Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Category: Employment and Unemployment Page 3 of 4

You don’t get the payroll tax “cut”

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On December 27, 2011

45 Comments

There has been much ballyhoo about how there is a payroll tax cut and that an extra $40 per paycheck (every two week) will make a big difference.

Sure, if you get to keep it (via Americablog):

Some rates will be significantly higher, such as a 27.4% increase to $17 from $13.34 just to receive local broadcast channels. Others will be modestly higher, such as a 9.5% increase to $69 from $63 for broadcast plus basic cable channels, or a 7.3% increase to $58.99 from $54.99 for the digital video package. Compare that with a 3.5% annual inflation rate as of October. “The cable industry maintains a near-monopoly over television services,” said Doug Heller, executive director of Consumer Watchdog, a Santa Monica advocacy group. “Their prices are completely disconnected from the real lives of their customers.”

Pricing power is the ability to raise your prices beyond the inflation rate and expect that most people will pay.  It occurs in monopolies and oligopolies and in necessities during crises (how much is a loaf of bread worth if you’ll die without it?)

American consumers and workers, as a group, do not have pricing power and they do not have alternatives.  They cannot charge more for their labor, because there is a huge surplus of workers.  Because almost every major industry is an oligopoly or a local monopoly,  as consumers, they cannot move from one company to another, as the companies are almost all in collusion and raising prices more or less in lockstep.  There is no real competition on price in most industries (certainly not in telecom).

Until Americans have the ability to opt out, things will not get better.  And tax cuts will do NOTHING.  If you give money to ordinary people corporations with pricing power will take it away.  If you give money to corporations or rich people, they will use it for leveraged financial plays (job destruction), offshoring or outsourcing (job destruction) or on luxury consumption like $50,000/night hotel rooms and private jets (some job creation, but destroying the quality of services you get.)

What the US needs right now is a massive tax increase on the rich and corporations.  They are not spending their money usefully, and in the case of corporations are sitting on billions.  In fact, every extra dollar of profit makes things worse, not better.  If corps and the rich can’t use money to create growth, and in fact are using it in destructive ways, you take it away and use it to create growth (assuming the Obama administration knew how to do that, which it doesn’t.  But theoretically, assuming competent individuals of good will in power.  Yes, you can laugh hysterically now.)

You now have a year to a year and a half at most before the next economic meltdown

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On January 20, 2011

60 Comments

The RNC is asking for 2.5 trillion in spending cuts over 10 years. Assume Obama and Dems split the difference (remember, Obama wanted a freeze already, anyway).  1.25 trillion.

The effects of that on the US economy, such as it is, will be catastrophic.

If you can work right now, do.  Earn as much money as you can, reduce your costs as low as you can and get ready for the next downturn.  It’s going to be ugly.  Jobs will continue to be shifted out of the country, Americans will continue to be turned into debt-serfs with every relationship a revenue stream for some entity which provides a necessary service (whether internet, credit, food, or whatever).  Your house probably can’t be sold for what it’s worth, since the banks have a ton of houses they need to sell, so don’t assume you have an asset worth its face value, instead evaluate it as housing.

Times are bad, they will get worse, especially as this type of austerity is happening in virtually every western country.  Expect both high inflation in what you actually need (food, for example) and high unemployment (the return of stagflation), whatever the “official” rate of inflation says.

This is what Americans voted for.  Republicans were very clear that this is what they wanted, and Obama spent his campaign talking about tax cuts, not spending.  They’ll meet somewhere in the middle. “No, let’s amputate at the hip, not the neck.”

Jobs make break even point

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On November 5, 2010

13 Comments

151,000 jobs were gained last month.  150K is the break-even point given population gain to maintain employment.  This is neither a good nor a bad figure.

Brutal Animation of Unemployment Rates

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On August 6, 2010

11 Comments

Extraordinarily depressing, and this doesn’t even use the measures I’d use, like participation rates or U-6.

Romer resigns the day before economy sheds 131,000 jobs

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On August 6, 2010

28 Comments

Most of those were census jobs. Ex-census, it’s a loss of 12,000. That’s still, needless to say abysmal.(pdf)

As for Romer, head of the Council of Economic advisors for Obama, and sidelined for her entire tenure, it’s ’bout time she quit. It’s one thing to trade your soul and reputation for power and access. It’s another thing to trade your soul for powerlessness.

Really nothing worth saying about the job numbers. They were to be expected. Obama decided to save his TARP slush fund for his own reelection. Too bad for Congressional Dems, but hey, they were complicit.

Catching Up with the Obama Dilemma

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On June 21, 2010

48 Comments

I haven’t had much to say the last bit, because the rest of the blogosphere and even mainstream pundits are catching up to where I was a while ago.  Let’s see where we are, and where we’re going.

To recap:

1) the stimulus bill was neither big enough, nor well enough put together to do the job.  However many jobs it “saved and created” they weren’t enough.

2) Obama is not in the least interested in doing progressive things unless great pain is inflicted on him, personally.  This is most likely because he is not a progressive.

3) On civil liberties, Obama is probably actually worse than Bush.  Yes, that’s quite an accomplishment, but there you have it.

4) He’s an incompetent leader, who over-centralizes decision making, refuses to delegate, then makes decisions slowly and badly.

5) His courtiers are not the problem (although they’re almost all scum), he is the problem: he chose them.

6) The spring job recovery is already petered out, and around the world virtually every major economy other than China is turning to austerity, including the US.  US cities and States are in a horrible state, gross income is down, and bank lending is still not recovering.  The US economy has become more oligopolistic and more sclerotic than ever before, with the major firms who run the economy making their money by squeezing little people who have nowhere to turn.  Thanks to Bernanke, Paulson, Geither, Bush and Obama’s bailouts, and refusal to engage in meaningful restructuring of the economy or the financial industry, their profits have recovered.  That means, to them, that the crisis is over.

7) Election results in the midterms are looking really bad.  I was warning about this in beginning of 2009, because if Obama’s economic policies didn’t work, and if he continually alienated the base, it was going to cause problems.  The only thing Obama and Congressional Dems have going for them is how bloody awful the Republicans are.  But being the lesser evil isn’t always enough.  Liberals and progressives can’t vote Republican, but they can refuse to donate, not volunteer, and in many cases, not vote.

Going forward Obama is faced with a choice.  He won’t do enough to make the base happy, because he genuinely doesn’t believe in any progressive ideals.  What he can do, however, is goose the economy. He has most of the TARP slush fund to play with.  He could dump it into the economy post-haste in order to rescue the mid-terms.

Whether to do so is a dilemma for him.  On the one hand standard methodologies are still showing that the Dems (barely) hold onto the House, and keep the Senate.  But it isn’t much of a stretch for the Republicans to win the House.

If they do so, Obama’s presidency is effectively over.  The Republicans will Clintonize him, tying him down in a blizzard of subpoenas and fake scandals.  He will get nothing done for the next two years, and will probably lose re-election.

On the other hand, if he spends the money in 2010, it won’t be there in 2012, and after all, Dems might squeeze through without it.

Choices, choices…

I’d feel sorry for him, but he’s made clear that he isn’t a Democratic president, and he isn’t a liberal or a progressive, so I see no point in wasting any angst on personal problems he himself created.  All of this was totally predictable, and was, in fact predicted by multiple people.

Obama never made a sincere effort to fix the economy, to end the wars, to stop civil liberties abuses or to revamp the financial industry.

As he reaps, so he sows.  It is unfortunate Americans have to suffer even more than he does (he’ll be taken care of after he leaves the Presidency, never fear), but such is life.  Maybe it’s time to stop voting for people who say they love Reagan and that they don’t believe in Democratic solutions to problems.

Coming up…

We’re still in a Depression

and

Why it is never in Congress’s interests to look after Americans

The Jobs Report and the Future

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On June 4, 2010

9 Comments

I’m not going to waste a lot of time on the job report, obviously a job report with 411,000 census jobs out of  431,000 total jobs is not, actually, a good one.  Despite their spin, the Obama administration knows this.  They will ram through the jobs bill and try and dump it into the economy as fast as possible.  200 billion is, actually, about as much as the real stimulus per year in the stimulus bill (the tax cuts had no effect on hiring because they went to rent seeking corporate profits).  They will also seek to dump as much of the TARP slush fund as they can.  The insiders seem to have finally realized that if they don’t get a real job recovery before the election, Obama could lose his Congressional working majority or maybe even his majority, and if that happens, the rest of his Presidency will be spent arguing over the equivalent of white stains on dresses.

Can they pull it off?  Well, 200 billion plus another couple hundred billion from TARP is real money.  On the other hand, they are adept at spending tons of money and getting very little for it, plus the Republicans will be as obstructionist as possible: they know that their election chances hang in the balance too.  Add to that the stupidity of conservative Democrats, more concerned with deficits than jobs, and the situation is dicey, especially as Europe goes into hardcore Hooverism with austerity budget after austerity budget and China frets over a housing market which a Bank of China official noted is now further into bubble territory than the US’s was when it burst.

Hang on tight, folks, the economy is going to get a honking big syringe full of adrenaline at the same time as it’s strung out and another bunch of doctors are giving it a pile of benzies.  Hope it can take it.

Another Progressive pundit clueless on the effect of unemployment on elections

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On May 11, 2010

16 Comments

Um, dude, no, Boehner is right, and you’re wrong, when it comes to the real world (h/t Cujo)

That was odd, wasn’t it? The disconnect makes it seem as if GOP talking points are lacking in flexibility, unable to adapt to changing circumstances. When the economy was losing jobs every month, Boehner would say, “Where are the jobs?” Now that the economy has added more than 200,000 jobs in two consecutive months for the first time in four years, Boehner is still saying, “Where are the jobs?” It suggests the would-be Speaker isn’t paying attention to current events very well.

When The Economy Interferes With An Election Strategy

Ok, depending on how you count it, the economy needs to add about 140K to 150K jobs JUST to keep up with increases in the population.  About 8.4 million jobs were lost in the last recession.  At a rate of, say 250,000 jobs/month, it will take 7 years to both put everyone back to work, and to sop up population increases.

For people in the ordinary economy “where are the jobs?” is a perfectly valid question, and it is a perfectly valid election strategy, because even if the economy starts regularly producing jobs at over 300,000, when November rolls around, the vast majority of people who need a job, still won’t have one.

Here’s my prediction: as a percentage of population, employment will not recover before the next recession.  80%+ of all productivity increases will go to corporate profits, and wages will stagnate.

Boehner is right to ask “where are the jobs?”  Both as a matter of fact, because there aren’t enough jobs, and as a matter of electoral strategy.

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