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A Decline in "Good" Jobs
Michael considered fate at 13:50   |   Permalink   |   Post a Comment

Still feels a little doom and gloom. Here's what Steven E. Landsburg from "More Sex is Safer Sex" has to say (all facts unchecked, and quotes not exact, or your money back):
Anytime before the 18th century, humans lived on inflation-adjusted value of $1000/yr, and one generation was *never* better off than the one prior, and that's the way it was for millenia.
In late 18th century, per-capita income begins to grow at .75% year (humans are super-pumped, but still don't have washing machines).
By the 20th century, per-capita income begins to rise at a rate of 1.5% increase per year.
(the Great Depression happens, and inflation-adjusted income levels fall back 20 years, but they recover, were the 80's *that* bad?).
Since 1960, per-capita incomes have been steadily growing at 2.3% per year.
Let's just say (God forbid), our economy is stagnant at the 2.3% rise in per-capita income increase. In 25 years today's "average" $50,000 yearly salary will be $89,000 (inflation-adjusted!), 25 more years and the average salary will be $158,000, another 400 years and the "average" salary will be $1,000,000/day.
Here's part of the problem, just today, a brilliant economic mind (my new loan officer) told me, 'sure it's great that you have no debt, but you really should always have a loan that you're continually paying off'. I'm not even making this up.
Anyway, yeah, take home message: health care, big drag on the economy, got ya.
Here's your project. Get me a pie chart with health care expenditures, i.e. what % of my health care dollar is spent on doctor's salaries, the insurance company's take, pharmaceuticals, admin, equipment (i.e. x-ray machines, MRI's, scalpels and syringes) etc. Bonus points for pretty colors. (If you believe Kucinich's website, he claims like 20% of your private health care dollar is used for billing/collection, but it's only 2% for Medicare, I don't know if buy it). I want to know where the inefficiency is. 

All good points, Bone, and I wasn't belaboring the issue of inflation. Certainly, in a growing economy it is bound to happen, such is life.

However, when there is a ratio between wage/benefit increases and inflation that is less than one, well, it's like going backwards.

So.. that being said, you probably hit the nail on the head vis-a-vis healthcare. I have no doubt whatsoever that the administration costs "incurred" at the insurance company level could easily top 20% (I put incurred in quotes as there is should be a distinction between costs and just plain bleeding of the patient - no pun intended).

I'll see what I can do about a chart.. 

That Landsburg guy is pretty right wing, i saw a sketchy defense of free trade by him the other day in NYTimes editorials.
All i know is that I am sure Chocolate-rations are up, we have never had such high level of Chocolate-rations, as long as enough economists tell us so.
But then how come it FEELS like we used to have more? 
I'm really not much of a dooms-dayer, even if I sometimes sound like one. I actually prefer to acknowledge, discuss, and debate current shortcomings with an eye towards improving future outlook.. the desired end result, of course, would be preventing any doom.

Not all doom can be prevented, of course, most of all short term. See: The Great Depression. By now we should all know and realize that economies operate as natural systems and, therefore, exist in a certain state of chaos - complexity beyond our means to grasp - even Keynes. No matter how much interest rate finagling the Fed may do, they can't promise to completely smooth out economic cycles. And, indeed, perhaps like a shark who pauses mid-swim, a linear economy will surely die? Who knows, that is pure conjecture.

What I've come to tell you today, however, isn't about sharks. It is about the lacklustre performance of the U.S. economy in the role of preserving (forget about increasing) the average American worker's standard of living. In any given year or time or era, if you look around hard enough, you'll find someone complaining that things used to be better, that things are going into the shitter. I'm not hear to tell you that, I'm just here to point out that the politicians that insist things just keep getting better aren't the only game with an opinion in town, and it is always worthwhile to look at both sides of the coin. Otherwise, how would you know that there is any heads at all?

From the Center for Economic and Policy Research (CEPR) comes this November 2007 report - The Good, The Bad, and the Ugly: Job Quality in the United States over the Three Most Recent Business Cycles.
Executive Summary

This report looks at the evolution of "good jobs" over the last three business cycles (one each in the 1980s, 1990s, and 2000s), where a "good job" is defined as one that pays at least $17 per hour (the inflation-adjusted median male earnings in 1979) and offers employer-provided health insurance and a pension.

A review of annual data from the March Current Population Survey covering the years 1979 through 2006 finds that the 2000s business cycle underway (2000-2006) has consistently under-performed comparable periods during the preceding two cycles (1979-1985 and 1989-1995).

Major findings include:
  • Over the current business cycle, the share of "good jobs" fell substantially (2.3 percentage points), following much smaller drops over the same period in the 1980s (down 0.5 percentage points) and 1990s (down 0.1 percentage points) business cycles.
  • The deterioration in good jobs in the 2000s business cycle has been particularly sharp for men -- down 4.4 percentage points, compared to a 3.4 percentage-point decline in the 1980s and a 1.9 percentage-point drop in the 1990s.
  • Over the 2000s business-cycle to date, the share of women in good jobs fell (down 0.2 percentage points), reversing the solid positive trends over comparable periods in the preceding two business cycles (up 3.3 percentage points in the 1980s cycle and 2.0 percentage points in the 1990s cycle).
  • The 2000s cycle has done relatively well when it comes to increases in the share of jobs that pay at least $17 per hour (up 0.6 percentage points overall between 2000 and 2006). The share of jobs paying at least $17 per hour, by contrast, was essentially flat in 1980s (up 0.1 percentage point) and fell slightly in the 1990s (down 0.2 percentage points).
  • The driving force behind the decline in the share of good jobs in the 2000s is the sharp deterioration in employer-provided health insurance (down 3.1 percentage points) and employer-sponsored pension and retirement-savings plans (down 4.9 percentage points).
  • The fall off in health and pension benefits has been sharper in the 2000s than it was over comparable periods in the earlier two decades. Health insurance coverage declined 3.1 percentage points in the 2000s, compared to a 0.7 percentage-points drop over a comparable period in the 1980s and a 1.5 percentage-points fall in the 1990s.
  • Pension coverage trends have also been worse in the current decade (down 4.9 percentage points) than they were over corresponding periods in earlier cycles (down 3.1 percentage points in the 1980s and up 1.6 percentage points in the 1990s).
The take home message here is highlighted in the fourth bullet point above. Not only has average worker productivity severely increased since 1979, but the benefits given to those workers has fell, significantly in this decade. Meanwhile, wages have remained basically stagnant.

So who is benefiting from this increased productivity? It's murky. We need to remember that products such as computers and cell phones have consistently come down in prices since 1979.. but we must also remember that the average consumer's need for a computer and a cell phone has only gone up.

Like I said, it is a chaotic, complex economy out there.

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