Unemployment: guess who’s getting the biggest squeeze? And how about those green jobs?
Barry Ritholtz, over at The Big Picture Blog, offered an interesting macro perspective right before today’s unemployment numbers were released, which showed unemployment jumping to 10.2%:
We stand at one of those odd junctions, when bad news will be perversely good news. A weak [Non Farm Payroll] report will be more confirmation that QE will continue deep into 2010, and the Fed will keep the liquidity spigots wide open. Too strong an improvement — a less bad report — raises the spectre of the end of easy money. Mr. Market may not like that too much .
via The Big Picture.
How did we get ourselves into this situation? Maybe because our economy has grown so dependent on Wall Street bailouts. To be fair, the economy was shedding 700,000 jobs a month when the Obama Administration took over, compared to 150,000 this month, as Labor Bureau Secretary Hilda L. Solis points out. But I found a subsequent post on Big Picture rather disheartening in broader terms. Apparently the weekly average of hours worked among American Workers keeps on dropping.
To my mind, this graph, via Jake at Econompic shows just how bad things have really gotten. Not only are fewer Americans working, but those who are working are working far fewer hours than they used to:
Courtesy of Econompic Data
But do you notice something about this graph? Hours worked have gotten pretty dismal lately. But they’ve been steadily declining since 1964, when the data was first collected. How did we get here? More importantly, what does it mean?
In 2007, Steven E. Landsburg looked at this trend for Slate, noting that the lower- and working-classes that have been disproportionately feeling that squeeze — a major component in the “explosion of inequality” that has become so apparent in recent years. [His analysis was based on a study by Mark Aguiar and Erik Hurst from the Federal Reserve Bank of Boston.]
About 10 percent of us are stuck in 1965, leisurewise. At the opposite extreme, 10 percent of us have gained a staggering 14 hours a week or more. (Once again, your gains are measured in comparison to a person who, in 1965, had the same characteristics that you have today.) By and large, the biggest leisure gains have gone precisely to those with the most stagnant incomes—that is, the least skilled and the least educated. And conversely, the smallest leisure gains have been concentrated among the most educated, the same group that’s had the biggest gains in income.
Chalk it up to a changing world, in which American industry has suffered a slow, steady decline for years in favor of white-collar tech and finance jobs — a trend made worse by the recent downturn (BLS stats show industrial jobs and leisure and hospitality jobs are suffering most right now).
Sounds like a perfect time for all that federal money for green jobs to start kicking in, right?
Wrong. Today’s NY Times points out — by way of NY Senator Chuck Schumer — that the overwhelming bulk of federal funds disbursed for green tech have gone not toward American job creation, but to firms overseas:
Mr. Schumer pointed to a recent analysis by the Investigative Reporting Workshop, a nonprofit journalism project at American University, which found that 84 percent of the $1.05 billion in “green” stimulus funding distributed since September had gone to foreign companies building renewable energy projects in the United States — mostly wind projects.
In a letter he sent to Energy Secretary Steven Chu, the senator urged Mr. Chu to “reject any request for stimulus money unless the high-value components, including the wind turbines, are manufactured in the United States.”
via Jobs Issue Jeopardizes Wind Farm’s Stimulus Deal – NYTimes.com.
Apparently the more things “change,” the more they stay the same.
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Jesus, we will never learn, is it possible Obama will fail over the notion that “It is the economy, stupid”?
Fed $$ (our taxes) going overseas? Wind turbines and other green tech NOT made in the USA? Today? Now? This administration? What kind of crazy is that? Wake up wake up wake up ….
So what if the stimulus money for green projects is going to foreign corporations?
The notion of “buying American” or limiting government dollars to “American companies” just simply doesn’t work well in a globalized economy. You buy American if you buy a Toyota, Hyundai, or Mercedes — the cars sold here in the States are built by Americans, even though the companies are foreign of course.
We’ve been down this road before with US steel protectionism — it simply doesn’t work to lower costs and become more effective if you restrict yourself to American manufacturers.
Takeonme,
I, too, am very wary of protectionism. And though I agree with you generally, I have to say I totally disagree with you in this case. There’s absolutely no reason why we should be spending our federal tax dollars — dollars that are part of a financial recovery bailout — on technology developed and/or produced overseas.
It’s one thing, as a consumer, to buy a Japanese car. Or, as a manufacturer, to get your parts from China. Those are private decisions that are part and parcel of today’s global economy. And it’s normal to want to find the best and cheapest products available. If they come from overseas, so be it.
But it’s different when we’re talking about American tax dollars. That money was disbursed to create green-tech jobs in the United States. If we don’t have the world’s best green technology right now, if we don’t build the world’s best turbines, then R&D should be part of how we spend that money until we do.
In response to another comment. See in context »Mr. Considine,
There is no mystery here. Capital seeks the highest return on investment. The machinery to make windmills or solar panels costs the same no matter where you are in the world. The demand for windmills and solar panels exists through out the world. If you want to invest your capital anywhere in the world, where are you going to do it? Where labor is the cheapest and hence, the return on investment the greatest. The US has been loosing high paying manufacturing jobs because it is much more profitable to manufacture overseas. Why pay an American worker 20 USD/hr when you can pay a Chinese worker 0.20 USD/hr for the same work?
India produces 55 megatons of steel each year, more than the UK, France, Germany, or even Korea? China produces a whopping 500 megatons per year, more than any other country, more than the US, Japan, Russian, India, and Korea combined. The vast majority of this steel is for export, to EU and US. Why build a steel mill in China or India instead of Ohio or Pennsylvania? It is much more profitable is why.
This is not rocket science, it is Economics 101.
My point exactly. Coping with a global economy through protectionist policies has never worked. Rather, Americans need to focus on the R & D aspects of green technology. This will provide us with jobs, demand, and (hopefully) a cleaner environment.
In response to another comment. See in context »Hello takeonme,
Except that those jobs will be “off-shored” to other countries as well. The headline on the cover of Chemical & Engineering News recently was “Out-Sourcing R&D”.
In response to another comment. See in context »Hi, David,
Oh, I never said there was any mystery. You’re right, it makes perfect sense. But I get the feeling you and I agree that still doesn’t make it ok when we’re talking about our tax dollars going to create (or at least pay for) jobs overseas.
Corporate decisions are one thing. I don’t begrudge anyone or any company that seeks the highest return possible (as long as you aren’t poisoning children in the process). And, yes, of course, labor is the magic ingredient there.
But, on principle, if you’re going to use American tax money, the money should stay in America, even if it costs more. If we can’t deal with that, then we simply have to start finding ways to produce things more cheaply. If it means lower wages … well, lower wages are better than no wages.
Of course, this whole argument is predicated on the assumption that this whole bailout was an acceptable solution to begin with. I’m not convinced it was. When we’re talking about how best to use “free money” it completely screws up everything we learned in Economics 101, because Econ 101 also taught us there was “no such thing as a free lunch.”
When we remove the most basic concept of scarcity from the model, what are we left with? I’m not sure. I’d ask an economist to explain it to me, but there are so many contradictory opinions out there I don’t know whom I would believe.
In response to another comment. See in context »Why pay an American worker 20 USD/hr when you can pay a Chinese worker 0.20 USD/hr for the same work?
Because that’s what the stimulus money was supposed to do.
In response to another comment. See in context »Unless that graph is just men, a big part of that decline is the entry of women into the labor force, many of whom work part time. Then, men’s hours have declined while women’s have increased. You can see this in a report I co-authored with Lynne Casper and Liana Sayer: http://www.unc.edu/~pnc/WMW04.pdf, through 2000 at least. -Philip Cohen (www.familyinequality.com)
Hi, Yyyikes,
That’s an interesting factor you bring up. I’m going to check out your report now. Thanks so much for writing.
In response to another comment. See in context »[...] Capital seeks the highest return on investment. The machinery to make windmills or solar panels costs the same no matter where you are in the world. The demand for windmills and solar panels exists through out the world. …. I’m looking for volunteer interview subjects to participate in a series of video shorts about health care horror stories in the heartland. Click the “email me tips” link above. Hope to hear from you or someone you know (pass the word along!). …This Post [...]
Protectionist policies don’t work…well they work in China…they have worked for much of this country’s history…the current economy doesn’t work for the majority of American workers and the middle class…we we ever recover from our unemployment problem? Do you think everyone can get a college education in America? Twenty seven per cent of our teenagers can’t find a job. Labor in this country has not seen an increase in wages for over twenty years.
[...] when you contemplate last Friday’s jobless numbers, 10.2% conservatively, 17.5% more realistically, you see even more how ridiculous it is for anyone to be pointing to the [...]