Thursday, January 3, 2013

More Bumpy Lines

The Economic Policy Institute (EPI), published a list of what it calls its top charts of 2012 a couple of weeks ago. A couple of them are particularly interesting, I think, if you're interested in why I scoff when people talk about us being in an economic recovery. These charts are all from that article, and produced by EPI, unless otherwise noted. Click on them to see them full size.

The first is EPI's answer to whether we're recovering or not:

Personally, I think that even EPI's chart understates the problem, but that's a good first pass at an estimate of how many jobs we still need to create to get back to where we were at the start of the Bush Administration twelve years ago. As I note nearly every time I write about unemployment numbers, we need something like 100,000 new jobs each month just to keep up with the increase in potential workers. We have barely maintained that pace during the Obama Administration's last two years. Before that, it was a power dive to the bottom until the spring of 2010.

The next slide of note is this one, which shows the drop in so-called "prime age" employment during the Great Recession, and the lack of recovery in that number since then. I keep encountering people who state, without a trace of humor, that the reason the employment to population ratio has been going down is because the Baby Boomers all decided to retire early (see NOTE 1). This chart shows quite clearly that they don't know what they're talking about:

Yes, that's right, those people are not anywhere near retirement age, and lots of them are still out of work, too.

Finally, my favorite. It shows more clearly than any charts, like this for instance, that ordinary working stiffs are not seeing the benefits of the growth of our economy in the last three decades:

Robert Reich noted this trend last year when he wrote this:

Here's the good news. The economic pie is growing again. Growth in the 4th quarter last year hit 3 percent on an annualized rate. That's respectable -- although still way too slow to get us back on track given how far we plunged.

Here's the bad news. The share of that growth going to American workers is at a record low.

That's largely because far fewer Americans are working. Although the nation is now producing more goods and services than it did before the slump began in 2007, we're doing it with six million fewer people.

Bye Bye American Pie: The Challenge of the Productivity Revolution

See when that trend started? It was in the Carter Administration, when the idea that government and unions were the problem began to take hold. I've written before that in some regards the unions have been their own worst enemies since the 1960s, but they have been one of the few counterbalances to the increasing power of corporations in both America and much of the modern world. Government, through progressive taxation that was largely ended in the 1980s, was another reason. Since then, it's been nothing but up for the rich, and it will soon be nothing but down for the rest of us.

But that's a story for another day.

NOTE 1: OK, I exaggerated a little. They say that more Boomers are retiring early. They're still idiots. No one who isn't already extremely well off is going to retire in an economy like this one, and as we can see, there are fewer of us in that circumstance every year.


Paul Sunstone said...

Cujo, you of all people, might be interested in Bill Moyer's interview of two political scientists on the topic of how the economic inequality in America was engineered through government policies. The interview is about 40 minutes long, but fascinating. If you are indeed interested, it can be found here.

Cujo359 said...

Two decades ago, a former Nixon staffer named Kevin Phillips wrote as much in The Politics of Rich And Poor. Sad to say, few people paid attention at the time, even though it was clear he was right even then.

Paul Sunstone said...

Thanks, Cujo! You state that it was during the Carter Administration that the idea government and unions were the problem began to take hold. Just to clarify, do you mean that idea was found within the Administration itself, or only that it began to take hold during the same time frame as the Administration?

Cujo359 said...

He started the "de-regulation" craze that became part of the current "drown it in the bathtub" dogma. I don't remember how Carter's dealings with unions went back then, but there were lots of folks at the time, including economists like Milton Friedman, who were happy to tell you that they were a problem.

As I've mentioned before, unions were in some ways their own worst enemies back then. They worried about communism, when they should have been worried about retrenchment. They were often inflexible when re-negotiating work rules that were part of the reason American industry was falling behind foreign manufacturers. Of course, they were a mirror image of corporate management back then, who basically didn't see anything wrong with what they were doing, either. But the unions stopped being about workers, and started being about themselves, and that was part of why they're so diminished today.