Census: Recession taking toll on young adults

Of course you can always be an "intern" and pay for the privilege of doing an entry level job for free for six months.  This is what happens when you let theory (free trade) override common sense and experience.  Call you Congressperson or favorite Presidential candidate and demand an end to offshoring, outsourcing and illegal immigration.  Do it now!---rng


By HOPE YEN
Associated Press

Sep 22, 6:26 AM EDT

WASHINGTON (AP) -- Call it the recession's lost generation.

     In record-setting numbers, young adults struggling to find work are shunning long-distance moves to live with Mom and Dad, delaying marriage and buying fewer homes, often raising kids out of wedlock. They suffer from the highest unemployment since World War II and risk living in poverty more than others - nearly 1 in 5.

     New 2010 census data released Thursday show the wrenching impact of a recession that officially ended in mid-2009. It highlights the missed opportunities and dim prospects for a generation of mostly 20-somethings and 30-somethings coming of age in a prolonged slump with high unemployment.

     "We have a monster jobs problem, and young people are the biggest losers," said Andrew Sum, an economist and director of the Center for Labor Market Studies at Northeastern University. He noted that for recent college grads now getting by with waitressing, bartending and odd jobs, they will have to compete with new graduates for entry-level career positions when the job market eventually does improve.

"Their really high levels of underemployment and unemployment will haunt young people for at least another decade," Sum said.

Richard Freeman, an economist at Harvard University, said young people "will be scarred and they will be called the `lost generation' - in that their careers would not be the same way if we had avoided this economic disaster."

The latest figures also show a rebound in the foreign-born population to 40 million, or 12.9 percent, the highest share since 1920. The 1.4 million increase from 2009 was the biggest since the mid-decade housing boom and could fuel debate in this election season about immigration strategy.

Most immigrants continue to be low-skilled workers from Latin America, with growing numbers from Asia also arriving. An estimated 11.2 million people are in the U.S. illegally.

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Full employment: Don’t give it up without a fight

An oldie but ultra goodie.  Must read.---rng

from Economic Policy Institute

REPORT | Jobs, Wages, and Living Standards

By Dean Baker and Jared Bernstein | January 2, 2002

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Introduction

As the unemployment rate began to tick up in recent months, comments like these began appearing in the press:

“…the economy is moving to a more normal, sustainable unemployment rate after a period of rapid growth.” -Neal Soss, chief economist at Credit Suisse First Boston, quoted in the Washington Post, May 5, 2001

“Unemployment, despite thousands of recent layoffs across a wide range of sectors, is still well below the rate commonly associated with stable inflation and growth.” -New York Times editorial, June 28, 2001

Important policy-making institutions echo these sentiments. According to the Congressional Budget Office (CBO) – the scorekeeper for budget battles for more than two decades – the recent rise in unemployment is simply a return to normal. It views the sustainable unemployment rate as being 5.2%, more than a full percentage point above the 3.9% low hit last year. The influential Organization for Economic Cooperation and Development takes a similar position.

These may sound like the measured, reasonable views of cautious analysts, but, as we see it, they are misguided positions with worrisome consequences. The cost of taking these ideas seriously is high, and it is a cost that falls disproportionately on the working class. In fact, in terms of living standards, working families have no better ally in today’s economy than full employment, and maintaining it should be our foremost goal.

Those who advocate settling for unemployment rates above the low and sustainable rates achieved toward the end of the last recovery are wolves in sheep’s clothing, engaged, perhaps unknowingly, in a subtle breed of class warfare. If, when the economy picks up steam again, we settle into unemployment rates that prevailed over the 1980s and early 1990s, we will be consigning middle- and low-income working families to the raft of economic problems that beset them over these years: stagnant incomes, falling wages, and growing inequality.

What is full employment?For our purposes, full employment means that virtually everyone who wants a job has one. It doesn’t mean that there are no unsuccessful job seekers, i.e., that the unemployment rate is zero. It allows for frictional unemployment – the notion that a small share of the workforce is seeking jobs and will soon find them. Aside from that, at full employment the number of workers seeking jobs matches up neatly with the needs of employers; the supply of and demand for labor are in equilibrium, and the labor force is fully utilized.

Unfortunately, some groups of disadvantaged persons in the country have very high “structural” unemployment rates, meaning that their unemployment rates are consistently many times that of the overall rate. Yet, as we will show, these are the very persons helped the most by full employment.

to read complete article(highly recommended)

Free trade-in theory and practice

excerpted from New American

WRITTEN BY BRIAN FARMER

THURSDAY, 08 SEPTEMBER 2011 00:00

...So goes the theory, but the example above illustrating the mechanics of comparative advantage makes a number of assumptions that are not altogether realistic in the real world:

• Transport costs are ignored.

• There is full employment in both countries.

• Costs are constant and there are no economies of scale.

• There are only two economies producing two commodities.

• Each commodity is of identical quality in both countries.

• Factors of production are perfectly mobile within each country, in order to allow production to be switched without cost.

• Factors of production are immobile between countries, in order to maintain each country’s comparative advantage.

• There are no tariffs, quotas, or other trade barriers.

• All buyers and sellers know where the cheapest commodities can be found at all times.

• Governments do not impede or distort the marketplace through their domestic tax and regulatory policies — or if they do, the two countries are equally impacted.

Flaws in Free Trade

Those assumptions (and that list is by no means exhaustive) lead to a number of significant flaws in Ricardo’s theory that are all too often overlooked or downplayed by its adherents and, therefore, the predicted benefits do not occur to the extent forecasted, when put into practice.

In fact, transport costs do enter into the final price of a product, and transport costs can vary greatly, depending on the weight or bulk of a product. Also ignored is the cost of economic damage done in the process of manufacturing something. A classic example is environmental pollution, which has an economic cost that is not reflected in the price. Goods from a country with lax pollution standards will be relatively cheap, relative to a country with strict pollution laws. Practicing free trade in such circumstances benefits a country such as China, but harms both itself and other countries, because pollution crosses national borders.

In addition, because of cheap products made in countries with lax environmental standards, countries with burdensome environmental restrictions will be adversely affected in the way of employment. Of course, it could be argued that a country heavily burdened by taxes and regulations should work to get rid of, or at least ease, that burden, rather than work to further block foreign competition. Nonetheless, such a country will suffer the loss of businesses and jobs if it removes its international trade barriers prior to easing its tax/regulatory burden. But as the list above clearly illustrates, not all factors are related to government interventionism.

The theory of comparative advantage asserts that, within any country, free trade will cause factors of production to be reallocated from economic sectors with a comparative disadvantage to economic sectors with a comparative advantage. But this process will break down if factors of production cannot readily reorganize. For example, if labor cannot easily move from an industry in decline to an industry on the upswing, due to mismatching skills, then free trade will lead to increasing unemployment. And that brings us into conflict with the assumption that full employment always exists in every country. The doctrine of comparative advantage not only assumes that workers and their skills are perfectly interchangeable, but also assumes that the up-and-coming industries will always be willing and able to immediately employ any and all displaced workers. Look around and see if that is happening in your area!

The corresponding assumption regarding the factors of production is that they are not internationally mobile. If they were, then productive resources would be located wherever in the world they could be used with the most relative efficiency. This international movement would optimize the world economy, but would not necessarily benefit a particular country, because it would have lost its comparative advantage to the country holding an absolute advantage. An assumption that may have been at least partially plausible during Ricardo’s time is no longer true today. As explained by economist Paul Craig Roberts:

The international mobility of factors of production is a new phenomenon. It permits first world businesses, seeking lower costs, greater profits, and a stronger competitive position, to substitute cheap foreign labor for the entire range of domestic labor involved in the creation of tradable goods and services. Only labor involved in non-traded goods and services is safe from foreign substitution. It is not yet possible to package hair cuts, surgical operations, dentistry or home repairs as internationally tradable services.

The known necessary conditions for free trade to be mutually beneficial do not hold in today’s environment where factors of production are as mobile, if not more so, than traded goods. What we are witnessing is not trade based on comparative advantage but the flow of first world factors of production to cheap Asian labor where the productivity of capital and technology is highest.

[I] do not dispute that global gains might exceed first world losses. Nevertheless, the flow of factors of production to absolute advantage in place of comparative advantage vitiates the case for free trade — that it produces mutual gains to the countries involved. What we may be witnessing is global capitalism destroying national sovereignties, leading to a global government.

Thus we have the awkward situation that Americans experience today, when cheaper foreign-manufactured goods replace goods that used to be produced here: Corporations and investors like the higher profits, consumers like the lower prices, but workers don’t like the resulting job losses. Because most consumers are also workers, there is no guarantee that, under free trade, they will gain more as consumers than they lose as workers.

IOUs, such as corporate and government bonds. As the United States has moved from a manufacturing economy to a service economy, it has put itself into a precarious situation. Because we have not been willing to protect various manufacturing industries, America can no longer produce goods in sufficient quantities to offset the amount of goods that it imports. And much of what we do “produce” is not exportable: How does one export the output of a retail sales clerk, a fast-food restaurant server, or a bartender? With every month that goes by, we are told that America has racked up yet another monstrous trade deficit. Common sense should tell us that this situation is unsustainable because we have only a limited number of assets that we can sell off, and we cannot afford to service an unlimited amount debt. But based on the dogma of comparative advantage, that is what blind faith in unrestricted free trade has brought us.

While the theory of comparative advantage can be a useful tool for economic analysis, it is simply not logical to use it as proof that unlimited free trade all of the time with every country in the world is good for America. That could only be true if all of the associated assumptions about comparative advantage were actually valid in the real world, but they are not. In fact, the way the world works nowadays means that those assumptions move further away from reality with every passing day. 

to read complete article

The Dangers of Outsourcing to Foreign Countries

This article was written four years ago.  Shocking numbers and statistics.  Please remember that your economic misery is not caused by personal failings on your part, but caused by official government policy.  The powers that be want a high unemployment rate to turn you into scared little rabbits, who will work for whatever they want to pay, in any sweatshop they choose.  Are you going to let them get away with it?---rng


from socyberty.com
by Heather Wood in Economics, April 15, 2007

Read more: http://socyberty.com/economics/the-dangers-of-outsourcing-to-foreign-countries/#ixzz1X21c3kak
The drawbacks of outsourcing work to foreign countries.

     According to a report put out by the Bureau of Economic Analysis, the median income in 1969 was equal to $33,072. Almost thirty years later, that figure stood at $35,172. In twenty years time, incomes have only risen approximately $2,000. Given the much higher cost of living, this report shows how we are working harder to earn less. The rising cost of fuel, cars, heating, electricity, the advent of cable and the Internet, all play a large part in the difference in costs of living. It is no wonder that more couples are forced to work and the day of the stay-at-home parent is coming to an end.
     Today, the average unemployment rate stands at 4 ½%. Alaska, Michigan, and South Carolina have the highest unemployment rates, each set at more than 6%. One of the largest contributors to the national unemployment rate is outsourcing work to foreign countries.
     According to Goldman Sachs, between 300,000 to 500,000 jobs have been lost to date. The company estimates that this will lead to a loss of 6 million jobs over the next ten years. With 140 jobs located in the United States, this may not seem like a lot, but it would be similar to eliminating every job in Arizona. That is a significant number of jobs to be eliminated.

Most of the outsourced jobs are in these related fields:

• Business Applications
• Communication Services
• Data Operations
• Help Desks
• IT Infrastructure
• IT Security
• PC Management
• Specialized Manufacturing
• Websites

Many companies are outsourcing jobs to other countries. A small list follows.

• Cisco Systems
• Dupont
• General Electric
• IndyMac Bancorp
• Marriott Hotels
• Penske
• Proctor & Gamble
• Unilever
• Wachovia
• Wyeth

     Low labor, production, and energy costs in many countries including China, Japan, India, and Mexico is causing companies to shut their factories within the United States and open new factories in foreign countries. This leads to the loss of jobs within the United States, a lower standard of quality, and resentment by those who are living within the United States and are sick of seeing jobs go overseas.
     In 1994, NAFTA (North American Free Trade Agreement) was passed by then President Bill Clinton. His goal was to open the trade routes to all countries. Unfortunately, it led to many plants moving across the borders to Canada and Mexico. While outsourcing had begun in the 1980s, it grew by leaps and bounds in the latter part of the 1990s. Jobs went overseas to China, Japan, and India and the economy began to falter as American’s lost their jobs and suddenly faced living on minimum wage as higher paying jobs went to these other countries.

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US economy created no job growth in August, data show First time since 1945 that government has reported net monthly job change of zero

     ZERO. Remember that number when you go to the voting booth in November of 2012. ----lee

msnbc.com news services

September 2, 2011

     WASHINGTON — Employment growth ground to a halt in August, as sagging consumer confidence discouraged already skittish U.S. businesses from hiring, keeping pressure on the Federal Reserve to provide more monetary stimulus to aid the struggling economy.

     Nonfarm payrolls were unchanged last month, the Labor Department said Friday. It was the first time since 1945 that the government has reported a net monthly job change of zero. The August payrolls report was the worst since September 2010, while nonfarm employment for June and July was revised to show 58,000 fewer jobs.

     “The bottom line is this is bad,” Diane Swonk, chief economist with financial services firm Mesirow Financial, told CNBC Friday.
     Despite the lack of employment growth, the jobless rate held steady at 9.1 percent in August. The unemployment rate is derived from a separate survey of households, which showed an increase in employment and a tick up in the labor force participation rate.
     While the jobs report underscored the frail state of the economy, the hiring slowdown probably will not be seen as a recession signal as layoffs are not rising that much.
     A strike by about 45,000 Verizon Communications workers helped push employment in the information services down by 48,000. Allowing for the decline from the Verizon strike, private payrolls would have risen by 62,000.
    
     A rough month
     "August was a pretty rough month for the economy," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pa. "We saw financial markets tighten. I think businesses sort of responded by putting hiring on the back burner," he said before the release of the report.

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