March Unemployment Rate: 4.7%

[AliEnvy]

My only critique has been not to have blind confidence in any single metric without analysis.

 

[nbcrusader]

OK. But what metric constitutes "proper analysis"?

 

[STING2]

1. Life expectancy at birth
2. Adult literacy rate
3. Combined primary, secondary, and tertiary education gross enrolment rate.
4. Per capita GDP

Hundreds? Makes it easier to understand why the math rank is so low.

Well, there are at least a hundred different tables on the indicators page here that in some way are related to or influence those 4 factors. http://hdr.undp.org/statistics/data/indicators.cfm

As to your last sentence, go read the faq/rules you agreed to when you became a member of the forum.

 

[AliEnvy]

OK. But what metric constitutes "proper analysis"?

You're not being clear or maybe it's just late. Proper analysis is, in part, comparing relevant information and metrics.

 

[AliEnvy]

STING, every public policy made in some way affects one or more of those four areas either directly or indirectly.

You want to justify your HDI rank as OK...whatevah, you're certainly not alone. Again, we don't agree and I'm going to leave it at that.

 

[STING2]

STING, every public policy made in some way affects one or more of those four areas either directly or indirectly.

You want to justify your HDI rank as OK...whatevah, you're certainly not alone. Again, we don't agree and I'm going to leave it at that.

Can you site any economist who has actually said that the United States HDI rank is not ok, or not good?

Every Economist I know considers an HDI in the top 10 and an unemployment rate of 4.7% to be a good thing. But by your previous explanation, your going to continue to claim that its poor, even if this year the USA jumps to #5 in HDI, while remaining #4 in Per Capita GDP.

I don't know anyone who is calling Ireland's recent introduction to the top 10 on the HDI list a failure just because its #2 in per capita GDP.


Back to the post that started this thread:

"The March Unemployment rate in the United States dropped to 4.7% as over 200,000 jobs were added. Unemployment levels are now fast approaching the lowest levels of the Clinton administration which was a record for the country. The Unemployment level for all of year 2000 was 4% with one of the summer months dropping to 3.8%. The current unemployment rate will likely fall to 4.4% or 4.3% before the end of 2006. 2007 could potentially see unemployment levels equal to the best single year of the Clinton administration."

That is the type of news that makes most economist happy, or at least spells temporary relief. The United States through out most of its history has had a higher unemployment rate than this. This is good news no matter how much one wants to try and ignore it or attempt to reduce its relevance.

Good economic news in the United States should make every Canadian happy since the United States buys so much of the goods and services Canadians produce. 85% of Canada's exports go to the United States. What would Canada's standard of living look like without its big neighbor to the south?

 

[yolland]

I think we can all agree that a low unemployment rate is better than a high one. However, recent decreases in US unemployment have not made me more optimistic for the longterm economic future of the average American--particularly the average working-class and lower-middle-class American. And I'd feel that way largely, though not totally, regardless of which party was in power. Here are a few reasons why:

----- According to the UN's 2005 Development Programme Report, the US ranks 73rd out of 123 countries on income equality (data not available for all 177 members). Among the 40 other "high HDI" countries counted, only 7--Argentina, Chile, Costa Rica, Mexico, Panama, Singapore and Uruguay--had worse income disparities than the US.

Our inequality is significantly worse now than it was 25 years ago, too. According to Census Bureau data, in 1980 the lowest fifth of wage-earners accounted for 4.2% of total household income; by 2002, only 3.5%. Conversely, the highest fifth accounted for 43.7% of total household income in 1980, but 49.7% in 2002. The disparity is even more pronounced if you look at the wealthiest 5% (20% of total household income), who made 11 times the wages of the lowest fifth in 1980, but 19 times their wages in 2000.

Or, to look at it in terms of inflation-adjusted income change: from the late 1970s to the late 1990s, the income of the poorest fifth declined 6%; the middle fifth's income grew 5%; the top fifth's income grew 33%; and the income of the wealthiest 5% grew 55%.

Actually, these are the greatest disparities the US has seen since the 1920s, period.

----- According to the Organisation for Economic Co-operation and Development (OECD), the US ranks near the bottom of the developed world for annual percentage of people moving out of poverty (in other words, upward mobility). Some examples from their 2001 Employment Outlook data:

Denmark 60.4%
UK 58.8%
Netherlands 55.7%
Ireland 54.6%
Spain 49.6%
Belgium 48.2%
France 46.9%
Germany 41.1%
Italy 40.6%
Canada 36.4%
Portugal 37.0%
United States 29.5%

That is less than half our mobility rate in the 1960s.

----- Average real weekly earnings, as measured by the Bureau of Labor Statistics (nominal wage divided by Consumer Price Index), have been declining steadily since the 1970s. They grew by about 2.5% in the '50s; about 1% in the '60s; declined about 1% in both the '70s and '80s; briefly increased about .5% in the '90s; then fell 1% from 2000 to 2005. (They haven't increased thus far in 2006, despite the drop in unemployment.) This decline has been especially severe for less educated workers: a man without a high school diploma earns a third less today than he would have in 1973, for example.

Meanwhile the US poverty rate as of 2004 was 12.7%, an increase of 1.4% from 2000. While this is slightly lower than the peaks of the early '80s and '90s, it is still far too high.

----- The real value of the minimum wage has been declining steadily, too; 1969's minimum wage of $1.30, for example, was equivalent to $9 in 2005 terms. The current federal minimum wage of $5.15 works out to $10,407 a year, just $837 above the poverty line for a single person (they add $3260 for each additional household member). I don't know how anyone is supposed to build a savings account on that kind of money.

----- I'm not sure where STING2 got the $49,000 figure, but according to Census Bureau data for 2004--the last year for which such figures are available--median household income was $44,389 (which would be $38,000-something after taxes). This figure is, however, likely to decrease in real terms if recent trends towards disproportional growth at the lower-paying end of the services sector continue. For example, the (averaged) average income for workers in retail, education, food service, accomodation, and entertainment is only $29,203. An increase in low-paying service sector jobs cannot compensate for the loss of manufacturing sector jobs, which once provided good wages for so many blue-collar workers, over the last quarter century.

----- While I agree with nb that a culture of spending rather than saving is a problem, it is easy to go overboard in estimating the influence of this factor. As bonoman mentioned, comparisons to how many households owned cell phones, PCs, game systems, and portable electronics 30 years ago is not very meaningful, since most of these items were not widely available at the time. Furthermore, their costs have plunged as the cost of manufacturing them (abroad) has declined. In the 1950s, for example, a microwave cost more than 2 years' worth of low-income rent. Now they cost well under one month's low-income rent.

----- Finally, the relatively weak social safety nets present in the US compared to other developed countries need to be taken into account when considering the relationship between income and standard of living. E.g, the 16% of Americans who have no health insurance (per Census data). Or the 82% of lowest-fifth-(by-income) workers who have no pension coverage.



Given these and other factors, I don't personally find the recent decrease in unemployment--or for that matter, the tripling of US GDP since 1960--all that comforting.

 

[AliEnvy]

Actually, these are the greatest disparities the US has seen since the 1920s, period.

The "since the 20s" comparison is a recurrent theme for many aspects of the economy right now, including artifically high stock markets, real estate bubbles, record high debt, income disparity etc etc.

In the meantime, economists and government are spinning to keep consumer confidence high while praying that nothing triggers a meltdown until output catches up to prices so to speak...which is being compromised by global competition.

Whatever it's going to take to fix it will be tough medicine so politically it's a rock and hard place.

 

[nbcrusader]

I'm not sure income equality gives us a meaningful statistic. First, it will always take increasing amounts of money to remain in the top bracket - i.e., once you hit the top 5%, you will need to increase you income to remain in the top 5%.

I'm not sure it provides me any comfort or discomfort knowing that the upper brackets are ahead of me by $50,000 or $500,000 or $5 Million.

 

[nbcrusader]

You're not being clear or maybe it's just late. Proper analysis is, in part, comparing relevant information and metrics.

Probably both late and unclear.

I guess I was searching for the relevant information and metrics we need to determine whether an economic situation is generally good.

Employment rates and income bands, by themselves, may not provide the answer.

 

[yolland]

but this is idiotic, and proves my point.

This was uncalled for.

I will reiterate for the sake of it that Iraq discussions don't belong in this thread; however, when the topic is economic data, economic statistics are a relevant contribution. As are constructive critiques of why said statistics may be inadequate to tell the whole story.

 

[Irvine511]

This was uncalled for.

I will reiterate for the sake of it that Iraq discussions don't belong in this thread; however, when the topic is economic data, economic statistics are a relevant contribution. As are constructive critiques of why said statistics may be inadequate to tell the whole story.

just to be clear -- the "idiotic" comment was to myself, as in it was "idiotic" of me to continue banging my head against the wall in this thread.

 

[yolland]

OK sorry, didn't get that. Thanks for clarifying.

 

[STING2]

I think we can all agree that a low unemployment rate is better than a high one. However, recent decreases in US unemployment have not made me more optimistic for the longterm economic future of the average American--particularly the average working-class and lower-middle-class American. And I'd feel that way largely, though not totally, regardless of which party was in power. Here are a few reasons why:

----- According to the UN's 2005 Development Programme Report, the US ranks 73rd out of 123 countries on income equality (data not available for all 177 members). Among the 40 other "high HDI" countries counted, only 7--Argentina, Chile, Costa Rica, Mexico, Panama, Singapore and Uruguay--had worse income disparities than the US.

Our inequality is significantly worse now than it was 25 years ago, too. According to Census Bureau data, in 1980 the lowest fifth of wage-earners accounted for 4.2% of total household income; by 2002, only 3.5%. Conversely, the highest fifth accounted for 43.7% of total household income in 1980, but 49.7% in 2002. The disparity is even more pronounced if you look at the wealthiest 5% (20% of total household income), who made 11 times the wages of the lowest fifth in 1980, but 19 times their wages in 2000.

Or, to look at it in terms of inflation-adjusted income change: from the late 1970s to the late 1990s, the income of the poorest fifth declined 6%; the middle fifth's income grew 5%; the top fifth's income grew 33%; and the income of the wealthiest 5% grew 55%.

Actually, these are the greatest disparities the US has seen since the 1920s, period.

----- According to the Organisation for Economic Co-operation and Development (OECD), the US ranks near the bottom of the developed world for annual percentage of people moving out of poverty (in other words, upward mobility). Some examples from their 2001 Employment Outlook data:

Denmark 60.4%
UK 58.8%
Netherlands 55.7%
Ireland 54.6%
Spain 49.6%
Belgium 48.2%
France 46.9%
Germany 41.1%
Italy 40.6%
Canada 36.4%
Portugal 37.0%
United States 29.5%

That is less than half our mobility rate in the 1960s.

----- Average real weekly earnings, as measured by the Bureau of Labor Statistics (nominal wage divided by Consumer Price Index), have been declining steadily since the 1970s. They grew by about 2.5% in the '50s; about 1% in the '60s; declined about 1% in both the '70s and '80s; briefly increased about .5% in the '90s; then fell 1% from 2000 to 2005. (They haven't increased thus far in 2006, despite the drop in unemployment.) This decline has been especially severe for less educated workers: a man without a high school diploma earns a third less today than he would have in 1973, for example.

Meanwhile the US poverty rate as of 2004 was 12.7%, an increase of 1.4% from 2000. While this is slightly lower than the peaks of the early '80s and '90s, it is still far too high.

----- The real value of the minimum wage has been declining steadily, too; 1969's minimum wage of $1.30, for example, was equivalent to $9 in 2005 terms. The current federal minimum wage of $5.15 works out to $10,407 a year, just $837 above the poverty line for a single person (they add $3260 for each additional household member). I don't know how anyone is supposed to build a savings account on that kind of money.

----- I'm not sure where STING2 got the $49,000 figure, but according to Census Bureau data for 2004--the last year for which such figures are available--median household income was $44,389 (which would be $38,000-something after taxes). This figure is, however, likely to decrease in real terms if recent trends towards disproportional growth at the lower-paying end of the services sector continue. For example, the (averaged) average income for workers in retail, education, food service, accomodation, and entertainment is only $29,203. An increase in low-paying service sector jobs cannot compensate for the loss of manufacturing sector jobs, which once provided good wages for so many blue-collar workers, over the last quarter century.

----- While I agree with nb that a culture of spending rather than saving is a problem, it is easy to go overboard in estimating the influence of this factor. As bonoman mentioned, comparisons to how many households owned cell phones, PCs, game systems, and portable electronics 30 years ago is not very meaningful, since most of these items were not widely available at the time. Furthermore, their costs have plunged as the cost of manufacturing them (abroad) has declined. In the 1950s, for example, a microwave cost more than 2 years' worth of low-income rent. Now they cost well under one month's low-income rent.

----- Finally, the relatively weak social safety nets present in the US compared to other developed countries need to be taken into account when considering the relationship between income and standard of living. E.g, the 16% of Americans who have no health insurance (per Census data). Or the 82% of lowest-fifth-(by-income) workers who have no pension coverage.



Given these and other factors, I don't personally find the recent decrease in unemployment--or for that matter, the tripling of US GDP since 1960--all that comforting.

#1 Income disparity in a country is not in of itself a problem. It does not necessarily mean that the poor are getting poorer. The enormous wealth achieved by the top 20% of the population does not necessarily impact the bottom 20% and in fact in many ways the bottom 20% can benefit from the top 20% of earners as this is where you will find many of the people who will start business's and higher those on the bottom who may not have a job.

#2 US Census Bureau data for median income cover 2002 to 2004. While there is not a statistic for 2006, I think will find in the coming years when such statistics are available that median income for 2006 will be around 49,000 dollars, at least in 2006 dollars. Median income has also been increasing since the 1970s. Will see if it decreases as you predict it will. I heard the same predictions in the 1990s.

#3 The average US poverty rate since 1959 has been 14.1%. The poverty rate in 2004 is 12.7%. Uh oh, we have below average poverty historically in Bush's America. This is the 17th lowest poverty rate in the history of the United States! The lowest the poverty rate has ever been was 11.1%. The year 2000 had an unemployment rate of 4%. The poverty rate in the year 2000 was 11.3%. As the current US unemployment rate drops closer to 4%, I am sure you will find a poverty rate similar or even lower than the 2000 figure which was the THIRD LOWEST in USA history!

#4 You can't define the average American by people on minimum wage or people in the bottom 20% in income. The average American does not make minimum wage nor are they obviously in the bottom 20%, or the 12.7% who live in poverty as of 2004.

#5 The comparison, to the 1970s, of all the various non-essential items your average household has in 2006 is a meaningful one on many levels. On the one hand it shows the overall technological changes that have happened in society in only 30 years time. In addition, when was the last time in history your average household could spend so much of their income on things that were not essential to daily living?

#6 But hey, if your so nostalgic for a USA 1970s standard of living, consider moving to Argentina, because in 2006, they currently enjoy the standard of living that the United States had in the early 1970s as measured by the Human Development Index.

To sum up, the United States when its all said and done still ranks #10 in the world in Standard of living. But if one thinks a more socialist environment would be more to their liking, try out France with their awesome social safety net. Once you get a job its almost impossible to be fired for any reason. The government tried to change that this past month and was met with riots and force to back down. Where does France rank in Standard Of Living, oops, their only at #16, 6 places behind the United States despite having the many benefits of socialism which many wish for in this country. France has been on a steady decline for a number of years now.

Norway has the highest standard of living in the world, but I'm sure if someone put Norway under a microscope, you could find statistics and frame them in a way to make Norway look bad, or as you say, "not all that comforting".