While commentators tend to focus on the unemployment rate—which is moderate at 4.9 percent—the employment-population ratio is arguably more informative. After long spells out of a job, people may become discouraged and give up looking for work altogether. A large group of working-age, able-bodied individuals outside the labor force is a sign of major weakness in the economy.
California’s path-breaking bid to end workplace pay disparities faces one of its widest gender wage gaps among the state’s own employees.
As an indicator of economic hardship, the US Census Bureau’s Supplemental Poverty Measure (SPM) improves on the official poverty measure by better accounting for regional differences in the cost of living as well as for the various resources (including non-cash benefits like food assistance) that families use to cover expenses.
“More than a fifth of American men — about 20 million people — between 20 and 65 had no paid work last year. Seven million men between 25 and 55 are no longer even looking for work, twice as many black men as white. There are 20 million men with felony records who are not in jail, with dim prospects of employment, and more of these are black men. Half the men not in the labor force report they are in bad physical or mental health. Men account for only 42 percent of college graduates, handicapping them in a job market that rewards higher levels of education. “
Women still earn less than men, but they’ve narrowed the gap because they tend to work in jobs that require more social and analytical skills, a new study from the Pew Research Center finds. . . Women’s pay went up 32 percent while men’s pay went down 3 percent from 1980 to 2015, according to the study, “The State of American Jobs.”
The shifting demand for skills in the modern workplace may be working to the benefit of women. Women, who represent 47% of the overall workforce, make up the majority of workers in jobs where social or analytical skills are relatively more important, 55% and 52%, respectively. For their part, men are relatively more engaged in jobs calling for more intensive physical and manual skills, making up 70% of workers in those occupations. This is likely to have contributed to the shrinking of the gender pay gap from 1980 to 2015 given that wages are rising much faster in jobs requiring social and analytical skills.
Since the Great Recession, the U.S. economy has experienced low real GDP growth and low real interest rates, including for long maturities. We show that these developments were largely predictable by calibrating an overlapping-generation model with a rich demographic structure to observed and projected changes in U.S. population, family composition, life expectancy, and labor market activity. The model accounts for a 1 ¼ percentage-point decline in both real GDP growth and the equilibrium real interest rate since 1980, essentially all of the permanent declines in those variables according to some estimates. The model also implies that these declines were especially pronounced over the past decade or so because of demographic factors most-directly associated with the post-war baby boom and the passing of the information technology boom. Our results further suggest that real GDP growth and real interest rates will remain low in coming decades, consistent with the U.S. economy having reached a “new normal.”
So now the question is this: when will wage growth resume its upward path? A lot of research into this question has been focused on productivity. But the Federal Reserve of New York has just released some research that points to demographics as a defining issue. They write that across the US economy, all segments of the population “display rapid real wage growth early in a worker’s career, with positive real wage growth ending when the worker is in his/her forties. This is followed by a period of either flat (high school graduates or less) to declining real wages (some college or more). By age 55, all education categories are, on average, experiencing negative real wage growth.” . . . We have shown that U.S. real wage growth has been slowing down over the past thirty-five years with the aging of our workforce. Abstracting from cyclical factors impacting the labor market, this slowing is likely to continue in the years ahead as more individuals near retirement and experience negative real wage growth… Consequently, the aging of the U.S. population will continue to act as a headwind to labor productivity and wage growth.
Much has been written about the aging of the U.S. population, but the importance of this trend for the economy and its evolution can easily be overlooked. This week, we focus on the aging of the labor force and explore its implications for the behavior of real wage growth. In this first post, we examine estimated real wage profiles of workers and document how their levels and growth rates differ across demographic characteristics such as sex, race/ethnicity, education level, and age. Moreover, we argue that the demographic trends predict a slower pace of real wage growth for an increasing fraction of the workforce. Our second post combines the implied real wage growth rates and changing demographics of the U.S. labor force to derive a “cyclically neutral” aggregate real wage growth series. We show that this series has been steadily declining since the mid-1980s.
“A November ballot measure, Proposition 55, would extend that dangerous dependency on the rich for another 12 years, and its strong lead in the polls is a testament to the cynical validity of Brown’s observation about voters’ willingness to approve taxes that they won’t be paying themselves. However, some go even further, seeking taxes on those who have absolutely no power to protest, even at the polls.”
SPM improves on the official poverty measure by better accounting for differences in the cost of living across the US. When California’s high housing costs are factored in, a much larger share of the state’s population is living in poverty: 20.6 percent under the SPM, compared to 15.0 percent under the official measure. Accounting for housing costs boosts California’s poverty rate to the highest of any state, up from 17th highest under the official poverty measure.
The median household income—the level at which half are above and half are below—rose 5.2% from a year earlier, after adjusting for inflation, or $2,800, to $56,500, the Census Bureau said Tuesday. . . The largest increases in incomes were for households in the bottom fifth of all earners, while incomes declined slightly for households in the top fifth. The ratio between incomes for households at the 90th percentile and 10th percentile declined last year.
Along with up-skilling workers, we should lower the regulatory barriers to entrepreneurship. It’s a sad fact that America tends to regulate the entrepreneurship of the poor much more stringently than it does that of the rich. You can begin an Internet company in Silicon Valley with little regulatory oversight; you need more than ten permits to open a grocery store in the Bronx.
The Thomson Reuters/PayNet Small Business Lending Index fell to 129.0, down from March’s downwardly revised 135.1 and marking the index’s seventh decline in the last 10 months. The PayNet index typically corresponds to U.S. gross domestic product growth one or two quarters ahead.
“This analysis surveys the economic landscape emerging from the Great Recession and compares it to previous recovery periods. It identifies differences in the strength and geography of county-level growth in employment and business establishments — two key markers of economic dynamism — and uncovers three significant transformations in the economy. The first and most unambiguously troubling is a collapse in the number of new firms in the economy. The second is the increasing geographic concentration of recovery-era businesses and jobs into a smaller number of more populous counties. The third is the shift in the counties driving the nation’s economic recoveries from smaller to larger ones. Together, the findings capture an economy veering towards a less broadly dynamic, less entrepreneurial, and more geographically concentrated equilibrium — more reliant than ever on a few high-performing geographies abundant in talent and capital to carry national rates of growth.”