Comments on economics, mystery fiction, drama, and art.

Friday, January 08, 2010

Trends in Establishment Employment

Just for information, here's actual establishment employment (the black line) and two trends. The first (the blue trend line) is based on the 1950 - 2001 period; the second (red) trend line is based on the 1950 - 2007 period. My own sense is that the trend for the 1950 - 2001 period fits the earlier part of establishment employment better, and is more consistent with the observation that establishment employment grew quite slowly in the first decade of the 21st century, even if we use only the period up to 2007 to establish our trend. Click on the chart to enlarge it.


James Fallows has a very good post (based on an article in The Atlantic) on the decline in the quality, and even operability, of public infrastructure in the US (with an embedded video of a frightening water main break in Baltimore). A key quote:

"Stephen Flynn points out that the physical infrastructure of big East Coast cities was mainly built by the 1880s; of the industrial Midwest by World War I; and of the West Coast by 1960. "It was advertised to last 50 years, and overengineered so it might last 100," he said. "Now it's running down. When a pothole swallows an SUV, it's treated as freak news, but it shows a water system that's literally collapsing beneath us." (Surface cave-ins often reflect a sewer or water line that has leaked or collapsed below.)"

Given the general scholarly consensus that returns to infrastructure investment are quite large, there are significant opportunities here both to improve the quality of life in the US (and particularly in our larger cities) and also to undertake projects with significant job-creation potential.

It's worth pointing out, though, just how much more difficult it is to replace sewers and water and gas lines and buried telecommunications lines than it is to put them in place to begin with. Even modest sewer replacement projects create horrendous traffic problems, and even modest road reconstruction projects can be ruinous for local businesses, which often see 50% or larger declines in sales.

In addition, any coordinated effort at doing infrastructure replacement will almost certainly have to be developed and funded by the federal government. Too many cities--Gary, for example, where I work, or Detroit, or Camden*--cannot do this themselves. Even reasonably prosperous cities (Chicago, Miami, Atlanta) would find the burden very difficult to bear.

But if we don't make the effort, then the ability of our economy to continue to grow and to provide adequate opportunities is likely to be severely undermined.

*If you want to be really depressed, take a look at this book.

Why I continue to worry about the recovery.

The employment-population ratio peaked in March 2007 at 63.4%.

It has declined consistently since and is now (December 2009) at 58.2%.

That's 33 months of decline so far.

That's a decline of 5.2 percentage points, which is 8.2%.

The previous largest post-World-War II decline occurred in the twin recessions of the early 1980s.

Then, the employment-population ratio peaked in December 1979 at 60.1%.

Then, it bottomed out in February/March 1983 at 57.1%.

That was 39 months of decline.

But the decline was only three percentage points, or 5%.

As our population continues to grow, and employment continues to fall, it will become harder, and take longer, to return to our long-term trend.

Based on the long-term employment trend from January 1950 through December 2007 (before the recession began, but after seven years of sub-standard employment growth), we would expect to have had something around 150 million payroll jobs by the end of 2009. We actually had about 131 million.

If employment grows at 50% above its 1950 - 2007 trend (2.65% per year instead of 1.75% per year), it will take until November 2011 until our economy returns to the pre-recession level of employment. And, to date, employment is still falling.

If employment grows at 50% above its 1950 - 2007 trend, it will take until March 2032 until our economy returns to its long-term trend level of employment.

I am not happy about any of this.

I am especially not happy when UPS lays off 1800 workers and its stock price rises.
(Click on the chart to enlarge it.)

Thursday, January 07, 2010

"...working as adjuncts at less than the minimum wage..."

A recent article in the Chronicle of Higher Education presents some cogent arguments against encouraging one's students to attend grad school, especially in the humanities. But then, the author says this: "...working as adjuncts at less than the minimum wage..." You see comments like this a lot when people write about how badly adjuncts are paid. But, of course, it's nonsense.

In 2010, the federal minimum wage is $7.25 per hour. Suppose you're teaching one course for a stipend of $2500 (which sounds pretty typical to me). That's 344 hours at the minimum wage, or, over a 16-week (countng finals) semester, 21.5 hours per week. Ri-i-i-i--i-i-ght. Anyone spending that much time on a single course is acting foolishly, and I seriously doubt that there is anyone working in higher ed who is that foolish. I was an adjunct (at IUPUI back in the 1970s), and I know how much time I spent per course...about 10 hours a week, or 160 hours for a course. At my assumed stipend and semester length, that's $15.625 per hour, or slightly more than twice the minimum wage.

That's not to say that adjuncts are well paid. At $2500 per course, one would have to teach 8 courses per semester (presumably at four different institutions, given the typical constraints on adjunct faculty teaching loads) to make $40,000 during the academic year. With, typically, no benefits. (Remember--that's 32 weeks worth of work, not 50.) Adjuncts are severely underpaid and given much less respect by their institutions and by full-time (and particularly tenured) faculty than they deserve.

But they don't make less than the minimum wage.