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    Monday, July 13, 2009

     

    Blacks See Wages Shrink

    by Dollars and Sense



    Another very troubling report from the Economic Policy Institute (EPI). In their latest weekly economic snapshot they show that African Americans are the only group of workers who have seen their wages go down during the recession. As noted in our last post (see point 3), the official unemployment rate for African Americans is more than 50 percent higher than the national average (14.7% vs. 9.5%).

    From EPI:

    African Americans see weekly wage decline

    by Algernon Austin

    Over the last two years (from the first quarter of 2007 to the first quarter of 2009), black workers 25 to 54 years old experienced a 3.7% decline-a drop of about $23-in their inflation-adjusted median weekly wage (see Chart). No other major racial or ethnic group showed a decline over this period.1



    This pattern suggests the continuation of negative wage growth for black workers seen over the last complete business cycle, from 2000 to 2007. Over that cycle, the median weekly wage for African American workers declined 0.6%, while other groups experienced increases, although these increases were generally quite small.2 If these trends continue, blacks will likely lead in the percentage-point increase in poverty caused by the recession.

    Notes
    1. The wage increases are likely due in part to a "composition" effect. Low-wage workers are disproportionately affected by unemployment, which alone would lead to higher median wages among those who keep their jobs. Additionally, the Hispanic and Asian wage growth may also be affected by their geographic location in stronger local economies. Immigrant workers, who make up a large share of the Hispanic and Asian labor force, tend to be disproportionately located in metropolitan areas with strong economic growth. See David Dyssegaard Kallick, Immigrants and the Economy: Contribution of Immigrant Workers to the Country's 25 Largest Metropolitan Areas, New York: Fiscal Policy Institute, forthcoming.

    2. For additional details, see Algernon Austin, Reversal of Fortune: Economic Gains of the 1990s Overturned for African Americans from 2000-07, Washington, D.C.: Economic Policy Institute, 2008; and Algernon Austin and Marie T. Mora, Hispanics and the Economy: Economic Stagnation for Hispanic American Workers, Throughout the 2000s, Washington D.C.: Economic Policy Institute, 2008.


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    7/13/2009 12:42:00 PM 0 comments

    Wednesday, April 29, 2009

     

    Yes, Things Are Really Bad

    by Dollars and Sense


    Another fabulously depressing economic snapshot from the Economic Policy Institute (EPI):

    Unusually bad and getting worse

    by Josh Bivens

    Today’s report on gross domestic product (GDP) growth in the first quarter of 2009 just confirms the obvious: the United States economy is mired in a particularly steep recession. The chart below shows the decline in GDP and its components compared to the average of all other recessions since World War II. On every indicator except government purchases the current recession is worse than average, and it should be noted that further declines are almost inevitable in coming quarters.

    The last quarter of 2008 and the first quarter of 2009 together posted the worst half-year of GDP performance in over 60 years. While coming quarters may see a moderation in the pace of decline, it’s clear that this recession is already a stand-out in its severity and will only get worse.



    For more analysis, see today’s GDP Picture.


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    4/29/2009 03:42:00 PM 0 comments

    Wednesday, April 22, 2009

     

    Sky High Unemployment for Blacks With Degrees

    by Dollars and Sense


    Another EPI economic snapshot:

    Fifteen months into a deep recession, college-educated white workers still had a relatively low unemployment rate of 3.8% in March of this year. The same could not be said for African Americans with four-year degrees. The March 2009 unemployment rate for college-educated blacks was 7.2%-almost twice as high as the white rate-and up 4.5 percentage points from March 2007, before the start of the current recession (see chart). Hispanics and Asian Americans with college degrees were in between, both with March 2009 unemployment rates of 5%.

    Some argue that the problem of joblessness among African Americans can be solved by education alone, but at every education level the unemployment rate for blacks exceeds that of whites. The disparities among the college-educated and other evidence strongly suggest that even if the black educational attainment distribution was exactly the same as the white distribution, blacks would still have a higher unemployment rate than whites. Without a renewed commitment to anti-discrimination in employment and job creation in black communities, high rates of black joblessness will likely persist.


    See original post for sources and more info.

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    4/22/2009 11:08:00 AM 11 comments

    Wednesday, April 08, 2009

     

    Housing Meltdown Leads To More Bankruptcies

    by Dollars and Sense

    From EPI. Hardly surprising, but the numbers are still very striking:

    Economic Snapshot for April 8, 2009

    Housing collapse drives up consumer bankruptcies

    by Nooshin Mahalia

    The bursting of the housing bubble, which led to a foreclosure crisis and economic downturn, is also likely triggering a surge in bankruptcies. Consumer bankruptcy filings hit more than 1 million in 2008, up from just under 600,000 in 2006.

    Since falling home prices reduce an owner's ability to use home equity to manage financial distress and debt-related difficulties, we would expect bankruptcies to be more common in states with declining home values. The latest data show how strong that connection is.

    Between 2006 and 2008, personal bankruptcies rose 58% in states without declines in the Home Price Index (HPI)1 but rose 118%-more than twice as fast-in the 16 states with HPI declines (see Chart).



    Other factors contributing to bankruptcies include job losses, high credit card balances, and costly medical expenses.

    This finding supports the notion that people were using home equity as part of their personal safety net in times of crisis. With this option quickly disappearing, more people will be forced into bankruptcy court.

    Note
    1. The Office of Federal Housing Enterprise Oversight publishes the Home Price Index by tracking housing values for individual single-family residential properties. States with declines in home price were California, District of Columbia, Florida, Michigan, Massachusetts, Arizona, New York, Nevada, New Jersey, Ohio, Maryland, Minnesota, Rhode Island, Connecticut, New Hampshire, and Hawaii.

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    4/08/2009 01:36:00 PM 0 comments

    Wednesday, February 18, 2009

     

    2009 Global Economic Picture Bleak

    by Dollars and Sense

    The latest economic snapshot from the Economic Policy Institute (EPI):

    Economies of major developed countries will shrink in 2009

    by Tony Avirgan

    The U.S. economy is not suffering alone. According to projections by the International Monetary Fund, an international organization that oversees the global financial system, the economies of all developed countries are also likely to shrink substantially this year. The United Kingdom, which was hit hard by the financial collapse of Iceland, will probably contract the most, as measured by gross domestic product (GDP). (See Chart)

    The International Labor Organization (ILO), a United Nations agency, predicts that 50 million jobs could be lost and 200 million more people could fall into absolute poverty around the globe in 2009. The global nature of the crisis highlights the desirability of an international response. The IMF has said the only way for the damage to be contained is through large-scale global action, such as coordinated stimulus programs.


    The full post (including their nifty chart) is here.

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    2/18/2009 11:42:00 AM 0 comments

    Wednesday, February 04, 2009

     

    Recovery bill doesn't even cover basic needs

    by Dollars and Sense

    Another economic snapshot from the Economic Policy Institute (EPI).

    There has been much debate recently about the infrastructure spending provisions of economic recovery proposals, which some policy makers would rather replace with tax cuts. This is a bad idea—as we have previously written, it is widely recognized that infrastructure spending provides about 25-50% greater boost to the economy.

    A new report by The American Society of Civil Engineers argues that even the infrastructure investment contained in current stimulus proposals falls far short of what is needed to raise the nation's infrastructure to "good" condition. Assuming government investment on infrastructure remains constant, the report found that the recovery package as passed by the House of Representatives only covers about 8% of the five-year infrastructure investment gap, and that an additional $1.1 trillion is needed.

    We should not allow our children and grandchildren to be saddled with the burdens of a crumbling and outdated infrastructure. The recovery package should include more infrastructure investment, not less.

    See the original for a look at their nifty graphic.

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    2/04/2009 11:56:00 AM 0 comments

     

    Tough Times for Older Americans

    by Dollars and Sense

    A new report by the Economic Policy Institute (EPI) details the difficult position of older Americans in the recession. With the worsening economy, more older Americans are putting off retirement, yet with rising unemployment they face fewer options.

    "The obstacles older workers face on the way to retirement are mounting, and unfortunately not going to be solved anytime soon," said the report’s author, EPI researcher Emily Garr. "That's why it is imperative that we keep close tabs on how older workers are faring during the recession, as their hope of a secure retirement grows farther out of reach." The surge in labor force participation by older workers in this recession, which now affects about 1.36 million additional people, suggests more than simple demographic changes.

    The higher share of older workers in the labor force is at least partly a response to rising health care costs, plummeting home values, and losses in 401(k)s and individual retirement accounts, which are combining to make retirement unaffordable.

    Workers 55 and over are now 18.8% of the total population employed in the United States, up from 17.9% in December 2007. But the retirement age isn't the only thing that's on the rise for America's older workers, as Garr reports. As more employers shut down operations or trim their workforce, increasing numbers of over-55 workers who are forced to remain in the labor market find themselves on its downside – among the nation’s unemployed and underemployed workers. The number of unemployed workers 55 and over has increased a staggering 56.8% in less than a year.

    Displacement rates – which measure job losses due to plant closures, the elimination of positions, or other shifts in labor demand – are at the highest level on record for older workers. "Older workers were already more susceptible to displacement in 2007 than their predecessors were 10 or even 20 years ago, and this trend is exacerbated by the recession," said Garr. "More and more older workers are truly between a rock and a hard place. Retirement is not an option, but jobs that they can live on are getting scarcer."

    Though some evidence suggests that older workers may be better able than younger counterparts to find or maintain jobs in this recession, data show that employment activity reflects poor financial circumstances or delayed retirement rather than increased job opportunities.

    The high number of older workers forced to delay retirement has a ripple effect on other age groups, as well. For younger workers, labor force participation continues a long-term trend of decline. This suggests that, faced with a shrinking job opportunities, growing numbers are giving up on finding work and dropping out of the labor force entirely.

    With unemployment rates projected to rise throughout this year, Garr notes, the pressures on especially vulnerable older workers will only get worse.


    Read the full report here.

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    2/04/2009 11:46:00 AM 0 comments

    Wednesday, January 21, 2009

     

    States Need Bailouts Too

    by Dollars and Sense

    From the Economic Policy Institute:

    Economic Snapshot for January 21, 2009

    In recessions, federal grants are key to recovery for states

    by Kathryn Edwards

    Virtually all states are required by law to have a balanced budget, meaning that each year a state can only spend as much as it receives in taxes. Because of the current recession, revenue from taxes is very low and most states now face troubling budget shortfalls.

    The chart shows how badly state budgets were affected by the 2001 recession, clearly illustrating how, after the nation slides into recession, it can take years to climb out of the deep fiscal hole.

    Such recessionary shortfalls force states to either raise taxes (to increase revenue) or cut expenditures, usually by eliminating or gutting valuable public services in areas like health care or education. But cutting expenses and raising taxes only exacerbate the recession's effect because both further reduce demand in the state’s already weakened economy. That is why federal grants to the states are so crucial: they help states maintain needed public service levels, combat the recession, and provide a fighting chance at eventually building up reserves to weather the next downturn.

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    1/21/2009 04:36:00 PM 0 comments

    Wednesday, December 17, 2008

     

    Auto Bust Could Cost Millions of Jobs

    by Dollars and Sense


    Some sobering numbers from EPI:

    The United States cannot afford to sacrifice the domestic auto industry. A shutdown would eliminate up to 3.3 million U.S. jobs within the next year in all 50 states and the District of Columbia. The loss of total state employment would be anywhere from 4.0% to 8.9% in Michigan, Indiana, Kentucky, Alabama, Tennessee, and Ohio. Traditional auto manufacturing states would certainly be hard hit, but Southern states—including the Carolinas, Mississippi, and Oklahoma—would be, too.

    Massive job losses would just be the beginning of the fallout. Widespread community disruption, loss of services, and depopulation would follow in the wake of an auto industry bankruptcy. Increased government payments and tax losses alone would exceed $150 billion in the first three years following the bankruptcy of all three domestic auto companies.1

    An airline-style bankruptcy re-organization (Chapter 11) is not an option for U.S.-based automakers. U.S. consumers would abandon bankrupt car companies in droves, resulting in the widespread liquidation of company assets, dissipation of millions of highly skilled blue- and white-collar workers, and the relinquishing of the U.S. market to foreign-based car companies. Such foreign multinationals have eliminated four million U.S. jobs in the past 15 years and are directly responsible for more than one-third of the U.S. trade deficit.

    Click here for further info.

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    12/17/2008 05:57:00 PM 0 comments

    Friday, December 12, 2008

     

    Beware Fudged Facts About US Auto Wages

    by Dollars and Sense

    From EPI:

    With some senators turning down a rescue package for the auto industry based on their demands for immediate wage cuts for the people who build the autos, it's important that journalists are clear about what the wages levels actually are. Widespread claims that autoworkers currently receive over $70 per hour are false.

    In a recent New York Times story, reporter David Leonhardt explains in detail. A graphic that accompanies his story shows that at Ford, whose figures are comparable to the other two companies, the average worker’s current compensation (wages plus benefits) adds up to $55 per hour. Of that amount, about $12 is the cost of benefits like health care, while wage-related costs such as paid holidays, vacation, sick days and overtime add about $14. The average wages that show up in current workers' paychecks average $29 per hour before taxes – a solid, middle-class income, to be sure, but far from the $70 that many are claiming.

    So where does the claim of $70-plus per-hour come from? The only way to get to that number is to add in the "legacy costs" – the health and pension benefits paid to the huge number of Big Three former employees who are now retired. At Ford these costs add another $16 per hour to the company’s cost calculations.

    The Times graphic shows that, compared to the Big Three, Japanese carmakers' US plants pay an average base wage that is about $3 less per hour, and average compensation is about $10 less per hour, mostly because of less generous benefits.

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    12/12/2008 03:16:00 PM 0 comments

    Wednesday, December 10, 2008

     

    More people seeking fewer jobs

    by Dollars and Sense

    The Economic Policy Institute (EPI) put out a brief showing that there are now 3 people looking for jobs for every job opening, a ration that has skyrocketed in less than a year.


    See the full post here.

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    12/10/2008 01:58:00 PM 0 comments

    Thursday, November 20, 2008

     

    Unemployment Insurance Running Out

    by Dollars and Sense

    UPDATE 6:31 PM:

    Responding to the massive public outpouring as a result of our earlier blog post, Congress rushed through an emergency 13-week extension of jobless benefits. President Bush is expected to assign the legislation immediately.

    Original post from 2:23 PM:

    According to the latest Economic Snapshot by the Economic Policy Institute (EPI), the massive spike in jobless claims coincides with the expiration of unemployment benefits for millions.

    From EPI:


    Over 890,000 unemployed workers already have exhausted their 13-week extension, and another 1.2 million are projected to exhaust benefits by year's end.3 Without these benefits, the Congressional Budget Office finds that about 50% of the long-term unemployed fall under the poverty line.4 Congress should act swiftly to extend benefits for another seven weeks in all states, and an additional 20 weeks (for a total of 33) in states with unemployment over 6.0%.

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    11/20/2008 02:23:00 PM 1 comments