose that one month it underestimates the average wage by 0.1 percent. Suppose the next month it overestimates the average wage by 0.1 percent. This would lead to a wage growth number from one month to the next that was 0.2 percentage points above the true number. In a context where monthly wage growth has been averaging less than 0.2 percent, this would be a very large error. That is why it is always advisable to take a longer period than a single month to assess wage growth. (My preferred measure is taking the rate of change for the most recent three months compared with the prior three months.)

Many foolish comments about the November employment report could have been avoided if reporters recognized the erratic nature of the monthly data. The 9 cent gain (0.4 percent) reported in the average hourly wage for November was widely touted. Unfortunately, reporters did not bother to note that BLS reported a gain of just 0.1 percent in October and 0.0 percent in September. As a result of the weak wage growth the prior two months, the average wage for these three months grew at just a 1.8 percent annual rate compared with the average of the prior three months. That is somewhat below the 2.1 percent increase over the last year.

When we look at these numbers we have two choices. One is to take the monthly data at face value, as almost all the reports on the November report did, and believe that wage growth virtually stopped in September and October and then surged in November. Alternatively, we can believe that the slowdown in September and October and the surge in November were both driven by measurement error.

Mark WeisbrotPhiladelphia Inquirer, December 9, 2014

The following reports on labor market policy were recently released:

Center for American Progress

Economic Snapshot: November 2014
Christian E. Weller and Jackie Odum

One Strike and You’re Out: How We Can Eliminate Barriers to Economic Security and Mobility for People with Criminal Records
Rebecca Vallas and Sharon Dietrich

State Disinvestment in Higher Education Has Led to an Explosion of Student-Loan Debt
Elizabeth Baylor

Center on Budget and Policy Priorities

Boosting Disability Insurance Share of Social Security Tax Would Not Harm Retirees
Kathy A. Ruffing and Paul N. Van de Water

December 5, 2014

December 5, 2014 (Jobs Byte)

The economy added 321,000 jobs in November, the strongest gain since it added 360,000 in January of 2012. With upward revisions to the prior two months data, the average job gain over the last three months has been 275,000.