Americans believe the economy is in a recession. But is it true?
Just how bad is the U.S. economy? Who's asking? More important, who's answering?
The conventional wisdom is not always wrong. But because it depends so much on emotion, it can often mislead. As a result, it is in times like these that economic fundamentals become so important. Rather than dwelling on the bad news coming from the financial and housing sectors, we believe it is important to look at the underlying drivers of the economy. And those look very solid.
Back in 2002-03, the household measure of civilian employment was much stronger than the payroll survey, signaling economic recovery. However, at the time, many prominent economists, including Alan Greenspan, (wrongly) argued that the payroll survey was right about the economy, not the household survey.
Then, in late 2007, the household survey was weaker than payroll growth, signaling slower growth and gaining some adherents now that it was showing weakness. But in the past few months, the household survey -- which we have followed closely all along -- has turned up strongly. In the first four months of 2008, when the payrolls survey shows a loss of 65,000 jobs per month, the household survey shows a gain of 179,000 per month.
Look for more positive economic data in the months ahead, as the most predicted recession in U.S. history never comes to pass.
As of spring 2008, we're probably just a third of the way through the unfolding debacle in the housing, credit, and financial markets. In political and regulatory terms, the ultimate problems and remedies have only begun to define themselves.
We're not just looking at an ordinary recession. Since the 1970s, the United States has redefined itself from a manufacturing nation to a financial economy built on debt, leverage, and a considerable ratio of speculation. Both political parties have been complicit in this, and the downturn now beginning will be unusual and potentially tragic.
The lesson of history is that previous leading world economic powers, from Rome and Imperial Spain to the Netherlands (back when New York was New Amsterdam) and early 20th-century Britain, have been unable to reform themselves in time to avoid decline. Politics has failed in the face of entrenched interests. In the process, excessive debt and dependence on finance rather than production has been front and center. New nations move to the head of the line -- and these days we can see Asia smiling.
Women rally for an equal pay bill in front of Congress.
Equal pay for equal work is the feminist catch phrase in the U.S. Senate this week. That’s because lawmakers are scheduled to take on a measure arising out of the case of Lilly Ledbetter, an Alabama woman who lost a wage discrimination suit at the Supreme Court last year.
According to the National Center for Pay Equity, women’s earnings in 2006 were 76.9 percent of men’s, with the median full-time, year-round female employee earning just $32,515, compared to a median male earning of $42,261. But should we be outraged? No. And here’s why.
Women earn less largely because we have the luxury of decisions that men generally can only dream of. We work less hours in the average work week, we are more likely to take time off to have kids or care for aging parents, and we choose lower paying fields requiring less formal education. Oh, and we’re less far less likely to be killed at work, a little detail often neglected at the NCPE.
According to the Bureau of Labor Statistics, men are much more likely to suffer fatal workplace injuries than women. According to 2006 BLS statistics, the most recent year available, 428 American women were killed on the job. Compare this with the 5,275 men who lost their lives. The reason: Men take more dangerous, laborious, and physically demanding jobs, and they are compensated heavily for taking such positions. According to the BLS, the most deadly fields for 2006 were those heavily dominated by men, including logging, mining, waste management, law enforcement, construction, and transportation projects.
Conversely, as the BLS statistics demonstrated, the fields with the lowest death rates, including education and social services, are female-dominated. Ultimately, the average man is more willing than the average woman to spend his days inside dark mines to extract coal.Act like a man and you’ll be compensated as one.
Last May, the Supreme Court ruled in Ledbetter v. Goodyear that employees who have suffered years of discrimination can’t have their day in court, if they don’t discover the discrimination within 180 days of their employer’s initial discriminatory pay decision.
The Ledbetter decision not only reversed years of employment law, it also ignored the realities of a workplace. Often employees don’t know what their co-workers are paid. In fact, only one in ten private sector employers has adopted a pay openness policy and companies often prohibit employees from sharing wage information at all. An expectation that an employee learn that information within the first 180 days of a pay decision is unreasonable.
Unless Congress intervenes, companies will be able to discriminate for years and unjustly profit from paying women, minorities, the elderly, and people with disabilities less, as long as it keeps the discrimination secret for a few months.
In other words, if a company is discriminating in its wages and hides it for just a few short months, it can pay women less than men, blacks less than whites, older workers less than younger ones, and so on, and so on, with absolutely no accountability. Ever. They can hurt workers and their families, and just pocket the money.
U.S. firms employ more than 1.6 million call center operators in places like Bangalore, India.
Outsourcing U.S. jobs is a hot-button political issue, along with the economy and unemployment, this election year. But what happens if there aren't enough Americans qualified to do the jobs U.S. firms would otherwise outsource? The head AT&T said on Wednesday that the phone company was having trouble finding enough skilled workers to fill all the 5,000 customer service jobs it promised to return to the United States from India.
Why are our international peers outperforming us? There are clear, common threads between the education systems of the highest-performing nations. These countries have established uniform, rigorous standards, invested in their teachers and given more time and support to their students.
We need greater expectations and higher education standards. The reliance on computer technology has made math and science more important than ever. Yet by the end of 8th grade, what passes for the U.S. math curriculum is two years behind the math being learned by students in foreign countries. We need modern academic standards that will ensure kids are better prepared for today's workplace demands.
Another area that merits closer inspection is school calendars. Our current academic years continue to be scheduled as if they are straight out of the 19th-century agrarian model, when kids were needed during the afternoons and summers to help perform work around the home or farm. As a result, American children spend less time learning than their foreign peers. If we expect American students to be competitive, then we must find ways to get them more effective classroom time.
The technology industry claims the United States doesn't produce enough technologists. This claim is specious at best. Wages for information technology workers have been relatively flat while the career risks for the profession have skyrocketed. The industry's track record of attracting female and underrepresented minorities to technical professions has been woeful. By giving the industry a steady diet of cheap labor, there is no reason for companies to expand the domestic talent pool they draw from and invest in American workers to fill these jobs. And it also gives the companies ample opportunities to replace older workers with younger ones, fueling age discrimination.
A more sensible set of solutions would be twofold. First, significantly increase investments in U.S. students and underemployed workers so they can fill these job openings. Second, let the market work. If technology workers are as scarce as companies claim, then wages would be bid up and talented workers would choose engineering instead of more lucrative and safe fields in finance, medicine or law.
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