The PBS Newshour won the gold medal for journalistic malpractice on Friday by having David Brooks and Ruth Marcus tell the country what the Friday jobs report means. Brooks and Marcus got just about everything they said completely wrong.

Starting at the beginning, Brooks noted the slower than projected job growth and told listeners:

"Yes, I think there's a consensus growing both on left and right that we -- the structural problems are becoming super obvious.

"So when the -- this recession started a number of years ago, you had 63, something like that, out of 100 Americans in the labor force. Now we're down, fewer than in [the employment to population ratio is now 58.7 percent] -- than when the recession started. And so that suggests we have got some deep structural problems. It probably has a lot to do with technological change. People are not hiring -- companies are not hiring human beings. They're hire machines."

It's hard to know what on earth Brooks thinks he is talking about. There is nothing close to a consensus on either the left or right that the economy's problems are structural, as opposed to a simple lack of demand (i.e. people spending money). This is shown clearly by the overwhelming support on the Federal Reserve Board for its policy of quantitative easing. This policy is about trying to boost demand. A policy that the Republican Chairman, Ben Bernanke, has repeatedly advocated to Congress as well. This policy would not make sense if they viewed the weak demand for labor in the economy as being the result of structural problems. So clearly Brooks' consensus excludes the Fed.

It also is worth noting the other part of Brooks' story, that instead of hiring workers firms "hire machines," is completely contradicted by the data. Investment has actually slowed in the last couples of years. (Non-residential investment is up by just 2.4 percent from its year ago level.) This means that firms are not hiring machines, or at least not as rapidly as they had in prior years. Also the rate of productivity growth has slowed sharply from the pre-recession period. In the last three years productivity growth has averaged less than 1.0 percent a year. This compares to more than 2.5 percent a year from 1995 until the recession in 2007. This means that machines are displacing workers much less rapidly than in a decade when we had much lower unemployment.

A contentious new law on “development promotion” that quickly passed the Honduran congress last month has provoked alarm in communities already trying to halt projects that could roll over indigenous rights and damage the environment. The “Ley de Promoción del Desarrollo y Reconversión de la Deuda Pública” (Development Promotion and Public Debt Restructuring Act) – passed under unusual and controversial congressional rules - will facilitate the sale of various public and natural resources for development purposes.

Legislators promoting the bill cited Honduras’ fiscal woes, saying revenue generated through the sale of concessions and of public assets would help the government pay off its debt. A new report [PDF] from the Congressional Research Service notes:

Honduras suffered an economic contraction of 2.4% in 2009 as a result of the combined impact of the global financial crisis and domestic political crisis. Although the economy has partially recovered, with estimated growth of 3.3% in 2012, the Honduran government continues to face serious fiscal challenges. The central government’s deficit has been growing in recent years. As it has struggled to obtain financing for the budget, public employees and contractors occasionally have gone unpaid and basic government services have been interrupted. Honduras also continues to face significant social disparities, with over two-thirds of the population living in poverty.

The CRS report goes on to state that “President Lobo also inherited a weak economy with high levels of poverty and inequality.” But as we described in a November 2009 report, “poverty and inequality decreased significantly during the Zelaya administration, with rapid growth of more than 6 percent during the first two years,” and “Some expansionary monetary policy was used to counter-act the global downturn in 2008.” This was interrupted by the coup – the “domestic political crisis” referred to by CRS -- to which we noted the Honduran economy was “especially vulnerable,” as well as to the global economic downturn.

Throughout all of the post-WWII recessions, the prevalence of involuntary part-time work has closely mirrored the unemployment rate (recessions are shaded in the chart below). This relationship has even held in the Great Recession. However, the latest recession was unique because the rise in involuntary part-time employment was so sharp and it has persisted for so long.

The increase of involuntary part-time workers in the most recent recession (99.78 percent) was more than double that of earlier recessions (about 40 percent on average). Also, at this point, in the five recessions before the Great Recession, the part-time rate had already returned to close to “normal.” In those recessions the number of part-time workers for economic reasons had dropped back to between 15 and 35 percent above the pre-recession levels. In this recovery, five and a half years after the recession began, the share of workers involuntarily working part-time remains more than 80 percent over the pre-recession rate.

August 2, 2013

August 2, 2013 (Jobs Byte)

In a recent report, we demonstrated that despite large increases over the last three decades in educational attainment, black workers are less likely to be in a good job than they were three decades ago. In this post, we compare outcomes over the same per

Jared Bernstein and Dean Baker
The New York Times, July 31, 2013

July 31, 2013

July 31, 2013 (GDP Byte)