Posts Tagged ‘unemployment’

NEET

According to UNICEF, the latest crisis of capitalism has hit 15-24 year olds especially hard, with the number of young people who are not participating in education, employment, or training rising dramatically in many countries. In the European Union 7.5 million young people (almost equal to the population of Switzerland) were classified as NEET in 2013—nearly a million more than in 2008.

The largest absolute increases were in Croatia, Cyprus, Greece, Italy, and Romania, all with relative changes of around 30 per cent or higher.

Of the OECD countries that are not in the European Union, the United States saw the largest increase in the NEET rate (from 12 to 15 percent), followed by Australia (9.9 to 12.2 percent).

As the authors of the UNICEF report explain,

Unemployment among adolescents and young adults is a significant long-term effect of the recession. Among those aged 15–24, unemployment has increased in 34 of the 41 countries analysed. Youth unemployment and underemployment have reached worrying levels in many countries.

Even when unemployment or inactivity decreases, that does not necessarily mean that young people are finding stable, reasonably paid jobs. The number of 15- to 24-year-olds in part-time work or who are underemployed has tripled on average in countries more exposed to the recession. Contract work has become more common, contributing to the general precariousness of labour markets.

These young people, because of the conditions of unemployment and precarious employment that have been imposed on them, constitute a lost generation

child-poverty

A new UNICEF report shows that 2.6 million children have sunk below the poverty line in the world’s most affluent countries since 2008, bringing the total number of children in the developed world living in poverty to an estimated 76.5 million.*

In 23 of the 41 countries analyzed, child poverty has increased since 2008. In Ireland, Croatia, Latvia, Greece, and Iceland, rates rose by over 50 per cent.

In the United States, the overall poverty rate for children rose from an already high 30.1 percent in 2008 to 32.2 percent in 2012.

The report also explains that, in recent decades, the social safety net in the United States has favored the working poor more than the out-of-work poor. Thus, for example,

Among those at or below 100 per cent of the poverty threshold, a large decrease in earned income and TANF in 2010 is offset by large increases in food stamps and the EITC. There was also a modest increase in unemployment insurance. For this group as a whole, the increase in child poverty was lower during this recession than it was in 1982.

For those at or below 50 per cent of the poverty threshold – the extreme poor – the story is somewhat different. Panel B still shows a large decrease in earned income and TANF and a large increase in food stamps, but it also shows a much smaller increase in the EITC and a slight decline in unemployment insurance, in contrast with the situation of the regular poor.

This highlights how the United States safety net has changed to provide more support for poor working families and less for the extreme poor with no work. As a result, extreme child poverty has also increased more in this recession than in the recession of 1982, indicating that the safety net was stronger for the poorest children 30 years ago.

 

*The UNICEF report uses a fixed reference point, anchored to the relative poverty line in 2008, as a benchmark against which to assess the absolute change in child poverty over time. This change is calculated by computing child poverty in 2008 using a poverty line fixed at 60 per cent of median income. Using the same poverty line in 2012, adjusted for inflation, the rate is computed and the difference in the two rates is shown. A positive number indicates an increase in child poverty. (Using a relative poverty line each year would obscure the impact on poverty of an overall decline in median income. In the United Kingdom, for example, relative child poverty decreased from 24 per cent in 2008 to 18.6 per cent in 2012 due to a sharp decline in median income and the subsequent lowering of the relative poverty line. Using the anchored indicator, it actually increased from 24.0 per cent to 25.6 per cent from the start of the recession.)

liu-bolin-hiding-in-the-city-puffed-food liu-bolin-hiding-in-the-city-no-18-laid-off

Chinese artist Liu Bolin makes himself invisible and, in doing so, makes visible two key aspects of capitalism: commodity fetishism (“Hiding in the City – Puffed Food”) and unemployment (“Hiding in the City No.18 – Laid Off”).

Morin-edit-toon-Obama-economy

Special mention

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BN-EV720_urmid1_G_20141003114813 BN-EV772_wagega_G_20141003134803

On one hand, as the Wall Street Journal observes,

For President Obama, the steep ascent of the unemployment rate heading into the 2010 midterms made it tough for Democrats to call for patience while the economy healed. But the economy in the past three years has been on a much rosier trajectory.

On the other hand,

Wages are the weakest part of the current economic recovery, as is evident by this chart. Virtually every midterm election since 1994 has seen better wage gains than what many Americans are currently experiencing. Weak wage growth can weigh on voters–and on a president’s approval ratings.

And the bottom line? Nate Silver continues to have the Republicans as slight favorites (59.4 chance) to win the Senate.

headline

I often explain to students, when I’m teaching economic models, they have to look at what’s happening behind the blackboard—all the implicit mechanisms that allow the models to work as they do.

By the same token, we have to ask, what’s going on behind the unemployment headlines?

The headlines today all trumpet the number of new jobs added in September (248,000), such that the official unemployment rate fell for the first time since August 2008 to below 6 percent (5.9 percent, to be exact).

That’s good news. Employment is picking up. But, of course, that’s not the end of the story. And Tyler Durden helps us see why.

quality of jobs

First, most of the new jobs (4 of the top 5 categories) were in retail trade, leisure and hospitality, education and health, and temp help.

So yes, America added a whole lot of minimum wage waiters, store clerks, groundskeepers and temps: truly the stuff New Normal “recoveries” are made of.

participation rate sept 2014

Second, the labor force participation rate dropped once again—from an already three decade low in August—to 62.7 percent. In other words, as against the 232,000 people who found jobs, the number of people not in the labor force rose to a new record high, increasing by 315,000 to 92.6 million!

average hourly earnings sept 2014

And finally, even while new jobs are being created, hourly earnings are not moving at all (in fact, to be accurate, they actually declined by a penny from the $24.54 in August). In other words, real wages—accounting for inflation—continue to decline.

So, that’s what’s happening behind the triumphant unemployment headlines: the continued creation of lousy, low-paying jobs; the continued exit of hundreds of thousands of workers from the labor force; and the continued decline in real wages.

Anyone want to talk about the reserve army of labor?

ftblog6871-1

According to Andrew Levin [pdf], the current employment gap of 3 percentage points is roughly three times the oft-cited difference between the official unemployment rate and the so-called natural rate of unemployment.

Levin defines the overall employment gap as the the deviation of actual employment from its maximum sustainable level. It is the sum of three components: (a) the unemployment gap, the deviation between actual unemployment and its longer-run normal rate; (b) the participation gap, the deviation between the actual labor force and the level that would solely reflect demographic and structural factors; and (c) the underemployment gap, the extent of involuntary part-time work (measured in full-time equivalent jobs) relative to its longer-run normal incidence.

Those who can’t find a job, have given up looking for a job, and are working a part-time job when they’d prefer to be working full-time watch with disbelief as the inflation hawks push the Fed to raise interest rates and private employers say they’re doing all they can to hire available workers.