Posts Tagged ‘unemployment’

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As regular readers know, I’ve been warning for years that growing economic inequality puts the existing order—both economy and society—at risk.

Well, as it turns out, the 700 or so “experts” surveyed by the World Economic Forum have finally woken up to that fact.*

According to the Global Risks Report 2017 (pdf),

“Growing income and wealth disparity” is seen by respondents as the trend most likely to determine global developments over the next 10 years, and when asked to identify interconnections between risks, the most frequently mentioned pairing was that of unemployment and social instability. . .

The slow pace of economic recovery since 2008 has intensified local income disparities, with a more dramatic impact on many households than aggregate national income data would suggest. This has contributed to anti- establishment sentiment in advanced economies, and although emerging markets have seen poverty fall at record speed, they have not been immune to rising public discontent – evident, for example, in large demonstrations against corruption across Latin America.

I think they’re right: high and still-rising inequality creates the conditions for growing unemployment and and profound social instability.

But that’s where the agreement ends. Clearly, the view of the Davos folk is that “their” order is put at risk by growing inequality. The Brexit vote and Donald Trump’s election—not to mention the unexpected success of Bernie Sanders’s campaign and the rise of “fringe,” anti-mainstream political movements around the world—are threatening to upend existing economic and social institutions.

For the rest of us, the “risks” posed by growing inequality actually represent an opportunity—to imagine and enact alternative institutions and thus a radically different economic and social order.

 

*Although the Davos understanding of the problem of inequality is more than a bit strange. One of the so-called experts in a session on inequality, “Squeezed and Angry: How to Fix the Middle-Class Crisis,” is none other than hedge-fund billionaire Ray Dalio.

 

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We all know that the recovery since the Great Recession has been highly skewed. But has it hurt whites more than blacks and Hispanics, thereby explaining Donald Trump’s victory in the presidential election?

That’s the story being told by Eduardo Porter (here and here), relying on data from the Economic Cycle Research Institute (pdf). Their basic argument is that, of the millions of net new jobs created since the pre-recession highwater mark of November 2007, most of them went to black and Hispanic (and Asian) workers, not to white workers (who make up the majority of the workforce).

The numbers are correct—but their analysis is seriously incomplete.

According to the numbers that serve as the basis of ECRI analysis (and which are represented in the chart above), about 5.5 million more workers are employed now compared to nine years ago (the purple line)—including 4.9 million more Hispanic (green line) and 2.3 million more African American (blue line) workers but 722 thousand fewer white (red line) workers.*

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It comes as no surprise that those different job trajectories are reflected in the different trajectories of the employment-population ratio. Whereas the overall ratio and the ratio for whites have barely changed (at 59 and 60 percent, respectively) since the recession ended, the other ratios have in fact changed—rising for both Hispanics (from 59.3 to 62.2) and blacks (from 52.9 to 56.6).

So, there are differences in job growth, a large part of which can be accounted for by different regional growth patterns (large cities vs. small towns and rural areas), sectoral shifts (services vs. industrial production), and demographic profiles (both the proportion of the working-age population and retirement rates).

However, in every other way, the different groups within the American working-class have moved in tandem.

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For example, the labor-force-participation rate has declined over the past nine years—in general and for each subgroup, white, black, and Hispanic—and remains now just above record lows.

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Unemployment rates have also moved in the same direction—first rising dramatically after the crash and then falling during the recovery (but still remaining above what they were before the crash).

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Meanwhile, workers’ wages have barely budged—overall and for whites, blacks, and Hispanics—between the fourth quarter of 2007 and the third quarter of 2016.

The folks at the Center for Economic and Policy Research get it:

Porter is right in seeing support for Trump as being to a substantial extent a response to bad economic prospects. But the economic prospects of working class whites in the last decade were not notably worse than the prospects of working class blacks.

And, I would add, all the other groups that make up the American working-class.

The fact is, all members of the working-class—white, black, and Hispanic—have been victimized during the Second Great Depression. As I have shown elsewhere (e.g., here and here), as a class, they’ve fallen further and further behind the tiny group of employers and wealthy individuals at the top. That’s the real skewed nature of the economic recovery.

As I see it, the difference in their political allegiances and voting patterns cannot then be explained by white workers losing out to black and Hispanic workers. It’s due, instead, to the fact that one group that has been left behind (working-class whites) threw in their lot with one candidate (right-wing,  white-nationalist Trump)—while other members of the working-class (blacks and Hispanics), who have been equally left behind, simply could not.

And, soon, all of them will discover Trump’s promises were no more than dog-whistle politics and his economic program will leave them even further behind.

 

*The numbers don’t sum correctly (even without including Asian workers) because white Hispanics may be double-counted as both white and Hispanic, and black Hispanics may be double-counted as both black and Hispanic.

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Special mention

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The extensive media coverage since Fidel Castro died has included many different voices—from those of journalists who interviewed him and wrote about him, especially in the early years, through Cold Warriors and Cuban émigrés who did battle with him to political figures whose comments have been crafted to align with contemporary constituencies and goals.* But the media have left out one important group: ordinary people who, over the years, found themselves inspired by and generally sympathetic with (even when critical of many features of) the Cuban Revolution.

I’m referring to people around the globe—students, workers, peasants, activists, and many others, throughout the Americas and across the world—who have understood the significance of the Revolution for Cuba and, as a historical example of anti-imperialism and human development, for their own attempts to enact radical political and economic change.

What we haven’t learned from recent coverage is that re-revolutionary Cuba was under the thumb of the U.S.-backed dictatorship of Fulgencio Batista, who governed a relatively wealthy but highly unequal country in which the majority of people had no voice and suffered from high unemployment, a low level of literacy, poor health, and inadequate housing. And they were exploited in an economy dominated by large landowners, U.S. corporations, and American organized crime. The 26th of July Movement (a name that originated in the failed attack led by Fidel on the Moncada Barracks in 1953) launched an insurrection in 1956, with the landing of small force that found its way to the Sierra Maestra Mountains, and, with the support of an army of volunteers in the countryside and “Civic Resistance” groups in the cities, succeeded in overthrowing Batista. A small revolutionary organization with widespread popular support managed to confront and ultimately defeat a typical authoritarian Washington-backed Latin American regime just 90 miles off the U.S. coast.

And while a great attention has been paid to the growing tensions from early on between the new Cuban government and the United States, which sponsored a series of clandestine invasions and assassination attempts, mainstream accounts have overlooked the tremendously successful campaigns to do what had seemed impossible in Cuba and elsewhere—to eliminate illiteracy, promote health, and improve living and working conditions, especially in the countryside. In fact, one of the reasons Havana became and remained so shabby (as legions of foreign visitors who rarely venture outside the capital city never fail to describe) was the Cuban government’s focus on transforming conditions in rural areas so that, in contrast to many other countries, impoverished agricultural workers and their families would have no need to move en masse into the city.

That’s what I noticed when I traveled to Cuba in the late-1970s during the administration of Jimmy Carter, when U.S. travel restrictions were allowed to lapse. I didn’t see the urban ghettoes I drove through before boarding my flight in Montreal, and nowhere did I come across the poverty and inequality characteristic of rural areas across all the countries where I’d lived and worked in Latin America.

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Thanks to the Revolution, Cuba has achieved enormous progress—not only in comparison to the rest of Latin America and the Third World but even (at least in terms of indicators like infant mortality) the United States. That radical turnaround, and the ability to maintain it in the face of unrelenting U.S.-government opposition over decades, is the major reason Fidel and the Cuban Revolution have been admired around the world.

By the same token, the Cuban Revolution has not been romanticized or supported uncritically, especially as a model for left-wing movements elsewhere. For the most part, the economy has been organized around state ownership, not worker-run enterprises. And a small number of political leaders, including Fidel himself, and a single political party have managed to hold onto power, with little in the way of democratic decision-making beyond the local level—not to mention public antipathy towards and discrimination against LGBT people, the jailing of journalists and political dissidents, and so on. Economically and politically, Cuba is no paradise.

Still, for all its faults and mis-steps, the Cuban Revolution has long served as an example of the ability of people to struggle against the impossible and to win. Fidel was thus on the right side of history.

 

*Including the anti-socialist drivel offered by John McTernan, a former speech writer for Tony Blair.

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Special mention

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In a recently leaked audio file (from a private fundraiser in February), Hillary Clinton referred to them as “children of the Great Recession. . .living in their parents’ basement,” who “feel they got their education and the jobs that are available to them are not at all what they envisioned for themselves. And they don’t see much of a future.”*

Well, as it turns out, the children of the Great Recession, especially those who completed college in recent years, were right: the jobs that have been available to them have not been at all what they envisioned for themselves.

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According to new research by Jaison R. Abel and Richard Deitz, unemployment among all workers, including college graduates, rose sharply during the Great Recession and continued to climb in the early stages of the recovery to levels not seen in decades.** It also increased dramatically for recent college graduates (whom the authors define as those with at least a bachelor’s degree who are 22 to 27 years old), doubling from about 3.5 percent before the recession to a peak of more than 7 percent in 2011. And even while unemployment among recent college graduates began to fall in late 2011, and to decline thereafter, it fell less steeply than for both college graduates as a whole and for all workers.

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But high rates of unemployment only reveal part of the plight of recent college graduates during the second Great Depression. Many of them also found themselves underemployed, that is, working in jobs that did not require a college degree. Not all of them were working as baristas, of course, but their underemployment rate has consistently held well above the rate for all college graduates (which, historically, has hovered at around one-third)—climbing well into 2014, rising to more than 46 percent, a level not seen since the early 1990s. As Abel and Deitz explain,

This divergence between falling unemployment and rising underemployment among recent college graduates between mid-2011 and mid-2014 suggests that more graduates were finding jobs during this time, just not necessarily good ones.

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The fact is, no matter how hard they tried, recent college graduates have had a difficult time finding jobs that met their degrees. That’s because, beginning in 2011, the demand for college jobs has fallen further and further behind postings for non-college jobs. According to the authors,

The steady growth of non-college jobs, coupled with the relatively soft demand for college graduates during this three-year period, appears to have forced many recent college graduates to take jobs not commensurate with their education. With the demand for college graduates rising again beginning in mid-2014, underemployment also started to come down. However, even with this modest improvement, 44.6 percent of college graduates—nearly one in two—found themselves underemployed in the early stages of their careers following the Great Recession.

What’s interesting is that recent college graduates, who were disappointed by the fewer and worse jobs they offered, for which they and their families had accumulated large amounts of student debt, did not choose the safe, mainstream option. They opted for a much-derided “idealism” and supported Sanders in much higher numbers than his self-identified “center-left/center-right” opponent.

For the last few decades, the value of a college degree has been economic and social dogma in the United States. Recent college graduates, who were forced to confront that dogma, were perhaps more prepared then to challenge other dogmas, including the political options presented by the American establishment.

 

*From Clinton’s perspective, underemployed Millennials’ support for Bernie Sanders betrayed “a deep desire to believe that we can have free college, free healthcare, that what we’ve done hasn’t gone far enough, and that we just need to, you know, go as far as, you know, Scandinavia, whatever that means, and half the people don’t know what that means, but it’s something that they deeply feel.”

**The charts from the Abel and Deitz research paper are updated on the Federal Reserve Bank of New York web site.

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Rev. Michael Pfleger pours mock blood on the ground, to spell out “SOS,” at the corner of West 79th Street and South Racine Avenue, to raise awareness of Chicago’s gun violence 31 August 2016

It may be nice to take a run in New York City’s Riverside Park—where “There are people of all ages, and, yes, all races exercising, strolling hand in hand, playing with their dogs, kicking soccer balls and throwing Frisbees”—but it’s no sign all is well in American cities.

Certainly not in Chicago (or, for that matter, Milwaukee, Baltimore, Ferguson, Flint, Detroit, and many other cities across the United States).

Back in June, as the number of shooting homicides in Chicago continued to rise, I wrote that the mounting gun violence was “The more or less inevitable result of creating and perpetuating an urban economy characterized by high rates of unemployment and poverty, in which racial and ethnic minorities are forced to endure much higher rates of unemployment and poverty and are then segregated into a few neighborhoods.”

while on the surface they’ve been assaulted by gangs and guns, too many Chicagoans have actually been wounded or killed by a City of Unequally Unemployed and Impoverished Segregated Neighborhoods.

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As of yesterday (the end of August), the number of shooting deaths—at least 425—has surpassed the total for all of last year, with four months still to go.