Monday Morning ReadsPosted: April 15, 2013 Filed under: morning reads | Tags: child welfare, high unemployment, Income Inequality 19 Comments
Well, today is tax avoidance day for Romney and his ilk. The rest of us have to settle with the IRS today. That’s even true for the folks that have been on unemployment for a terribly long time. There are no treasure isles for them.
There are two labor markets nowadays. There’s the market for people who have been out of work for less than six months, and the market for people who have been out of work longer. The former is working pretty normally, and the latter is horribly dysfunctional. That was the conclusion of recent research I highlighted a few months ago by Rand Ghayad, a visiting scholar at the Boston Fed and a PhD candidate in economics at Northeastern University, and William Dickens, a professor of economics at Northeastern University, that looked at Beveridge curves for different ages, industries, and education levels to see who the recovery is leaving behind.
Okay, so what is a Beveridge curve? Well, it just shows the relationship between job openings and unemployment. There should be a pretty stable relationship between the two, assuming the labor market isn’t broken. The more openings there are, the less unemployment there should be. If that isn’t true, if the Beveridge curve “shifts up” as more openings don’t translate into less unemployment, then it might be a sign of “structural” unemployment. That is, the unemployed just might not have the right skills. Now, what Ghayad and Dickens found is that the Beveridge curves look normal across all ages, industries, and education levels, as long as you haven’t been out of work for more than six months. But the curves shift up for everybody if you’ve been unemployed longer than six months. In other words, it doesn’t matter whether you’re young or old, a blue-collar or white-collar worker, or a high school or college grad; all that matters is how long you’ve been out of work.
But just how bad is it for the long-term unemployed? Ghayad ran a follow-up field experiment to find out. In a new working paper, he sent out 4800 fictitious resumes to 600 job openings, with 3600 of them for fake unemployed people. Among those 3600, he varied how long they’d been out of work, how often they’d switched jobs, and whether they had any industry experience. Everything else was kept constant. The mocked-up resumes were all male, all had randomly-selected (and racially ambiguous) names, and all had similar education backgrounds. The question was which of them would get callbacks
It turns out long-term unemployment is much scarier than you could possibly imagine.
So, if you have to write a check to the Feds, remember, your money is going to subsidize huge corporations while we rank near the bottom of the list on Child Welfare.
The United States ranked in the bottom four of a United Nations report on child well-being. Among 29 countries, America landed second from the bottom in child poverty and held a similarly dismal position when it came to “child life satisfaction.”
Keeping the U.S. company at the bottom of the report, which gauged material well-being, overall health, access to housing and education, were Lithuania, Latvia and Romania, three of the poorest countries in the survey.
UNICEF said in a statement on the survey that child poverty in countries like the U.S. “is not inevitable but is policy-susceptible” and that there isn’t necessarily a strong relationship between per capita GDP and overall child well-being, explaining: “The Czech Republic is ranked higher than Austria, Slovenia higher than Canada, and Portugal higher than the United States.”
The Netherlands ranked number one on the list, with Norway, Iceland, Finland and Sweden filling out the top five.
But don’t feel too discouraged, fellow Americans! As the International Business Times notes, the U.S. has managed to take first place in plenty of other surveys conducted by global organizations:
The United States is No. 1 on many other lists: It spends more on the military than the next 12 nations on the list combined; it’s the best in the world at imprisoning people; and it has the most obese people, the highest divorce rate, and the highest rate of both illicit and prescription drug use.
Kinda makes you all kinds of proud and patriotic, doesn’t it? Bill Moyers puts it this way: “We Are Living in the United States of Inequality.”
“A petty, narcissistic, pridefully ignorant politics has come to dominate and paralyze our government,” says Moyers, “while millions of people keep falling through the gaping hole that has turned us into the United States of Inequality.”
Inequality matters. You will hear people say it doesn’t, but they are usually so high up the ladder they can’t even see those at the bottom. The distance between the first and the least in America is vast and growing.
The Washington Post recently took a look at two counties in Florida and found that people who live in the more affluent St. Johns County live longer than those who live next door in less rich Putnam County. The Post concluded: “The widening gap in life expectancy between these two adjacent Florida counties reflects perhaps the starkest outcome of the nation’s growing economic inequality: Even as the nation’s life expectancy has marched steadily upward…a growing body of research shows that those gains are going mostly to those at the upper end of the income ladder.”
That’s true across America. In California’s Silicon Valley, Apple, Facebook and Google, among others, have reinvented the Gold Rush. But down the road in San Jose it’s not so pretty a picture. Do the math: in an area where one fourth of the population earn an average of about $19,000 dollars a year, rent alone can average more than $20,000 dollars a year, and that difference adds up to homelessness.
I keep writing about all these things with the goal of trying to explain why our stupid ass political leaders are still obsessed with some phantom menace of a federal budget deficit and debt. Joblessness, children living in poverty, the lack of retirement saving by people closing in our retirement, and all kinds of other things are problems. Why are they obsessed with something that isn’t an issue? The deal is that I cannot come up with one, sane rational, explanation. Here’s one Democratic Representative saying the entire thing is crazy. I agree with him.
Democratic Rep. Jerrold Nadler of New York took aim at the conventional wisdom on Sunday morning, saying the government was cutting the federal deficit too quickly.
His comments came during a MSNBC panel discussion about President Barack Obama’s budget plan.
“If you look at the deficit, we brought it down in three years from 10.1 percent of GDP to 7.1 percent of GDP — this year it will be about five and a half,” he explained in the latter half of the segment. “That’s the largest deficit reduction — fastest — since the demobilization after World War II. It is too fast. It is having an inhibiting effect on economic growth and employment.”
Nadler said the deficit should only be addressed once the country had solved its unemployment problem.
“Our immediate problem is an economy which is going to stay at 7.6 percent unemployment indefinitely,” he remarked. “Already, we have a contractionary fiscal policy that is inhibiting the economy. We should, from an economic point of view, be increasing the deficit right now somewhat.”
The New York congressman said Obama caved to Republican talking points about reducing the federal deficit in his latest budget. The budget would reduce the deficit by $1.8 trillion over 10 years by raising taxes on the rich and cutting Social Security benefits, among other measures.
I certainly hope more congressional critters will speak up on this. Economists have been saying this for quite a few years and no one listens to us. Here’s some more information on this from Investor’s Business Daily.
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