Census: Half of Americans Are Poor or Low-Income

[Richard Hakluyt]

Yeah I don't think I am ever going to get that discussion going as to why decreasing labor costs are not increasing employment

it's a really good question and I have yet to hear a totally convincing answer.
Given that firm balance sheets have improved and profits remain pretty decent, this would be a logical time for firms to react by hiring labor and competing for extra market share.  It's not happening.

Uncertainty?

To me the stockmarket seems full of bargains, but the firms and investors seem scared that something exceptionally appalling may happen.

[Ideologue]

My guess.  Your labout costs maybe decreasing, but it is still expensive relative to China or automation.  Actually, the relatively good US employment figures in the past decade or so were fueled by the housing bubble.  Now that the bubble is gone, employment just reverted back to its natural state. 

Other than "reverted," I fear I agree with you.  I think 7% unemployment is probably the "natural rate" at this point in time, and it will get worse.  I remember talking to Joan about this a few weeks ago, but I don't remember how we came to either agree or agree or to disagree.

To add a little to the "service sector" theory: the service sector, I think, requires some "basic competence" in the economy in order to function.  I.e., if none of us are making things, then we cannot live off simply selling services to one another, unless we are also selling services abroad to people who do make things.

Obviously, this simplifies the situation a bit--to a degree, Americans do still make a lot of stuff (food, computer hardware, medicines, cars, sorta), and to some degree we do sell services abroad (educational services, medical services, engineering services, paramilitary services).  But I think it's clear that to some degree or another we've been living on credit for goods, while transitioning to an economy dominated by service without any basic foundation, and that was unsustainable, and in 2008 or thereabouts it suddenly stopped being sustained.

it's a really good question and I have yet to hear a totally convincing answer.
Given that firm balance sheets have improved and profits remain pretty decent, this would be a logical time for firms to react by hiring labor and competing for extra market share.  It's not happening.

I still say that's because even with a fall in demand, reduced wages mean less loss or even increased absolute profits for firms.  However, without any obvious increase in demand on the horizon, hiring makes no sense.

We should probably cut interest rates.

[KRonn]

Yeah I don't think I am ever going to get that discussion going as to why decreasing labor costs are not increasing employment

it's a really good question and I have yet to hear a totally convincing answer.
Given that firm balance sheets have improved and profits remain pretty decent, this would be a logical time for firms to react by hiring labor and competing for extra market share.  It's not happening.

Uncertainty?

To me the stockmarket seems full of bargains, but the firms and investors seem scared that something exceptionally appalling may happen.

What could possibly go wrong now? Except for the Euro declining, or a host of European nations going bankrupt- Greece, Italy, Spain, Portugal, Ireland. Or a number of French and other banks having lowered credit ratings. US banks like Bank of America in trouble. Fannie Mae and Freddie Mac continuing to need billions of tax payer cash to shore them up, along with a weak housing market over all. The dollar decline, or a feared wave of inflation to hit with all the money being printed? Still anemic US economic growth rate. Seems a lot for businesses to worry about, and that's just some things off the top of my head.

[The Brain]

The Empire is failing and the barbarians are non-Germanic.

[Richard Hakluyt]

Yeah I don't think I am ever going to get that discussion going as to why decreasing labor costs are not increasing employment

it's a really good question and I have yet to hear a totally convincing answer.
Given that firm balance sheets have improved and profits remain pretty decent, this would be a logical time for firms to react by hiring labor and competing for extra market share.  It's not happening.

Uncertainty?

To me the stockmarket seems full of bargains, but the firms and investors seem scared that something exceptionally appalling may happen.

What could possibly go wrong now? Except for the Euro declining, or a host of European nations going bankrupt- Greece, Italy, Spain, Portugal, Ireland. Or a number of French and other banks having lowered credit ratings. US banks like Bank of America in trouble. Fannie Mae and Freddie Mac continuing to need billions of tax payer cash to shore them up, along with a weak housing market over all. The dollar decline, or a feared wave of inflation to hit with all the money being printed? Still anemic US economic growth rate. Seems a lot for businesses to worry about, and that's just some things off the top of my head.

It is late here and my post was unclear. I absolutely agree with you, fear is crippling our economies, it is the obverse of the ludicrous over-confidence of the early years of this millenium. Many firms, however, are actually in a strong position.

[Ideologue]

The Empire is failing and the barbarians are non-Germanic.

And contemporary maps will call the territory "Slavonia."

[KRonn]

Yeah I don't think I am ever going to get that discussion going as to why decreasing labor costs are not increasing employment

it's a really good question and I have yet to hear a totally convincing answer.
Given that firm balance sheets have improved and profits remain pretty decent, this would be a logical time for firms to react by hiring labor and competing for extra market share.  It's not happening.

Uncertainty?

To me the stockmarket seems full of bargains, but the firms and investors seem scared that something exceptionally appalling may happen.

What could possibly go wrong now? Except for the Euro declining, or a host of European nations going bankrupt- Greece, Italy, Spain, Portugal, Ireland. Or a number of French and other banks having lowered credit ratings. US banks like Bank of America in trouble. Fannie Mae and Freddie Mac continuing to need billions of tax payer cash to shore them up, along with a weak housing market over all. The dollar decline, or a feared wave of inflation to hit with all the money being printed? Still anemic US economic growth rate. Seems a lot for businesses to worry about, and that's just some things off the top of my head.

It is late here and my post was unclear. I absolutely agree with you, fear is crippling our economies, it is the obverse of the ludicrous over-confidence of the early years of this millenium. Many firms, however, are actually in a strong position.

Yeah, things are in an odd way right now. Firms that are doing well aren't moving much on hiring, expanding and such. I was just pointing out in general that I feel it shouldn't be a surprise that corps are sitting still, with all the stuff going on, while we seem to be constantly waiting for the next crisis or two to emerge. Also, I see polls that people have lessening confidence in goverment, at least in the US, so that has to play into things too, the overall mood/confidence.

[Admiral Yi]

Back when I was an undergrad econ text books agreed that "full employment" was in fact around 7%.

[Ideologue]

Back when I was an undergrad econ text books agreed that "full employment" was in fact around 7%.

Hrm.  Well, when I say 7%, I mean U3, official rate (despite my antipathy toward it).  If the more apt U5 or U6 numbers were 7%, and this was considered the natural rate, I'd be somewhat okay with it.

Put another way, does that old-school full employment rate mean 93% of total potential labor force (working age population) are full-time and permanently employed, or 93% of job-seekers seeking work in past whatever-it-is months are employed in full-time, part-time or temporary positions?

Also I suspect your old-school economics profs (just as many, too many, are today) were afeared of the inflashun.

[Baron von Schtinkenbutt]

Swimming pools fall into that category for me, too - just seems like something that causes endless hassle and expense, for the very occasonal use.

I agree completely.  From now on, we are going to specifically avoid houses with swimming pools.  I will certainly never pay to have one put in.

[Baron von Schtinkenbutt]

Hrm.  Well, when I say 7%, I mean U3, official rate (despite my antipathy toward it).  If the more apt U5 or U6 numbers were 7%, and this was considered the natural rate, I'd be somewhat okay with it.

Put another way, does that old-school full employment rate mean 93% of total potential labor force (working age population) are full-time and permanently employed, or 93% of job-seekers seeking work in past whatever-it-is months are employed in full-time, part-time or temporary positions?

Also I suspect your old-school economics profs (just as many, too many, are today) were afeared of the inflashun.

I remember a similar number from my economics classes, though I remember it being about 5%.  The definition of natural unemployment I remember was based on the concept that, at any given time, some number of people would always be looking for work due to churn in seasonal and temporary jobs, new entrants and re-entrants to the labor market, those transitioning from one job to another for personal reasons (generally due to long-distance moves), and people who just flat out get fired.  It was also related to the rate at which the economy could grow; its hard to add jobs if the unemployment rate is too low.

[Ideologue]

Yeah, I remember being taught 4.6% or something like that.  We're younger than Yi, though--iirc, you're only a few years older than me--so maybe a 5% figure was more en vogue than when he was in undergrad (like 1990 or so I guess).

But my point is that there's a big gulf between 5% and 7%.  About three or four million people.  And a big difference between 7% "unemployment rate" as is conventionally reported and an employment rate that more fully reflects reality.

[Ed Anger]

Swimming pools fall into that category for me, too - just seems like something that causes endless hassle and expense, for the very occasonal use.

I agree completely.  From now on, we are going to specifically avoid houses with swimming pools.  I will certainly never pay to have one put in.

My fear was that if I had a swimming pool, I'd wake up one morning a neighbor's kid would be floating face down in it. It would be like a party at Tommy Lee's house.

[Sheilbh]

PS Shelf, did you get my email/PM ?

No

Which is odd.  Try the PM again and hopefully it'll get through.

Still haven't received mongers.  I'll PM you my e-mail, you may have an old one.

[Neil]

45k was a lot more money back in the day.