Fudged Employment Statistics: Birth-death adjustment scam
Official employment statistics does not take into account declining participation
in labor market as well as overestimate the contribution to employment of
new companies during the slow down (and underestimate those during acceleration
of economy). For some reason
of Labor Statistics does not provide the standard error estimate.
And this is a must for any "sampling" data (this is a survey of about 160,000
businesses and government agencies, representing approximately 400,000 individual
worksites) and actually its accuracy can later be calculated based on other
sources of data like tax records and social security payments. Birth/death
adjustment during economics slowdown definitely distorts the estimate up.
The declining participation in work force also means that actual unemployment
rate is higher.
The labor force participation rate is pro-cyclical, meaning that it goes
up as tight labor markets induce new entrants into the labor market; and
it goes down when soggy labor markets lead the discouraged unemployed to
drop out of the labor force.
So, the short answer to the puzzle why there was a statistically solid
job growth since mid 2006 might be related to the method of collecting the
statistic. It might well be that nonfarm payroll growth really is/was almost
absent and was result of aberration caused by the semi-absurd method of
adjustment of data. That's a serious deficiency...
The unemployment rate is measured by the Household Survey and number
of jobs lost in the Establishment Survey. The Birth/Death Revisions are
to the Establishment Survey.
Detailed data in the Bureau of Labor Statistics (BLS) Business Employment
Dynamics (BED) release, which comes out with a two-quarter lag, show employment
growth of only 19 thousand in 2006Q3, while the nonfarm payroll tally for
that quarter was over 450 thousand. The question arises why government reports
more then 100K created jobs figure each month. Richard Benson in his paper
Government Creates Jobs analyzed the situation in the following way:
Our elected officials and Wall Street
executives all have a vested interest in keeping the perception of a
robust economy alive. The employment data announced each
month is critical to this perception, but a thorough analysis of the
data suggests something quite different that what we are told.
Since 9/11, 60 percent of job creation
has related almost directly to the housing boom and consumer spending,
generated from home equity extraction through
mortgage refinance. Remember, the Federal Reserve cut
interest rates to one percent and kicked off the greatest housing bubble
of all time. The housing boom created an America with over 1,200,000
real estate agents, and hundreds of thousands of jobs in the mortgage
and home construction industry.
On the surface, the job market looks sound and Wall Street bulls
take every opportunity to reinforce this belief whenever low initial
unemployment claims are announced. But common
sense tells me there is something brewing below the surface and this
housing bust will have an even bigger impact on our economy, than previously
suggested, by reducing employment and consumer spending, in a big way.
(The officially reported governmental statistics fail to note that
a very high percentage of new jobs created in the past few years were
commission-only jobs, or jobs with independent contractor status. Workers
categorized as independent contractors are not eligible for unemployment
benefits. This means all of the real estate agents who haven't
made a sale, along with the mortgage bankers who no longer have a company
to bring their loans to, will not be filing for unemployment, even though
they haven't made a dime. The Department of Labor Statistics, however,
continues to view these unemployed and vastly under-employed workers
as holding full- time jobs.)
The latest employment data from the payroll survey showed it added
88,000 workers. However, the household survey - a broader measure -
showed a loss of almost 500,000 jobs. According to the household survey,
over 360,000 workers simply dropped out of the labor force in April.
So, if you want to believe the Wall Street touts, please go right ahead
and put your rose-colored glasses back on and tune into that movie with
the happy Hollywood ending. If, on the other hand, you think like me
and believe there is an economic storm brewing, please read on.
Our government "prints up jobs out of thin air" the same way the
Federal Reserve prints up money. To manufacture jobs, The Bureau of
Labor Statistics uses their very own Net Birth/Death computer model
(see CES Net Birth/Death Model for job creation at
www.bls.gov). The idea behind the model
is simple: Because small firms are always failing and starting up and
it takes a few months for them to report on the payroll survey, an estimate
is needed for the new jobs created. So, back when the economy was recovering,
the Net Birth/Death Computer Model added jobs that had very likely been
created. Their methodology goes like this:
- The Net Birth/Death model first creates jobs on a non-seasonally
- The computer-generated jobs are then added to the jobs actually
reported by the payroll survey for the month;
- The new total is then seasonally adjusted which creates the
reported monthly unemployment number announced to the public. It's
only much later that ongoing payroll surveys confirm or rebut the
estimated job creation.
I realize the above may sound confusing,
but it's actually meant to. This is economic propaganda created by our
very own government! This false creation of jobs is not that much different
from the over-stated earnings created by the executives at Enron that
brought the company down.
Pimco's Gross analyses the situation in a slightly different way and
with less emotions but points out to the same mechanism of computer generated
Here at PIMCO, we continue to expect the unemployment rate to go up.
Thus, we are still (painfully, since December) long of duration, concentrated
in the front end of the yield curve. And why are we still bearish on
First and foremost, unemployment is a lagging variable,
notably of momentum in discretionary aggregate demand. And discretionary
aggregate demand has been unambiguously decelerating in recent quarters,
and not just in residential construction, as displayed in the chart
The Great Puzzle
So why hasn’t the unemployment rate already risen? It’s the great puzzle,
in the words of San Francisco Fed President Janet Yellen.
The short answer to the puzzle is that the
labor force participation rate has fallen, accounting fully for the
drop from 4.7% to 4.5% for the unemployment rate over the last year.
But this doesn’t make sense when you look at nonfarm
payroll growth, which, again in the words of Ms. Yellen, has been gangbusters.
... ... ...
And a key reason is that the BLS, while very good at counting heads
at existing firms, must make an assumption, in real time, about the
birth-death rate for firms, so as to estimate the net gain/loss in jobs
as firms open and close, a never-ending feature of a capitalist economy.
In the early years of expansions, the birth assumption systematically
is too low and the death assumption is systematically too high, which
results in "jobless recoveries," which turn out to be not-so-jobless
recoveries upon revision. The exact
opposite holds in the late years of expansions and particularly in recessions.
Such is the case, it would appear, at present.
Thus, in contrast to last August, when the job tally for the year ending
March 2006 was revised up some 800 thousand, a stunningly large revision,
the opposite is likely to unfold in this August’s benchmark revision
for the year ending March 2007. Not to suggest, I hasten to add, that
a downward revision equal to last year’s upward revision is in the cards.
The honest answer is that we don’t know how big it will be.
But available data, notably the BED and JOLTS
data, point squarely to a downward revision.
So what, you say. Economists always bellyache about the quality of the
data when they go against their forecasts. This is true.
It is also true, however, that poor data
can make for poor policy making, if and when the data is taken to be
religiously true. This is particularly the case if the
data is known to be lagging data of the business cycle, as is the case
with the unemployment rate. Acting on the data, or refusing to act because
of it, is the stuff of policy mistakes, sometimes known as recessions.
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If we are to believe authorities the USA. added 916K jobs in March, and the official
unemployment rate is at 6% (note the word official; the current official U6 unemployment rate as
of March 2021 is 10.70%; so the real number is probably much higher than 10%)
Fudging data became as prominent as it was in the USSR. The neoliberal empire can't afford objective stats.
"... monthly data is collected over a brief timeframe - just a few days - and that the calculations are seasonally adjusted. ..."
"... Yes, at least half the sheep population think they are real. It's insane how dumb people are today. ..."
I spent the last 2 weeks digging into the numbers - especially timing of the surveys and
data collection. I get the fact that weekly claims don't reflect new hires. I also realize
that monthly data is collected over a brief timeframe - just a few days - and that the
calculations are seasonally adjusted.
But let's be reasonable - how is it possible to have 700K - 800K initial jobless claims
every week and create nearly a million new jobs? Does anyone really believe any of these numbers?
Yes, at least half the sheep population think they are real. It's insane how dumb people
"... The Globe and Mail ..."
"... The Globe and Mail ..."
"... The Endless Crisis: How Monopoly-Finance Capital Produces Stagnation and Upheaval from the USA to China ..."
How many people are really out of work? The answer is surprisingly difficult to ascertain.
For reasons that are likely ideological at least in part, official unemployment figures greatly
under-report the true number of people lacking necessary full-time work.
That the "reserve army of labor" is quite large goes a long way toward explaining the
persistence of stagnant wages in an era of increasing productivity.
How large? Across North America, Europe and Australia, the real unemployment rate is
approximately double the "official" unemployment rate.
The "official" unemployment rate in the United States, for example, was 5.5 percent for
February 2015. That is the figure that is widely reported. But the U.S. Bureau of Labor
Statistics keeps track of various other unemployment rates, the most pertinent being its "U-6"
figure. The U-6 unemployment rate includes all who are counted as unemployed in the "official"
rate, plus discouraged workers, the total of those employed part time but not able to secure
full-time work and all persons marginally attached to the labor force (those who wish to work
but have given up). The actual U.S. unemployment rate for February 2015, therefore, is 11 percent .
Canada makes it much more difficult to know its
real unemployment rate. The official Canadian
unemployment rate for February was 6.8 percent, a slight increase from January that
Statistics Canada attributes to "more people search[ing] for work." The official measurement in
Canada, as in the U.S., European Union and Australia, mirrors the official standard for
measuring employment defined by the International Labour Organization -- those not working at
all and who are "actively looking for work." (The ILO is an agency of the United Nations.)
Statistics Canada's closest measure toward counting full unemployment is its R8 statistic,
but the R8 counts people in part-time work, including those wanting full-time work, as
"full-time equivalents," thus underestimating the number of under-employed by hundreds of
according to an analysis by The Globe and Mail . There are further hundreds of
thousands not counted because they do not meet the criteria for "looking for work." Thus
The Globe and Mail analysis estimates Canada's real unemployment rate for 2012 was
14.2 percent rather than the official 7.2 percent. Thus Canada's true current unemployment rate
today is likely about 14 percent.
Everywhere you look, more are out of work
The gap is nearly as large in Europe as in North America. The official European Union
unemployment rate was 9.8
percent in January 2015 . The European Union's Eurostat service requires some digging to
find out the actual unemployment rate, requiring adding up different parameters. Under-employed
workers and discouraged workers comprise four percent of the E.U. workforce each, and if we add
the one percent of those seeking work but not immediately available, that pushes the
actual unemployment rate to about 19 percent.
The same pattern holds for Australia. The Australia Bureau of Statistics revealed that its
measure of "extended labour force under-utilisation" -- this includes "discouraged" jobseekers,
the "underemployed" and those who want to start work within a month, but cannot begin
immediately -- was
13.1 percent in August 2012 (the latest for which I can find), in contrast to the
"official," and far more widely reported, unemployment rate of five percent at the time.
Concomitant with these sobering statistics is the length of time people are out of work. In
the European Union, for example, the long-term unemployment rate -- defined as the number of
people out of work for at least 12 months --
doubled from 2008 to 2013 . The number of U.S. workers unemployed for six months or longer
more than tripled from
2007 to 2013.
Thanks to the specter of chronic high unemployment, and capitalists' ability to transfer
jobs overseas as "free trade" rules become more draconian, it comes as little surprise that the
share of gross domestic income going to wages has declined steadily. In the U.S., the share has
declined from 51.5 percent in 1970 to about 42 percent. But even that decline likely
understates the amount of compensation going to working people because almost all gains in
recent decades has gone to the top one percent.
Around the world, worker
productivity has risen over the past four decades while wages have been nearly flat. Simply
put, we'd all be making much more money if wages had merely kept pace with increased
Insecure work is the global norm
The increased ability of capital to move at will around the world has done much to
exacerbate these trends. The desire of capitalists to depress wages to buoy profitability is a
driving force behind their push for governments to adopt "free trade" deals that accelerate the
movement of production to low-wage, regulation-free countries. On a global basis, those with
steady employment are actually a minority of the world's workers.
Using International Labour Organization figures as a starting point, professors John Bellamy
Foster and Robert McChesney calculate that the "global reserve army of labor" -- workers who
are underemployed, unemployed or "vulnerably employed" (including informal workers) -- totals
2.4 billion. In contrast, the world's wage workers total 1.4 billion -- far less! Writing in
their book The Endless
Crisis: How Monopoly-Finance Capital Produces Stagnation and Upheaval from the USA to
China , they write:
"It is the existence of a reserve army that in its maximum extent is more than 70 percent
larger than the active labor army that serves to restrain wages globally, and particularly in
poorer countries. Indeed, most of this reserve army is located in the underdeveloped
countries of the world, though its growth can be seen today in the rich countries as well."
The earliest countries that adopted capitalism could "export" their "excess" population
though mass emigration. From 1820 to 1915, Professors Foster and McChesney write, more than 50
million people left Europe for the "new world." But there are no longer such places for
developing countries to send the people for whom capitalism at home can not supply employment.
Not even a seven percent growth rate for 50 years across the entire global South could absorb
more than a third of the peasantry leaving the countryside for cities, they write. Such a
sustained growth rate is extremely unlikely.
As with the growing environmental crisis, these mounting economic problems are functions of
the need for ceaseless growth. Once again, infinite growth is not possible on a finite planet,
especially one that is approaching its limits. Worse, to keep the system functioning at all,
obsolescence of consumer products necessary to continually stimulate household spending
accelerates the exploitation of natural resources at unsustainable rates and all this
unnecessary consumption produces pollution increasingly stressing the environment.
Humanity is currently consuming the equivalent of one and a
half earths , according to the non-profit group Global Footprint Network. A separate report
by WWF–World Wide Fund For Nature in collaboration with the Zoological Society of London
and Global Footprint Network, calculates that the Middle East/Central Asia, Asia-Pacific, North
America and European Union regions are each consuming about double their
We have only one Earth. And that one Earth is in the grips of a system that takes at a pace
that, unless reversed, will leave it a wrecked hulk while throwing ever more people into
poverty and immiseration. That this can go on indefinitely is the biggest fantasy.
"... The real unemployment rate is probably somewhere between 10%-12%. ..."
"... The U-6 also includes what the labor dept. calls involuntary part time employed. It should include the voluntary part time as well, but doesn't (See, they're not actively looking for work even if unemployed). ..."
"... But even the involuntary part time is itself under-estimated. I believe the Labor Dept. counts only those involuntarily part time unemployed whose part time job is their primary job. It doesn't count those who have second and third involuntary part time jobs. That would raise the U-6 unemployment rate significantly. The labor Dept's estimate of the 'discouraged' and 'missing labor force' is grossly underestimated. ..."
"... The labor dept. also misses the 1-2 million workers who went on social security disability (SSDI) after 2008 because it provides better pay, for longer, than does unemployment insurance. That number rose dramatically after 2008 and hasn't come down much (although the government and courts are going after them). ..."
"... The way the government calculates unemployment is by means of 60,000 monthly household surveys but that phone survey method misses a lot of workers who are undocumented and others working in the underground economy in the inner cities (about 10-12% of the economy according to most economists and therefore potentially 10-12% of the reported labor force in size as well). ..."
"... The SSDI, undocumented, underground, underestimation of part timers, etc. are what I call the 'hidden unemployed'. And that brings the unemployed well above the 3.7%. ..."
The real unemployment rate is probably somewhere between 10%-12%. Here's why: the 3.7% is
the U-3 rate, per the labor dept. But that's the rate only for full time employed. What the
labor dept. calls the U-6 includes what it calls discouraged workers (those who haven't looked
for work in the past 4 weeks). Then there's what's called the 'missing labor force'–i.e.
those who haven't looked in the past year. They're not calculated in the 3.7% U-3 unemployment
rate number either. Why? Because you have to be 'out of work and actively looking for work' to
be counted as unemployed and therefore part of the 3.7% rate.
The U-6 also includes what the labor dept. calls involuntary part time employed. It
should include the voluntary part time as well, but doesn't (See, they're not actively looking
for work even if unemployed).
But even the involuntary part time is itself under-estimated. I believe the Labor Dept.
counts only those involuntarily part time unemployed whose part time job is their primary job.
It doesn't count those who have second and third involuntary part time jobs. That would raise
the U-6 unemployment rate significantly. The labor Dept's estimate of the 'discouraged' and
'missing labor force' is grossly underestimated.
The labor dept. also misses the 1-2 million workers who went on social security
disability (SSDI) after 2008 because it provides better pay, for longer, than does unemployment
insurance. That number rose dramatically after 2008 and hasn't come down much (although the
government and courts are going after them).
The way the government calculates unemployment is by means of 60,000 monthly household
surveys but that phone survey method misses a lot of workers who are undocumented and others
working in the underground economy in the inner cities (about 10-12% of the economy according
to most economists and therefore potentially 10-12% of the reported labor force in size as
well). The labor dept. just makes assumptions about that number (conservatively, I may
add) and plugs in a number to be added to the unemployment totals. But it has no real idea of
how many undocumented or underground economy workers are actually employed or unemployed since
these workers do not participate in the labor dept. phone surveys, and who can blame them.
The SSDI, undocumented, underground, underestimation of part timers, etc. are what I
call the 'hidden unemployed'. And that brings the unemployed well above the 3.7%.
Finally, there's the corroborating evidence about what's called the labor force
participation rate. It has declined by roughly 5% since 2007. That's 6 to 9 million workers who
should have entered the labor force but haven't. The labor force should be that much larger,
but it isn't. Where have they gone? Did they just not enter the labor force? If not, they're
likely a majority unemployed, or in the underground economy, or belong to the labor dept's
'missing labor force' which should be much greater than reported. The government has no
adequate explanation why the participation rate has declined so dramatically. Or where have the
workers gone. If they had entered the labor force they would have been counted. And their 6 to
9 million would result in an increase in the total labor force number and therefore raise the
All these reasons–-i.e. only counting full timers in the official 3.7%;
under-estimating the size of the part time workforce; under-estimating the size of the
discouraged and so-called 'missing labor force'; using methodologies that don't capture the
undocumented and underground unemployed accurately; not counting part of the SSI increase as
unemployed; and reducing the total labor force because of the declining labor force
participation-–together means the true unemployment rate is definitely over 10% and
likely closer to 12%. And even that's a conservative estimate perhaps." Join the debate on
Facebook More articles by: Jack Rasmus
Jack Rasmus is author of the recently published book, 'Central Bankers at the End of
Their Ropes: Monetary Policy and the Coming Depression', Clarity Press, August 2017. He blogs
at jackrasmus.com and his twitter handle
is @drjackrasmus. His website is http://kyklosproductions.com .
"... Current Establishment Survey (CES) Report ..."
"... Current Population Survey (CPS ..."
"... The much hyped 3.6% unemployment (U-3) rate for April refers only to full time jobs (35 hrs. or more worked in a week). And these jobs are declining by 191,000 while part time jobs are growing by 155,000. So which report is accurate? How can full time jobs be declining by 191,000, while the U-3 unemployment rate (covering full time only) is falling? The answer: full time jobs disappearing result in an unemployment rate for full time (U-3)jobs falling. A small number of full time jobs as a share of the total labor force appears as a fall in the unemployment rate for full time workers. Looked at another way, employers may be converting full time to part time and temp work, as 191,000 full time jobs disappear and 155,000 part time jobs increase. ..."
"... The April selective numbers of 263,000 jobs and 3.6% unemployment rate is further questionable by yet another statistic by the Labor Dept.: It is contradicted by a surge of 646,000 in April in the category, 'Not in the Labor Force', reported each month. That 646,000 suggests large numbers of workers are dropping out of the labor force (a technicality that actually also lowers the U-3 unemployment rate). 'Not in the Labor Force' for March, the previous month Report, revealed an increase of an additional 350,000 added to 'Not in the Labor Force' totals. In other words, a million–or at least a large percentage of a million–workers have left the labor force. This too is not an indication of a strong labor market and contradicts the 263,000 and U-3 3.6% unemployment rate. ..."
"... Whether jobs, wages or GDP stats, the message here is that official US economic stats, especially labor market stats, should be read critically and not taken for face value, especially when hyped by the media and press. The media pumps selective indicators that make the economy appear better than it actually is. Labor Dept. methods and data used today have not caught up with the various fundamental changes in the labor markets, and are therefore increasingly suspect. It is not a question of outright falsification of stats. It's about failure to evolve data and methodologies to reflect the real changes in the economy. ..."
"... Government stats are as much an 'art' (of obfuscation) as they are a science. They produce often contradictory indication of the true state of the economy, jobs and wages. Readers need to look at the 'whole picture', not just the convenient, selective media reported data like Establishment survey job creation and U-3 unemployment rates. ..."
The recently released report on April jobs on first appearance, heavily reported by the
media, shows a record low 3.6% unemployment rate and another month of 263,000 new jobs created.
But there are two official US Labor dept. jobs reports, and the second shows a jobs market much
weaker than the selective, 'cherry picked' indicators on unemployment and jobs creation noted
above that are typically featured by the press.
Problems with the April Jobs Report
While the Current Establishment Survey (CES) Report (covering large businesses)
shows 263,000 jobs created last month, the Current Population Survey (CPS ) second
Labor Dept. report (that covers smaller businesses) shows 155,000 of these jobs were
involuntary part time. This high proportion (155,000 of 263,000) suggests the job creation
number is likely second and third jobs being created. Nor does it reflect actual new workers
being newly employed. The number is for new jobs, not newly employed workers. Moreover, it's
mostly part time and temp or low paid jobs, likely workers taking on second and third jobs.
Even more contradictory, the second CPS report shows that full time work jobs actually
declined last month by 191,000. (And the month before, March, by an even more 228,000 full time
The much hyped 3.6% unemployment (U-3) rate for April refers only to full time jobs (35
hrs. or more worked in a week). And these jobs are declining by 191,000 while part time jobs
are growing by 155,000. So which report is accurate? How can full time jobs be declining by
191,000, while the U-3 unemployment rate (covering full time only) is falling? The answer: full
time jobs disappearing result in an unemployment rate for full time (U-3)jobs falling. A small
number of full time jobs as a share of the total labor force appears as a fall in the
unemployment rate for full time workers. Looked at another way, employers may be converting
full time to part time and temp work, as 191,000 full time jobs disappear and 155,000 part time
And there's a further problem with the part time jobs being created: It also appears that
the 155,000 part time jobs created last month may be heavily weighted with the government
hiring part timers to start the work on the 2020 census–typically hiring of which starts
in April of the preceding year of the census. (Check out the Labor Dept. numbers preceding the
prior 2010 census, for April 2009, for the same development a decade ago).
Another partial explanation is that the 155,000 part time job gains last month (and in prior
months in 2019) reflect tens of thousands of workers a month who are being forced onto the
labor market now every month, as a result of US courts recent decisions now forcing workers who
were formerly receiving social security disability benefits (1 million more since 2010) back
into the labor market.
The April selective numbers of 263,000 jobs and 3.6% unemployment rate is further
questionable by yet another statistic by the Labor Dept.: It is contradicted by a surge of
646,000 in April in the category, 'Not in the Labor Force', reported each month. That 646,000
suggests large numbers of workers are dropping out of the labor force (a technicality that
actually also lowers the U-3 unemployment rate). 'Not in the Labor Force' for March, the
previous month Report, revealed an increase of an additional 350,000 added to 'Not in the Labor
Force' totals. In other words, a million–or at least a large percentage of a
million–workers have left the labor force. This too is not an indication of a strong
labor market and contradicts the 263,000 and U-3 3.6% unemployment rate.
Bottom line, the U-3 unemployment rate is basically a worthless indicator of the condition
of the US jobs market; and the 263,000 CES (Establishment Survey) jobs is contradicted by the
Labor Dept's second CPS survey (Population Survey).
GDP & Rising Wages Revisited
In two previous shows, the limits and contradictions (and thus a deeper explanations) of US
government GDP and wage statistics were featured: See the immediate April 26, 2019 Alternative
Visions show on preliminary US GDP numbers for the 1st quarter 2019, where it was shown how the
Trump trade war with China, soon coming to an end, is largely behind the GDP latest numbers;
and that the more fundamental forces underlying the US economy involving household consumption
and real business investment are actually slowing and stagnating. Or listen to my prior radio
show earlier this year where media claims that US wages are now rising is debunked as well.
Claims of wages rising are similarly misrepresented when a deeper analysis shows the
proclaimed wage gains are, once again, skewed to the high end of the wage structure and reflect
wages for salaried managers and high end professionals by estimating 'averages' and limiting
data analysis to full time workers once again; not covering wages for part time and temp
workers; not counting collapse of deferred and social wages (pension and social security
payments); and underestimating inflation so that real wages appear larger than otherwise.
Independent sources estimate more than half of all US workers received no wage increase
whatsoever in 2018–suggesting once again the gains are being driven by the top 10% and
assumptions of averages that distort the actual wage gains that are much more modest, if at
Ditto for GDP analysis and inflation underestimation using the special price index for GDP
(the GDP deflator), and the various re-definitions of GDP categories made in recent years and
questionable on-going GDP assumptions, such as including in GDP calculation the questionable
inclusion of 50 million homeowners supposedly paying themselves a 'rent equivalent'.
A more accurate 'truth' about jobs, wages, and GDP stats is found in the 'fine print' of
definitions and understanding the weak statistical methodologies that change the raw economic
data on wages, jobs, and economic output (GDP) into acceptable numbers for media promotion.
Whether jobs, wages or GDP stats, the message here is that official US economic stats,
especially labor market stats, should be read critically and not taken for face value,
especially when hyped by the media and press. The media pumps selective indicators that make
the economy appear better than it actually is. Labor Dept. methods and data used today have not
caught up with the various fundamental changes in the labor markets, and are therefore
increasingly suspect. It is not a question of outright falsification of stats. It's about
failure to evolve data and methodologies to reflect the real changes in the economy.
Government stats are as much an 'art' (of obfuscation) as they are a science. They
produce often contradictory indication of the true state of the economy, jobs and wages.
Readers need to look at the 'whole picture', not just the convenient, selective media reported
data like Establishment survey job creation and U-3 unemployment rates.
When so doing, the bigger picture is an US economy being held up by temporary factors (trade
war) soon to dissipate; jobs creation driven by part time work as full time jobs continue
structurally to disappear; and wages that are being driven by certain industries (tech, etc.),
high end employment (managers, professionals), occasional low end minimum wage hikes in select
geographies, and broad categories of 'wages' ignored.
Join the debate on
Facebook More articles by: Jack Rasmus
Jack Rasmus is author of the recently published book, 'Central Bankers at the
End of Their Ropes: Monetary Policy and the Coming Depression', Clarity Press, August 2017. He
blogs at jackrasmus.com and his twitter
handle is @drjackrasmus. His website is http://kyklosproductions.com .
The jobs reports are fabrications and that the jobs that do exist are lowly paid domestic
service jobs such as waitresses and bartenders and health care and social assistance. What has
kept the American economy going is the expansion of consumer debt, not higher pay from higher
productivity. The reported low unemployment rate is obtained by not counting discouraged workers
who have given up on finding a job.
I was listening while driving to rightwing talk radio. It is BS just like NPR. It was about
the great Trump economy compared to the terrible Obama one. The US hasn't had a great economy
since jobs offshoring began in the 1990s, and with robotics about to launch Americans are
unlikely ever again to experience a good economy.
The latest jobs report released today claims 236,000 new private sector jobs. Where are the
jobs, if they in fact exist?
Manufacturing, that is making things, produced a mere 4,000 jobs.
The jobs are in domestic services. There are 54,800 jobs in "administrative and waste
services." This category includes things such as employment services, temporary help
services, and building services such as janitor services.
"Health care and social assistance" accounts for 52,600 jobs. This category includes
things such as ambulatory health care services and individual and family services.
And there are 25,000 new waiters and bartenders.
Construction, mainly specialty trade contractors, added 33,000.
There are a few other jobs scattered about. Warehousing and storage had 5,400 new
Real estate rental and leasing hired 7,800.
Legal services laid off 700 people.
Architectural and engineering services lost 1,700 jobs.
There were 6,800 new managers.
The new jobs are not high value-added, high productivity jobs that provide middle class
In the 21st century the US economy has only served those who own stocks. The liquidity that
the Federal Reserve has pumped into the economy has driven up stock prices, and the Trump tax
cut has left corporations with more money for stock buybacks and dividend payments. The
institute on Taxation and Economic Policy reports that 60 Fortune 500 companies paid no taxes
on $79 billion in income, instead receiving a rebate of $4.3 billion. https://itep.org/notadime/
The sign of a good economy is when companies are reinvesting their profits and borrowed
money in new plant and equipment to meet rising demand. Instead, US companies are spending more
on buybacks and dividends than the total of their profits. In other words, the companies are
going into debt in order to drive up their share prices by purchasing their own shares. The
executives and shareholders are looting their own companies, leaving the companies less
capitalized and deeper in debt. https://systemicdisorder.wordpress.com/2016/10/26/work-harder-for-speculators/
Meanwhile, for the American people the Trump regime's budget for 2020 delivers $845 billion
in cuts to Medicare, $1.5 trillion in cuts to Medicaid, and $84 billion in cuts to Social
Security disability benefits.
History is repeating itself: Let them eat cake. After me the deluge.
The French Revolution followed.
"... Buying beautiful clothes at full retail price was not a part of my childhood and it is not a part of my life now. It felt more illicit and more pleasurable than buying drugs. It was like buying drugs and doing the drugs, simultaneously."" ..."
"... "Erie Locomotive Plant Workers Strike against Two-Tier" [ Labor Notes ]. "UE proposed keeping the terms of the existing collective bargaining agreement in place while negotiating a new contract, but Wabtec rejected that proposal. Instead it said it would impose a two-tier pay system that would pay new hires and recalled employees up to 38 percent less in wages, institute mandatory overtime, reorganize job classifications, and hire temporary workers for up to 20 percent of the plant's jobs. ..."
"... Workers voted on Saturday to authorize the strike." • Good. Two-tier is awful, wherever found (including Social Security). ..."
"My Year of Living Like My Rich Friend" [
"[S]hopping with T was different. When she walked into a store, the employees greeted her by name and began to
pull items from the racks for her to try on. Riding her coattails, I was treated with the same consideration, which is how I
wound up owning a beautiful cashmere 3.1 Philip Lim sweater that I had no use for and rarely wore, and which was eventually
eaten by moths in my closet.
Buying beautiful clothes at full retail price was not a part of my childhood and it is not a part of my life now. It
felt more illicit and more pleasurable than buying drugs. It was like buying drugs and doing the drugs, simultaneously.""
"Erie Locomotive Plant Workers Strike against Two-Tier" [
Notes ]. "UE proposed keeping the terms of the existing collective bargaining agreement in
place while negotiating a new contract, but Wabtec rejected that proposal. Instead it said it
would impose a two-tier pay system that would pay new hires and recalled employees up to 38
percent less in wages, institute mandatory overtime, reorganize job classifications, and hire
temporary workers for up to 20 percent of the plant's jobs.
Workers voted on Saturday to
authorize the strike." • Good. Two-tier is awful, wherever found (including Social
"... While the Tea Party was critical of status-quo neoliberalism -- especially its cosmopolitanism and embrace of globalization and diversity, which was perfectly embodied by Obama's election and presidency -- it was not exactly anti-neoliberal. Rather, it was anti-left neoliberalism-, it represented a more authoritarian, right [wing] version of neoliberalism. ..."
"... Within the context of the 2016 election, Clinton embodied the neoliberal center that could no longer hold. Inequality. Suffering. Collapsing infrastructures. Perpetual war. Anger. Disaffected consent. ..."
"... Both Sanders and Trump were embedded in the emerging left and right responses to neoliberalism's crisis. Specifically, Sanders' energetic campaign -- which was undoubtedly enabled by the rise of the Occupy movement -- proposed a decidedly more "commongood" path. Higher wages for working people. Taxes on the rich, specifically the captains of the creditocracy. ..."
"... In other words, Trump supporters may not have explicitly voted for neoliberalism, but that's what they got. In fact, as Rottenberg argues, they got a version of right neoliberalism "on steroids" -- a mix of blatant plutocracy and authoritarianism that has many concerned about the rise of U.S. fascism. ..."
"... We can't know what would have happened had Sanders run against Trump, but we can think seriously about Trump, right and left neoliberalism, and the crisis of neoliberal hegemony. In other words, we can think about where and how we go from here. As I suggested in the previous chapter, if we want to construct a new world, we are going to have to abandon the entangled politics of both right and left neoliberalism; we have to reject the hegemonic frontiers of both disposability and marketized equality. After all, as political philosopher Nancy Fraser argues, what was rejected in the election of 2016 was progressive, left neoliberalism. ..."
"... While the rise of hyper-right neoliberalism is certainly nothing to celebrate, it does present an opportunity for breaking with neoliberal hegemony. We have to proceed, as Gary Younge reminds us, with the realization that people "have not rejected the chance of a better world. They have not yet been offered one."' ..."
Quote from the book is courtesy of Amazon preview of the book
Neoliberalism (Key Ideas in Media & Cultural Studies)
In Chapter 1, we traced the rise of our neoliberal conjuncture back to the crisis of liberalism during the late nineteenth and
early twentieth centuries, culminating in the Great Depression. During this period, huge transformations in capitalism proved impossible
to manage with classical laissez-faire approaches. Out of this crisis, two movements emerged, both of which would eventually shape
the course of the twentieth century and beyond. The first, and the one that became dominant in the aftermath of the crisis, was the
conjuncture of embedded liberalism. The crisis indicated that capitalism wrecked too much damage on the lives of ordinary citizens.
People (white workers and families, especially) warranted social protection from the volatilities and brutalities of capitalism.
The state's public function was expanded to include the provision of a more substantive social safety net, a web of protections for
people and a web of constraints on markets. The second response was the invention of neoliberalism. Deeply skeptical of the common-good
principles that undergirded the emerging social welfare state, neoliberals began organizing on the ground to develop a "new" liberal
govemmentality, one rooted less in laissez-faire principles and more in the generalization of competition and enterprise. They worked
to envision a new society premised on a new social ontology, that is, on new truths about the state, the market, and human beings.
Crucially, neoliberals also began building infrastructures and institutions for disseminating their new' knowledges and theories
(i.e., the Neoliberal Thought Collective), as well as organizing politically to build mass support for new policies (i.e., working
to unite anti-communists, Christian conservatives, and free marketers in common cause against the welfare state). When cracks in
embedded liberalism began to surface -- which is bound to happen with any moving political equilibrium -- neoliberals were there
with new stories and solutions, ready to make the world anew.
We are currently living through the crisis of neoliberalism. As I write this book, Donald Trump has recently secured the U.S.
presidency, prevailing in the national election over his Democratic opponent Hillary Clinton. Throughout the election, I couldn't
help but think back to the crisis of liberalism and the two responses that emerged. Similarly, after the Great Recession of 2008,
we've saw two responses emerge to challenge our unworkable status quo, which dispossesses so many people of vital resources for individual
and collective life. On the one hand, we witnessed the rise of Occupy Wall Street. While many continue to critique the movement for
its lack of leadership and a coherent political vision, Occupy was connected to burgeoning movements across the globe, and our current
political horizons have been undoubtedly shaped by the movement's success at repositioning class and economic inequality within our
political horizon. On the other hand, we saw' the rise of the Tea Party, a right-wing response to the crisis. While the Tea Party
was critical of status-quo neoliberalism -- especially its cosmopolitanism and embrace of globalization and diversity, which was
perfectly embodied by Obama's election and presidency -- it was not exactly anti-neoliberal. Rather, it was anti-left neoliberalism-,
it represented a more authoritarian, right [wing] version of neoliberalism.
Within the context of the 2016 election, Clinton embodied the neoliberal center that could no longer hold. Inequality. Suffering.
Collapsing infrastructures. Perpetual war. Anger. Disaffected consent. There were just too many fissures and fault lines in
the glossy, cosmopolitan world of left neoliberalism and marketized equality. Indeed, while Clinton ran on status-quo stories of
good governance and neoliberal feminism, confident that demographics and diversity would be enough to win the election, Trump effectively
tapped into the unfolding conjunctural crisis by exacerbating the cracks in the system of marketized equality, channeling political
anger into his celebrity brand that had been built on saying "f*** you" to the culture of left neoliberalism (corporate diversity,
political correctness, etc.) In fact, much like Clinton's challenger in the Democratic primary, Benie Sanders, Trump was a crisis
Both Sanders and Trump were embedded in the emerging left and right responses to neoliberalism's crisis. Specifically, Sanders'
energetic campaign -- which was undoubtedly enabled by the rise of the Occupy movement -- proposed a decidedly more "commongood"
path. Higher wages for working people. Taxes on the rich, specifically the captains of the creditocracy.
Universal health care. Free higher education. Fair trade. The repeal of Citizens United. Trump offered a different response to
the crisis. Like Sanders, he railed against global trade deals like NAFTA and the Trans-Pacific Partnership (TPP). However, Trump's
victory was fueled by right neoliberalism's culture of cruelty. While Sanders tapped into and mobilized desires for a more egalitarian
and democratic future, Trump's promise was nostalgic, making America "great again" -- putting the nation back on "top of the world,"
and implying a time when women were "in their place" as male property, and minorities and immigrants were controlled by the state.
Thus, what distinguished Trump's campaign from more traditional Republican campaigns was that it actively and explicitly pitted
one group's equality (white men) against everyone else's (immigrants, women, Muslims, minorities, etc.). As Catherine Rottenberg
suggests, Trump offered voters a choice between a multiracial society (where folks are increasingly disadvantaged and dispossessed)
and white supremacy (where white people would be back on top). However, "[w]hat he neglected to state," Rottenberg writes,
is that neoliberalism flourishes in societies where the playing field is already stacked against various segments of society,
and that it needs only a relatively small select group of capital-enhancing subjects, while everyone else is ultimately dispensable.
In other words, Trump supporters may not have explicitly voted for neoliberalism, but that's what they got. In fact, as Rottenberg
argues, they got a version of right neoliberalism "on steroids" -- a mix of blatant plutocracy and authoritarianism that has many
concerned about the rise of U.S. fascism.
We can't know what would have happened had Sanders run against Trump, but we can think seriously about Trump, right and left
neoliberalism, and the crisis of neoliberal hegemony. In other words, we can think about where and how we go from here. As I suggested
in the previous chapter, if we want to construct a new world, we are going to have to abandon the entangled politics of both right
and left neoliberalism; we have to reject the hegemonic frontiers of both disposability and marketized equality. After all, as political
philosopher Nancy Fraser argues, what was rejected in the election of 2016 was progressive, left neoliberalism.
While the rise of hyper-right neoliberalism is certainly nothing to celebrate, it does present an opportunity for breaking
with neoliberal hegemony. We have to proceed, as Gary Younge reminds us, with the realization that people "have not rejected the
chance of a better world. They have not yet been offered one."'
Mark Fisher, the author of Capitalist Realism, put it this way:
The long, dark night of the end of history has to be grasped as an enormous opportunity. The very oppressive pervasiveness
of capitalist realism means that even glimmers of alternative political and economic possibilities can have a disproportionately
great effect. The tiniest event can tear a hole in the grey curtain of reaction which has marked the horizons of possibility under
capitalist realism. From a situation in which nothing can happen, suddenly anything is possible again.4
I think that, for the first time in the history of U.S. capitalism, the vast majority of people might sense the lie of liberal,
capitalist democracy. They feel anxious, unfree, disaffected. Fantasies of the good life have been shattered beyond repair for most
people. Trump and this hopefully brief triumph of right neoliberalism will soon lay this bare for everyone to see. Now, with Trump,
it is absolutely clear: the rich rule the world; we are all disposable; this is no democracy. The question becomes: How will we show
up for history? Will there be new stories, ideas, visions, and fantasies to attach to? How can we productively and meaningful intervene
in the crisis of neoliberalism? How can we "tear a hole in the grey curtain" and open up better worlds? How can we put what we've
learned to use and begin to imagine and build a world beyond living in competition? I hope our critical journey through the neoliberal
conjuncture has enabled you to begin to answer these questions.
More specifically, in recent decades, especially since the end of the Cold War, our common-good sensibilities have been channeled
into neoliberal platforms for social change and privatized action, funneling our political energies into brand culture and marketized
struggles for equality (e.g., charter schools, NGOs and non-profits, neoliberal antiracism and feminism). As a result, despite our
collective anger and disaffected consent, we find ourselves stuck in capitalist realism with no real alternative. Like the neoliberal
care of the self, we are trapped in a privatized mode of politics that relies on cruel optimism; we are attached, it seems, to politics
that inspire and motivate us to action, while keeping us living in competition.
To disrupt the game, we need to construct common political horizons against neoliberal hegemony. We need to use our common stories
and common reason to build common movements against precarity -- for within neoliberalism, precarity is what ultimately has the potential
to thread all of our lives together. Put differently, the ultimate fault line in the neoliberal conjiuicture is the way it subjects
us all to precarity and the biopolitics of disposability, thereby creating conditions of possibility for new coalitions across race,
gender, citizenship, sexuality, and class. Recognizing this potential for coalition in the face of precarization is the most pressing
task facing those who are yearning for a new world. The question is: How do we get there? How do we realize these coalitional potentialities
and materialize common horizons?
HOW WE GET THERE
Ultimately, mapping the neoliberal conjuncture through everyday life in enterprise culture has not only provided some direction
in terms of what we need; it has also cultivated concrete and practical intellectual resources for political interv ention and social
interconnection -- a critical toolbox for living in common. More specifically, this book has sought to provide resources for thinking
and acting against the four Ds: resources for engaging in counter-conduct, modes of living that refuse, on one hand, to conduct one's
life according to the norm of enterprise, and on the other, to relate to others through the norm of competition. Indeed, we need
new ways of relating, interacting, and living as friends, lovers, workers, vulnerable bodies, and democratic people if we are to
write new stories, invent new govemmentalities, and build coalitions for new worlds.
Against Disimagination: Educated Hope and Affirmative Speculation
We need to stop turning inward, retreating into ourselves, and taking personal responsibility for our lives (a task which is ultimately
impossible). Enough with the disimagination machine! Let's start looking outward, not inward -- to the broader structures that undergird
our lives. Of course, we need to take care of ourselves; we must survive. But I firmly believe that we can do this in ways both big
and small, that transform neoliberal culture and its status-quo stories.
Here's the thing I tell my students all the time. You cannot escape neoliberalism. It is the air we breathe, the water in which
we swim. No job, practice of social activism, program of self-care, or relationship will be totally free from neoliberal impingements
and logics. There is no pure "outside" to get to or work from -- that's just the nature of the neoliberalism's totalizing cultural
power. But let's not forget that neoliberalism's totalizing cultural power is also a source of weakness. Potential for resistance
is everywhere, scattered throughout our everyday lives in enterprise culture. Our critical toolbox can help us identify these potentialities
and navigate and engage our conjuncture in ways that tear open up those new worlds we desire.
In other words, our critical perspective can help us move through the world with what Henry Giroux calls educated hope. Educated
hope means holding in tension the material realities of power and the contingency of history. This orientation of educated hope knows
very well what we're up against. However, in the face of seemingly totalizing power, it also knows that neoliberalism can never become
total because the future is open. Educated hope is what allows us to see the fault lines, fissures, and potentialities of the present
and emboldens us to think and work from that sliver of social space where we do have political agency and freedom to construct a
new world. Educated hope is what undoes the power of capitalist realism. It enables affirmative speculation (such as discussed in
Chapter 5), which does not try to hold the future to neoliberal horizons (that's cruel optimism!), but instead to affirm our commonalities
and the potentialities for the new worlds they signal. Affirmative speculation demands a different sort of risk calculation and management.
It senses how little we have to lose and how much we have to gain from knocking the hustle of our lives.
Against De-democratization: Organizing and Collective Coverning
We can think of educated hope and affirmative speculation as practices of what Wendy Brown calls "bare democracy" -- the basic
idea that ordinary' people like you and me should govern our lives in common, that we should critique and try to change our world,
especially the exploitative and oppressive structures of power that maintain social hierarchies and diminish lives. Neoliberal culture
works to stomp out capacities for bare democracy by transforming democratic desires and feelings into meritocratic desires and feelings.
In neoliberal culture, utopian sensibilities are directed away from the promise of collective utopian sensibilities are directed
away from the promise of collective governing to competing for equality.
We have to get back that democractic feeling! As Jeremy Gilbert taught us, disaffected consent is a post-democratic orientation.
We don't like our world, but we don't think we can do anything about it. So, how do we get back that democratic feeling? How do we
transform our disaffected consent into something new? As I suggested in the last chapter, we organize. Organizing is simply about
people coming together around a common horizon and working collectively to materialize it. In this way, organizing is based on the
idea of radical democracy, not liberal democracy. While the latter is based on formal and abstract rights guaranteed by the state,
radical democracy insists that people should directly make the decisions that impact their lives, security, and well-being. Radical
democracy is a practice of collective governing: it is about us hashing out, together in communities, what matters, and working in
common to build a world based on these new sensibilities.
The work of organizing is messy, often unsatisfying, and sometimes even scary. Organizing based on affirmative speculation and
coalition-building, furthermore, will have to be experimental and uncertain. As Lauren Berlant suggests, it means "embracing the
discomfort of affective experience in a truly open social life that no
one has ever experienced." Organizing through and for the common "requires more adaptable infrastructures. Keep forcing the existing
infrastructures to do what they don't know how to do. Make new ways to be local together, where local doesn't require a physical
neighborhood." 5 What Berlant is saying is that the work of bare democracy requires unlearning, and detaching from, our
current stories and infrastructures in order to see and make things work differently. Organizing for a new world is not easy -- and
there are no guarantees -- but it is the only way out of capitalist realism.
Against Disposability: Radical Equality
Getting back democratic feeling will at once require and help us lo move beyond the biopolitics of disposability and entrenched
systems of inequality. On one hand, organizing will never be enough if it is not animated by bare democracy, a sensibility that each
of us is equally important when it comes to the project of determining our lives in common. Our bodies, our hurts, our dreams, and
our desires matter regardless of our race, gender, sexuality, or citizenship, and regardless of how r much capital (economic,
social, or cultural) we have. Simply put, in a radical democracy, no one is disposable. This bare-democratic sense of equality must
be foundational to organizing and coalition-building. Otherwise, we will always and inevitably fall back into a world of inequality.
On the other hand, organizing and collective governing will deepen and enhance our sensibilities and capacities for radical equality.
In this context, the kind of self-enclosed individualism that empowers and underwrites the biopolitics of disposability melts away,
as we realize the interconnectedness of our lives and just how amazing it feels to
fail, we affirm our capacities for freedom, political intervention, social interconnection, and collective social doing.
Against Dispossession: Shared Security and Common Wealth
Thinking and acting against the biopolitics of disposability goes hand-in-hand with thinking and acting against dispossession.
Ultimately, when we really understand and feel ourselves in relationships of interconnection with others, we want for them as we
want for ourselves. Our lives and sensibilities of what is good and just are rooted in radical equality, not possessive or self-appreciating
individualism. Because we desire social security and protection, we also know others desire and deserve the same.
However, to really think and act against dispossession means not only advocating for shared security and social protection, but
also for a new society that is built on the egalitarian production and distribution of social wealth that we all produce. In this
sense, we can take Marx's critique of capitalism -- that wealth is produced collectively but appropriated individually -- to heart.
Capitalism was built on the idea that one class -- the owners of the means of production -- could exploit and profit from the collective
labors of everyone else (those who do not own and thus have to work), albeit in very different ways depending on race, gender, or
citizenship. This meant that, for workers of all stripes, their lives existed not for themselves, but for others (the appropriating
class), and that regardless of what we own as consumers, we are not really free or equal in that bare-democratic sense of the word.
If we want to be really free, we need to construct new material and affective social infrastructures for our common wealth. In
these new infrastructures, wealth must not be reduced to economic value; it must be rooted in social value. Here, the production
of wealth does not exist as a separate sphere from the reproduction of our lives. In other words, new infrastructures, based on the
idea of common wealth, will not be set up to exploit our labor, dispossess our communities, or to divide our lives. Rather, they
will work to provide collective social resources and care so that we may all be free to pursue happiness, create beautiful and/or
useful things, and to realize our potential within a social world of living in common. Crucially, to create the conditions for these
new, democratic forms of freedom rooted in radical equality, we need to find ways to refuse and exit the financial networks of Empire
and the dispossessions of creditocracy, building new systems that invite everyone to participate in the ongoing production of new
worlds and the sharing of the wealth that we produce in common.
It's not up to me to tell you exactly where to look, but I assure you that potentialities for these new worlds are everywhere
Under neoliberlaism the idea of loyalty between a corporation and an employee makes no more sense than loyalty between a motel and its guests.
"... Any expectation of "loyalty", that two-way relationship of employee/company from an earlier time, was wishful thinking ..."
"... With all the automation going on around the world, these business leaders better worry about people not having money to buy their goods and services plus what are they going to do with the surplus of labor ..."
"... This is the nail in the coffin. As an IT manager responsible for selecting and purchasing software, I will never again recommend IBM products ..."
"... The way I saw it, every time I received a paycheck from IBM in exchange for two weeks' work, we were (almost) even. I did not owe them anything else and they did not owe me anything. The way I saw it, every time I received a paycheck from IBM in exchange for two weeks' work, we were (almost) even. I did not owe them anything else and they did not owe me anything. The idea of loyalty between a corporation and an at-will employee makes no more sense than loyalty between a motel and its guests. ..."
"... The annual unemployment rate topped 8% in 1975 and would reach nearly 10% in 1982. The economy seemed trapped in the new nightmare of stagflation," so called because it combined low economic growth and high unemployment ("stagnation") with high rates of inflation. And the prime rate hit 20% by 1980. ..."
Jeff Russell ,
March 22, 2018 4:31 PM
I started at IBM 3 days out of college in 1979 and retired in 2017. I was satisfied with my choice and never felt mistreated because
I had no expectation of lifetime employment, especially after the pivotal period in the 1990's when IBM almost went out of business.
The company survived that period by dramatically restructuring both manufacturing costs and sales expense including the firing
of tens of thousands of employees. These actions were well documented in the business news of the time, the obvious alternative
, in reply
to" aria-label="in reply to"> •
I told the authors that anyone working at IBM after 1993 should have had no expectation of a lifetime career. Downsizing, outsourcing,
movement of work around the globe was already commonplace at all such international companies. Any expectation of "loyalty",
that two-way relationship of employee/company from an earlier time, was wishful thinking .
I was always prepared to be sent packing, without cause, at any time and always had my resume up-to-date. I stayed because
of interesting work, respectful supervisors, and adequate compensation.
The "resource action" that forced my decision to retire was no surprise, the company that hired me had been gone for decades.
With all the automation going on around the world, these business leaders better worry about people not having money to buy
their goods and services plus what are they going to do with the surplus of labor
, in reply
to" aria-label="in reply to"> •
I had, more or less, the same experience at Cisco. They paid me to quit. Luckily, I was ready for it.
March 23, 2018 9:52 AM
The article mentions IBMs 3 failures. So who was it that was responsible for not anticipating the transitions? It is hard enough
doing what you already know. Perhaps companies should be spending more on figuring out "what's next" and not continually playing
catch-up by dumping the older workers for the new.
I was laid off by IBM after 29 years and 4 months. I had received a division award in previous year, and my last PBC appraisal
was 2+ (high performer.) The company I left was not the company I started with. Top management--starting with Gerstner--has steadily
made IBM a less desirable place to work. They now treat employees as interchangeable assets and nothing more. I cannot/would not
recommend IBM as an employer to any young programmer.
George Purcell ,
March 23, 2018 7:41 AM
Truly awesome work. I do want to add one thing, however--the entire rhetoric about "too many old white guys" that has become so
common absolutely contributes to the notion that this sort of behavior is not just acceptable but in some twisted way admirable
Bob Fritz ,
March 22, 2018 7:35 PM
I read the article and all the comments.
March 22, 2018 2:00 PM
Is anyone surprised that so many young people don't think capitalism is a good system any more?
I ran a high technology electronic systems company for years. We ran it "the old way." If you worked hard, and tried, we would
bend over backwards to keep you. If technology or business conditions eliminated your job, we would try to train you for a new
one. Our people were loyal, not like IBMers today. I honestly think that's the best way to be profitable.
People afraid of being unjustly RIFFed will always lack vitality.
I'm glad someone is finally paying attention to age discrimination. IBM apparently is just one of many organizations that discriminate.
March 25, 2018 5:00 PM
I'm in the middle of my own fight with the State University of New York (SUNY) over age discrimination. I was terminated by
a one of the technical colleges in the SUNY System. The EEOC/New York State Division of Human Rights (NYDHR) found that "PROBABLE
CAUSE (NYDHR's emphasis) exists to believe that the Respondent (Alfred State College - SUNY) has engaged in or is engaging in
the unlawful discriminatory practice complained of." Investigators for NYDHR interviewed several witnesses, who testified that
representatives of the college made statements such as "we need new faces", "three old men" attending a meeting, an older faculty
member described as an "albatross", and "we ought to get rid of the old white guys". Witnesses said these statements were made
by the Vice President of Academic Affairs and a dean at the college.
This saga at IBM is simply a microcosm of our overall economy. Older workers get ousted in favor of younger, cheaper workers;
way too many jobs get outsourced; and so many workers today [young and old] can barely land a full-time job.ThinkingAloud ,
March 23, 2018 7:18 AM
This is the behavior that our system incentivises (and gets away with) in this post Reagan Revolution era where deregulation is
lauded and unions have been undermined & demonized. We need to seriously re-work 'work', and in order to do this we need to purge
Republicans at every level, as they CLEARLY only serve corporate bottom-lines - not workers - by championing tax codes that reward
outsourcing, fight a livable minimum wage, eliminate pensions, bust unions, fight pay equity for women & family leave, stack the
Supreme Court with radical ideologues who blatantly rule for corporations over people all the time, etc. etc. ~35 years of basically
uninterrupted Conservative economic policy & ideology has proven disastrous for workers and our quality of life. As goes your
middle class, so goes your country.
The last five words are chilling... This is an award-winning piece....
March 22, 2018 7:39 PM
I am a retired IBM manager having had to execute many of these resource reduction programs.. too many.. as a matter of fact. ProPUBLICA....You
March 22, 2018 3:22 PM
IBM has always treated its customer-facing roles like Disney -- as cast members who need to match a part in a play. In the 60s
and 70s, it was the white-shirt, blue-suit white men whom IBM leaders thought looked like mainframe salesmen. Now, rather than
actually build a credible cloud to compete with Amazon and Microsoft, IBM changes the cast to look like cloud salespeople. (I
work for Microsoft. Commenting for myself alone.)
MHV IBMer ,
March 23, 2018 10:35 PM
Now IBM still treats their employees like Disney - by replacing them with H-1B workers.
I am a survivor, the rare employee who has been at IBM for over 35 years. I have seen many, many layoff programs over 20 years
now. I have seen tens of thousands people let go from the Hudson Valley of N.Y. Those of us who have survived, know and lived
through what this article so accurately described. I currently work with 3 laid off/retired and rehired contractors. I have seen
age discrimination daily for over 15 years. It is not only limited to layoffs, it is rampant throughout the company. Promotions,
bonuses, transfers for opportunities, good reviews, etc... are gone if you are over 45. I have seen people under 30 given promotions
to levels that many people worked 25 years for. IBM knows that these younger employees see how they treat us so they think they
can buy them off. Come to think of it, I guess they actually are! They are ageist, there is no doubt, it is about time everyone
knew. Excellent article.
Goldie Romero ,
March 23, 2018 2:31 PM
Nice article, but seriously this is old news. IBM has been at this for ...oh twenty years or more.jblog ,
March 23, 2018 10:37 AM
I don't really have a problem with it in terms of a corporation trying to make money. But I do have a problem with how IBM also
likes to avoid layoffs by giving folks over 40 intentionally poor reviews, essentially trying to drive people out. Just have the
guts to tell people, we don't need you anymore, bye. But to string people along as the overseas workers come in...c'mon just be
honest with your workers.
High tech over 40 is not easy...I suggest folks prep for a career change before 50. Then you can have the last laugh on a company
From pages 190-191 of my novel, Ordinary Man (Amazon):
March 22, 2018 10:19 PM
it all, layoffs became common, impacting mostly older employees with many years
of service. These job cuts were dribbled out in small numbers to conceal them
from the outside world, but employees could plainly see what was going on.
The laid off
employees were supplanted by offshoring work to low-costs countries and hiring
younger employees, often only on temporary contracts that offered low pay and
no benefits – a process pejoratively referred to by veteran employees as
"downsourcing." The recruitment of these younger workers was done under the
guise of bringing in fresh skills, but while many of the new hires brought new
abilities and vitality, they lacked the knowledge and perspective that comes
an older more experienced worker would be asked to help educate newer
employees, only to be terminated shortly after completing the task. And the new
hires weren't fooled by what they witnessed and experienced at OpenSwitch,
perceiving very quickly that the company had no real interest in investing in
them for the long term. To the contrary, the objective was clearly to grind as
much work out of them as possible, without offering any hope of increased
reward or opportunity.
Most of the
young recruits left after only a year or two – which, again, was part of the
true agenda at the company. Senior management viewed employees not as talent,
but simply as cost, and didn't want anyone sticking around long enough to move
up the pay scale.
This is why you need unions.
Aaron Stackpole ,
March 22, 2018 5:23 PM
This is the nail in the coffin. As an IT manager responsible for selecting and purchasing software, I will never again recommend
IBM products. I love AIX and have worked with a lot if IBM products but not anymore. Good luck with the millennials though...
March 22, 2018 12:14 PM
The same thing has been going on at other companies, since the end of WWII. It's unethical, whether the illegality can be proven
Dave Allen ,
March 22, 2018 1:07 PM
In the RTP area, where I live, I know many, many current and former employees. Times have changed, but the distinction between
right and wrong hasn't.
I worked for four major corporations (HP, Intel, Control Data Corporation, and Micron Semiconductor) before I was hired by IBM
as a rare (at that time) experienced new hire.
, in reply
to" aria-label="in reply to"> •
Even though I ended up working for IBM for 21 years, and retired in 2013, because
of my experiences at those other companies, I never considered IBM my "family."
The way I saw it, every time I received a paycheck
from IBM in exchange for two weeks' work, we were (almost) even. I did not owe them anything else and they did not owe me anything.
The way I saw it, every time I received a paycheck
from IBM in exchange for two weeks' work, we were (almost) even. I did not owe them anything else and they did not owe me anything.
The idea of loyalty between a corporation and an at-will employee makes no more sense than loyalty between a motel and its guests.
It is a business arrangement, not a love affair. Every individual needs to continually assess their skills and their value to
their employer. If they are not commensurate, it is the employee's responsibility to either acquire new skills or seek a new employer.
Your employer will not hesitate to lay you off if your skills are no longer needed, or if they can hire someone who can do your
job just as well for less pay. That is free enterprise, and it works for people willing to take advantage of it.
I basically agree. But why should it be OK for a company to fire you just to replace you with a younger you? If all that they
accomplish is lowering their health care costs (which is what this is really about). If the company is paying about the same for
the same work, why is firing older workers for being older OK?
, in reply
to" aria-label="in reply to"> •
Good question. The point I was trying to make is that people need to watch out for themselves and not expect their employer to
do what is "best" for the employee. I think that is true whatever age the employee happens to be.
, in reply
to" aria-label="in reply to"> •
Whether employers should be able to discriminate against (treat differently) their employees based on age, gender, race, religion,
etc. is a political question. Morally, I don't think they should discriminate. Politically, I think it is a slippery slope when
the government starts imposing regulations on free enterprise. Government almost always creates more problems than they fix.
Sorry, but when you deregulate the free enterprise, it created more problems than it fixes and that is a fact that has been proven
for the last 38 years.
, in reply
to" aria-label="in reply to"> •
That's just plain false. Deregulation creates competiiton. Competition for talented and skilled workers creates opportunities
for those that wish to be employed and for those that wish to start new ventures. For example, when Ma Bell was regulated and
had a monopoly on telecommunications there was no innovation in the telecom inudstry. However, when it was deregulated, cell phones,
internet, etc exploded ... creating billionaires and millionaires while also improving the quality of life.
, in reply
to" aria-label="in reply to"> •
No, it happens to be true. When Reagan deregulate the economy, a lot of those corporate raiders just took over the companies,
sold off the assets, and pocketed the money. What quality of life? Half of American lived near the poverty level and the wages
for the workers have been stagnant for the last 38 years compared to a well-regulated economy in places like Germany and the Scandinavian
countries where the workers have good wages and a far better standard of living than in the USA. Why do you think the Norwegians
told Trump that they will not be immigrating to the USA anytime soon?
, in reply
to" aria-label="in reply to"> •
What were the economic conditions before Regan? It was a nightmare before Regan.DDRLSGC
, in reply
to" aria-label="in reply to"> •
The annual unemployment rate topped 8% in 1975 and would reach nearly 10% in 1982. The economy seemed trapped in the new nightmare
of stagflation," so called because it combined low economic growth and high unemployment ("stagnation") with high rates of inflation.
And the prime rate hit 20% by 1980.
At least we had a manufacturing base in the USA, strong regulations of corporations, corporate scandals were far and few, businesses
did not go under so quickly, prices of goods and services did not go through the roof, people had pensions and could reasonably
live off them, and recessions did not last so long or go so deep until Reagan came into office. In Under Reagan, the jobs were
allowed to be send overseas, unions were busted up, pensions were reduced or eliminated, wages except those of the CEOs were staganent,
and the economic conditions under Bush, Senior and Bush, Jr. were no better except that Bush, Jr, was the first president to have
a net minus below zero growth, so every time we get a Republican Administration, the economy really turns into a nightmare. That
is a fact.
, in reply
to" aria-label="in reply to"> •
You have the Republicans in Kansas, Oklahoma, and Wisconsin using Reaganomics and they are economic disaster areas.
You had an industrial base in the USA, lots of banks and savings and loans to choose from, lots of mom and pop stores, strong
government regulation of the economy, able to live off your pensions, strong unions and employment laws along with the court system
to back you up against corporate malfeasance. All that was gone when Reagan and the two Bushes came into office.
james Foster ,
March 29, 2018 8:37 PM
Amazingly accurate article. The once great IBM now a dishonest and unscrupulous corporation concerned more about earnings per
share than employees, customers, or social responsibility. In Global Services most likely 75% or more jobs are no longer in the
US - can't believe a word coming out of Armonk.
, in reply
to" aria-label="in reply to"> •
I'm not sure there was ever a paradise in employment. Yeah, you can say there was more job stability 50 or 60 years ago, but that
applied to a much smaller workforce than today (mostly white men). It is a drag, but there are also lot more of us old farts than
there used to be and we live a lot longer in retirement as well. I don't see any magic bullet fix either.
George A ,
March 27, 2018 6:12 PM
Warning to Google/Facebook/Apple etc. All you young people will get old. It's inevitable. Do you think those companies will take
care of you?
March 25, 2018 3:01 PM
Great article. What's especially infuriating is that the industry continues to claim that there is a shortage of STEM workers.
For example, google "claim of 1.4 million computer science jobs with only 400,000 computer science graduates to fill them". If
companies would openly say, "we have plenty of young STEM workers and prefer them to most older STEM workers", we could at least
start addressing the problem. But they continue to promote the lie of there being a STEM shortage. They just want as big a labor
pool as possible, unemployed workers be damned.
March 23, 2018 12:00 PM
I've worked there 17 years and have worried about being layed off for about 11 of them. Moral is in the toilet. Bonuses for the
rank and file are in the under 1% range while the CEO gets millions. Pay raises have been non existent or well under inflation
for years. Adjusting for inflation, I make $6K less than I did my first day. My group is a handful of people as at least 1/2 have
quit or retired. To support our customers, we used to have several people, now we have one or two and if someone is sick or on
vacation, our support structure is to hope nothing breaks. We can't keep millennials because of pay, benefits and the expectation
of being available 24/7 because we're shorthanded. As the unemployment rate drops, more leave to find a different job, leaving
the old people as they are less willing to start over with pay, vacation, moving, selling a house, pulling kids from school, etc.
The younger people are generally less likely to be willing to work as needed on off hours or to pull work from a busier colleague.
I honestly have no idea what the plan is when the people who know what they are doing start to retire, we are way top heavy with
30-40 year guys who are on their way out, very few of the 10-20 year guys due to hiring freezes and we can't keep new people past
2-3 years. It's like our support business model is designed to fail.
March 23, 2018 11:41 AM
Make no mistake. The three and four letter acronyms and other mushy corporate speak may differ from firm to firm, but this is
going on in every large tech company old enough to have a large population of workers over 50. I hope others will now be exposed.
March 23, 2018 10:23 AM
This article hits the nail right on the head, as I come up on my 1 year anniversary from being....ahem....'retired' from 23 years
at IBM....and I'll be damned if I give them the satisfaction of thinking this was like a 'death' to me. It was the greatest thing
that could have ever happened. Ginny and the board should be ashamed of themselves, but they won't be.
March 23, 2018 1:00 AM
Starting around age 40 you start to see age discrimination. I think this is largely due to economics, like increased vacation
times, higher wages, but most of all the perception that older workers will run up the medical costs. You can pass all the age
related discrimination laws you want, but look how ineffective that has been.
Rick Gundlach ,
March 22, 2018 11:38 PM
If you contrast this with the German workforce, you see that they have more older workers with the skills and younger workers
without are having a difficult time getting in. So what's the difference? There are laws about how many vacation weeks that are
given and there is a national medical system that everyone pays, so discrimination isn't seen in the same light.
The US is the only hold out maybe with South Africa that doesn't have a good national medical insurance program for everyone.
Not only do we pay more than the rest of the world, but we also have discrimination because of it.
This is very good, and this is IBM. I know. I was plaintiff in Gundlach v. IBM Japan, 983 F.Supp.2d 389, which involved their
violating Japanese labor law when I worked in Japan. The New York federal judge purposely ignored key points of Japanese labor
law, and also refused to apply Title VII and Age Discrimination in Employment to the parent company in Westchester County. It
is a huge, self-described "global" company with little demonstrated loyalty to America and Americans. Pennsylvania is suing them
for $170 million on a botched upgrade of the state's unemployment system.
March 22, 2018 2:05 PM
In early 2013 I was given a 3 PBC rating for my 2012 performance, the main reason cited by my manager being that my team lead
thought I "seemed distracted". Five months later I was included in a "resource action", and was gone by July. I was 20 months
shy of 55. Younger coworkers were retained. That was about two years after the product I worked on for over a decade was off-shored.
, in reply
to" aria-label="in reply to"> •
Through a fluke of someone from the old, disbanded team remembering me, I was rehired two years later - ironically in a customer
support position for the very product I helped develop.
While I appreciated my years of service, previous salary, and previous benefits being reinstated, a couple years into it I
realized I just wasn't cut out for the demands of the job - especially the significant 24x7 pager duty. Last June I received email
describing a "Transition to Retirement" plan I was eligible for, took it, and my last day will be June 30. I still dislike the
job, but that plan reclassified me as part time, thus ending pager duty for me. The job still sucks, but at least I no longer
have to despair over numerous week long 24x7 stints throughout the year.
A significant disappointment occurred a couple weeks ago. I was discussing healthcare options with another person leaving the
company who hadn't been resource-actioned as I had, and learned the hard way I lost over $30,000 in some sort of future medical
benefit account the company had established and funded at some point. I'm not sure I was ever even aware of it. That would have
funded several years of healthcare insurance during the 8 years until I'm eligible for Medicare. I wouldn't be surprised if their
not having to give me that had something to do with my seeming "distracted" to them. <rolls eyes="">
What's really painful is the history of that former account can still be viewed at Fidelity, where it associates my departure
date in 2013 with my having "forfeited" that money. Um, no. I did not forfeit that money, nor would I have. I had absolutely no
choice in the matter. I find the use of the word 'forfeited' to describe what happened as both disingenuous and offensive. That
said, I don't know whether's that's IBM's or Fidelity's terminology, though.
Jeff, You should call Fidelity. I recently received a letter from the US Department of Labor that they discovered that IBM was
"holding" funds that belonged to me that I was never told about. This might be similar or same story .
Obsession for the Perfect Worker Fading in Tight U.S. Job Market points to an issue in
hiring that has been discussed here at AB:
This is a problem because, at 4.1 percent last month, U.S. unemployment is at the lowest
level since 2000 and companies from Dallas to Denver are struggling to find the right
workers. In some cases this is constraining growth, the Federal Reserve
reported last week.
Corporate America's search for an exact match is "the number-one problem with hiring in
our country," said Daniel Morgan, a recruiter in Birmingham, Alabama, who owns an Express
Employment Professionals franchise. "Most companies get caught up on precise experience to a
specific job," he said, adding: "Companies fail to see a person for their abilities and
U.S. employers got used to abundant and cheap labor following the 2007-2009 recession.
Unemployment peaked at 10 percent in October 2009, and didn't return to the lows of the
previous business cycle until last year. Firms still remain reluctant to boost pay or train
employees with less-than-perfect credentials, though recruiters say that may have to change
amid a jobless rate that's set to dip further.
Bill H ,
January 29, 2018 9:53 am
J.Goodwin , January 29, 2018 11:39 am
The way the article is cut off with the wage gains chart makes it seem that the article is
on the Dean Baker theme of "pay higher wages and they will come," in which he argues that
there is no shortage because you can hire workers away from your competitor, thereby merely
moving the deficit from one place to another without eliminating it and unintentionally
suggesting that there is actually is a shortage after all.
Immediately after that chart, however, the article segues into a pretty intelligent
discussion of employers learning to ascertain "how can your experience be used in my
application," making it unclear why the wage chart is even there.
The "lack of trained workers" complaint has long annoyed me, with its implication that it
is the public sector's responsibility to train workers for the private sector. Why? If a
company needs welders, why should that company not train its own welders?
Mona Williams , January 29, 2018 1:09 pm
Last week we were reviewing a job description we were preparing for a role in Canada. It
was basically a super senior description, they wanted everything, specific experience, higher
education, what amounts to a black belt project management certification but also accounting
and finance background.
At the bottom it says 5 years experience.
I almost fell off my chair. That's an indicator of the pay band they were trying to fill
at (let's say 3, and the description was written like a 10-15 years 6).
I tried to explain it to the person who wrote it and I said hey if we put this out there,
we will get no hits. There is no one with this experience who will take what you are
offering. I'm afraid we're going to end up with another home country expat instead. They're
often not up the same standard you could get with a local if you reasonably scoped the job
and gave a fair offer.
I think companies have forgotten how to compete for employees, and the recruiters are
completely out of touch. Or maybe they are aware of the conditions and HR just won't sign on
to fair value.
axt113 , January 29, 2018 1:26 pm
Before I retired 12 years ago, on-the-job training was much more common. Borders Books
(remember them?) trained me for a week with pay for just a temporary Christmas-season job.
Employers have gotten spoiled, and I hope they will figure this out. Some of the training
programs I hear about just make me sigh. Nobody can afford to be trained while not being
rps , January 29, 2018 3:58 pm
My Wife works as a junior recruiter, the problem she says is with the employers, they want
a particular set of traits, and if there is even a slight deviation they balk
She says that one recent employer she worked with wanted so many particulars for not
enough pay that even well experienced and well educated candidates she could find were either
unwilling to accept the offer, or were missing one or two traits that made them unacceptable
to the company.
This is exciting news for many of us who've been waiting for the pendulum to swing in
favor of potential employees after a decade of reading employers help wanted Santa wish list
criteria for a minimum wage job of 40+ hours. I'd argue the unemployment rate is not 4.1%;
rather, I know of many intelligent/educated/experienced versatile people who've been cut out
of the job market and/or chose not to work for breadcrumbs.
HR's 6 second resume review rule of potential candidates was a massive failure by
eliminating candidates whose skills, experience and critical thinking abilities could've
cultivated innovation across many disciplines. Instead companies looked for drone replacement
at slave wages. HR's narrow candidate searches often focused on resume typos or perceived
grammatical errors (highly unlikely HR recruiters have an English Ph.D), thus trashing the
resume. Perhaps, HR will be refitted with critical thinking people who see a candidate's
potential beyond the forgotten comma or period.
Neoliberalism as "Die-now economics." "Embodiment into lower class" or "the representation as a member the lower
class" if often fatal and upper mobility mobility is artificially limited (despite all MSM hype it is lower then in Europe). So just
being a member of lower class noticeably and negatively affects your life expectancy and other social metrics. Job insecurity
is the hazard reserved for lower and lower middle classes destructivly effect both physical and mental health. Too much stress
is not good for humans. Neoliberalism with its manta of competition uber alles and atomization of the workforce is a real killer.
also the fact that such article was published and the comments below is a clear sign that the days of neoliberalism are numbered.
It should go.
"... In our new book , we draw on an extensive body of scientific literature to assess the health effects of three decades of neoliberal policies. Focusing on the social determinants of health -- the conditions of life and work that make it relatively easy for some people to lead long and healthy lives, while it is all but impossible for others -- we show that there are four interconnected neoliberal epidemics: austerity, obesity, stress, and inequality. They are neoliberal because they are associated with or worsened by neoliberal policies. ..."
"... Neoliberalism operates through labor markets to undermine health not only by way of the financial consequences of unemployment, inadequate employment, or low wages, as important as these are, but also through chronic exposure to stress that 'gets under your skin' by way of multiple mechanisms. Quite simply, the effects of chronic insecurity wear people out over the life course in biologically measurable ways . ..."
"... Oh, and "beyond class" because for social beings embodiment involves "social production; social consumption; and social reproduction." In the most reductive definition of class -- the one I used in my crude 1% + 10% + 90% formulation -- class is determined by wage work (or not), hence is a part of production (of capital), not social consumption (eating, etc.) or social reproduction (children, families, household work ). So, even if class in our political economy is the driver, it's not everything. ..."
"... "Neoliberalism sees competition as the defining characteristic of human relations. It redefines citizens as consumers, whose democratic choices are best exercised by buying and selling, a process that rewards merit and punishes inefficiency. It maintains that "the market" delivers benefits that could never be achieved by planning. ..."
"... Attempts to limit competition are treated as inimical to liberty. Tax and regulation should be minimised, public services should be privatised. The organisation of labour and collective bargaining by trade unions are portrayed as market distortions that impede the formation of a natural hierarchy of winners and losers. Inequality is recast as virtuous: a reward for utility and a generator of wealth, which trickles down to enrich everyone. Efforts to create a more equal society are both counterproductive and morally corrosive. The market ensures that everyone gets what they deserve." ..."
"... As opposed to being champions of "self-actualization/identity" and "absolute relativism", I always got the impression that they were both offering stark warnings about diving too deeply into the self, vis-a-vis, identity. As if, they both understood the terrifying world that it could/would create, devoid of common cause, community, and ultimately empathy. A world where "we" are not possible because we have all become "I". ..."
"... Wonks like Yglesias love to mock working class concerns as "economic anxiety," which is at once belittling (it's all about f-e-e-e-lings ..."
"... "we have measurable health outcomes from political choices" So True!!! ..."
...Neoliberal epidemics are particular pathways of embodiment. From
Ted Schrecker and Clare Bambra in The Conversation :
In our new book
, we draw on an extensive body of scientific literature to assess the health effects of three decades of neoliberal policies.
Focusing on the social determinants
of health -- the conditions of life and work that make it relatively easy for some people to lead long and healthy lives,
while it is all but impossible for others -- we show that there are four interconnected neoliberal epidemics: austerity, obesity,
stress, and inequality. They are neoliberal because they are associated with or worsened by neoliberal policies. They are
epidemics because they are observable on such an international scale and have been transmitted so quickly across time and space
that if they were biological contagions they would be seen as of epidemic proportions.
(The Case-Deaton study provides an obvious fifth: Deaths of despair. There are doubtless others.)
Case in point for
one of the unluckier members of the 90%:
On the morning of 25 August 2014 a young New Jersey woman, Maria Fernandes, died from inhaling gasoline fumes as she slept
in her 13-year-old car. She often slept in the car while shuttling between her three, low-wage jobs in food service; she kept
a can of gasoline in the car because she often slept with the engine running, and was worried about running out of gasoline. Apparently,
the can accidentally tipped over and the vapours from spilled gasoline cost her life. Ms Fernandes was one of the more obvious
casualties of the zero-hours culture of stress and insecurity that pervades the contemporary labour market under neoliberalism.
And Schrecker and Bambra conclude:
Neoliberalism operates through labor markets to undermine health not only by way of the financial consequences of unemployment,
inadequate employment, or low wages, as important as these are, but also through chronic exposure to stress that 'gets under your
skin' by way of multiple mechanisms. Quite simply, the effects of chronic insecurity wear people out over the life course in
... ... ...
Oh, and "beyond class" because for social beings embodiment involves "social production; social consumption; and social reproduction."
In the most reductive definition of class -- the one I used in my crude 1% + 10% + 90% formulation -- class is determined by wage
work (or not), hence is a part of production (of capital), not social consumption (eating, etc.) or social reproduction (children,
families, household work ). So, even if class in our political economy is the driver, it's not everything.
December 11, 2017 at 8:30 pm
Amfortas the Hippie ,
December 11, 2017 at 4:20 pm
L.S. reminiscent of Ernst Becker's, "The Structure of Evil" – "Escape from Evil"? (..not to indicate good vs. evil dichotomy)
A great amount of perspective must be agreed upon to achieve "change" intoned. Divide and conquer are complicit, as noted .otherwise
(and as indicated by U.S. economic history) change arrives only when all have lost all and can therefore agree begin again.
There is however, Naomi Klein perspective, "Shock Doctrine", whereby influence contributes to destabilization, plan in hand
leading to agenda driven ("neoliberal"=market fundamentalism) outcome, not at all spontaneous in nature:
"Neoliberalism sees competition as the defining characteristic of human relations. It redefines citizens as consumers,
whose democratic choices are best exercised by buying and selling, a process that rewards merit and punishes inefficiency. It
maintains that "the market" delivers benefits that could never be achieved by planning.
Attempts to limit competition are treated as inimical to liberty. Tax and regulation should be minimised, public services
should be privatised. The organisation of labour and collective bargaining by trade unions are portrayed as market distortions
that impede the formation of a natural hierarchy of winners and losers. Inequality is recast as virtuous: a reward for utility
and a generator of wealth, which trickles down to enrich everyone. Efforts to create a more equal society are both counterproductive
and morally corrosive. The market ensures that everyone gets what they deserve."
December 11, 2017 at 10:55 pm
Well done, as usual.
On Case-Deason: Sounds like home. I keep the scanner on(local news) ems and fire only since 2006(sheriff got a homeland security
grant). The incidence of suicide, overdose and "intoxication psychosis" are markedly increased in the last 10+ years out here
in the wilderness(5K folks in whole county, last I looked). Our local economy went into near depression after the late 90's farm
bill killed the peanut program then 911 meant no hunting season that year(and it's been noticeably less busy ever since) then
drought and the real estate crash(we had 30 some realtors at peak..old family land being sold off, mostly). So the local Bourgeoisie
have had less money to spend, which "trickles down" onto the rest of us.:less construction, less eating out even at the cheap
places, less buying of gas, and on and on means fewer employees are needed, thus fewer jobs. To boot, there is a habit among many
employers out here of not paying attention to labor laws(it is Texas ) the last minwage rise took 2 years to filter out here,
and one must scrutinize one's pay stub to ensure that the boss isn't getting squirrelly with overtime and witholding.
Geography plays into all this, too 100 miles to any largish city.
... ... ...
Lambert Strether Post author
December 11, 2017 at 11:20 pm
I'm not well versed in Foucault or Lacan but I've read some of both and in reading between the lines of their writing (the
phantom philosophy?) I saw a very different message than that often delivered by post-modern theorists.
As opposed to being champions of "self-actualization/identity" and "absolute relativism", I always got the impression that
they were both offering stark warnings about diving too deeply into the self, vis-a-vis, identity. As if, they both understood
the terrifying world that it could/would create, devoid of common cause, community, and ultimately empathy. A world where "we"
are not possible because we have all become "I".
Considering what both their philosophies claimed, if identity is a lie, and the subject is always generated relative to the
other, then how the hell can there be any security or well being in self-actualization? It is like trying to hit a target that
does not exist.
All potentially oppressive cultural categorizations are examples of this (black, latino, gay, trans, etc.). If the identity
is a moving target, both to the oppressor and the oppressed, then how can it ever be a singular source of political action? You
can't hit what isn't there. This is not to say that these groups (in whatever determined category) are not oppressed, just that
formulating political action based strictly on the identity (often as an essential category) is impossible because it does not
actually exist materially. It is an amalgamation of subjects who's subjectivity is always relative to some other whether ally
or oppressor. Only the manifestations of oppression on bodies (as brought up in Lambert's post) can be utilized as metrics for
... ... ...
December 12, 2017 at 7:11 am
I thought of a couple of other advantages of the "embodiment" paradigm:
Better Framing . Wonks like Yglesias love to mock working class concerns as "economic anxiety," which is
at once belittling (it's all about f-e-e-e-lings *) and disempowering (solutions are individual, like therapy or drugs).
Embodiment by contrast insists that neoliberalism (the neoliberal labor market (class warfare)) has real, material, physiological
effects that can be measured and tracked, as with any epidemic.
... ... ...
"we have measurable health outcomes from political choices" So True!!!
Thank you for posting this.
"... Leslie Kwoh may be reached at email@example.com or (973) 392-4147. ..."
At 5:30 every morning, Tony Gwiazdowski rolls out of bed, brews a pot of coffee and carefully arranges his laptop, cell phone
and notepad like silverware across the kitchen table.
And then he waits.
Gwiazdowski, 57, has been waiting for 16 months. Since losing his job as a transportation sales manager in February 2009, he wakes
each morning to the sobering reminder that, yes, he is still unemployed. So he pushes aside the fatigue, throws on some clothes and
sends out another flurry of resumes and cheery cover letters.
But most days go by without a single phone call. And around sundown, when he hears his neighbors returning home from work, Gwiazdowski
-- the former mayor of Hillsborough -- can't help but allow himself one tiny sigh of resignation.
"You sit there and you wonder, 'What am I doing wrong?'" said Gwiazdowski, who finds companionship in his 2-year-old golden retriever,
Charlie, until his wife returns from work.
"The worst moment is at the end of the day when it's 4:30 and you did everything you could, and the phone hasn't rung, the e-mails
haven't come through."
Gwiazdowski is one of a growing number of chronically unemployed workers in New Jersey and across the country who are struggling
to get through what is becoming one long, jobless nightmare -- even as the rest of the economy has begun to show signs of recovery.
Nationwide, 46 percent of the unemployed -- 6.7 million Americans -- have been without work for at least half a year, by far the
highest percentage recorded since the U.S. Labor Department began tracking the data in 1948.
In New Jersey, nearly 40 percent of the 416,000 unemployed workers last year fit that profile, up from about 20 percent in previous
years, according to the department, which provides only annual breakdowns for individual states. Most of them were unemployed for
more than a year.
But the repercussions of chronic unemployment go beyond the loss of a paycheck or the realization that one might never find the
same kind of job again. For many, the sinking feeling of joblessness -- with no end in sight -- can take a psychological toll, experts
Across the state, mental health crisis units saw a 20 percent increase in demand last year as more residents reported suffering
from unemployment-related stress, according to the New Jersey Association of Mental Health Agencies.
"The longer the unemployment continues, the more impact it will have on their personal lives and mental health," said Shauna Moses,
the association's associate executive director. "There's stress in the marriage, with the kids, other family members, with friends."
And while a few continue to cling to optimism, even the toughest admit there are moments of despair: Fear of never finding work,
envy of employed friends and embarassment at having to tell acquaintances that, nope, still no luck.
"When they say, 'Hi Mayor,' I don't tell a lot of people I'm out of work -- I say I'm semi-retired," said Gwiazdowski, who maxed
out on unemployment benefits several months ago.
"They might think, 'Gee, what's wrong with him? Why can't he get a job?' It's a long story and maybe people really don't care
and now they want to get away from you."
SECOND TIME AROUND
Lynn Kafalas has been there before, too. After losing her computer training job in 2000, the East Hanover resident took four agonizing
years to find new work -- by then, she had refashioned herself into a web designer.
That not-too-distant experience is why Kafalas, 52, who was laid off again eight months ago, grows uneasier with each passing
day. Already, some of her old demons have returned, like loneliness, self-doubt and, worst of all, insomnia. At night, her mind races
to dissect the latest interview: What went wrong? What else should she be doing? And why won't even Barnes & Noble hire her?
"It's like putting a stopper on my life -- I can't move on," said Kafalas, who has given up karate lessons, vacations and regular
outings with friends. "Everything is about the interviews."
And while most of her friends have been supportive, a few have hinted to her that she is doing something wrong, or not doing enough.
The remarks always hit Kafalas with a pang.
In a recent study, researchers at Rutgers University found that the chronically unemployed are prone to high levels of stress,
anxiety, depression, loneliness and even substance abuse, which take a toll on their self-esteem and personal relationships.
"They're the forgotten group," said Carl Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers,
and a co-author of the report. "And the longer you are unemployed, the less likely you are to get a job."
Of the 900 unemployed workers first interviewed last August for the study, only one in 10 landed full-time work by March of this
year, and only half of those lucky few expressed satisfaction with their new jobs. Another one in 10 simply gave up searching.
Among those who were still unemployed, many struggled to make ends meet by borrowing from friends or family, turning to government
food stamps and forgoing health care, according to the study.
More than half said they avoided all social contact, while slightly less than half said they had lost touch with close friends.
Six in 10 said they had problems sleeping.
Kafalas says she deals with her chronic insomnia by hitting the gym for two hours almost every evening, lifting weights and pounding
the treadmill until she feels tired enough to fall asleep.
"Sometimes I forget what day it is. Is it Tuesday? And then I'll think of what TV show ran the night before," she said. "Waiting
is the toughest part."
AGE A FACTOR
Generally, the likelihood of long-term unemployment increases with age, experts say. A report by the National Employment Law Project
this month found that nearly half of those who were unemployed for six months or longer were at least 45 years old. Those between
16 and 24 made up just 14 percent.
Tell that to Adam Blank, 24, who has been living with his girlfriend and her parents at their Martinsville home since losing his
sales job at Best Buy a year and half ago.
Blank, who graduated from Rutgers with a major in communications, says he feels like a burden sometimes, especially since his
girlfriend, Tracy Rosen, 24, works full-time at a local nonprofit. He shows her family gratitude with small chores, like taking out
the garbage, washing dishes, sweeping floors and doing laundry.
Still, he often feels inadequate.
"All I'm doing on an almost daily basis is sitting around the house trying to keep myself from going stir-crazy," said Blank,
who dreams of starting a social media company.
When he is feeling particularly low, Blank said he turns to a tactic employed by prisoners of war in Vietnam: "They used to build
dream houses in their head to help keep their sanity. It's really just imagining a place I can call my own."
Meanwhile, Gwiazdowski, ever the optimist, says unemployment has taught him a few things.
He has learned, for example, how to quickly assess an interviewer's age and play up or down his work experience accordingly --
he doesn't want to appear "threatening" to a potential employer who is younger. He has learned that by occasionally deleting and
reuploading his resume to job sites, his entry appears fresh.
"It's almost like a game," he said, laughing. "You are desperate, but you can't show it."
But there are days when he just can't find any humor in his predicament -- like when he finishes a great interview but receives
no offer, or when he hears a fellow job seeker finally found work and feels a slight twinge of jealousy.
"That's what I'm missing -- putting on that shirt and tie in the morning and going to work," he said.
The memory of getting dressed for work is still so vivid, Gwiazdowski says, that he has to believe another job is just around
"You always have to hope that that morning when you get up, it's going to be the day," he said.
"Today is going to be the day that something is going to happen."
Leslie Kwoh may be reached at firstname.lastname@example.org or (973) 392-4147.
DrBuzzard Jun 13, 2010
I collect from the state of iowa, was on tier I and when the gov't recessed without passing extension, iowa stopped paying
tier I claims that were already open, i was scheduled to be on tier I until july 15th, and its gone now, as a surprise, when i
tried to claim my week this week i was notified. SURPRISE, talk about stress.
berganliz Jun 13, 2010
This is terrible....just wait until RIF'd teachers hit the unemployment offices....but then, this is what NJ wanted...fired
teachers who are to blame for the worst recession our country has seen in 150 years...thanks GWB.....thanks Donald Rumsfeld......thanks
Dick Cheney....thanks Karl "Miss Piggy" Rove...and thank you Mr. Big Boy himself...Gov Krispy Kreame!
rp121 Jun 13, 2010
For readers who care about this nation's unemployed- Call your Senators to pass HR 4213, the "Extenders" bill. Unfortunately,
it does not add UI benefits weeks, however it DOES continue the emergency federal tiers of UI. If it does not pass this week many
of us are cut off at 26 wks. No tier 1, 2 -nothing.
The longer you are unemployed, the more you are effected by those factors.
"... The good news is that only a relatively small number of people are seriously affected by the stress of unemployment to the extent they need medical assistance. Most people don't get to the serious levels of stress, and much as they loathe being unemployed, they suffer few, and minor, ill effects. ..."
"... Worries about income, domestic problems, whatever, the list is as long as humanity. The result of stress is a strain on the nervous system, and these create the physical effects of the situation over time. The chemistry of stress is complex, but it can be rough on the hormonal system. ..."
"... Not at all surprisingly, people under stress experience strong emotions. It's a perfectly natural response to what can be quite intolerable emotional strains. It's fair to say that even normal situations are felt much more severely by people already under stress. Things that wouldn't normally even be issues become problems, and problems become serious problems. Relationships can suffer badly in these circumstances, and that, inevitably, produces further crises. Unfortunately for those affected, these are by now, at this stage, real crises. ..."
"... Some people are stubborn enough and tough enough mentally to control their emotions ruthlessly, and they do better under these conditions. Even that comes at a cost, and although under control, the stress remains a problem. ..."
"... One of the reasons anger management is now a growth industry is because of the growing need for assistance with severe stress over the last decade. This is a common situation, and help is available. ..."
"... Depression is universally hated by anyone who's ever had it. ..."
"... Very important: Do not, under any circumstances, try to use drugs or alcohol as a quick fix. They make it worse, over time, because they actually add stress. Some drugs can make things a lot worse, instantly, too, particularly the modern made-in-a-bathtub variety. They'll also destroy your liver, which doesn't help much, either. ..."
"... You don't have to live in a gym to get enough exercise for basic fitness. A few laps of the pool, a good walk, some basic aerobic exercises, you're talking about 30-45 minutes a day. It's not hard. ..."
It's almost impossible to describe the various psychological impacts, because there are so many. There are sometimes serious consequences,
including suicide, and, some would say worse, chronic depression.
There's not really a single cause and effect. It's a compound effect, and unemployment, by adding stress, affects people, often
The world doesn't need any more untrained psychologists, and we're not pretending to give medical advice. That's for professionals.
Everybody is different, and their problems are different. What we can do is give you an outline of the common problems, and what
you can do about them.
The good news is that only a relatively small number of people are seriously affected by the stress of unemployment to the extent
they need medical assistance. Most people don't get to the serious levels of stress, and much as they loathe being unemployed, they
suffer few, and minor, ill effects.
For others, there are a series of issues, and the big three are:
- Anger, and other negative emotions
Stress is Stage One. It's a natural result of the situation. Worries about income, domestic problems, whatever, the list is as
long as humanity. The result of stress is a strain on the nervous system, and these create the physical effects of the situation
over time. The chemistry of stress is complex, but it can be rough on the hormonal system.
Over an extended period, the body's natural hormonal balances are affected, and this can lead to problems. These are actually
physical issues, but the effects are mental, and the first obvious effects are, naturally, emotional.
Anger, and other negative emotions
Not at all surprisingly, people under stress experience strong emotions. It's a perfectly natural response to what can be quite
intolerable emotional strains. It's fair to say that even normal situations are felt much more severely by people already under stress.
Things that wouldn't normally even be issues become problems, and problems become serious problems. Relationships can suffer badly in these circumstances, and that, inevitably, produces further crises. Unfortunately for those
affected, these are by now, at this stage, real crises.
If the actual situation was already bad, this mental state makes it a lot worse. Constant aggravation doesn't help people to keep
a sense of perspective. Clear thinking isn't easy when under constant stress.
Some people are stubborn enough and tough enough mentally to control their emotions ruthlessly, and they do better under these
conditions. Even that comes at a cost, and although under control, the stress remains a problem.
One of the reasons anger management is now a growth industry is because of the growing need for assistance with severe stress
over the last decade. This is a common situation, and help is available.
If you have reservations about seeking help, bear in mind it can't possibly be any worse than the problem.
Depression is universally hated by anyone who's ever had it. This is the next stage, and it's caused by hormonal imbalances which
affect serotonin. It's actually a physical problem, but it has mental effects which are sometimes devastating, and potentially life
The common symptoms are:
- Difficulty in focusing mentally, thoughts all over the place in no logical order
- Fits of crying for no known reason
- Illogical, or irrational patterns of thought and behavior
- Suicidal thinking
It's a disgusting experience. No level of obscenity could possibly describe it. Depression is misery on a level people wouldn't
conceive in a nightmare. At this stage the patient needs help, and getting it is actually relatively easy. It's convincing the person they need to do something about it that's difficult. Again, the mental state is working against the person. Even admitting there's a problem is hard for many people in this condition.
Generally speaking, a person who is trusted is the best person to tell anyone experiencing the onset of depression to seek help. Important: If you're experiencing any of those symptoms:
- Get on the phone and make an appointment to see your doctor. It takes half an hour for a diagnosis, and you can be on your
way home with a cure in an hour. You don't have to suffer. The sooner you start to get yourself out of depression, the better.
- Avoid any antidepressants with the so-called withdrawal side effects. They're not too popular with patients, and are under
some scrutiny. The normal antidepressants work well enough for most people.
Very important: Do not, under any circumstances, try to use drugs or alcohol as a quick fix. They make it worse, over time, because they actually add stress. Some drugs can make things a lot worse, instantly, too, particularly
the modern made-in-a-bathtub variety. They'll also destroy your liver, which doesn't help much, either.
Alcohol, in particular, makes depression much worse. Alcohol is a depressant, itself, and it's also a nasty chemical mix with
all those stress hormones.
If you've ever had alcohol problems, or seen someone with alcohol wrecking their lives, depression makes things about a million
Just don't do it. Steer clear of any so-called stimulants, because they don't mix with antidepressants, either.
Unemployment and staying healthy
The above is what you need to know about the risks of unemployment to your health and mental well being.
These situations are avoidable.
Your best defense against the mental stresses and strains of unemployment, and their related problems is staying healthy.
We can promise you that is nothing less than the truth. The healthier you are, the better your defenses against stress, and the
more strength you have to cope with situations.
Basic health is actually pretty easy to achieve:
Eat real food, not junk, and make sure you're getting enough food. Your body can't work with resources it doesn't have. Good food
is a real asset, and you'll find you don't get tired as easily. You need the energy reserves.
Give yourself a good selection of food that you like, that's also worth eating.
The good news is that plain food is also reasonably cheap, and you can eat as much as you need. Basic meals are easy enough to
prepare, and as long as you're getting all the protein veg and minerals you need, you're pretty much covered.
You can also use a multivitamin cap, or broad spectrum supplements, to make sure you're getting all your trace elements. Also
make sure you're getting the benefits of your food by taking acidophilus or eating yogurt regularly.
You don't have to live in a gym to get enough exercise for basic fitness. A few laps of the pool, a good walk, some basic aerobic
exercises, you're talking about 30-45 minutes a day. It's not hard.
Don't just sit and suffer
If anything's wrong, check it out when it starts, not six months later. Most medical conditions become serious when they're allowed
to get worse.
For unemployed people the added risk is also that they may prevent you getting that job, or going for interviews. If something's
causing you problems, get rid of it.
Nobody who's been through the blender of unemployment thinks it's fun.
Anyone who's really done it tough will tell you one thing:
Don't be a victim. Beat the problem, and you'll really appreciate the feeling.
"... By Bill Mitchell, Professor in Economics and Director of the Centre of Full Employment and Equity at the University of Newcastle, NSW, Australia. Originally published at billy blog ..."
"... The overwhelming importance of having a job for happiness is evident throughout the analysis, and holds across all of the world's regions. ..."
"... The pattern of human concerns ..."
"... The pattern of human concerns ..."
"... Journal of Happiness Studies ..."
"... The results show the differences between having a job and being unemployed are "very large indeed" on the three well-being measures (life evaluation, positive and negative affective states). ..."
"... Psychological Bulletin ..."
"... 1. "unemployment tends to make people more emotionally unstable than they were previous to unemployment". ..."
"... 2. The unemployed experience feelings of "personal threat"; "fear"; "sense of proportion is shattered"; loss of "common sense of values"; "prestige lost in own eyes and as he imagines, in the eyes of his fellow men"; "feelings of inferiority"; loss of "self-confidence" and a general loss of "morale". ..."
"... in the light of the structure of our society where the job one holds is the prime indicator of status and prestige. ..."
"... Psychological Bulletin ..."
"... Related studies found that the "unemployed become so apathetic that they rarely read anything". Other activities, such as attending movies etc were seen as being motivated by the need to "kill time" – "a minimal indication of the increased desire for such attendance". ..."
"... In spite of hopeless attempts the unemployed continually look for work, often going back again and again to their last place of work. Other writers reiterate this point. ..."
"... The non-pecuniary effects of not having a job are significant in terms of lost status, social alienation, abandonment of daily structure etc, and that has not changed much over history. ..."
"... I think what is missing from this article is the term "identity." If you meet new people, often the conversation starts with what you do for a living. Your identity, in part, is what you do. You can call yourself a plumber, a writer, a banker, a consultant, a reporter but the point is this is part of your identity. When you lose your job long term, your identity here loses one of its main anchor points. ..."
"... This is a crucial point that UBI advocates often ignore. There is a deeply entrenched cultural bias towards associating our work status with our general status and prestige and feelings of these standings. ..."
"... When unemployed, the stress of worry about money may suppress the creative juices. Speaking from experience. People may well 'keep looking for jobs' because they know ultimately they need a job with steady income. The great experience of some freelancers notwithstanding, not all are cut out for it. ..."
"... When considering the world's population as a whole, people with a job evaluate the quality of their lives much more favorably than those who are unemployed. ..."
"... Data like that provided by Mitchell is important to demolishing the horrid "economic anxiety" frame much beloved by liberals, especially wonkish Democrats.* It's not (a) just feelings , to be solved by scented candles or training (the liberal version of rugged individualism) and (b) the effects are real and measurable. It's not surprising, when you think about it, that the working class is about work . ..."
November 21, 2017 by Yves Smith Yves here. Reader
UserFriendly sent this post with the message, "I can confirm this." I can too. And before you
try to attribute our reactions to being Americans, note that the study very clearly points out
that its finding have been confirmed in "all of the world's regions".
By Bill Mitchell, Professor in Economics and Director of the Centre of Full Employment
and Equity at the University of Newcastle, NSW, Australia. Originally published at billy blog
Here is a summary of another interesting study I read last week (published March 30, 2017)
– Happiness at Work
– from academic researchers Jan‐Emmanuel De Neve and George Ward. It explores the
relationship between happiness and labour force status, including whether an individual is
employed or not and the types of jobs they are doing. The results reinforce a long literature,
which emphatically concludes that people are devastated when they lose their jobs and do not
adapt to unemployment as its duration increases. The unemployed are miserable and remain so
even as they become entrenched in long-term unemployment. Further, they do not seem to sense
(or exploit) a freedom to release some inner sense of creativity and purpose. The overwhelming
proportion continually seek work – and relate their social status and life happiness to
gaining a job, rather than living without a job on income support. The overwhelming conclusion
is that "work makes up such an important part of our lives" and that result is robust across
different countries and cultures. Being employed leads to much higher evaluations of the
quality of life relative to being unemployed. And, nothing much has changed in this regard over
the last 80 or so years. These results were well-known in the 1930s, for example. They have a
strong bearing on the debate between income guarantees versus employment guarantees. The UBI
proponents have produced no robust literature to refute these long-held findings.
While the 'Happiness Study' notes that "the relationship between happiness and employment is
a complex and dynamic interaction that runs in both directions" the authors are
The overwhelming importance of having a job for happiness is evident throughout the
analysis, and holds across all of the world's regions. When considering the world's
population as a whole, people with a job evaluate the quality of their lives much more
favorably than those who are unemployed. The importance of having a job extends far beyond
the salary attached to it, with non-pecuniary aspects of employment such as social status,
social relations, daily structure, and goals all exerting a strong influence on people's
And, the inverse:
The importance of employment for people's subjective wellbeing shines a spotlight on the
misery and unhappiness associated with being unemployed.
There is a burgeoning literature on 'happiness', which the authors aim to contribute to.
They define happiness as "subjective well-being", which is "measured along multiple
life evaluation (by way of the Cantril "ladder of life"), positive and negative affect to
measure respondents' experienced positive and negative wellbeing, as well as the more
domain-specific items of job satisfaction and employee engagement. We find that these diverse
measures of subjective wellbeing correlate strongly with each other
Cantril's 'Ladder of Life Scale' (or "Cantril Ladder") is used by polling organisations to
assess well-being. It was developed by social researcher Hadley Cantril (1965) and documented
in his book The pattern of human concerns .
You can learn more about the use of the 'Cantril Ladder' HERE
As we read, the "Cantril Self-Anchoring Scale consists of the following":
Please imagine a ladder with steps numbered from zero at the bottom to 10 at the top. The
top of the ladder represents the best possible life for you and the bottom of the ladder
represents the worst possible life for you. On which step of the ladder would you say you
personally feel you stand at this time? (ladder-present) On which step do you think you
will stand about five years from now? (ladder-future)
[Reference: Cantril, H. (1965) The pattern of human concerns , New Brunswick,
Rutgers University Press.]
Christian Bjørnskov's 2010 article – How Comparable are the Gallup
World Poll Life Satisfaction Data? – also describes how it works.
[Reference: Bjørnskov, C. (2010) 'How Comparable are the Gallup World Poll Life
Satisfaction Data?', Journal of Happiness Studies , 11 (1), 41-60.]
The Cantril scale is usually reported as values between 0 and 10.
The authors in the happiness study use poll data from 150 nations which they say "is
representative of 98% of the world's population". This survey data is available on a mostly
annual basis since 2006.
The following graph (Figure 1 from the Study) shows "the self-reported wellbeing of
individuals around the world according to whether or not they are employed."
The "bars measure the subjective wellbeing of individuals of working age" by employment
The results show the differences between having a job and being unemployed are "very large
indeed" on the three well-being measures (life evaluation, positive and negative affective
People employed "evaluate the quality of their lives around 0.6 points higher on average as
compared to the unemployed on a scale from 0 to 10."
The authors also conduct more sophisticated (and searching) statistical analysis
(multivariate regression) which control for a range of characteristics (gender, age, education,
marital status, composition of household) as well as to "account for the many political,
economic, and cultural differences between countries as well as year-to-year variation".
The conclusion they reach is simple:
the unemployed evaluate the overall state of their lives less highly on the Cantril ladder
and experience more negative emotions in their day-to-day lives as well as fewer positive
ones. These are among the most widely accepted and replicated findings in the science of
happiness Here, income is being held constant along with a number of other relevant
covariates, showing that these unemployment effects go well beyond the income loss associated
with losing one's job.
These results are not surprising. The earliest study of this sort of outcome was from the famous study published by Philip
Eisenberg and Paul Lazersfeld in 1938. [Reference: Eisenberg, P. and Lazarsfeld, P. (1938) 'The psychological effects of
unemployment', Psychological Bulletin , 35(6), 358-390.]
They explore four dimensions of unemployment:
I. The Effects of Unemployment on Personality.
II. Socio-Political Attitudes Affected by Unemployment.
III. Differing Attitudes Produced by Unemployment and Related Factors.
IV. The Effects of Unemployment on Children and Youth.
On the first dimension, they conclude that:
1. "unemployment tends to make people more emotionally unstable than they were previous to
2. The unemployed experience feelings of "personal threat"; "fear"; "sense of proportion is
shattered"; loss of "common sense of values"; "prestige lost in own eyes and as he imagines, in
the eyes of his fellow men"; "feelings of inferiority"; loss of "self-confidence" and a general
loss of "morale".
Devastation, in other words. They were not surprised because they note that:
in the light of the structure of our society where the job one holds is the prime
indicator of status and prestige.
This is a crucial point that UBI advocates often ignore. There is a deeply entrenched
cultural bias towards associating our work status with our general status and prestige and
feelings of these standings. That hasn't changed since Eisenberg and Lazersfeld wrote up the findings of their study in
It might change over time but that will take a long process of re-education and cultural
shift. Trying to dump a set of new cultural values that only a small minority might currently
hold to onto a society that clearly still values work is only going to create major social
tensions. Eisenberg and Lazarsfeld also considered an earlier 1937 study by Cantril who explored
whether "the unemployed tend to evolve more imaginative schemes than the employed".
[Reference: Cantril, H. (1934) 'The Social Psychology of Everyday Life', Psychological
Bulletin , 31, 297-330.]
The proposition was (is) that once unemployed, do people then explore new options that were
not possible while working, which deliver them with the satisfaction that they lose when they
become jobless. The specific question asked in the research was: "Have there been any changes of interests
and habits among the unemployed?" Related studies found that the "unemployed become so apathetic that they rarely read
anything". Other activities, such as attending movies etc were seen as being motivated by the
need to "kill time" – "a minimal indication of the increased desire for such
On the third dimension, Eisenberg and Lazersfeld examine the questions – "Are there
unemployed who don't want to work? Is the relief situation likely to increase this number?",
which are still a central issue today – the bludger being subsidized by income
They concluded that:
the number is few. In spite of hopeless attempts the unemployed continually look for work,
often going back again and again to their last place of work. Other writers reiterate this
So for decades, researchers in this area, as opposed to bloggers who wax lyrical on their
own opinions, have known that the importance of work in our lives goes well beyond the income
we earn. The non-pecuniary effects of not having a job are significant in terms of lost status,
social alienation, abandonment of daily structure etc, and that has not changed much over
history. The happiness paper did explore "how short-lived is the misery associated with being out of
work" in the current cultural settings.
The proposition examined was that:
If the pain is only fleeting and people quickly get used to being unemployed, then we
might see joblessness as less of a key public policy priority in terms of happiness.
They conclude that:
a number of studies have demonstrated that people do not adapt much, if at all, to being
unemployed there is a large initial shock to becoming unemployed, and then as people stay
unemployed over time their levels of life satisfaction remain low . several studies have
shown that even once a person becomes re-employed, the prior experience of unemployment
leaves a mark on his or her happiness.
So there is no sudden or even medium-term realisation that being jobless endows the
individual with a new sense of freedom to become their creative selves, freed from the yoke of
work. To bloom into musicians, artists, or whatever.
The reality is that there is an on-going malaise – a deeply entrenched sense of
failure is overwhelming, which stifles happiness and creativity, even after the individual is
able to return to work.
This negativity, borne heavily by the individual, however, also impacts on society in
The paper recognises that:
A further canonical finding in the literature on unemployment and subjective wellbeing is
that there are so-called "spillover" effects.
High levels of unemployment "increase fear and heighten the sense of job insecurity". Who
will lose their job next type questions?
The researchers found in their data that the higher is the unemployment rate the greater the
anxiety among those who remain employed.
The overwhelming conclusion is that "work makes up such an important part of our lives" and
that result is robust across different countries and cultures.
Being employed leads to much higher evaluations of the quality of life relative to being
The unemployed are miserable and remain so even as they become entrenched in long-term
unemployment. They do not seem to sense (or exploit) a freedom to release some inner sense of
creativity and purpose.
The overwhelming proportion continually seek work – and relate their social status and
life happiness to gaining a job, rather than living without a job on income support.
Modern Monetary Theory (MMT) allows us to understand that it is the government that chooses
the unemployment rate – it is a political choice.
For currency-issuing governments it means their deficits are too low relative to the
spending and saving decisions of the non-government sector.
For Eurozone-type nations, it means that in surrendering their currencies and adopting a
foreign currency, they are unable to guarantee sufficient work in the face of negative shifts
in non-government spending. Again, a political choice.
Guarantee can be used as a vehicle to not only ensure their are sufficient jobs available
at all times but also to start a process of wiping out the worst jobs in the non-government
That can be done by using the JG wage to ensure low-paid private employers have to
restructure their workplaces and pay higher wages and achieve higher productivity in order to
attract labour from the Job Guarantee pool.
The Series So Far
This is a further part of a series I am writing as background to my next book with Joan
Muysken analysing the Future of Work . More instalments will come as the research
The series so far:
- When Austrians
ate dogs .
- Employment as a
human right .
- The rise of the
"private government .
- The evolution of
full employment legislation in the US .
- Automation and
full employment – back to the 1960s .
- Countering the
march of the robots narrative .
- Unemployment is
miserable and does not spawn an upsurge in personal creativity .
The blogs in these series should be considered working notes rather than self-contained
topics. Ultimately, they will be edited into the final manuscript of my next book due in 2018.
The book will likely be published by Edward Elgar (UK).
That is enough for today!
November 21, 2017 at 6:11 am
The Rev Kev ,
November 21, 2017 at 6:35 am
Perhaps I'm utterly depressed but I haven't had a job job for over 5 years. Plenty of
work, however, more than I can handle and it requires priorisation. But I am deliberately not part of the organized herd. I stay away from big cities –
it's scary how managed the herd is in large groups – and I suppose that unemployment
for a herd animal is rather distressing as it is effectively being kicked out of the
Anyway my advice, worth what you pay for it but let he who has ears, etc. – is to go
local, very local, grow your own food, be part of a community, manage your own work, and
renounce the energy feast herd dynamics. "Unemployment", like "recession", is a mechanism of
control. Not very practical advice for most, I realize, trapped in the herd as they are in
car payments and mortgages, but perhaps aspirational?
November 21, 2017 at 10:24 am
I think what is missing from this article is the term "identity." If you meet new people,
often the conversation starts with what you do for a living. Your identity, in part, is what
you do. You can call yourself a plumber, a writer, a banker, a consultant, a reporter but the
point is this is part of your identity. When you lose your job long term, your identity here
loses one of its main anchor points.
Worse, there is a deliberate stigma attached with being long term unemployed. In that article
you have seen the word bludger being used. In parts of the US I have read of the shame of
'living off the county'. And yes, I have been there, seen that, and got the t-shirt. It's
going to be interesting as mechanization and computers turn large portions of the population
from workers to 'gig' workers. Expect mass demoralization.
November 21, 2017 at 12:13 pm
yes the lives many of us have lived, no longer exist though we appear not notice, as we
"can" live in many of same "ways" ..rather well known psychologist defined some 40 years ago, best to "drop through
November 21, 2017 at 2:20 pm
Well, you also lose money, maybe you become homeless etc. as you have nowhere else to turn
(if there are kids involved to support it gets even scarier though there are some programs).
Or maybe you become dependent on another person(s) to support you which is of course
degrading as you know you must rely on them to live, whether it's a spouse or lover when you
want to work and bring in money, or mom and dads basement, or the kindest friend ever who
lets you sleep on their couch. I mean these are the things that really matter.
Privileged people whose main worry in unemployment would be losing identity, wow out of
touch much? Who cares about some identity for parties, but the ability to have a stable
decent life (gig work hardly counts) is what is needed.
November 21, 2017 at 7:08 pm
I believe your comment sums up the situation the best -- and most realistically.
November 22, 2017 at 12:45 am
I normally wouldn't comment like this, but you have brought up some extremely important
points about identity that I would like to address.
Recently I had the most intense mushroom experience of my entire life–so intense
that my identity had been completely stripped and I was left in a formless state, at the
level of seeing my bare, unvarnished animal neural circuitry in operation. Suddenly with a
flash of inspiration I realized that the identity of everyone, all of us, is inextricably
tied up in what we do and what we do for other people.
Following from that, I understood that if we passively rely on others for survival,
whether it be relying on friends, family, or government, then we do not have an identity or
reason for existing. And the inner self, the animal core of who we are, will realise this
lack of identity (even if the concious mind denies it), and will continually generate
feelings of profound depression and intense nihilism that will inevitably destroy us if the
root cause is not addressed.
Before this experience I was somewhat ambivalent about my politics, but immediately after
I knew that the political right was correct on everything important, from attitudes on sex to
economic philosophy. People need a core of cultural stability and hard work to grow and
become actualized. The alternative is rudderless dissatisfaction and envy that leads
On the topic of giving "out of kindnes and goodwill", giving without demanding anything in
return is a form of abuse, as it deprives those who receive our feel-good generosity the
motivation to form a coherent identity. If the parents of a basement-dweller were truly good
people, instead of supporting said dweller they'd drag her out by the ear and make her grow
food in the yard or some such. Likewise, those who have supported you without also giving
concrete demands and expecations in return have been unkind, and for your own good I hope
that you will immediately remove yourself from their support. On the other hand, if you have
been thoughtlessly giving because it warms the cockles of your heart, then stop it now. You
are ruining other people this way, and if your voting habits are informed by this kind of
malevolence I'd encourage you to change those as well.
Anyway the original poster is right about everything. Working and having a purpose in life
is an entirely different animal from making money and being "successful" in the
government-sponsored commercial economy. Society and government deliberately try to conflate
the two for various reasons, primarily graft of labor and genius, but that is only a
deliberate mis-framing that needlessly harms people when the mainstream economic system is in
catastrophic decline, as ours is today. You should try to clear up this misconception within
yourself as a way of getting better.
Well, I hope this message can give you a few different thoughts and help you find your way
out of the existential angst you're caught in. Don't wallow in helplessness. Think of
something useful to do, anything, whether it earns you money or not, and go out and start
doing it. You'll be surprised at how much better you feel about yourself in no time.
Jeremy Grimm ,
November 21, 2017 at 12:33 pm
The problem is you said – I – had an extreme experience [burning bush], the
truth was reviled to – I – and I alone during this extreme chemically altered
state. Which by the way just happens to conform to a heap of environmental biases I
collected. This is why sound methodology demands peer review. disheveled some people think Mister Toads Wild ride at Disneyland on psychotropics is an
excellent adventure too.
Henry Moon Pie ,
November 21, 2017 at 7:00 am
I think your observation about the importance of work to identity is most perceptive. This
post makes too little distinction between work and a job and glosses over the place of work
in defining who we are to ourselves and to others. I recall the scene in the movie "About a
Boy" when the hero meets someone he cares about and she asks him what he does for a
I believe there's another aspect of work -- related to identity -- missing in the analysis
of this post. Work can offer a sense of mission -- of acting as part of an effort toward a
larger goal no individual could achieve alone. However you may regard the value in putting
man on the moon there is no mistaking the sense of mission deeply felt by the engineers and
technicians working on the project. What jobs today can claim service to a mission someone
November 21, 2017 at 8:29 am
Agreed on your points. Wage slavery is nothing to aspire to. Self-determination within a
context of an interdependent community is a much better way to live. We do our thing in the city, however.
November 21, 2017 at 10:10 am
Finding that "interdependent community" is the hard part. My experience has been that this
endeavour is almost chance based; Serendipity if you will.
Here Down South, the churches still seem to have a stranglehold on small and mid scale social
organization. One of the big effects of 'churching' is the requirement that the individual
gave up personal critical thinking. Thus, the status quo is reinforced. One big happy 'Holy
November 21, 2017 at 3:07 pm
from the article
This is a crucial point that UBI advocates often ignore. There is a deeply entrenched
cultural bias towards associating our work status with our general status and prestige and
feelings of these standings.
That hasn't changed since Eisenberg and Lazersfeld wrote up the findings of their study
It might change over time but that will take a long process of re-education and cultural
shift. Trying to dump a set of new cultural values that only a small minority might
currently hold to onto a society that clearly still values work is only going to create
major social tensions.
Yves Smith Post author ,
November 21, 2017 at 4:23 pm
I would agree about the entenched cultural norms, etc. But not the pessimism and timeline
for change. An individual can communicate a complex idea to millions in seconds, things move
fast these days.
For me, it seems that what we (we being UBI/radical change proponents) are lacking is a
compelling easily accessible story. Not just regarding UBI (as that is but one part of the
trully revolutionary transformations that must occur) but encompassing everything.
We have countless think pieces, bits of academic writing, books, etc that focus on
individual pieces and changes in isolation. But we've largely abandoned the all-encompassing
narrative, which at their heart is precisely what religion offers and why it can be so
seductive, successful, and resilient for so long.
The status quo has this type of story, it's not all that compelling but given the fact
that it is the status quo and has inertia and tradition on its side (along with the news
media, political, entertainment, etc) it doesn't have to be.
We need to abandon the single narrow issue activism that has become so prominent over the
years and get back to engaging with issues as unseparable and intimately interconnected.
Tinkering around the edges will do nothing, a new political religion is what is
November 21, 2017 at 5:11 pm
Sorry, I disagree vehemently. Deeply held cultural attitudes are very slow to change and
the study found that work being critical to happiness examined a large number of
Look at feminism. I was a half-generation after the time when women were starting to get a
shot at real jobs. IIRC, the first class that accepted women at Harvard Law School was in the
1950 and at Harvard Business School, 1965. And the number of first attendees was puny. The
1965 class at HBS had 10 8 women out of a graduating class of over 800; my class in 1981 had
only 11% women.
In the 1980s, you saw a shift from the belief that women could do what men could do to
promotion of the idea that women could/should be feminine as well as successful. This looked
like seriously mixed messages, in that IMHO the earlier tendency to de-emphasize gender roles
in the workplace looked like a positive development.
Women make less than 80% of what men do in the US. Even female doctors in the same
specialities make 80% of their male peers.
The Speenhamland in the UK had what amounted to an income guarantee from the 1790s to
1832. Most people didn't want to be on it and preferred to work. Two generations and being on
the support of local governments was still seen as carrying a stigma.
More generally, social animals have strongly ingrained tendencies to resent situations
they see as unfair. Having someone who is capable of working not work elicits resentment from
many, which is why most people don't want to be in that position. You aren't going to change
And people need a sense of purpose. There are tons of cases of rich heirs falling into
drug addiction or alcoholism and despair because they have no sense of purpose in life. Work
provides that, even if it's mundane work to support a family. That is one of the great
dissservices the Democrats have done to the citizenry at large: sneering at ordinary work
when blue-collar men were the anchors of families and able to take pride in that.
Yves Smith Post author ,
November 21, 2017 at 8:34 pm
So a few points.
Regarding the large number of societies, we often like to think we're more different than
we actually are focusing on a few glaringly obvious differences and generalizing from there.
Even going back a few hundred years when ideas travelled slower we were still (especially the
"west" though the "east" wasn't all that much more different either) quite similar. So I'm
less inclined to see the large number of societies as evidence.
Generally on societal changes and movements: The issue here is that the leadership has not
changed, they may soften some edges here or there (only to resharpen them again when we're
looking elsewhere) but their underlying ideologies are largely unchanged. A good mass of any
population will go along to survive, whether they agree or not (and we find increasing
evidence that many do not agree, though certainly that they do not agree on a single
It may be impossible to implement such changes in who controls the levers of power in a
democratic fashion but it also may be immoral not implement such changes. Of course this is
also clearly a similar path to that walked by many a demonized (in most cases rightfully so)
dictator and despot. 'Tread carefully' are wise words to keep in mind.
Today we have a situation which reflects your example re: social animals and resentment of
unfairness: the elite (who falls into this category is of course debatable, some individuals
moreso than others). But they have intelligently, for their benefit, redirected that
resentment towards those that have little. Is there really any logical connection between not
engaging in wage labor (note: NOT equivalent to not working) and unfairness? Or is it a myth
crafted by those who currently benefit the most?
That resentment is also precisely why it is key that a Basic income be universal with no
means testing, everyone gets the same.
I think we should not extrapolate too much from the relatively small segment of the
population falling into the the inherited money category. Correlation is not causation and
It also seems that so often individuals jump to the hollywood crafted image of the
layabout stoner sitting on the couch giggling at cartoons (or something similarly negative)
when the concept of less wage labor is brought up. A reduction of wage labor does not equate
to lack of work being done, it simply means doing much of that work for different reasons and
rewards and incentives.
As I said in the Links thread today, we produce too much, we consume too much, we grow too
much. More wage labor overall as a requirement for survival is certainly not the solution to
any real problem that we face, its a massively inefficient use of resources and a massive
strain on the ecosystems.
November 21, 2017 at 8:53 pm
I am really gobsmacked at the sense of entitlement on display here. Why are people
entitled to an income with no work? Being an adult means toil: cleaning up after yourself,
cleaning up after your kids if you have them, if you are subsistence farmer, tending your
crops and livestock, if you are a modern society denizen, paying your bills and your taxes on
time. The idea that people are entitled to a life of leisure is bollocks. Yet you promote
Society means we have obligations to each other. That means work. In rejecting work you
And the touting of "creativity" is a top 10% trope that Thomas Frank called out in Listen,
Liberal. It's a way of devaluing what the bottom 90% do.
November 21, 2017 at 9:38 pm
My argument with the article is that, to me, it smacks of Taylorism. A follow-on study
would analyze how many hours a laborer must work before the acquired sense of purpose and
dignity and associated happiness began to decline. Would it be 30 hours a week of
backbreaking labor before dignity found itself eroded? 40? 50? 60? When does the worker
break? Just how far can we push the mule before it collapses?
The author alludes to this: "The overwhelming proportion relate their social status and
life happiness to gaining a job"
Work equals happiness. Got it.
But, as a former robotics instructor, and as one who watches the industry (and former
students), I see an automated future as damn near inevitable. Massive job displacement is
coming, life as a minimum wage burger flipper will cease, with no future employment prospects
short of government intervention (WPA and CCC for all, I say). I'm not a Luddite, obviously,
but there are going to be a lot of people, billions, worldwide, with no prospect of
employment. Saying, "You're lazy and entitled" is a bit presumptuous, Yves. Not everyone has
your ability, not everyone has my ability. When the burger flipping jobs are gone, where do
they go? When roombas mop the floors, where do the floor moppers go?
nihil obstet ,
November 21, 2017 at 10:05 pm
"WPA and CCC for all, I say. "
We could use a new Civilian Conservation Corps and and a Works Progress Administration.
There's lots of work that needs doing that isn't getting done by private corporations.
November 21, 2017 at 10:14 pm
The outrage at non-work wealth and income would be more convincing if it were aimed also
at owners of capital. About 30% of national income is passive -- interest, rents, dividends.
Why are the owners of capital "entitled to an income with no work?" It's all about the
morality that underlies the returns to capital while sugaring over a devaluation of labor. As
a moral issue, everyone should share the returns on capital or we should tax away the
interest, rents, and dividends. If it's an economic issue, berating people for their beliefs
isn't a reason.
Yves Smith Post author ,
November 22, 2017 at 2:27 am
Why are the owners of capital "entitled to an income with no work?"
THIS!!!! So much, THIS!!!! But, what else is a Wobbly to say, eh?
November 22, 2017 at 2:58 am
The overwhelming majority do work. The top 0.1% is almost entirely private equity managers
who are able to classify labor income as capital gains through the carried interest loophole.
Go look at the Forbes 400.
The 1% are mainly CEOs, plus elite professionals, like partners at top law and consulting
firms and specialty surgeons (heart, brain, oncology). The CEOs similarly should be seen as
getting labor income but have a lot of stock incentive pay (that is how they get seriously
rich) which again gets capital gains treatment.
You are mistaking clever taking advantage of the tax code for where the income actually
comes from. Even the kids of rich people are under pressure to act like entrepreneurs from
their families and peers. Look at Paris Hilton and Ivanka as examples. They both could have
sat back and enjoyed their inheritance, but both went and launched businesses. I'm not saying
the kids of the rich succeed, or would have succeed to the extent they do without parental
string-pulling, but the point is very few hand their fortune over to a money manager and go
sailing or play the cello.
November 22, 2017 at 1:34 am
Isn't the brother of the infamous Koch duo doing exactly that? Actually, if all the .001%ers were like him, we'd all be better off
November 21, 2017 at 9:09 pm
What's your take on Rutger Bergman's ted talk? i think most jobs aren't real jobs at all,
like marketing and ceo's. why can't we do 20 hour work weeks so we don't have huge amounts of unemployment? Note, I was "unemployed" for years since "markets" decide not to fund science in the US.
Yay Germany At least I was fortunate enough to not be forced to work at Walmart or McDonalds
like the majority of people with absolutely no life choices. Ah the sweet coercion of
Andrew Dodds ,
November 22, 2017 at 2:48 am
Your hopes for a UBI are undone by some of the real world observations I've made over many
years, with regard to how a guaranteed income increase, of any measure, for a whole
population of an area, affects prices. Shorter: income going up means prices are raised by
merchants to capture the new income.
- Examples: A single industry town raises wages for all employees by 2% for the new calendar
year. Within the first 2 weeks of the new year, all stores and restaurants and service
providers in the town raise their prices by 2%. This happens every year there is a general
- Example: Medicare part D passes and within 2 years, Pharma now having new captive
customers whose insurance will pay for drugs, raise prices higher and higher, even on generic
- A more recent example: ACA passes with no drug price ceilings. Again, as with the passage
of Medicare part D, Pharma raises drug prices to unheard of levels, even older and cheap but
life saving drugs, in the knowledge that a new, large group will have insurance that will pay
for the drugs – a new source of money.
Your assumption that any UBI would not be instantly captured by raised prices is naive, at
best. It's also naive to assume companies would continue to pay wages at the same level to
people still employed, instead of reducing wages and letting UBI fill in the rest. Some
corporations already underpay their workers, then encourage the workers to apply for food
stamps and other public supports to make up for the reduced wage.
The point of the paper is the importance of paid employment to a person's sense of well
being. I agree with the paper.
November 21, 2017 at 11:28 am
For the vast majority, a UBI would be income-neutral – it would have to be, to avoid
massive inflation. So people would receive a UBI, but pay more tax to compensate. The effect
on prices would be zero.
The advantage of a UBI is mostly felt at the lower end, where insecure/seasonal work does
now pay. At the moment, a person who went from farm labourer to Christmas work to summer
resort work in the UK would certainly be working hard, but also relentlessly hounded by the
DWP over universal credit. A UBI would make this sort of lifestyle possible.
Lambert Strether ,
November 22, 2017 at 1:44 am
Good for you, but your perspicacity is not scalable. People are social animals and your attitude toward "the herd", at least as expressed here,
is that of a predator, even if your taste doesn't run toward predation. Social solutions will necessarily be scalable or they won't be solutions for long.
November 21, 2017 at 6:37 am
> the organized herd a herd animal trapped in the herd
I don't think throwing 80% to 90% of the population into the "prey" bucket is especially
perspicacious politically (except, of course, for predators or parasites). I also don't think it's especially perspicacious morally. You write:
Not very practical advice for most, I realize, trapped in the herd as they are in car
payments and mortgages, but perhaps aspirational?
Let me translate that: "Trapped in the herd as many are to support spouses and children."
In other words, taking the cares of the world on themselves in order to care for others.
November 21, 2017 at 7:41 am
Unemployed stay at home dad here. My children are now old enough to no longer need a stay
at home dad. Things I have done: picked up two musical instruments and last year dug a
natural swimming pond by hand. Further, one would need to refute all the increased happiness
in retirement (NBER). Why social security but not UBI? I get being part of the precariat is
painful and this is a reality for most the unemployed no matter where you live in the world.
A UBI is unworkable because it will never be large enough to make people's lives
unprecarious. Having said that, I am almost positive if you gave every unemployed person 24 k
a year and health benefits, there would be a mass of non working happy creative folks.
November 21, 2017 at 8:34 am
UBI seems to me to encourage non-virtuous behavior – sloth, irresponsibility,
fecklessness, and spendthriftness. I like the Finnish model – unemployment insurance is
not limited – except if you refuse work provided by the local job center. Lots of work
is not being done all over America – we could guarantee honest work to all with some
imagination. Start with not spraying roundup and rather using human labor to control weeds
and invasive species.
I do agree that universal health insurance is necessary and sadly Obamacare is not
a different chris ,
November 21, 2017 at 9:19 am
The crux of this problem is the definition used for "non-virtuous behaviour."
A new CCC is a good place to start though. (Your Tax Dollars At Work! [For some definition of
As for BJ above, I would suppose that child rearing was his "employment" for years. good so
far, but his follow-up is untypical. The 'Empty Nester' mother is a well known meme.
November 21, 2017 at 11:18 am
Spendthriftness on 24K a year? Seriously? If we are disgorging unprofessional opinions, I will add my own: sloth and
irresponsibility are more signs of depression rather than freedom from having to work. In
fact, I believe (and I think much of the stuff here) supports the idea that people want to be
seen as useful in some way. Doesn't include me! :) .. unfortunately, I have the charmingly named "dependents" so there
you have it.
November 21, 2017 at 9:23 am
I lived 6 years as a grad student on 24k a year and would say it was easy. Only thing I
would have to had worried about was awful health insurance. A two household each with 24k
would be even easier, especially if you could do it in a low cost area. So I am not sure what
you mean by spendthrift. But again it will never happen, so we will be stuck with what we
have or most likely an even more sinister system. I guess I am advocating for a JG with
unlimited number of home makers per household.
November 21, 2017 at 10:55 am
except if you refuse work provided by the local job center
And who's to say that the local "job center" has work that would be appropriate for every
person's specific talents and interests? This is no better than saying that you should be
willing to go work for some minimum-wage retail job with unpredictable scheduling and other
forms of employer abuses after you lose a high-paying job requiring special talents. I have
to call bullshit on this model. I went through a two-year stretch if unemployment in no small
part because the vast majority of the available jobs for my skill set were associated with
the MIC, surveillance state or the parasitic FIRE sector. I was able to do this because I had
saved up enough FY money and had no debts or family to support.
I can also attest to the negative aspects of unemployment that the post describes. Its all
true and I can't really say that I'e recovered even now, 2.5 years after finding another
November 21, 2017 at 10:42 am
The job center in the neighbouring Sweden had the same function. Had is the important
word. My guess is that the last time someone lost their unemployment insurance payout due to
not accepting a job was in the early 1980s. Prior to that companies might, maybe, possibly
have considered hiring someone assigned to them – full employment forced companies to
accept what was offered. Companies did not like the situation and the situation has since
Now, when full employment is a thing of the past, the way to lose unemployment insurance
payouts is by not applying to enough jobs. An easily gamed system by people not wanting to
work: just apply to completely unsuitable positions and the number of applications will be
high. Many companies are therefore overwhelmed by applications and are therefore often forced
to hire more people in HR to filter out the unsuitable candidates.
People in HR tend not to know much about qualifications and or personalities for the job so
they tend to filter out too many. We're all familiar with the skills-shortage .
Next step of this is that the companies who do want to hire have to use recruitment agencies.
Basically outsourcing the HR to another company whose people are working on commission.
Recruiters sometimes know how to find 'talent', often they are the same kind of people with
the same skills and backgrounds as people working in HR.
To even get to the hiring manager a candidate has to go through two almost identical and
often meaningless interviews. Recruiter and then HR. Good for the GDP I suppose, not sure if
it is good for anything else.
But back on topic again, there is a second way of losing unemployment insurance payout:
Time. Once the period covered has passed there is no more payouts of insurance. After that it
it is time to live on savings, then sell all assets, and then once that is done finally go to
the welfare office and prove that savings are gone and all assets are sold and maybe welfare
might be paid out. People on welfare in Sweden are poor and the indignities they are being
put through are many. Forget about hobbies and forget about volunteering as the money for
either of those activities simply aren't available. Am I surprised by a report saying
unemployed in Sweden are unhappy? Nope.
Jeremy Grimm ,
November 21, 2017 at 1:53 pm
meanwhile NYTimes testimonials Friday, show average family of 4 healthprofit costs
(tripled, due to trump demise ACA) to be $30,000. per year, with around $10,000. deductible
end of any semblance of affordable access, "murKa"
Bill Smith ,
November 21, 2017 at 8:01 am
What do you mean by virtuous behavior?
Where does a character like Bertie Wooster in "Jeeves" fit in your notions of virtuous
behavior? Would you consider him more virtuous working in the management of a firm,
controlling the lives and labor of others -- and humorously helped by his his brilliant
valet, Jeeves, getting him out of trouble?
For contrast -- in class and social status -- take a beer-soaked trailer trash gentleman
of leisure -- and for sake of argument blessed with less than average intelligence -- where
would you put him to work where you'd feel pleased with his product or his service? Would you
feel better about this fellow enjoying a six-pack after working 8 hours a day 5 days a week
virtuously digging and then filling a hole in the ground while carefully watched and goaded
by an overseer? [Actually -- how different is that from "using human labor to control weeds
and invasive species"? I take it you're a fan of chain-gangs and making the poor pick up
trash on the highways?]
What about some of our engineers and scientists virtuously serving the MIC? Is their
behavior virtuous because they're not guilty of sloth, irresponsibility [in executing their
work], fecklessness, and spendthriftness? On this last quality how do you feel about our
government who pay the salaries for all these jobs building better ways to kill and maim?
November 21, 2017 at 11:07 am
How big is the swimming pool and how long did it take? Where did you put the dirt?
November 21, 2017 at 9:32 am
It is a design by David Pagan Butler. It is his plunge pool design, deepend is 14 by 8 by
7 deep. I used the dirt to make swales around some trees. Win win all around.
November 21, 2017 at 11:25 am
curious to know whether you are married to someone with a job?
David Kane Miller ,
November 21, 2017 at 6:55 am
The answer is yes my spouse works. So I do have a schedule of waking up to make her lunch
everyday, meeting her at lunch to walk, and making dinner when she gets home, but we do all
those things on her days off so .
But again we would need to explain away, why people who are retired are happier? Just
because they think they payed into social security? Try explaining to someone on the SS dole
how the government spends money into existence and is not paid by taxes or that the
government never saved their tax money, so there are not entitled to this money.
a different chris ,
November 21, 2017 at 9:23 am
I hated working for other people and doing what they wanted. I began to feel some
happiness when I had a half acre on which I could create my own projects. Things improved
even more when I could assure myself of some small guaranteed income by claiming Social
Security at age 62. To arise in the morning when I feel rested, with interesting projects
like gardens, fences, small buildings ahead and work at my own pace is the essence of delight
for me. I've been following your arguments against UBI for years and disagree vehemently.
November 21, 2017 at 9:42 am
I feel I would behave the same as you, if I had the chance. *But* no statements about
human beings are absolute, and because UBI would work for either of us does not mean it would
work for the majority. Nothing devised by man is perfect.
November 21, 2017 at 9:37 am
It's not you; it's not me. It's those deplorable people.
Lambert Strether ,
November 22, 2017 at 1:56 am
first you had to buy the half acre in a suitable location, then you had to work many years
to qualify for social security, the availability of which you paid for and feel you deserve.
You also have to buy stuff for fences gardens and small buildings. At most that rhymes with a
ubi but is significantly different in it's make up.
November 21, 2017 at 7:16 am
> when I
had a half acre on which I could create my own projects
That is, when you acquired the half acre, which not everyone can do. It seems to
me there's a good deal of projecting going on with this thread from people who are, in
essence, statistical outliers. But Mitchell summarizes the literature:
So for decades, researchers in this area, as opposed to bloggers who wax lyrical on
their own opinions, have known that the importance of work in our lives goes well beyond
the income we earn.
If the solution that works for you is going to scale, that implies that millions more will
have to own land. If UBI depends on that, how does that happen? (Of course, in a
post-collapse scenario, the land might be taken , but that same scenario makes the
existence of institutions required to convey the UBI highly unlikely. )
November 21, 2017 at 7:25 am
Very glad to hear that Bill Mitchell is working on the "Future of Work" book, and to have
this post, and the links to the other segments. Thank you, Yves!
November 21, 2017 at 11:26 am
I don't agree with this statement. Never will. I'm the complete opposite. Give me more
leisure time and you'll find me painting, writing, playing instruments and doing things that
I enjoy. I recall back to when I was a student, I relished in the free time I got (believe me
University gave me a lot of free time) between lectures, meaning I could enjoy this time
pursuing creative activities. Sure I might be different than most people but I know countless
people who are the same.
My own opinion is that root problem lies in the pathology of the working mentality, that
'work' and having a 'job' is so engrained into our society and mindset that once you give
most people the time to enjoy other things, they simply can't. They don't know what to do
with themselves and they eventually become unhappy, watching daytime TV sat on the sofa.
I recall back to a conversation with my mother about my father, she said to me, 'I don't
know how your father is going to cope once he retires and has nothing to do' and it's that
very example of where work for so many people becomes so engrained in their mindset, that
they are almost scared of having 'nothing to do' as they say. It's a shame, it's this
systemic working mentality that has led to this mindset. I'm glad I'm the opposite of this
and proud by mother brought me up to be this way. Work, and job are not in my vocabulary. I
work to live, not live to work.
November 21, 2017 at 12:18 pm
I agree with Andrew. I think this data on the negative effects says more about how being
employed fundamentally breaks the human psyche and turns them into chattel, incapable of
thinking for themselves and destroying their natural creativity. The more a human is molded
into a "good worker" the less they become a full fledged human being. The happiest people are
those that have never placed importance on work, that have always lived by the maxim "work to
live, not live to work". From my own experience every assertion in this article is the
opposite of reality. It is working that makes me apathethic, uncreative, and miserable. The
constant knowing that you're wasting your life, day after day, engaged in an activity merely
to build revenue streams for the rich, instead of doing things that help society or that
please you on a personal level, is what I find misery inducing.
November 21, 2017 at 12:48 pm
I agree. If financial insecurity is removed from the equation -- free time can be used creatively
for self-actualization, whatever form that may take: cultivating the arts, hobbies, community
activities, worthy causes and projects. The ideology wafting from Mitchell's post smells to me like a rationale for wage slavery
(market driven living, neo-liberalism, etc.)
November 21, 2017 at 3:18 pm
Besides how are people supposed to spend their time "exploring other opportunities" when
unemployed anyway? To collect unemployment which isn't exactly paying that much anyway, they
have to show they are applying to jobs. To go to the movies the example given costs money,
which one may tend to be short on when unemployed. They probably are looking for work
regardless (for the income). There may still be some free time. But they could go back to
school? Uh in case one just woke up from a rock they were under for 100 years, that costs
money, which one may tend to be short on when unemployed, plus there is no guarantee the new
career will pan out either, no guarantee someone is just chomping at the bit to hire a newly
trained 50 year old or something. I have always taken classes when unemployed, and paid for
it and it's not cheap.
Yes to use one's time wisely in unemployment in the existing system requires a kind of
deep psychological maturity that few have, a kind of Surrender To Fate, to the uncertainty of
whether one will have an income again or not (either that or a sugar daddy or a trust fund).
Because it's not easy to deal with that uncertainty. And uncertainty is the name of the game
in unemployment, that and not having an income may be the pain in it's entirety.
Yves Smith Post author ,
November 21, 2017 at 5:21 pm
Sadly this breaking down into a "good worker" begins for most shortly after they begin
school. This type of education harms society in a myriad of ways including instilling a
dislike of learning, deference to authority (no matter how irrational and unjust), and a
destruction of a child's natural curiosity.
Yves Smith Post author ,
November 21, 2017 at 4:29 pm
I don't buy your premise that people are "creative". The overwhelming majority do not have
creative projects they'd be pursuing if they had leisure and income. Go look at retirees,
ones that have just retired, are healthy, and have money.
November 21, 2017 at 6:25 pm
You are really misconstruing what the studies have found and misapplied it to your
situation. Leisure time when you have a job or a role (being a student) is not at all the
same as having time when you are unemployed, with or without a social safety net.
November 21, 2017 at 6:37 pm
- Work: that can be me hiring someone to cut my yard, or another type of one-off thing
filled with precariousness.
- Job: that less temporary work, but by no means permanent. Just a step up from the
precariousness of work.
- Career: that is work in the same field over a long period of time and it is more likely
that someone will develop an identity through performing the work. Still precarious, but
maybe more fulfilling.
- Sense of purpose: I was always under the impression that is something you have to give
yourself. If it can be taken away by someone what was the purpose?
Lambert Strether ,
November 22, 2017 at 2:00 am
one often has a role when unemployed: finding work. But it's not a very fulfilling one!
But if one is trying to find work, it's not exactly the absence of a role either even if it
still leaves significantly more free time than otherwise, maybe winning the lottery is the
absence of a role.
But then it's also not like we give people a UBI even for a few years (at any time in
adult life) to get an education. Only if they take out a student loan approaching the size of
a mortgage or have parents willing to pony up are they allowed that (to pay not just for the
education but to live because having a roof over one's head etc. is never free, a UBI via
debt it might be called).
November 21, 2017 at 7:47 am
> Give me more leisure time and you'll find me painting, writing, playing instruments
and doing things that I enjoy.
Nothing to breed resentment of "the creative class" here! Blowback from Speenhamland
brought on the workhouses, so be careful what you wish for.
November 21, 2017 at 10:00 am
Again the UBI vs JG debate .
UBI won't happen and JG has been tried (and failed).
The argument that JG would allow the public sector to hire more people is demeaning to
people already employed in the public sector and demonstrably false – people are hired
into the public sector without there being a JG. It is most certainly possible to be against
a JG while wanting more people working in the public sector.
The way forward is to have a government acting for people instead of for corporations.
Increase the amount of paid vacations, reduce the pension age and stop with the Soviet style
worship of work: While some people are apparently proud of their friends and relatives who
died while at work it is also possible to feel sad about that.
November 21, 2017 at 10:27 am
JG has been tried (and failed).
When and where? The NCCC seemed to work pretty good here in the Western US.
Yves Smith Post author ,
November 21, 2017 at 4:39 pm
The JG was tried in Communist countries in Europe, Asia and Americas. The arguments then
and there were the same as here and now, made by the same type of social 'scientists'
Would a JG be different here and now as the Republicans and Democrats are representing the
best interests of the people? Or are they representing the same kind of interests as the
Communist parties did?
November 21, 2017 at 10:00 am
Data, please. The USSR fell because it was spending on its military to keep up with the
US, a much larger economy. Countering your assertion we have this:
November 21, 2017 at 10:15 am
As long as people argue that "it's not fair" to fix the inequality issue and employ things
like debt jubilee or student loan forgiveness, or if we fix the ridiculous cost of health
care what will all those insurance agents do then we will wind up with the real kind of class
warfare, rather than the current punching from the top down, the punching will come from the
bottom, because the situation is not fair now, it's just TINA according to those who profit
from it. In my own life there is a balance of creativity and work, and I find work enables my
creativity by putting some pressure on my time, i.e., I get up earlier, I practice at 8:30 am
instead of sleeping til 10 and winding up with S.A..D., I go to bed rather than watch tv or
drink to excess.. in other words i have some kind of weird schedule, I have days off sort of
When I've been unemployed I feel the way s described in the article. I find the arguments in
favor of ubi tend to come from people who already have assets, or jobs, or family who they
take care of which is actually a job although uncommonly described as such. The only truth I
see in real life is that the unemployed I am intimately familiar with first are mentally
oppressed by the notion that to repair their situation will require they work every waking
hour at substandard wages for the rest of their life and that is a major barrier to getting
started, and that is a policy choice the gov't and elite classes purposefully made which
created the precariat and will be their undoing if they are unable to see this.
November 21, 2017 at 10:08 am
Hey look, even the msm is looking at it
November 21, 2017 at 7:53 am
As someone who works in the public sector I never quite thought of it like that,
November 21, 2017 at 10:45 am
Disappointing that there's no analysis in this context of less employment, as in shorter
work weeks and/or days, as opposed to merely all or none.
November 21, 2017 at 11:31 am
see – hear
(but no possibility without healthcare access, rather than healthtprofit)
November 21, 2017 at 1:04 pm
Interesting point. I read a science fiction story in which the protagonist arrives for
work at his full time job at 10:00 AM, and he's finished for the day at 4:00 PM. I can't
remember the name of the story or novel, unfortunately.
Lambert Strether ,
November 22, 2017 at 2:02 am
Agreed. And they already have it in places like Denmark. Why don't we talk about that? It
actually exists unlike utopian schemes for either total UBI or total work guarantee
(government job creation is not utopian, but imagining it will employ everyone is, and I
would like the UBI to be more widely tried, but in this country we are nowhere close). Funny
how utopia becomes more interesting to people than actual existing arrangements, even though
of course those could be improved on too.
The Danish work arrangement is less than a 40 hour week, and mothers especially often work
part-time but both sexes can. It's here in this country where work is either impossibly
grueling or you are not working. No other choice. In countries with more flexible work
arrangements more women actually work, but it's flexible and flexible for men who choose to
do the parenting as well. I'm not saying this should be for parents only of course.
Otis B Driftwood ,
November 21, 2017 at 7:58 am
Because the JG sets the baseline for employment, which private companies must meet, the JG
(unlike the UBI) can do this.
November 21, 2017 at 8:38 am
My own situation is that I am unhappy in my well-paying job and would like nothing more
than to devote myself to other interests. I'm thirty years on in a relationship with someone
who grew up in bad financial circumstances and panics whenever I talk about leaving my job. I
tell her that we have 2 years of living expenses in the bank but I can't guarantee making the
same amount of money if I do leave my job. She has a job that she loves and is important and
pays barely 1/2 of my own income. So she worries about her future with me. She worries about
losing her home. I suppose that makes me the definition of a wage slave. And it makes for an
increasingly unhappy marriage. I admire those who have faced similar circumstances and found
a way through this. Sorry to vent, but this topic and the comments hit a nerve with me and
I'm still trying to figure this out.
November 21, 2017 at 1:11 pm
We are presently going through a period where that "two year cushion" has evaporated, for
various reasons. We are seeing our way through this, straight into penury and privation.
Take nothing for granted in todays' economy.
November 21, 2017 at 12:47 pm
yes find the lower paying job that you like more first. If you just quit for nothing in
the hopes of finding one it might not happen. Of course unemployment also happens sometimes,
whether we want it or not.
Lambert Strether ,
November 22, 2017 at 2:03 am
The newer generations are worse when it comes to lifestyle. Those of that are older can at
least remember a time without cellphones internet streaming services leasing a new car every
2 years etc.
What about the young? My niece and her husband should be all set , his mom sunk money into
a home on the condition she moved into a mother in law apartment. So far so good right? 2
years in they are imploding even with the free child care she provides. Combined their
wireless bill a month is over $300. The sit on the couch side by side and stream netflix
shows to dueling iphones in front of a 65 inch tv that is not even turned on. Wearing
headphones in silence.
Both driving new vehicles , both have gym memberships they don't use . They buy lattes 3
or 4 times a day which is probably another 500 a month.
My uncle passed away recently and my niece asked if she was in the will. It was literally
her only communication on the subject. They are going under and could easily trim a few
thousand a month from the budget but simply won't. No one in the family is going to lift a
finger for them at this point they burned every possible bridge already. I have seen people
living in cars plenty lately but I think these will be the first I see to living in brand new
Somewhere along the line they got the impression that the american dream was a leased car
a starbucks in one hand and an iphone in the other .
Confront them with the concept of living within a paycheck and they react like a patient
hearing he has 3 months to live.
November 22, 2017 at 3:00 am
Ah. Reagan's "welfare queens" updated. Kids these days!
November 21, 2017 at 8:00 am
Yeah being poor, never mind growing up poor, just well and truly sucks and it can really
@@@@ you up. Gives people all sorts of issues. I'm rather like her, but I have had the joy of
multi-hour commutes to unexciting soul crushing work. Happy, happy, joy, joy! However don't
forget that with the current political economy things are likely to go bad in all sorts of
ways. This whole site is devoted to that. My suggestion is to keep the job unless you have
something lined up. Not being able to rent has it own stresses too. Take my word for it.
November 21, 2017 at 9:19 am
I may be engaging in semantics but I think conflating work and jobs makes this article a
bit of a mixed bag. I know plenty of people who are terribly unhappy in their jobs, but
nonetheless extract a sense of wellbeing from having a stable source of INCOME to pay their
bills (anecdotally speaking, acute stress from recent job losses is closely linked to
uncertainty about how bills are going to be paid, that's why those with a safety net of
accumulated savings report less stress than those without). Loss of status, social standing
and identity and the chronic stress borne from these become evident much later I.e. when the
unemployment is prolonged, accompanied of course by the still unresolved top-of-mind concern
of "how to pay the bills".
As such, acute stress for the recently unemployed is driven by financial/income
uncertainty (I.e. how am I going to pay the bills) whereas chronic stress from prolonged
unemployment brings into play the more identity driven aspects like loss of social standing
and status. For policy interventions to have any effects, policy makers would have to
delineate the primary drivers of stress (or lack of wellbeing as the author calls it) during
the various phases of the unemployment lifecycle. An Unemployment Insurance Fund (UIF) like
we have here in South Africa appears to address the early stages of unemployment, and the
accompanying acute stress, quite well by providing the income guarantee (for six months) that
cushions the shock of losing a job. What's still missing of course are interventions that
promote the quick return to employment for those on UIF, so maybe a middle of the road
solution between UBI and a jobs guarantee scheme is how policy makers should be framing this,
instead of the binary either/or we currently have.
November 21, 2017 at 10:06 am
Lots' of people think they're unhappy with their jobs. Let them sit unemployed for 9
months and ask them if they want that job back. The usual parade of anecdata is on display here in the comments. Mitchell's real data and
analysis in the article above still stand.
November 21, 2017 at 1:15 pm
If you'd read through my comment, and not rushed through it with a view of dishing out a
flippant response, you'd have seen that nowhere do I question the validity of his data, I
merely question how the argument is presented in some areas (NC discourages unquestioning
deference to the views of experts no??). By the way, anecdotes do add to richer understanding
of a nuanced and layered topic (as this one is) so your dismissal of them in your haste to
invalidate people's observations is hardly helpful.
Lambert Strether ,
November 22, 2017 at 2:04 am
Yes people many not like their jobs but prefer the security of having them to not. Yes
even if the boss sexually harasses one (as we are seeing is very common). Yes even if there
is other workplace abuse. Yes even when it causes depression or PTSD (but if one stays with
such a job long term it ruins the self confidence that is one prerequisite to get another
job!). Yes even if one is in therapy because of job stress, sexual harassment or you name it.
The job allows the having health insurance, allows the therapy, allows the complaining about
the job in therapy to make it through another week.
November 21, 2017 at 8:13 am
> The usual parade of anecdata is on display here in the comments. Mitchell's real data
and analysis in the article above still stand.
Ding ding ding!
November 21, 2017 at 1:40 pm
When unemployed, the stress of worry about money may suppress the creative juices.
Speaking from experience. People may well 'keep looking for jobs' because they know ultimately they need a job with
steady income. The great experience of some freelancers notwithstanding, not all are cut out
I would love to see some more about happiness or its lack in retirement–referenced
by stay-at-home dad BJ , above.
I wonder, too, about the impact of *how* one loses one's job. Getting laid off vs fired vs
quitting vs involuntary retirement vs voluntary, etc feel very different. Speaking from
experience on that, too. I will search on these points and post anything of interest.
November 21, 2017 at 10:23 am
There are also other things that are degrading about the very process of being unemployed
not mentioned here. What about the constant rejection that it can entail? One is unemployed
and looking for work, one sends out resumes, many of them will never be answered, that's
rejection. Then if one is lucky they get interviews, many will never lead to jobs, yet more
rejection. Does the process of constant rejection itself have a negative effect on a human
being whether it's looking for jobs or dates or whatever? Isn't it learned helplessness to if
one keeps trying for something and keeps failing. Isn't that itself demoralizing entirely
independent of any doubtful innate demoralizing quality of leisure.
Yves Smith Post author ,
November 21, 2017 at 5:15 pm
I am not so sure if I agree with this article. I think it really depends on whether or not
you have income to support yourself, hate or love your job, and the amount of outside
interests you have, among other things. Almost everyone I know who lives in the NYC area and
commutes into the city .doesn't like their job and finds the whole situation "soul-crushing".
Those that live in Manhattan proper are (feel) a bit better off. I for one stopped working
somewhat voluntarily last year. I write somewhat because I began to dislike my job so much
that it was interfering with my state of well being, however, if I had been allowed to work
remotely I probably would have stuck it out for another couple of years.
I am close enough to
62 that I can make do before SS kicks in although I have completely changed my lifestyle
– i.e. I've given up a materialistic lifestyle and live very frugally.
saved for many years once I decided to embark on this path. I do not find myself depressed at
all and the path this year has been very enriching and exciting (and scary) as I reflect on
what I want for the future. I'm pretty sure I will end up moving and buying a property so
that I can become as self sufficient as possible. Also, I probably will get a job down the
line – but if I can't get one because I am deemed too old that will be ok as well. The
biggest unknown for me is how much health insurance will cost in the future .
November 22, 2017 at 3:30 am
The article made clear that the studies included "unemployed but with income" from
government support. It is amazing the degree to which readers ignore that and want to make
the findings about "unemployed with no income".
November 21, 2017 at 10:43 am
That's because we Americans all have work=good=worthy=blessed by God while
workless=scum=worthless=accursed by God engraved into our collective soul. Our politics, our
beliefs, are just overlays to that.
Even when we agree that the whole situation just crushes people into paste, and for which
they have no defense regardless of how hard they work, how carefully they plan, or what they
do, that underlay makes use feel that this is their/our fault. Any suggestions that at least
some support can be decoupled from work, and that maybe work, and how much you earn, should
not determine their value, brings the atavistic fear of being the "undeserving poor,"
parasites and therefore reprobated scum.
So we don't hear what you are saying without extra effort because it's bypassing our
Left in Wisconsin ,
November 21, 2017 at 12:02 pm
Add my voice to those above who feel that forced labor is the bane of existence, not the
wellspring. All this study says to me is that refusing to employ someone in capitalist
society does not make them happy. It makes them outcasts.
So, I say yes to a JG, because anyone who wants work should be offered work. But at the
same time, a proper JG is not forced labor. And the only way to ensure that it is not forced
labor, is to decouple basic needs from wage slavery.
November 21, 2017 at 1:31 pm
I am critical of those who distinguish between the job and the income. Of course the
income is critical to the dignity of the job. For many jobs, it is the primary source of that
dignity. The notion that all jobs should provide some intrinsic dignity unrelated to the
income, or that people whose dignity is primarily based on the income they earn rather than
the work they do are deluded, is to buy in to the propaganda of "passion" being a requirement
for your work and to really be blind to what is required to make a society function. Someone
has to change the diapers, and wipe the butts of old people. (yes, I've done both.) It
doesn't require passion and any sense of satisfaction is gone by about the second day. But if
you could make a middle class living doing it, there would be a lot fewer unhappy people in
It is well known that auto factory jobs were not perceived as good jobs until the UAW was
able to make them middle class jobs. The nature of the actual work itself hasn't changed all
that much over the years – mostly it is still very repetitive work that requires little
specialized training, even if the machine technology is much improved. Indeed, I would guess
that more intrinsic satisfaction came from bashing metal than pushing buttons on a CNC
machine, and so the jobs may even be less self-actualizing than they used to be.
The capitalist myth is that the private sector economy generates all the wealth and the
public sector is a claim on that wealth. Yet human development proves to us that this is not
true – a substantial portion of "human capital" is developed outside the paid economy,
government investment in R&D generates productivity growth, etc. And MMT demonstrates
that we do not require private sector savings to fund public investment.
We are still a ways from having the math to demonstrate that government investment in
caring and nurturing is always socially productive – first we need productivity numbers
that reflect more than just private sector "product." But I think we are moving in that
direction. Rather than prioritize a minimum wage JG of make-work, we should first simply pay
people good wages to raise their own children or look after their elderly and disabled
relatives. The MMT JG, as I understand it, would still require people to leave their kids
with others to look after them in order to perform some minimum wage task. That is just
Whiskey Bob ,
November 21, 2017 at 1:34 pm
Maybe it's dumb, it's certainly dumb in a system like the U.S. where work is brutal and
often low paid and paid childcare is not well remunerated either. But caretakers also working
seems to work in countries with greater income equality, good job protections, flexible work
arrangements, and a decent amount of paid parental leave – yea Denmark, they think
their children should be raised by professionals, but also work-life balance is still pretty
November 21, 2017 at 2:28 pm
My take is that capitalism has made the benefits and malus of having a job so ingrained
into culture and so reinforced. Having a job is so closely linked to happiness because it
gives you the money needed to pursue it.
A job affords you the ability to pursue whatever goals you want within a capitalist
framework. "Everything" costs money and so having a job gives you the money to pay for those
costs and go on to fulfill your pursuit of happiness.
Analyzing whether people are happy or not under these conditions seem apparent that it is
going to lead to results heavily biased towards finding happiness through employment.
The unemployed are often living off someone else's income and feel like an undeserving
parasite. Adults are generally ingrained with the culture that they have to grow up and be
independent and be able to provide for a new family that they will start up. Becoming
unemployed is like being emasculated and infantile, the opposite of what is expected of
There's also that not having a job is increasingly being punished especially in the case
of America. American wages have stayed either largely static or have worsened, making being
unemployed that much more of a burden on family or friends. Unemployment has been demonized
by Reaganism and has become systematically punishable for the long term unemployed. If you
are unemployed for too long, you start losing government support. This compounds the frantic
rush to get out of unemployment once unemployed.
There is little luxury to enjoy while unemployed. Life while unemployed is a frustrating
and often disappointing hell of constant job applications and having many of them lead to
nothing. The people providing support often start to become less so over time and become more
convinced of laziness or some kind of lack of character or willpower or education or ability
or whatever. Any sense of systemic failure is transplanted into a sense of personal failure,
especially under neoliberalism.
I am not so sure about the case of Europe and otherwise. I am sure that the third world
often has little or no social safety nets so having work (in exploitative conditions in many
cases) is a must for survival.
Anyways, I wonder about the exact methodologies of these studies and I think they often
take the current feelings about unemployment and then attempt to extrapolate talking points
for UBI/JG from them. Yes, UBI wouldn't change culture overnight and it would take a very,
very long time for people to let down their guard and adjust if UBI is to be implemented in a
manner that would warrant trust. This article seems to understand the potential for that, but
decides against it being a significant factor due to the studies emphasizing the malus of
I wonder how different the results would be if there were studies that asked people how
they would feel if they were unemployed under a UBI system versus the current system. I know
a good number of young people (mostly under 30) who would love to drop out and just play
video games all day. Though the significance of such a drastic demographic shift would
probably lead to great political consequences. It would probably prove the anti-UBI crowd
right in that under a capitalist framework, the capitalists and the employed wouldn't
tolerate the unemployed and would seek to turn them into an underclass.
Personally I think a combination of UBI and JG should be pursued. JG would work better
within the current capitalist framework. I don't think it is without its pitfalls due to
similar possible issues (with the similar policy of full employment) either under
Keynesianism (e.g. Milton Friedman sees it as inefficient) or in the USSR (e.g. bullshit
jobs). There is the possibility of UBI having benefits (not having the unemployed be a burden
but a subsidized contributer to the economy) so I personally don't think it should be fully
disregarded until it is understood better. I would like it if there were better scientific
studies to expand upon the implications of UBI and better measure if it would work or not.
The upcoming studies testing an actual UBI system should help to end the debates once and for
November 21, 2017 at 5:30 pm
I have a creative pursuit (no money) and a engineering/physical science technical career
(income!). I am proficient in and passionate about both. Over the last few years, the
technical career became tenuous due to consolidation of regional consulting firms (endemic to
this era)- wages flat to declining, higher work stress, less time off, conversation to
contact employment, etc.- which has resulted in two layoffs.
During the time of tenuous employment, my art took on a darker tone. During unemployment the
art stopped altogether.
I'm recently re-employed in a field that I'm not proficient. Both the peter principle and
imposter syndrome apply. My art has resumed, but the topics are singular about despair and
work, to the point that I feel like I'm constantly reworking the same one piece over and over
again. And the quality has plummeted too.
In some fields (e.g. engineering), being a wage slave is the only realistic option due to
the dominance of a small number of large firms. The big players crowd out independents and
free lancers, while pressuring their own employees through just-high-enough wages and
limiting time off. Engineering services is a relationship- based field, and the big boys (and
they are nearly all boys) have vastly bigger networks to draw work from than a small firm
unless that small firm has a big contact to feed them work (until they get gobbled up). The
big firms also have more areas of expertise which limits how useful a boutique firm is to a
client pool, except under very narrow circumstances. And if you are an introvert like most
engineering people, there's no way to compete with big firms and their marketing staff to
expand a network enough to compete.
In that way, consulting is a lot like art. To make a living at it you need either contacts or
a sponsor. Or an inheritance.
nihil obstet ,
November 21, 2017 at 6:07 pm
I would be interested to know what the definition of unemployment was for the purpose of
this study (I couldn't find it in the supplied links). If it's simply "people who don't have
a job," for example, then it would include the likes of the idle rich, retirees, wards of the
state, and so on. Binary statements like this one do make it sound like the broad definition
is the one in use:
When considering the world's population as a whole, people with a job evaluate the
quality of their lives much more favorably than those who are unemployed.
The conclusion seems at odds with results I've seen for some of those groups – for
example, I thought it was fairly well accepted that retirees who are supported by a
government plan that is sufficient for them to live on were generally at least as happy as
they had been during their working life.
If, on the other hand, the study uses a narrow definition (e.g. people who are of working
age, want a job or need one to support themselves financially, but can't find one) then the
conclusion seems a lot more reasonable. But that's a heavily loaded definition in economic
and cultural terms. In that case, the conclusion (people are happier if they have a job) only
holds true in the current prevailing model of society. It doesn't rule out the possibility of
structuring society or the economy differently in such a way that people can be non-working
and happy. The existence of one such population already (retirees) strongly suggests that
outcomes like this are possible. A UBI would be an example of just such a restructuring of
society, and therefore I don't think that this study and its result are necessarily a valid
argument against it.
November 21, 2017 at 6:52 pm
Which makes a person happier -- being considered worthless by one's society or valuable?
How many studies do we need to answer that question? Apparently, a lot, because studies like
this one keep on going. The underlying assumption is that jobs make one valuable. So if you
don't have a job you're worthless. Now, who's happier on the whole, people with jobs or the
unemployed? That's surely good for a few more studies. Did you know that members of socially
devalued groups (minorities, non-heteros, and the like) have higher rates of dysfunction,
rather like the unemployed? Hmm, I wonder if there's maybe a similar principle at work. And
my solution is not to turn all the people of color white nor to change all the women to men
nor to "cure" gays. Well, maybe a few more conclusive studies of this kind will convince me
that we must all be the same, toeing the line for those whom it has pleased God to dictate
our values to us.
I am convinced that we shouldn't outlaw jobs, because I believe the tons of stories about
happy people in their jobs However, I also believe we shouldn't force everyone into jobs,
because I know tons of stories about happy people without jobs. You know, the stories that
the JG people explain away: parents caring for their children (JG -- "oh, we'll make that a
job!"), volunteers working on local planning issues (JG -- "oh, we'll make that a job, too.
In fact, we'll make everything worth doing a job. The important thing is to be able to force
people to work schedules and bosses, because otherwise, they'll all lie around doing nothing
and be miserable"), the retired (JG -- "that's not really the same, but they'd be better off
staying in a job"). And this is all before we get to those who can't really hold a job
because of disability or geography or other responsibilities.
I support the JG over the current situation, but as to what we should be working for, the
more I read the JG arguments, the more paternalistic and just plain narrow minded judgmental
Lambert Strether ,
November 22, 2017 at 1:24 am
If someone else gives you a sense of purpose and takes it away what was the purpose?
Data like that provided by Mitchell is important to demolishing the horrid "economic
anxiety" frame much beloved by liberals, especially wonkish Democrats.* It's not (a) just feelings , to be solved by scented candles or training (the liberal version of
rugged individualism) and (b) the effects are real and measurable. It's not surprising, when
you think about it, that the working class is about work .
* To put this another way, anybody who has really suffered the crawling
inwardness of anxiety, in the clinical sense, knows that it affects every aspect of one's
being. Anxiety is not something deplorables deploy as cover for less than creditable
15, 2017 at 06:58 AM
What's missing in each and every case above -- at least in the USA! -- is
countervailing power. 6% labor union density in private business is equivalent
to 20/10 blood pressure in the human body: it starves every other healthy
cm -> Denis
Drew ... ,
April 15, 2017 at 12:16 PM
It is not just labor market bargaining power that has gone missing, it
is not only the lost political muscle for the average person (equal campaign
financing, almost all the votes), it is also the lack of machinery to deal
with day-to-day outrages on a day-to-day basis (that's called lobbying).
Late dean of the Washington press corps David Broder told a young reporter
that when he came to DC fifty years ago (then), all the lobbyists were union.
Big pharma's biggest rip-offs, for profit school scams, all the stuff you
hear about for one day on the news but no action is ever taken -- that's
because there is no (LABOR UNION) mechanism to stay on top of all (or any)
of it (LOBBYISTS).
It is a chicken and egg problem. Before large scale automation and globalization,
unions "negotiated" themselves their power, which was based on employers
having much fewer other choices. Any union power that was ever legislated
was legislated as a *result* of union leverage, not to enable the latter
(and most of what was legislated amounts to limiting employer interference
Peter K. -> cm... ,
April 15, 2017 at 12:18 PM
It is a basic feature of human individual and group relations that when
you are needed you will be treated well, and when you are not needed you
will be treated badly (or at best you will be ignored if that's less effort
overall). And by needed I mean needed as a specific individual or narrowly
What automation and globalization have done is created a glut of labor
- specifically an oversupply of most skill sets relative to all the work
that has to be done according to socially mediated decision processes (a
different set of work than what "everybody" would like to happen as long
as they don't have to pay for it, taking away from other necessary or desired
expenditure of money, effort, or other resources).
Maybe when the boomers age out and become physically too old to work,
the balance will tip again.
"What automation and globalization have done is created a glut of labor
cm -> Peter K.... ,
April 15, 2017 at 01:32 PM
No it's been policy and politics. Automation and globalization are red
herrings. They've been used to enrich the rich and stick it to everyone
They don't have to be used that way.
There is nothing natural or inherent about it. It's all politics and
class war and the wrong side is winning.
OK - they have *enabled* it. The agency is always on the human side. But
at the same time, you cannot wish or postulate away human greed.
cm -> Peter K.... ,
April 15, 2017 at 01:44 PM
Same thing with the internet - it has been hailed as a democratizing force,
but instead it has mostly (though not wholly) amplified the existing power
differentials and motivation structures.
-> cm... ,
April 15, 2017 at 03:19 PM
Anecdotally, a lot of companies and institutions are either restricting
internal internet access or disconnecting parts of their organizations from
the internet altogether, and disabling I/O channels like USB sticks, encrypting
disks, locking out "untrusted" boot methods, etc. The official narrative
is security and preventing leaks of confidential information, but the latter
is clearly also aimed in part at whistleblowers disclosing illegal or unethical
practices. Of course that a number of employees illegitimately "steal" data
for personal and not to uncover injustices doesn't really help.
Surely there is a huge difference between the labor market here and the
labor market in continental Europe -- though labor there faces the same
squeezing forces it faces here. Think of German auto assembly line workers
making $60 an hour counting benefits.
April 15, 2017 at 04:14 PM
Think Teamster Union UPS drivers -- and pity the poor, lately hired (if
they are even hired) Amazon drivers -- maybe renting vans.
The Teamsters have the only example here of what is standard in continental
Europe: centralized bargaining (aka sector wide labor agreements): the Master
National Freight Agreement: wherein everybody doing the same job in the
same locale (entire nation for long distance truckers) works under one common
contract (in French Canada too).
Imagine centralized bargaining for airlines. A few years ago Northwest
squeezed a billion dollars in give backs out of its pilots -- next year
gave a billion dollars in bonuses to a thousand execs. Couldn't happen under
centralized bargaining -- wouldn't even give the company any competitive
"What's missing in each and every case above -- at least in the USA! --
is countervailing power."
It was deliberately destroyed. Neoliberalism needs to "atomize" work
force to function properly and destroys any solidarity among workers. Unions
are anathema for neoliberalism, because they prevent isolation and suppression
Amazon and Uber are good examples. Both should be prosecuted under RICO
act. Wall-Mart in nor far from them.
Rising fatalities from heart disease and stroke, diabetes, drug overdoses,
accidents and other conditions caused the lower life expectancy revealed
in a report by the National Center for Health Statistics .
== quote ==
Anne Case and Angus Deaton garnered national headlines in 2015 when they
reported that the death rate of midlife non-Hispanic white Americans had
risen steadily since 1999 in contrast with the death rates of blacks, Hispanics
and Europeans. Their new study extends the data by two years and shows that
whatever is driving the mortality spike is not easing up.
... ... ..
Offering what they call a tentative but "plausible" explanation, they
write that less-educated white Americans who struggle in the job market
in early adulthood are likely to experience a "cumulative disadvantage"
over time, with health and personal problems that often lead to drug overdoses,
alcohol-related liver disease and suicide.
== end of quote ==
Greed is toxic. As anger tends to accumulate, and then explode, at some
point neoliberals might be up to a huge surprise. Trump was the first swan.
Everybody bet on Hillary victory. And then...
"... John Williams counts the long term discouraged workers (discouraged for more than one year) who formerly (before "reforms") were counted officially. When the long term discouraged are counted, the US unemployment rate is in the 22-23 percent range. This is born out by the clear fact that the labor force participation rate has been falling throughout the alleded "recovery." Normally, labor force participation rates rise during economic recoveries. ..."
"... It is an extraordinary thing that although the US government itself reports that if even a small part of discouraged workers are countered as unemployed the unemployment rate is 8.6%, the presstitute financial media, a collection of professional liars, still reports, in the face of the government's admission, that the unemployment rate as 4.4%. ..."
The "recovery" is more than a mystery. It is a miracle. It exists only on fake news paper.
According to CNN, an unreliable source for sure, Jennifer Tescher, president and CEO of the Center
for Financial Services Innovation, reports that about half of Americans report that their living
expenses are equal to or exceed their incomes. Among those aged 18 to 25 burdened by student loans,
54% say their debts are equal to or exceed their incomes. This means that half of the US population
has ZERO discretionary income. So what is driving the recovery?
Nothing. For half or more of the US population there is no discretionary income there with which
to drive the economy.
The older part of the population has no discretionary income either. For a decade there has been
essentially zero interest on the savings of the elderly, and if you believe John Williams of shadowstats.com,
which I do, the real interest rates have been zero and even negative as inflation is measured in
a way designed to prevent Social Security cost of living adjustments.
In other words, the American economy has been living on the shrinkage of the savings and living
standards of its population.
Last Friday's employment report is just another lie from the government. The report says that
the unemployment rate is 4.4% and that June employment increased by 222,000 jobs. A rosy picture.
But as I have just demonstrated, there are no fundamentals to support it. It is just another US government
lie like Saddam Hussein's weapons of mass destruction, Assad's use of chemical weapons against his
own people, Russian invasion of Ukraine, and so forth and so on.
The rosy unemployment picture is totally contrived. The unemployment rate is 4.4% because discouraged
workers who have not searched for a job in the past four weeks are not counted as unemployed.
The BLS has a second measure of unemployment, known as U6, which is seldom reported by the presstitute
financial media. According to this official measure the US unemployment rate is about double the
Why? the U6 rate counts discouraged workers who have been discouraged for less than one year.
John Williams counts the long term discouraged workers (discouraged for more than one year) who
formerly (before "reforms") were counted officially. When the long term discouraged are counted,
the US unemployment rate is in the 22-23 percent range. This is born out by the clear fact that the
labor force participation rate has been falling throughout the alleded "recovery." Normally, labor
force participation rates rise during economic recoveries.
It is very easy for the government to report a low jobless rate when the government studiously
avoids counting the unemployed.
It is an extraordinary thing that although the US government itself reports that if even a small
part of discouraged workers are countered as unemployed the unemployment rate is 8.6%, the presstitute
financial media, a collection of professional liars, still reports, in the face of the government's
admission, that the unemployment rate as 4.4%.
Now, let's do what I have done month after month year after year. Let's look at the jobs that
the BLS alleges are being created. Remember, most of these alleged jobs are the product of the birth/death
model that adds by assumption alone about 100,000 jobs per month. In other words, these jobs come
out of a model, not from reality.
Where are these reported jobs? They are where they always are in lowly paid domestic services.
Health care and social assistance, about half of which is "ambulatory health care services," provided
59,000 jobs. Leisure and hospitality provided 36,000 jobs of which 29,300 consist of waitresses and
bartenders. Local government rose by 35,000. Manufacturing, once the backbone of the US economy,
provided a measly 1,000 jobs.
As I have emphasized for a decade or two, the US is devolving into a third world workforce where
the only employment available is in lowly paid domestic service jobs that cannot be offshored and
that do not pay enough to provide an independent existance. This is why 50% of 25-year olds live
at home with their parents and why there are more Americans aged 24-34 living with parents than living
This is not the economic profile of a "superpower" that the idiot neoconservatives claim the US
to be. The American economy that offshoring corporations and financialization have created is incapable
of supporting the enormous US debt burden. It is only a matter of time and circumstance.
I doubt that the United States can continue in the ranks of a first world economy. Americans have
sat there sucking their thumbs while their "leaders" destroyed them.
PaulCraigRoberts.org by permission of author or representative)
"Weekly Initial Unemployment Claims decrease to 258,000"
by Bill McBride...3/30/2017...08:40:00 AM
The DOL reported:
..... In the week ending March 25, the advance figure for
seasonally adjusted initial claims was 258,000, a decrease of
3,000 from the previous week's unrevised level of 261,000.
The 4-week moving average was 254,250, an increase of 7,750
from the previous week's unrevised average of 246,500.
The previous week was revised up.
...This was above the consensus forecast.
The low level of claims suggests relatively few layoffs."
Thursday, March 30, 2017 at 05:40 PM
libezkova said in reply to im1dc...
This "seasonally adjusted" magic is more like another flavor
of statistical fraud... Because assumptions behind those
adjustments are so wrong they are not even discussed.
Also McJobs and Walmart jobs -- anything paying below
subsistence level are not actually jobs.
It's more like slavery. That's another nail in the coffin
of "free market" ideology. What is so free in a person taking
job in Wal Mart? Or any other McJob? That's neo-feudalism
with Wal Mart as a huge feudal landlord and mass of
desperate, hungry peasants.
Please note that around $100K jobs in the USA are needed just
to accommodate growing workforce.
== quote ==
How Many Jobs Are Needed to Keep Up with Population
Submitted by Robert Oak on September 8, 2012 - 6:45pm
The press quotes all sorts of figures for the number of
monthly job gains needed to keep up with population growth.
We see numbers like 80,000, 100,000, 125,000 and 175,000
thrown around like statistical snow as the number of jobs
needed each month just to keep up. What's the right one? How
many jobs are needed each month just to keep up with
The actual monthly amount can be calculated and the
Atlanta Fed even did us a huge favor by publishing an
interactive monthly jobs calculator so you can go check for
yourself. This month shows we need 104,116 payroll jobs to
maintain the same unemployment rate of 8.1% with all of the
other same terrible conditions the state of employment is in.
Thursday, March 30, 2017 at 08:06 PM
Krugman is a neoliberal stooge. Since when Social Security is an entitlement program. If you start
contributing at 25 and retire at 67 (40 years of monthly contributions), you actually get less then
you contribute, unless you live more then 80 years. It just protects you from "free market casino".
"... A "contribution" theory of what a proper distribution of income might be can only be made coherent if there are constant returns to scale in the scarce, priced, owned factors of production. Only then can you divide the pile of resources by giving to each the marginal societal product of their work and of the resources that they own. ..."
"... n a world--like the one we live in--of mammoth increasing returns to unowned knowledge and to networks, no individual and no community is especially valuable. Those who receive good livings are those who are lucky -- as Carrier's workers in Indiana have been lucky in living near Carrier's initial location. It's not that their contribution to society is large or that their luck is replicable: if it were, they would not care (much) about the departure of Carrier because there would be another productive network that they could fit into a slot in. ..."
"... If not about people, what is an economy about? ..."
"... I hadn't realized that Democrats now view Social Security and Medicare as "government handouts". ..."
"... Some Democrats like Krugman are Social Darwinists. ..."
"... PK is an ignorant vicious SOB. Many of those "dependent hillbillies" PK despises paid SS and Medicare taxes for many decades, most I know have never been on foos stamps, and if they are on disability it is because they did honest hard work, something PK knows nothing about. What an ignorant jerk. ..."
"... What is a very highly subsidized industry that benefits Delong and Krugman? Higher education. Damn welfare queens! :) ..."
"... No Krugman is echoing the tribalism of Johnny Bakho. These people won't move or educate themselves or "skill up" so they deserve what they get. Social darwinism. ..."
"... People like Bakho are probably anti-union as well. They're seen as relics of an earlier age and economically "uncompetitve." See Fred Dobbs below. That's the dog whistle about the "rust belt." ..."
"... Paul Krugman's reputation, formerly that of a a noted economic, succumbed after a brief struggle to Trump Derangement Syndrome. Friends said Mr Krugman's condition had been further aggravated by cognitive dissonance from a severely challenged worldview. ..."
"... He is survived by the New York Times, also said to be in failing health. ..."
"... For a long time DeLong was mocking the notion of "economic anxiety" amongst the voters. Does this blog post mean he's rethinking that idea? ..."
"... The GOP has a long history of benefitting from the disconnect where a lot of their voters are convinced that when government money goes to others (sometimes even within their own white congregations), then it is not deserved. ..."
December 18, 2016 at 05:13 AM ,
2016 at 05:13 AM
anne -> anne... ,
December 18, 2016 at 05:18 AM
December 17, 2016
What Do Trump Voters Want?
By Paul Krugman
Brad DeLong has an interesting meditation * on markets and political demands - inspired by
a note from Noah Smith ** - that offers food for thought. I wonder, however, if Brad's discussion
is too abstract; and I also wonder whether it fully recognizes the disconnect between what Trump
voters think they want and reality. So, an entry of my own.
What Brad is getting at is the widespread belief by, well, almost everyone that they are entitled
to - have earned - whatever good hand they have been dealt by the market economy. This is reflected
in the more or less universal belief of the affluent that they deserve what they have; you could
see this in the rage of rentiers at low interest rates, because it's the Federal Reserve's job
to reward savers, right? In this terrible political year, the story was in part one of people
in Appalachia angrily demanding a return of the good jobs they used to have mining coal - even
though the world doesn't want more coal given fracking, and it can get the coal it still wants
from strip mines and mountaintop removal, which don't employ many people.
And what Brad is saying, I think, is that what those longing for the return to coal want is
those jobs they deserve, where they earn their money - not government handouts, no sir.
A fact-constrained candidate wouldn't have been able to promise such people what they want;
Trump, of course, had no problem.
But is that really all there is? Working-class Trump voters do, in fact, receive a lot of government
handouts - they're almost totally dependent on Social Security for retirement, Medicare for health
care when old, are quite dependent on food stamps, and many have recently received coverage from
Obamacare. Quite a few receive disability payments too. They don't want those benefits to go away.
But they managed to convince themselves (with a lot of help from Fox News etc) that they aren't
really beneficiaries of government programs, or that they're not getting the "good welfare", which
only goes to Those People.
And you can really see this in the regional patterns. California is an affluent state, a heavy
net contributor to the federal budget; it went 2-1 Clinton. West Virginia is poor and a huge net
recipient of federal aid; it went 2 1/2-1 Trump.
I don't think any kind of economic analysis can explain this. It has to be about culture and,
as always, race.
ken melvin -> anne... ,
December 18, 2016 at 05:32 AM
December 17, 2016
Regional Policy and Distributional Policy in a World Where People Want to Ignore the Value
and Contribution of Knowledge- and Network-Based Increasing Returns
Pascal Lamy: "When the wise man points at the moon, the fool looks at the finger..."
Perhaps in the end the problem is that people want to pretend that they are filling a valuable
role in the societal division of labor, and are receiving no more than they earn--than they contribute.
But that is not the case. The value--the societal dividend--is in the accumulated knowledge
of humanity and in the painfully constructed networks that make up our value chains.
A "contribution" theory of what a proper distribution of income might be can only be made
coherent if there are constant returns to scale in the scarce, priced, owned factors of production.
Only then can you divide the pile of resources by giving to each the marginal societal product
of their work and of the resources that they own.
That, however, is not the world we live in.
In a world--like the one we live in--of mammoth increasing returns to unowned knowledge
and to networks, no individual and no community is especially valuable. Those who receive good
livings are those who are lucky -- as Carrier's workers in Indiana have been lucky in living near
Carrier's initial location. It's not that their contribution to society is large or that their
luck is replicable: if it were, they would not care (much) about the departure of Carrier because
there would be another productive network that they could fit into a slot in.
All of this "what you deserve" language is tied up with some vague idea that you deserve what
you contribute--that what your work adds to the pool of society's resources is what you deserve.
This illusion is punctured by any recognition that there is a large societal dividend to be
distributed, and that the government can distribute it by supplementing (inadequate) market wages
determined by your (low) societal marginal product, or by explicitly providing income support
or services unconnected with work via social insurance. Instead, the government is supposed to,
somehow, via clever redistribution, rearrange the pattern of market power in the economy so that
the increasing-returns knowledge- and network-based societal dividend is predistributed in a relatively
egalitarian way so that everybody can pretend that their income is just "to each according to
his work", and that they are not heirs and heiresses coupon clipping off of the societal capital
of our predecessors' accumulated knowledge and networks.
On top of this we add: Polanyian disruption of patterns of life--local communities, income
levels, industrial specialization--that you believed you had a right to obtain or maintain, and
a right to believe that you deserve. But in a market capitalist society, nobody has a right to
the preservation of their local communities, to their income levels, or to an occupation in their
industrial specialization. In a market capitalist society, those survive only if they pass a market
profitability test. And so the only rights that matter are those property rights that at the moment
carry with them market power--the combination of the (almost inevitably low) marginal societal
products of your skills and the resources you own, plus the (sometimes high) market power that
those resources grant to you.
This wish to believe that you are not a moocher is what keeps people from seeing issues of
distribution and allocation clearly--and generates hostility to social insurance and to wage supplement
policies, for they rip the veil off of the idea that you deserve to be highly paid because you
are worth it. You aren't.
And this ties itself up with regional issues: regional decline can come very quickly whenever
a region finds that its key industries have, for whatever reason, lost the market power that diverted
its previously substantial share of the knowledge- and network-based societal dividend into the
coffers of its firms. The resources cannot be simply redeployed in other industries unless those
two have market power to control the direction of a share of the knowledge- and network-based
societal dividend. And so communities decline and die. And the social contract--which was supposed
to have given you a right to a healthy community--is broken.
As I have said before, humans are, at a very deep and basic level, gift-exchange animals. We
create and reinforce our social bonds by establishing patterns of "owing" other people and by
"being owed". We want to enter into reciprocal gift-exchange relationships. We create and reinforce
social bonds by giving each other presents. We like to give. We like to receive. We like neither
to feel like cheaters nor to feel cheated. We like, instead, to feel embedded in networks of mutual
reciprocal obligation. We don't like being too much on the downside of the gift exchange: to have
received much more than we have given in return makes us feel very small. We don't like being
too much on the upside of the gift exchange either: to give and give and give and never receive
makes us feel like suckers.
We want to be neither cheaters nor saps....
If not about people, what is an economy about?
Observer -> anne... ,
December 18, 2016 at 05:59 AM
I hadn't realized that Democrats now view Social Security and Medicare as "government handouts".
Peter K. -> Observer... ,
December 18, 2016 at 09:25 AM
Some Democrats like Krugman are Social Darwinists. They're the "center-left" versus Bernie
Sanders's leftwing supporters.
Tom aka Rusty -> anne... ,
December 18, 2016 at 06:06 AM
PK is an ignorant vicious SOB. Many of those "dependent hillbillies" PK despises paid SS and
Medicare taxes for many decades, most I know have never been on foos stamps, and if they are on
disability it is because they did honest hard work, something PK knows nothing about. What an
Tom aka Rusty -> Tom aka Rusty... ,
December 18, 2016 at 06:31 AM
What is a very highly subsidized industry that benefits Delong and Krugman? Higher education.
Damn welfare queens! :)
RC AKA Darryl, Ron -> Tom aka Rusty... ,
December 18, 2016 at 06:37 AM
Not LOL worthy, but still a good solid :<)
anne -> Tom aka Rusty... ,
December 18, 2016 at 06:53 AM
EMichael -> Tom aka Rusty... ,
December 18, 2016 at 07:18 AM
Education from elementary through college and professional levels is of course publicly supported
in every reasonably advanced country in the world.
What is a very highly subsidized industry that benefits Rusty?
Peter K. -> EMichael... ,
December 18, 2016 at 09:33 AM
Damn welfare queen!
Or Krugman's textbook industry.
BenIsNotYoda -> Tom aka Rusty... ,
December 18, 2016 at 10:49 AM
PK's rhetoric, together with shills like pgl and emichael, has deteriorated quite a bit. Nicely
anne -> Tom aka Rusty... ,
December 18, 2016 at 06:34 AM
pgl -> anne... ,
December 18, 2016 at 09:34 AM
[ This is a false quote. A writer should never be falsely quoted. There is no such expression
used in this or any other essay by Paul Krugman. ]
It must be really cold where Rusty lives and he woke up in one foul mood.
DeDude -> Tom aka Rusty... ,
December 18, 2016 at 08:58 AM
Exactly the same could be said about many of those inner city minorities that the "dependent hillbillies"
look down on as "welfare queens". That may be one of the reasons they take special issues with
"food stamps", because in contrast to the hillbillies, inner city poor people cannot grow their
own food. What Krugman is pointing out is the hypocrisy of their tribalism - and also the idiocy,
because the dismantling of society would ultimately hurt the morons that voted GOP into power
Peter K. -> DeDude... ,
December 18, 2016 at 09:31 AM
"What Krugman is pointing out is the hypocrisy of their tribalism "
Peter K. -> Peter K.... ,
December 18, 2016 at 09:58 AM
No Krugman is echoing the tribalism of Johnny Bakho. These people won't move or educate
themselves or "skill up" so they deserve what they get. Social darwinism.
People like Bakho are probably anti-union as well. They're seen as relics of an earlier age
and economically "uncompetitve." See Fred Dobbs below. That's the dog whistle about the "rust
Julio -> Tom aka Rusty...
December 18, 2016 at 10:53 AM
His tone is supercilious and offensive. But your argument is that they are not "dependent" because
they earned every benefit they get from the government. I think his point is that "dependent"
is not offensive -- the term jus reflects how we all depend on government services. DeLong makes
the point much better in the article quoted by anne above.
Observer -> anne... ,
December 18, 2016 at 06:07 AM
RC AKA Darryl, Ron -> Observer... ,
December 18, 2016 at 06:38 AM
Paul Krugman's reputation, formerly that of a a noted economic, succumbed after a brief
struggle to Trump Derangement Syndrome. Friends said Mr Krugman's condition had been further aggravated
by cognitive dissonance from a severely challenged worldview.
He is survived by the New York Times, also said to be in failing health.
kthomas -> anne... ,
December 18, 2016 at 06:52 AM
Judith Miller. Dowd. Doh!at. Broder. Brooks.
anne -> anne... ,
December 18, 2016 at 06:55 AM
The New York Times is easily the finest newspaper in the world, is broadly recognized as such
and is of course flourishing. Such an institution will always have sections or editors and writers
of relative strength but these relative strengths change over time as the newspaper continually
Observer -> anne... ,
December 18, 2016 at 07:36 AM
anne -> Dan Kervick... ,
December 18, 2016 at 07:17 AM
NYT Co. to revamp HQ, vacate eight floors in consolidation
"In an SEC filing, New York Times Co. discloses a staff communication it provided today to
employees about a revamp of its headquarters -- including consolidating floors.
The company will vacate at least eight floors, consolidating workspaces and allowing for "significant"
rental income, the memo says."
Brad DeLong's piece was thoughtful.
Peter K. -> Dan Kervick... ,
December 18, 2016 at 09:30 AM
[ Importantly so, worth a couple of close readings. ]
For a long time DeLong was mocking the notion of "economic anxiety" amongst the voters. Does
this blog post mean he's rethinking that idea?
Peter K. -> Peter K.... ,
December 18, 2016 at 09:57 AM
Technocratic Democrats like DeLong and Krugman (or neoliberal centrists) are notoriously against
economic democracy and unions and the like.
Dan Kervick -> Peter K.... ,
December 18, 2016 at 01:13 PM
Maybe that's a factor here.
I think he and others have finally reached a point where denial is not an option.
DeDude -> anne... ,
December 18, 2016 at 08:37 AM
The GOP has a long history of benefitting from the disconnect where a lot of their voters
are convinced that when government money goes to others (sometimes even within their own white
congregations), then it is not deserved. But if that same government money goes to themselves
(or their real close relatives), then it is a hard earned and well-deserved payback for their
sacrifices and tax payments. So the GOP leadership has always called it "saving social security"
and "cracking down on fraud" rather than admitting to their attempts to dismantle those programs.
The Dems better be on the ball and call it what it is. If you want to save those programs you
just have to prevent rich people from wiggling out of paying for them (don't repeal the Obamacare
medicare taxes on the rich).
rjs -> anne... ,
December 18, 2016 at 10:12 AM
What Do Trump Voters Want? for starters, they'd probably want people like Krugman to stop looking
down their noses at them like they're lepers..
DeDude -> rjs ... ,
December 18, 2016 at 01:49 PM
Can we at least call those with the pointy white hats, despicable?
rjs -> DeDude... ,
December 18, 2016 at 02:29 PM
DeDude -> rjs ... ,
December 18, 2016 at 03:45 PM
depends on how many of those people who voted for Obama in 2012 you figure to have joined the
pointy white hat club since...
Would they not be despicable regardless of what kind of wood they previously enjoyed burning?
RC AKA Darryl, Ron : ,
December 18, 2016 at 06:15 AM
Excellent post election commentary from Bloom County (comic).
David : ,
December 18, 2016 at 07:16 AM
On the Pk piece. I think it is really about human dignity, and the need for it. There were a lot
of factors in this horrific election, but just as urban blacks need to be spared police brutality,
rural whites need a dignified path in their lives. Everyone, united, deserves such a path.
EMichael -> David... ,
December 18, 2016 at 07:36 AM
This is a real challenge for economists; how do we rebuild the rust belt (which applies to
areas beyond the literal rust belt).
If we do not, we risk Trump 2.0, which could be very scary indeed.
I agree to a point, but what the piece is about is that in search of a solution to the problems
of the rustbelt (whatever the definition is),people voted for Trump who had absolutely no plan
to solve such a problem, other than going back to the future and redoing Nafta and getting rid
Peter K. -> EMichael... ,
December 18, 2016 at 08:48 AM
Meanwhile, that vote also meant that the safety net that helps all Americans in trouble was
being placed in severe risk.
Those voters were fixed on his rhetoric and right arm extended while his left hand was grabbing
them by the (in deference to Anne I will not say the words, but Trump himself has said one of
them and the other is the male version).
"I agree to a point,"
sglover -> EMichael... ,
December 18, 2016 at 06:08 PM
Really? You didn't seem to before. You'd say what Duy or Noah Smith or DeLong were mulling about was
off-limits. You'd ban them from the comment section if you could. "This is a real challenge for economists; how do we rebuild the rust belt (which applies to
areas beyond the literal rust belt).
If we do not, we risk Trump 2.0, which could be very scary indeed." I don't see why this is such a controversial point for centrist like Krugman. How do we appeal to the white working class without contradicting our principles?
By promoting policies that raise living standards. By delivering, which mean left-wing policies
not centrist tinkering. It's the Clinton vs. Sanders primary. Hillary could have nominated Elizabeth Warren as her VP candidate but her corporate masters
wouldn't let her.
"Meanwhile, that vote also meant that the safety net that helps all Americans in trouble was being
placed in severe risk."
Fred C. Dobbs -> David... ,
December 18, 2016 at 08:07 AM
That safety net is an improvement over 1930. But it's been fraying so badly over the last 20-30
years that it's almost lost all meaning. It's something people turn to before total destitution,
but for rebuilding a life? A sick joke, filled with petty hassles and frustrations.
And the fraying has been a solidly bipartisan project. Who can forget welfare "reform"?
So maybe the yokels you're blaming for the 10,000-th time might not buy your logic or your
In the rustbelt, Dems are accustomed to
Peter K. -> Fred C. Dobbs... ,
December 18, 2016 at 08:49 AM
dealing with their supporters who are
union members. (Why the auto industry
was bailed out, dontchaknow.)
That obviously doesn't work so well
any more. In that region, recovery
was 'less than robust', no?
In New England, where unions are much
less of a factor, recovery has been
relatively successful. Dems remain
pretty strong here.
Why can't the rustbelt be more
like the northeast?
The ongoing new industrial revolution
would seem to have much to do
with such matters.
"In New England, where unions are much less of a factor, recovery has been relatively successful.
Dems remain pretty strong here."
Fred C. Dobbs -> Peter K.... ,
December 18, 2016 at 09:30 AM
Is that accurate?
unions don't have much to celebrate (in MA)
Fred C. Dobbs -> Peter K.... ,
December 18, 2016 at 09:44 AM
via @BostonGlobe - August 2014
... At the height of their influence in the 1950s, labor unions could claim to represent about
1 of every 3 American workers. Today, it's 1 in 9 - and falling.
Some have seen the shrinking size and waning influence of labor unions as a sign that the US
economy is growing more flexible and dynamic, but there's mounting evidence that it is also contributing
to slow wage growth and the rise in inequality. ...
(Union membership) NY 24.7%, MA 12.4%, SC 2.1%
... Are unions faring any better here in Massachusetts?
While Massachusetts's unions are stronger than average, it's not among the most heavily unionized
states. That honor goes to New York, where 1 in every 4 workers belongs to a union. After New
York, there are 11 other states with higher union membership rates then Massachusetts.
Here too, though, the decline in union membership over time has been steep.
(From 1983 to 2013) US -42%, MA -44%
Union Members Summary - BLS - Jan 2016
Peter K. -> Fred C. Dobbs... ,
December 18, 2016 at 09:56 AM
... In 2015, 30 states and the District of Columbia had union membership rates below
that of the U.S. average, 11.1 percent, and 20 states had rates above it. All states
in the East South Central and West South Central divisions had union membership rates
below the national average, and all states in the Middle Atlantic and Pacific divisions
had rates above it. Union membership rates increased over the year in 24 states and
the District of Columbia, declined in 23 states, and were unchanged in 3 states.
(See table 5.)
Five states had union membership rates below 5.0 percent in 2015: South Carolina
(2.1 percent), North Carolina (3.0 percent), Utah (3.9 percent), Georgia (4.0 percent),
and Texas (4.5 percent).
Two states had union membership rates over 20.0 percent in
2015: New York (24.7 percent) and Hawaii (20.4 percent).
State union membership levels depend on both the employment level and the union
membership rate. The largest numbers of union members lived in California (2.5 million)
and New York (2.0 million).
Roughly half of the 14.8 million union members in the
U.S. lived in just seven states (California, 2.5 million; New York, 2.0 million;
Illinois, 0.8 million; Pennsylvania, 0.7 million; and Michigan, Ohio, and New Jersey,
0.6 million each), though these states accounted for only about one-third of wage and
salary employment nationally.
(It appears that New England union participation
lags in the northeast, and also in the rest of
the US not in the Red Zone.)
Table 5. Union affiliation of employed wage and salary workers by state
"In New England, where unions are much
Fred C. Dobbs -> Peter K.... ,
December 18, 2016 at 10:12 AM
less of a factor, recovery has been
relatively successful. Dems remain
pretty strong here."
I'm questionning the causation. B/c New England has fewer unions, they're doing better?
My bet is that most of these centrists like Krugman don't like unions and think they're ancient
relics which hurt the economies "competitiveness."
I have noted before that New England
Fred C. Dobbs -> Peter K.... ,
December 18, 2016 at 10:21 AM
is doing better 'than average' (IMO)
because of high-tech industry & education.
Not necessarily because of a lack of
unionization, which is prevalent here
in public education & among service
workers. Note that in higher ed,
much here is private.
Private industry here traditionally
is not heavily unionized, although
that is probably not the case
among defense corps.
As to causation, I think the
Fred C. Dobbs -> Fred C. Dobbs... ,
December 18, 2016 at 10:24 AM
implication is that 'Dems dealing
with unions' has not been working
all that well, recovery-wise,
particularly in the rust belt.
That must have as much to do with
industrial management as it does
with labor, and the ubiquitous
on-going industrial revolution.
It may well be that in the
sglover -> Fred C. Dobbs... ,
December 18, 2016 at 06:10 PM
rust belt, corps are doing
reasonably well, but not as
much with labor. That is an
industrial revolution problem.
"In the rustbelt, Dems are accustomed to dealing with their supporters who are union members.
(Why the auto industry was bailed out, dontchaknow.)"
DeDude -> David... ,
December 18, 2016 at 09:35 AM
Uh huh. Sure.
Know how many times HRC visited UAW groups during her "campaign" in Michigan?
Those autoworkers are real ingrates.
Everybody needs, and desperately crave, self-confidence and dignity. In white rural culture that
has always been connected to the old settler mentality and values of personal "freedom" and "independence".
It is unfortunate that this freedom/independence mythology has been what attracted all the immigrants
from Europe over here. So it is as strongly engrained (both in culture and individual values)
as it is outdated and counterproductive in the world of the future. I am not sure that society
can help a community where people find themselves humiliated by being helped (especially by bad
government). Maybe somehow try to get them to think of the government help as an earned benefit?
Fred C. Dobbs -> DeDude... ,
December 18, 2016 at 10:22 AM
Ok, that seems very quaint.
September 11, 2015 |
The conventional unemployment rate (U3) is now close to assessments of its longer-run normal level,
but other dimensions of labour market slack remain elevated:
- U3 does not reflect the incidence of hidden unemployment, namely, about 2½ million
Americans who are not actively searching for work but are likely to rejoin the labour force as
the economy strengthens; and
- U3 does not incorporate the extent of underemployment (individuals working part-time
who are unable to find a full-time job), which remains significantly higher than its pre-recession
Thus, the 'true' unemployment rate – including hidden unemployment and underemployment –currently
stands at around 7¼%, and the total magnitude of the US employment gap is equivalent to around 3½
million full-time jobs.
- Non-farm payrolls have been expanding at a solid pace, but that pace will need to be maintained
for about two more years in order to close the employment gap.
In particular, recent analysis indicates that the potential labour force is expanding by about
50,000 individuals per month due to demographic factors. Thus, if non-farm payrolls continue rising
steadily by about 200,000 jobs per month (the average pace over the past six months), then the employment
gap will diminish next year and be eliminated in mid-2017. By contrast, a tightening of monetary
conditions would cause the economic recovery to decelerate and the pace of payroll growth might well
drop below 100,000 jobs per month, in which case the employment gap would barely shrink at all.
The contours of the inflation outlook
The FOMC has established an inflation goal of 2%, as measured by the personal consumption expenditures
(PCE) price index. Its recent communications have stated that the tightening process will commence
once the FOMC is "reasonably confident" that inflation will move back to the 2% objective
over the medium term.
- It seems unwise for such a crucial policy decision to place so much weight on the FOMC's inflation
outlook and little or no weight on the observed path of wages and prices.
- FOMC participants' inflation forecasts over the past few years have proven to be persistently
overoptimistic (see Figure 1).
Figure 1. The recent evolution of core PCE inflation
Note: In this figure, the core PCE inflation rate is given by the four-quarter
average change in the PCE price index excluding food and energy, and the FOMC's outlook is given
by the midpoint of the central tendency of core PCE inflation projections, as published in the FOMC
Summary of Economic Projections (SEP) at each specified date.
For example, in early 2013, when core PCE inflation was running at about 1½%, FOMC participants
generally anticipated that it would rise to nearly 2% over the course of 2014 and 2015, whereas in
fact it has declined to around 1.2%. Indeed, its underlying trend has been drifting steadily downward
since the onset of the last recession.
- Despite some recent suggestions to the contrary, there is a strong empirical linkage between
the growth of nominal wages and the level of the employment gap.
Moreover, as shown in my recent joint work with Danny Blanchflower, the wage curve exhibits some
flattening at high levels of labour market slack, which explains why nominal wage growth has remained
subdued over the past few years even as the employment gap has declined from its post-recession peak
(see Figure 2). This empirical pattern also implies that the pace of nominal wage growth is likely
to pick up somewhat over coming quarters as the employment gap declines further.
Figure 2. The wage curve
Note: In this figure, each dot denotes the pace of nominal wage growth (as
measured by the 12-month change in the average hourly earnings of production and non-supervisory
workers) and the average level of the employment gap (including hidden unemployment and underemployment)
for each calendar year from 1985 to 2014 and for August 2015 (the latest BLS employment report).
Gauging the stance of monetary policy
Fed officials have recently characterised the current stance of monetary policy as "extremely
accommodative." Such characterisations may be helpful in motivating the onset of "policy
normalisation" but seem inconsistent with professional forecasters' assessments of the equilibrium
real interest rate and with the implications of simple benchmark rules.
The distance between the current federal funds rate and its longer-run normal level depends crucially
on the magnitude of the equilibrium real interest rate.
- Most FOMC participants have projected the longer-run normal rate to be about 3¾%, consistent
with an equilibrium real rate only slightly lower than its historical average of about 2%.
Over the past few years professional forecasters have made substantial downward revisions to their
assessments of the 'new normal' level of interest rates.
- Surveys conducted by the Philadelphia Fed indicate that professional forecasters expect short-term
nominal interest rates to be around 2¾% in 2018 and to remain at that level on average over the
next ten years, corresponding to an equilibrium real interest rate of only ¾%.
Such revisions presumably reflect the downgrading of the outlook for potential output growth as
well as prospects for headwinds to aggregate demand persisting well into the future.
- If professional forecasters' assessments are roughly correct, then the current funds rate
is by no means extremely accommodative.
In June 2012, then-Vice Chair Yellen noted that "simple rules provide a useful starting point
for determining appropriate policy" while emphasising that such rules cannot be followed mechanically.
That speech considered the Taylor (1993) rule along with an alternative rule analysed by Taylor (1999)
that Yellen described as "more consistent with the FOMC's commitment to follow a balanced approach."
Thus, it is instructive to evaluate each of these simple rules using the current core PCE inflation
rate (which is 1.2%), the CBO's current assessment of the output gap (3.1%), and professional forecasters'
consensus estimate of the equilibrium real interest rate (r* = 0.75).
- Using these values, the Taylor rule prescribes a funds rate of 0.1%, exactly in line with
the FOMC's current target range of 0 to 0.25%; and
- The Taylor (1999) rule prescribes a funds rate well below zero (-1.4%).
Neither of these two benchmarks calls for a tighter stance of policy. Indeed, the 'balanced approach'
rule preferred by Yellen (2012) indicates that macroeconomic conditions will not warrant the initiation
of monetary policy tightening until sometime next year.
Assessing the balance of risks
Over the past 18 months, FOMC statements have regularly characterised the balance of risks to
the economic outlook as "nearly balanced." Of course, that assessment has recently
come into question due to a bout of financial market volatility in conjunction with shifting prospects
for major foreign economies (most notably China).
Regardless of how financial markets may evolve in the near term, however, it seems clear that
the balance of risks remains far from symmetric. If the US economy were to encounter a severe adverse
shock within the next few years (whether economic, financial, or geopolitical in nature), would the
FOMC have sufficient capacity to mitigate the negative consequences for economic activity and stem
a downward drift of inflation?
For example, if safe-haven flows caused a steep drop in Treasury yields along with a sharp widening
of risk spreads, would a new round of QE still be feasible or effective? Alternatively, would the
Federal Reserve implement measures to push short-term nominal rates below zero, as some other central
banks have done recently?
In the absence of satisfactory answers to such questions, it is essential for the FOMC to maintain
a highly accommodative stance of monetary policy as long as needed to ensure that labour market slack
is fully eliminated and that inflation moves back upward to its 2% goal. Such a strategy will help
strengthen the resilience of the US economy in facing any adverse shocks that may lie ahead.
The FOMC's near-term strategy has become so opaque that even the most seasoned analysts can only
guess what policy decisions may be forthcoming at its upcoming meetings. Moreover, the FOMC has provided
no information at all (apart from the phrase "likely to be gradual") about how its policy
stance will be adjusted over time in response to evolving macroeconomic conditions.
Unfortunately, such opacity is likely to exacerbate economic and financial uncertainty and hinder
the effectiveness of monetary policy in fostering the goals of maximum employment and price stability.
Therefore, it is imperative for the FOMC to formulate a systematic monetary policy strategy and to
explain that strategy clearly in its public communications.
- Blanchflower, D G and A T Levin (2015), "Labor Market Slack and Monetary Policy," NBER Working
Paper No. 21094.
- Federal Reserve (2015), "Minutes
of the Federal Open Market Committee", 28-29 July 28-29.
- Taylor, J B (1993), "Discretion Versus Policy Rules in Practice", Carnegie-Rochester Series on
Public Policy 39, pp. 195-214 (also released as SIEPR Publication No. 327, November 1992).
- Taylor, J B (1999), "An Historical Analysis of Monetary Policy Rules", in J. B. Taylor (ed.),
Monetary Policy Rules, Chicago, IL: University of Chicago Press
- Yellen, J L (2012), "Perspectives on Monetary Policy", speech at the Boston Economic Club Dinner,
Boston, MA, 6 June.
"To put this into some context, consider what it is we are measuring: The change in monthly hires
minus fires. A monthly change in a labor force of more than 150 million people. That turns out to be
a tiny net number relative to the entire pool -- about one tenth of one percent."
Employment Report Keeps Policymakers on Their Toes. by Tim
Duy: Just about everyone (myself
included) who ventured a payrolls forecast was crushed
by the scant December gain of just 74k. How much should you
adjust your outlook on the basis of just this one number?
Not much, if at all. It is important to watch for trends in
the data, and always keep
Barry Ritholtz's warning in the back of your mind:
...we know from each month's revisions that the initial
read is off, often by a substantial amount. It's a noisy
series, subject to many errors and subsequent
To put this into some context, consider what it is we
are measuring: The change in monthly hires minus fires.
A monthly change in a labor force of more than 150
million people. That turns out to be a tiny net number
relative to the entire pool -- about one tenth of one
This is why I continually suggest ignoring any given
month, and paying attention to the overall trend. That
is the most useful aspect of the monthly NFP data...if
you focus on the monthly numbers, you will be given so
many false signals and head fakes that you cannot
possibly trade on this information in an intelligent
Indeed, the December number was mitigated by an upward
revision to November, leaving the growth pattern looking
One interpretation of the December outcome was that it was
largely weather related. One would think, however, that such
an event would have a forecastable negative impact on
payrolls. Regardless, the bigger message is that the monthly
change in payrolls is a volatile series, and one should be
wary of putting too much emphasis on either small or large
Perhaps the real story then is that another existing trend
in the data, the downward pressure on the unemployment rate
from a falling labor force participation rate, continues
Moreover, the pace of improvement in alternative measures of
labor utilization is not accelerating and arguably appears
to be slowing as might be expected if the formally
cyclically unemployed increasingly become structurally
Altogether, I think the report can be neatly summed up as
1.) indicative of a more modest improvement in activity than
suggested by actual and estimated GDP numbers for the final
half of 2013 and 2.) suggestive of structural change in
The employment report generally complicates monetary
policymaking. Not the nonfarm payrolls numbers so much; that
number will largely be written off as anomalous in the
context of the overall trend. Indeed, this was the first
word from Fed officials. St. Louis Federal Reserve President
James Bullard, via the
Wall Street Journal:
"I would be disinclined to react to one month's number.
I think it's important to get future jobs reports and
see if new trends are developing," said Mr. Bullard at a
press briefing following remarks here to local business
Richmond Federal Reserve President Jeffrey Lacker
offered similar sentiments:
"As a general principle, it's wise not to overreact to
one month's employment report," Lacker said. "Employment
has been growing along a pretty steady trend this year.
It takes a lot more than one labor-market report to be
convincing that the trend has shifted, and in my
experience one employment report rarely has an effect by
itself on monetary policy."
I think the Fed is generally committed to winding down asset
purchases this year, and will not want to be overly
sensitive to just one report (that said, they will be overly
sensitive to one number if it fits their preferred policy
path). Only a more significant change in the overall tenor
of the data will alter the pace of tapering.
The drop in the unemployment rate, however, is something
more of a challenge. The Evans rule simply isn't looking
quite so clever anymore:
Monetary officials generally believed not only that 6.5%
unemployment was far in the future, but also that policy
would become much more obvious as we approached that target
because inflation pressures would be evident. Neither has
been true. Not only has unemployment fallen more quickly
than anticipated, but inflation remains stubbornly low. With
regards to the former, officials increasingly see the
decline in labor force participation as largely structural
and outside the purview of monetary policy. Bullard, via the
article quoted earlier:
Mr. Bullard signaled he wasn't particularly alarmed by a
decline in labor force participation, saying it appears
at the right level given current demographics.
And, via a
nice Wall Street Journal interview with San Francisco
President John Williams by Jon Hilsenrath:
We're still working hard on this issue of
employment-to-population. Everybody is struggling with
the puzzle of why the employment-to-population ratio has
stayed low. To what extent are movements in labor force
participation structural or cyclical? And to what extent
can monetary policy have an influence on those
developments? I think the majority of the decline in the
participation rate is due to structural factors related
to the aging of the population and people going into
disability. Very few people come back into the labor
force from that. I do think part of it is cyclical. The
data in the next year or so are going to inform us
better about what is the trend.
With each passing month policymakers are increasingly
comfortable taking the unemployment rate at face value. That
means they increasingly expect the inflation numbers to pick
up. Back to Williams:
As the unemployment rate continues to come down,
utilization continues to go up, as the economy continues
to improve, I would expect the underlying inflation rate
to track back towards 2%.
But he clearly recognizes the potential for inflation to
The second question is why is inflation so low? To what
extent does it reflect just some transitory influences,
such as health care costs, and to what extent is it
really reflecting a persistent ongoing inflation trend
that is too low? And again how can monetary policy
affect that? We're in this world where inflation doesn't
move around a lot around 2%. It has become hard to model
and to know exactly what are the factors causing
inflation to be too low and which are the ones that are
going to help bring it back to 2%. That gets to the
downside risk question. If inflation does stay
stubbornly low, that obviously is an argument for more
monetary accommodation than otherwise.
Likewise, Bullard shares these concerns:
Mr. Bullard said he continues to watch inflation
closely, saying it should rise as the economy picks up
and the jobless rate continues to fall. But the central
banker added he wants to actually see that rise come to
fruition as the Fed assesses further tapering of its
"If inflation stepped lower in a clear way, I think that
would give me some pause," Mr. Bullard said. "I'm
looking for signs inflation is going to come back."
So where does this leave us? First of all, I think the Evans
rule is already for all intents and purposes defunct. The
unemployment rate is just a hair away from 6.5%, and the Fed
has no intention of considering raising rates anytime soon.
Second, there probably isn't a replacement for the Evans
rule in the works. Bullard:
He expects the Fed for now to hold its threshold for
unemployment at 6.5%. The Fed has said it won't increase
interest rates until the jobless rate falls below that
level so long as inflation stays contained.
"Moving (thresholds) around too much is likely to damage
our credibility," Mr. Bullard said
And Williams on not setting a lower bound for inflation:
My view is the current [Fed policy] statement does a
good job of capturing the fact that once unemployment
gets below 6.5%, then obviously we'll be taking
seriously what is happening in inflation, we will be
looking at what is happening with employment and growth
and everything, and then we'll be judging what is the
appropriate stance of policy. It just gets very
complicated quickly when you start adding more and more
clauses about what conditions would you or would you not
raise interest rates. Unfortunately, that is the game
we're playing … the FOMC statement has gotten awfully
long. It has gotten awfully complicated. The statement
is probably better used to try to emphasize the key
points as opposed to trying to explain everything in our
My sense is that they thought the Evans rule was clever and
simple, but it turns out that fixed numerical objectives are
not quite so simple. Well, multiple numerical objectives are
not quite so simple. The ironic outcome to the Evans rule
experiment is that policy communication would arguably have
been smoother if the Fed simply emphasized an inflation
target. Policymakers could have been agnostic on the reasons
for the declines in labor force participation; it was
irrelevant given the path of inflation. Perhaps the focus on
the unemployment rate was something of an unnecessary
complication that now needlessly leaves the impression that
policy will soon turn more hawkish than is the case.
Thus, the third takeaway is that policy is now largely about
inflation (although arguably it always is always about
inflation). Ann Saphir and Jonathon Spicer
Stubbornly weak inflation is shaping up as the wild card
for U.S. monetary policy makers this year, with top
Federal Reserve officials stumped by why it has lingered
so low for so long and at odds as to what to do about
As the Fed wrestled through last year with deciding when
to start trimming its massive bond-buying stimulus, the
bulk of attention was focused on the unemployment rate,
which until recently has been slow to fall following its
spike up to 10 percent during the recession.
By last month, policy makers had grown confident enough
in the job market to dial back on the program. Figures
released Friday showed the jobless rate fell to a
five-year low of 6.7 percent in December, despite the
smallest monthly job gains in three years. With much of
the hiring slowdown attributed to bad weather, however,
many analysts say the Fed will stay on track with plans
to end bond buying by late this year.
But there is a hitch: inflation has been drifting down
for much of the last two years, measuring a feeble 1.1
percent in November by the Fed's preferred gauge.
As long as inflation reverts to target slowly (with a caveat
to be noted below), the Fed will not be quick to hike rates.
But the Fed will be increasingly nervous that a sudden burst
of inflation means they are behind the curve. Williams:
Whether we cut purchases by 10 billion a month or not,
we still have a very accommodative stance of policy and
that is going to stay with us for quite some time. That
is where I worry. If the economy really picks up or
inflation or risks to financial stability really do
start to emerge in a serious way, we need to be able to
move policy back to normal, or adjust policy
appropriately, in a timely manner. It's always a
difficult issue. This time it is just a much greater
risk because we're in a much more accommodative stance
I think it will be the sensitivity to positive inflation
surprises that has the potential to add a hawkish tenor to
policymaking. Without those surprises, policy will continue
along current expectations. There is a caveat - note that
Williams essentially admits that the possibility and
willingness to use monetary policy to address financial
stability. Triple mandate. Watch for it.
Bottom Line: I don't see much in the employment report to
indicate any fundamental change to existing trends. Nor do I
anticipate any change in policy. Tapering is likely to
continue at its modest pace. As expected, the Evans rule is
defunct, and it doesn't seem like policymakers are inclined
to replace it with another set of fixed numerical
guidelines. The primary driver of policy is now the pace of
incoming data relative to the inflation outlook. Financial
stability is probably something like a third-order concern
at this point, at least as far as monetary policy is
concerned. But that could change.
I have gotten many question about revisions to the Reader Emails on
Birth/Death Model and Unemployment Rate.
In case you missed it the
BLS has admitted that its Birth/Death Model has overestimated jobs by
about 800,000. The New York Times talked about this in
The Labor Department said that it planned to revise the job figures
by subtracting more than 800,000 jobs that it had wrongly estimated
were filled by workers.
The so-called "benchmark revision" that was announced today will
not formally be incorporated into the job figures until February,
and could be revised. But the figures indicate that last March the
government overestimated the total number of jobs by 824,000, or
0.6 percent. Its overestimate of private-sector employment was even
greater - 855,000 jobs, or 0.8 percent.
The culprit is probably the much maligned birth-death model, although
Victoria Battista, an economist at the Bureau of Labor Statistics,
said the bureau was looking into other possible issues, such as
changing response rates to the questionnaire sent out by the bureau
to employers each month.
That model adds in jobs assumed to have been created by employers
who are too new to have been added to the survey, and subtracts
jobs from employers assumed to have failed and therefore not responded
to the bureau's survey.
I have been complaining for years that the Birth/Death model was
I include in every monthly jobs post a statement similar to this one:
"At this point in the cycle birth death numbers should have been massively
contracting for months. The BLS is going to keep adding jobs through
the entire recession in a complete display of incompetence."
At least they finally understand there is a problem, years after it
was obvious to anyone using some semblance of common sense.
Birth Death Model Revisions 2009
click on chart for sharper image
Given those fantasyland projections I have serious doubts that 800,000
take aways is enough.
Short Comings In BLS Birth Death Model
Inquiring minds are reading
Recession shows shortcomings in U.S. economic data.
The U.S. government is having a tough time guesstimating how many
small businesses failed in this recession, casting doubt on the
reliability of vital data on employment and economic growth.
Somehow throughout this entire recession, the BLS model showed that
more jobs were being created by new businesses (birth) than those lost
by businesses going out of businesses. When you think about all the
small 1-2 person businesses in real estate that folded shop I just do
not buy the BLS's data.
The formula the U.S. Labor Department designed to help it deliver
timely, thorough monthly employment reports broke down in the heat
of the financial crisis, miscounting the number of jobs by an estimated
824,000 in the year through March.
That model appears to have misjudged how many companies went out
of business during the recession, meaning the labor market was even
weaker than initially thought when President Barack Obama took office
in January. More recent figures may still be underestimating job
losses now, but it will be many months before the Labor Department
One characteristic of this recession is that it has hit small businesses
especially hard, driving down demand and choking off vital sources
of credit at the same time.
Jan Hatzius, an economist at Goldman Sachs in New York, thinks that
is distorting not only the employment data, but also figures for
retail sales, durable goods and even the biggest economic indicator
of all -- gross domestic product.
Indeed, 43,546 businesses filed for bankruptcy in 2008, the highest
tally since 1998, and the pace has picked up this year, according
to data from the American Bankruptcy Institute.
In the second quarter of 2009, the most recent data available, 16,014
businesses filed for bankruptcy, up from 14,319 in the previous
three-month period and the highest mark in 16 years.
The Labor Department simply can't catch all those failures fast
enough to compile its monthly employment reports, which are normally
released on the first Friday after the end of the month. So it must
make an educated guess.
Each month, the department surveys about 160,000 firms to get a
sense of how many jobs were added or cut. It also uses the "birth-death"
model to try to estimate out how many companies opened or closed.
Once a year, the department looks at unemployment insurance tax
records to get a more accurate picture of how many people were employed,
and matches that up with its own data. Each February, it tries to
reconcile these differences by releasing a "benchmark revision".
Normally, the discrepancy is modest. This coming February, it is
likely to be about 824,000, according to the Labor Department's
preliminary estimate last month. That would mean instead of about
7.2 million jobs lost since the start of the recession in December
2007, there were more like 8 million.
"Preliminary research indicated that a big portion of that was a
result of a breakdown in the birth-death model," said Chris Manning,
the department's benchmark branch chief.
They are revising it, but I do not think by enough.
Reader Question On The Unemployment Rate
Kevin (and many others have asked) "What exactly do you think is going
to happen to all these missed unemployed people? Is the unemployment
rate going to spike in January, or does it get added in gradually?"
In terms of the unemployment rate, what happens is nothing. The unemployment
rate is measured by the Household Survey not the Establishment Survey.
The Birth/Death Revisions are to the Establishment Survey.
So while there will be dramatic revisions to the Establishment Survey
in terms of jobs lost in the January report (published on the first
Friday in February), it will not affect the unemployment rate.
Given how screwed up the Establishment Survey is (not that I have any
love affair with the Household Survey), when the economy does turn it
will likely show up in the Household Survey first. This is what happened
at the end of the last recession and it will likely happen again.
There has to be a better way than either of these methods.
Manning said his department was still trying to figure out what
went awry this time. One possibility is that the model was not sensitive
enough to the credit crunch, which choked off borrowing and pushed
many companies into bankruptcy.
Mike "Mish" Shedlock
"We're researching ways to better understand the limitations of
the model, in particular when it comes to responding to economic
shocks," he said.
Manning said his department was still trying to figure out what
went awry this time. One possibility is that the model was not sensitive
enough to the credit crunch, which choked off borrowing and pushed
many companies into bankruptcy.
"We're researching ways to better understand the limitations of
the model, in particular when it comes to responding to economic
shocks," he said.
"That's one of the best firsts in history. I love this.
800,000 jobs falsely added. So where does that put the
unemployment rate? is my burning question.
I do love their little deceptive
touches. I love how they're going to do the
revisions in February, so that nothing will disturb the nation's
psychological security - for example, a sudden revising upward
of the unemployment rate above 11%.
The recovery is a combination of reflation, Fed leverage,
massive government spending, Wall Street corruption feeling
sated and happy about itself again, and a blanket of renewed
false optimism spread tightly across the face of proletarian
We'll save the revisions for later.
"Pseudonymous, Mish addresses your question in the latter
part of his post:
Kevin (and many others have asked)
"What exactly do you think is going to happen to all
these missed unemployed people? Is the unemployment rate
going to spike in January, or does it get added in
In terms of the unemployment rate, what happens is nothing.
The unemployment rate is measured by the Household Survey not
the Establishment Survey. The Birth/Death Revisions are to the
So while there will be dramatic revisions to the
Establishment Survey in terms of jobs lost in the January report
(published on the first Friday in February), it will not affect
the unemployment rate.
"Forget about the unemployment numbers. All one needs to look
at is total employment as a percentage of the population. That
number has been going down for 10 years.
"Recent news stories have claimed that as the year comes to
an end, around 1 million unemployed will have used up all
available benefits. As a nice coincidence, their benefits ending
will begin to take hold just as Banks and Wall-Street firms
begin to payout year end bonuses. Figures vary, but all told it
is going to be way up into the tens of billions. It should make
for an nice holiday contrast. The bailed out bankers and
wall-street crowd will cash in fortunes enough to last any
normal person half a life time or more. That this is only
possible due to Taxpayer payouts to the financial services
industry shouldn't spoil the gusto of the banker's and street
firm's holiday festivities.
Lets all wish them well in spending their riches. New homes, new
cars, new mistresses, luxury clothes and vacations should be a
noticeable boost to a sagging consumer economy. The Fed has done
it's work well, and there are the payouts to prove it.
If you add up the household survey job losses this recession
(B2) you get just over 9M as of Oct. HS is very volatile, but if
you look at trailing 3-month avg numbers you get a pretty smooth
and IMO accurate story of what is happening to headline jobs
(you could plot and post this). HS shows that real job losses
began in dec 06, a year before the recession supposedly began.
Oct was particularly troubling because it shot back up to over
500k, completely reversing the Jun-Jul low numbers. Not a good
I downloaded the spreadsheet with future job loss
guesstimates... consider 400k balance of this year, 200k avg
2010, 0 in 2011, and then just enough to maintain status quo
(100k) for four years. Where, exactly, are the new jobs coming
from? Boomers will let the SUV's slip from their cold, dead
hands before letting loose of their jobs...
"So the NYT has written about the US government's penchant
for lying in its stats?
Next thing the NYT will show that it's catching up by
promulgating the idea - 10 years after sentient beings knew it -
that Greenspan was a hack moron who failed as a consultant and
HAD to suckle at teh tax teat to avoid dying of starvation?
Or they might reveal that Keynes studied economics for precisely
ONE term (note: not a semester - a TERM... shorter) and got his
job through nepotism.
For the record, I first wrote about the CES birth-death model
back in 2001 (sadly the archive of the place I was at is now no
To give a favour, here's something from DECEMBER 2004 which is
still online (at http://www.marketmentat.com/markets/oz/jobs-report-even-worse-than-it-looked/)...
"The CES net birth death model – which I prefer to call the
"fictional job creation" model – added 54,000 phantom jobs,
which (as luck would have it) offset the 54,000 downward
revision to September and October!!!
So, there's been a 54,000 "reduction of history", offset by
54,000 phantoms. Without those phantoms, the job situation in
the US looks dire; and phantoms don't spend anything – not even
on hedonically adjusted stuff."
There is nothing new under the sun - just as the central
planners of the old Soviet Union used to regularly lie to their
proles, so too the ponerocracy of the US does likewise, while
shovelling money to their cronies in ways that would make an
African dictator blush.
Fortunately (for the brown bits of the world) the US is now last
century's story, much as England was waning in the first third
of the 20th century and Rome was on the skids after it started
clipping its coin.
"Our conclusion is that if small firms aren't captured well in
the advance GDP data, the economy may be growing less quickly than
suggested by the recent official data."
-Jan Hatzius, Goldman Sachs economist
This certainly comes as no surprise to us:
"The U.S. government is having a tough time guesstimating how
many small businesses failed in this recession, casting doubt on
the reliability of vital data on employment and economic growth.
The formula the U.S. Labor Department designed to help it deliver
timely, thorough monthly employment reports broke down in the heat
of the financial crisis, miscounting the number of jobs by an estimated
824,000 in the year through March.
The most likely culprit is the so-called "birth-death"
model, which the Labor Department uses to estimate how
many companies were created or destroyed.
That model appears to
have misjudged how many companies went out of business during the
recession, meaning the labor market was even weaker than initially
thought when President Barack Obama took office in January.
More recent figures may still be underestimating job losses now,
but it will be many months before the Labor Department is certain
. . .
Government data has difficulty gauging the health of smaller
firms because there are simply too many of them, leaving officials
to rely on surveys and models that are hit and miss."
Let's put some numbers to this: In 2008, 43,546 businesses filed
for bankruptcy; Even more are filing in 2009 - Q2 of 2009, the most
recent data available, saw 16,014 bankruptcy filings - on pace
to run 33% more than the prior year.
BLS simply does not catch all of these failures in the monthly NFP
The next BLS B/D adjustment will be in February 2010, when they qill
like add another 800,000 to a million lost jobs to the prior years .
Recession shows shortcomings in U.S. economic data
Thu Nov 19, 2009
Emily Kaiser and Nancy Waitz
One of our
favorite bugaboos is finally getting its due: The horrifically misleading
Birth Death adjustment.
It is finally being recognized in the mainstream as the massive data
distorter that it is. The latest BLS analysis and data revision shows
that during 2008, the Birth Death adjustment caused NFP payrolls to
be significantly under reported.
NYT's Floyd Norris:
"It now appears that during the first half of 2008, when the
recession was getting under way, job losses averaged 146,000 per
month. That is nearly three
times the average of 49,000 jobs shown in the initial estimates.
How did the government get it so wrong?
The official job numbers are based on a monthly survey of employers,
augmented by something called the "birth-death model," which factors
in jobs assumed to have been created by employers who are too new
to have been included in the survey, and subtracts jobs from employers
assumed to have failed and therefore not responded to the latest
survey." (emphasis added)
Triple the job losses than reported, and right at a crucial part
of the economic cycle! Is it any wonder policy response from central
bankers and pols was so off? At the most crucial time, they failed to
see the oncoming headlights, because they were lost in a fog of data
so massaged as to have it completely and totally misrepresent reality.
About time this nionsense was recognized for the bullshit it is.
We need to have BLS needs to toss out the 2003 modification to the B/D.
We should get back to actually counting, rather than imagining, jobs.
As noted in
this fundamental reliance on garbage data led to one of the world's
greatest economic catastrophes of all time.
NFP: Birth/Death Adjustments (December 6th, 2007)
Overstated Job Growth, Understated Inflation (January 4th, 2008)
The Jobs News Gets Worse
NYT, October 3, 2009
Net Birth/Death Adjustments
Current Employment Statistics – CES (National)
August 7, 2009
The release of the July unemployment report was filled with a wide
array of distortions and inexplicable results (especially from the Birth-Death
model), which have undoubtedly resulted in a better-than-warranted reported
gain. In this post we'll explore these oddities in some detail.
U.S. economy sheds fewer jobs than expected
WASHINGTON (Reuters) - U.S. employers cut 247,000
jobs in July, far less than expected and the least
in any month since last August, according to a government report
on Friday that provided the clearest evidence yet that the
economy was turning around.
With fewer workers being laid off, the unemployment rate
eased to 9.4 percent in July from 9.5 percent the prior month,
the Labor Department said, the first time the jobless rate had fallen
since April 2008.
Wait, how can you lose jobs and have the rate of unemployment fall?
This doesn't make sense, because it is the equivalent of saying, "I
spent more than I earned and my savings went up." The key here
is understanding the ways in which the government measures unemployment.
First, job gains/losses are measured by a sampling of businesses
(called the "establishment" data). This gives us the headline number
of 247,000 jobs lost. Second, the rate of unemployment comes from a
completely different sample, this one of households, which gives us
the 9.4% rate of unemployment.
As always, the devil is in the details. Without the Birth-Death model
providing the largest addition of jobs in its entire series for July,
the 247,000 jobs lost number would have been higher.
The table below shows the contributions or subtraction of jobs provided
by the Birth-Death model in each month of July since its creation.
This July sports the highest addition ever:
Normally, July and January are "true-up" months, where all the past
overstatements of the Birth-Death model are cleaned up.
Does it make sense to you that this July, out of all months, the
Birth-Death model should be showing the largest monthly gain in the
series? It makes sense to me that July 2006 could have squeaked
out a positive, since that was at the tail end of a strong period of
growth. But July 2009? No, not even in the slighest.
If the B-D model had turned in a far more normal looking -60k to
-80k result, then the number of reported lost jobs would have been in
the range of 350,000 job losses, not the 237,000 reported.
However, I would have expected the fact that the B-D model has added
879,000 this year since the last true-up in January, during the
worst period of economic growth since the Great Depression, to
have been a strong indication that this July would have resulted in
one of the largest negative July adjustments on record. Instead
we got the strongest positive one!!
This is simply so far out of the bounds of "reasonable" that I am
almost out of words.
But it gets worse.
In the table below showing the Household data (source),
we can see that the way in which the rate of unemployment dropped from
9.5% to 9.4% was almost entirely due to the fact that 637,000 people
were dropped from the labor force - not from an increase in employment.
If we left these 637,000 people in the labor force, then
the rate of unemployment would have increased from 9.5% to 9.8%. What's
the difference between unemployment slipping to 9.4% rather than increasing
All the difference in the world when you have a major initiative
[Note: I am not displaying any sort of partisan or political
bias in posting this news item - I am devoutly non-partisan and my track
record spanning administrations will bear this out.]
August 4, 2009
WASHINGTON - The White House is making a major push this week to
persuade Americans that President Obama's policies are helping bring
the nation out of recession. But a four-letter word - jobs - may well
get in the way.
With poll numbers showing that support for Mr. Obama's handling of
the economy has declined, the president and other top administration
officials - Vice President Joseph R. Biden Jr., Energy Secretary Steven
Chu and Commerce Secretary Gary Locke - will hit the road on Wednesday
in a coordinated show of force.
They will try to make the case, as the president said Saturday in
his weekly address, that "in the last few months, the economy has done
measurably better than expected."
They have some statistics to back them up.
If you are wondering about the political pressure that propels the
BLS (et al.) to produce misleading but favorable economic statistics,
you need look no further than this article. Obama, like every president
before him, has a strong desire to use his station to inject optimism
into the economy. That's hard to do when the statistics are dismal,
so every effort is made to have them be brighter and more favorable
than they really are. Same as it ever was.
Bad statistics can be good for politicians, but not so much for sound
Do we have the "clearest evidence yet that the economy is turning
around," as the original article claimed above, or do we have evidence
of something else, like, perhaps, statistical trickery?
May 9, 2008
How can we realistically trust the data that come out of the various
US departments anymore? Even given the benefit of the doubt, i.e. assuming
model massage was originally established to provide a clearer picture
of the US economy, the ultimate result now looks more like an elaborate
GIGO * contraption designed by Rube Goldberg.
Case in point: the
Net Birth/Death model of the Bureau of Labor Statistics. During
the most severe downturn in the real estate and homebuilding sector
since the Great Depression, the model keeps creating phantom construction
jobs (see chart below, click to enlarge).
Not only did the model spew out a total of 98,000
net additional construction
jobs in the 12 months to April 2008, it produced more such jobs in April
2008 than the same month last year (45,000 vs. 37,000, or +21%). In
other words, new construction businesses that were established in that
period supposedly created many more jobs than those lost from businesses
The first casualty of war is the truth -
Aeschylus. Problem is, who's
*Garbage in, garbage out
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