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Workers

The State of the Unions in Los Angeles, California, and the United States

UCLA’s Institute for Research on Labor and Employment (IRLE) has published its latest annual report on union membership in the city of Los Angeles, the state of California, and the United States as a whole.  Some of their results, covering trends from 2005 through 2013, might surprise you.

As the economy continues to struggle, unionization rates have managed to hold their own or even improve somewhat relative to the situation before the recession.  In 2005 and again in 2013, 12.5 percent of US workers were union members.  Between the same two years, Los Angeles and California saw small increases in unionization rates; from 16.5 percent to 16.9 percent in California, and from 15.5 percent to 16.2 percent in Los Angeles. 

unions-ceprblog-2013-09-fig-1

Source: IRLE’s State of the Unions in 2013

CEPR and Teresa Kroeger / September 10, 2013

Article Artículo

Cheap Thoughts on the Self-Correcting Economy: Konczal vs. Krugman

My friends Mike Konczal and Paul Krugman are duking it out over views about a self-correcting economy in blog posts today. It's actually not much of a fight, but there are a couple of points worth adding.

First, Krugman repeats his often stated view that this time is different, that the downturn in 2007-2009 is not self-correcting because the Fed was up against the zero lower bound. The story is that other central banks also faced the same situation. This meant there was no choice but to turn to fiscal policy to provide the necessary lift to get the economy back to full employment.

There is a small problem with this "this time is different" argument. The Fed didn't quite lower interest rates to zero in the 2001 downturn, but it got pretty damn close. Because the bounce back from recession was so weak (the economy didn't start adding jobs again until September of 2003, almost two years after the end of the recession) it lowered the federal funds rate to 1.0 percent in the summer of 2002 and kept it there for two years. 

Okay, math geeks everywhere are jumping up and down right now pointing out that 1.0 percent is not zero. This is true, but the ECB had kept its overnight rate at 1.0 percent until well into 2012. This didn't keep economists from saying that it was up against the zero lower bound. While lowering the rate to its current 0.5 percent undoubtedly gives some positive boost to the euro zone economy, and lowering it further to zero would help even more, no one seriously believes that the drop from 1.0 percent to zero makes all that much difference.

In other words, it is reasonable to say that the Fed was up against the zero lower bound following the 2001 recession. This means that such experiences are not quite as rare as some may believe. It also means that stimulatory fiscal policy might have been an appropriate response to that downturn, even if the Bush tax cuts and the wars in Afghanistan and Iraq may not have been the best routes for boosting the economy.

The other point has to do with the long-run question. The idea is that something changes so that even if we never have any policy response to the downturn we eventually get back to something like full employment. Mike discusses the fact that workers who go unemployed long enough can eventually become unemployable. This suggests one possible route back to full employment. We eventually make enough of our workforce unemployable so that current levels of employment are consistent with full employment. (Mike doesn't push the argument this far, but it is certainly a plausible story.)

The other route suggested by both Mike and Paul is that something eventually kicks up to boost demand. This one is a bit harder to see.

Contrary to what you read in the papers, business investment is not low as share of output. It didn't fall off that much in the downturn and has pretty much recovered back to its pre-recession levels. Nor is consumption low. In fact, the share of disposable income that is going to consumption is well above the average in the 1960s, 1970s, and 1980s. It is below the peaks of the stock and housing bubble, but unless we get another bubble, it is difficult to see why it would rise back to those levels. People need to save for retirement. If anything, current savings rates are far too low for people to be able to enjoy comfortable retirements. So there is little reason to think there will be a rebound in consumption.

Dean Baker / September 08, 2013

Article Artículo

Restaurant Work in the States and the Loss of Middle Class Jobs

I did a short post while everyone was out enjoying their Labor Day weekend that I want to briefly revisit. The topic was the growth of bad jobs in the current recovery.

As many people have noted, a disproportionate share of the jobs being created in this upturn are in low-paying sectors like restaurants and retail trade. This means that even the people who are able to find work in the current labor market conditions are unlikely to get a job that will provide enough income to support a family.

This is clearly bad news for large segments of the workforce. The question is why are we seeing so many bad jobs?

On the one hand we have the technology story which tells us the economy has changed. The jobs that used to provide a decent standard of living for the middle class are disappearing. In our brave new world of robots and computers the economy creates some number of very good jobs for the people with the right skills and it creates bad jobs for everyone else.

The other line of reasoning is that it is not technology that has changed, rather it is people's desperation that is forcing them to take bad jobs that they would not have considered otherwise. In this view the bad jobs were always there, but most people had better alternatives so they didn't take them. What's changed from the period when we didn't see so many bad jobs is that we have a much weaker labor market. The weakness of the labor market is the key factor in this story.

Note that these two stories have very different policy implications. In the first story, we want to train more of the losers to get the skills they need to become winners. For the ones who are too old or just can't hack computer technology, well maybe we can dig up some spare change to keep them fed and housed, but you know, life is tough.

In the weak labor market story the key is to boost demand. This can be done through government spending, reducing the trade deficit, or by redistributing work through work sharing. If the labor market tightens then people will be able to get better jobs. In fact, if the labor market tightens enough even the bad jobs will become better jobs. In a tight labor market, employers will pay people much more to work in fast food restaurants or as retail clerks.

Dean Baker / September 05, 2013

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Argentina

Brazil

Globalization and Trade

Latin America and the Caribbean

World

The Most Awkward G20 Summit Ever?

President Obama is in St. Petersburg, Russia to participate in the G20 Summit today and tomorrow, amidst a time of heightened tensions between the U.S. and several G20 member nations. Looming over the summit are the Obama administration’s plans for a possible military attack on Syria, while Russian President Vladimir Putin has said that a U.S. military response without U.N. Security Council approval “can only be interpreted as an aggression" and UNASUR – which includes G20 members Argentina and Brazil, issued a statement that “condemns external interventions that are inconsistent with the Charter of the United Nations.”

New revelations of NSA spying on other G20 member nation presidents – Dilma Rousseff of Brazil and Enrique Peña Nieto of Mexico – leaked by NSA whistle-blower Edward Snowden and first reported in Brazil’s O Globo, have also created new frictions. Rousseff is reportedly considering canceling a state visit to Washington next month over the espionage and the Obama administration’s response to the revelations, and reportedly has canceled a scheduled trip to D.C. next week by an advance team that was to have done preparations for her visit. The Brazilian government has demanded an apology from the Obama administration. In an interview with Reuters on Wednesday, an anonymous senior Brazilian official underscored the gravity of the situation:

[T]he official, who declined to be identified due to the sensitivity of the episode, said Rousseff feels "patronized" by the U.S. response so far to the Globo report. She is prepared to cancel the visit as well as take punitive action, including ruling out the purchase of F-18 Super Hornet fighters from Chicago-based Boeing Co, the official said.

"She is completely furious," the official said.

"This is a major, major crisis .... There needs to be an apology. It needs to be public. Without that, it's basically impossible for her to go to Washington in October," the official said.

Other media reports suggest that Brazil may implement measures to channel its Internet communications through non-U.S. companies. But when asked in a press briefing aboard Air Force One this morning, Deputy National Security Advisor for Strategic Communications Ben Rhodes did not suggest that such an apology would be forthcoming:

CEPR / September 05, 2013