The New Deal’s forgotten accomplishments

A widely accepted criticism of Franklin D. Roosevelt’s New Deal is that it never really ended the Great Depression.  It took rearmament, the military draft and the Second World War to bring about full employment.

Conrad Black. of all people, writing in The American Conservative, of all publications, pointed out that what these critics overlook is the millions of Americans put to work by the New Deal conservation and public works programs.

Between 5 million and just under 8 million workers were employed on New Deal projects during the 1930s, but, according to Black, they were not included in the employment statistics cited by most historians, including partisan Democratic historians.

Solid line counts workers employed on public works as unemployed; dotted line does not.  Source: The Edge of the American West.

Black, formerly a Canadian newspaper publisher, has written biographies of Richard M. Nixon and Franklin D. Roosevelt.   Reviewing Robert Dallek’s recent biography of FDR, Black wrote: —

He states that the unemployed stood at 10 million in 1940, when Roosevelt broke a tradition as old as the republic and went after his third term.

In fact, unemployment was somewhat under 10 million, but was declining in the run-up to election day by 100,000 a month, largely due to the immense rearmament program Roosevelt had initiated and to the country’s first peace-time conscription, which he called a “muster”.

But Dallek completely ignores, for purposes of calculating unemployment, the many millions  of participants in his workfare programs, who were just as much employed as, and more usefully than, the millions of conscripts and defense workers in the major European countries and Japan, against which Roosevelt’s record in reducing unemployment is often unfavorably compared.

[snip]  These programs kept between five million and nearly eight million people usefully employed at any time building valuable public sector projects at bargain wages for Roosevelt’s first two terms, until defense requirements and the public sector took over and completed the extermination of unemployment.

Those unable to work received Social Security, unemployment and disability benefits from 1935 on.

Why millions of ordinary Americans back Trump

Donald Trump is a con man, a racist and a bully.  The record is clear.  But the world is full of confidence men, racists and bullies.  What sets him apart?

Thomas Frank, author of What’s the Matter With Kansas? and other great political books, took the trouble to listen for himself to several hours of Trump speeches (which I confess I have never done).

I saw the man ramble and boast and threaten and even seem to gloat when protesters were ejected from the arenas in which he spoke.  I was disgusted by these things, as I have been disgusted by Trump for 20 years.

But I also noticed something surprising. In each of the speeches I watched, Trump spent a good part of his time talking about an entirely legitimate issue, one that could even be called left-wing. 

Yes, Donald Trump talked about trade.  In fact, to judge by how much time he spent talking about it, trade may be his single biggest concern – not white supremacy.   Not even his plan to build a wall along the Mexican border, the issue that first won him political fame.  He did it again during the debate on 3 March: asked about his political excommunication by Mitt Romney, he chose to pivot and talk about … trade.

It seems to obsess him: the destructive free-trade deals our leaders have made, the many companies that have moved their production facilities to other lands, the phone calls he will make to those companies’ CEOs in order to threaten them with steep tariffs unless they move back to the US.

Trump embellished this vision with another favorite left-wing idea: under his leadership, the government would “start competitive bidding in the drug industry”.  (“We don’t competitively bid!” he marveled – another true fact, a legendary boondoggle brought to you by the George W Bush administration.) 

Many liberals think that Trump supporters are simply out of touch with reality.  But they themselves are out of touch with how trade and immigration are changing American life.

Increased ‘productivity’ in education

Source: Economic Policy Institute.

Blogger Duncan Black thinks these figures indicate that Americans should stop cutting public school teachers’ wages and benefits, reducing their job security and making them scapegoats for all the ills of society.

But according to the neo-liberal philosophy that prevails in U.S. industry, the decline in the number of teachers is a good thing, not a bad thing.

A neo-liberal would tell you that fewer teachers with lower salaries teaching larger classes is by definition an increase in productivity (but that the best way to achieve this is through privatization).

Have teenagers lost interest in summer jobs?

 Source: Vox.

Source: Pew Research.

Somewhat fewer teenagers from affluent families are interested in working summer jobs than in the past.  And more teenagers than in the past are attending school during the summer.

But another reason fewer teenagers are working summer jobs is that they can’t compete with the growing numbers of adults who want those same jobs.

LINKS

Why American Teens Aren’t Working Summer Jobs Anymore by Peter Gosselin for Bloomberg News.

The fading of the teen summer job by Drew DeSilver for Pew Research.

The changing U.S. economy in four maps

The most common job in each state in 1978.

The most common job in each state in 1988.

The most common job in each state in 2000.

The most common job in each state in 2014

Source: National Public Radio via Mike the Mad Biologist.

Long story short:  The most common jobs remaining are the ones that haven’t been automated and aren’t being done cheaper overseas.

Re-shoring: the U.S. manufacturing comeback

Last year about a third of U.S. corporations with manufacturing in China told the Boston Consulting Group that they are bringing or plan to bring operations back to the United States.

The trend is called “re-shoring,” and all indications are that it is real.  What’s driving it, according to an article in the Paris Tech Review, are falling U.S. energy costs due to hydrofracking for natural gas, closeness to world’s largest consumer market, a shorter supply chain and, especially, U.S. expertise in automation technology.

Click to enlarge

There’s the catch.  Automation lowers the cost of U.S. labor compared to other countries, but it also eliminates jobs.  Professor Tim Leunig of the London School of Economics estimated that if 10 percent of the Chinese electronics industry relocated to the United States, it would eliminate 300,000 Chinese jobs but only create 40,000 American jobs.

This doesn’t mean that re-shoring is of no benefit.   It is of great benefit.  The hollowing out of the U.S. manufacturing economy has reached a limit.  Manufacturing jobs are increasing only modestly, but they are no longer declining.

The mere fact that more wealth is being generated in the United States should be of benefit for all American workers, whether they work for suppliers and subcontractors of the manufacturing companies, for providers of goods and services who benefit from a bigger consumer market, or for local governments that benefit from an increased tax base.  But to the extent that the U.S. work force consists of temporary, part-time, low-wage workers, the wealth won’t be spread around.

The extremely slow U.S. economic recovery

The Dow Jones average is back to where it was before.   The American job market still has a long way to go.

There is less to these charts than meets the eye.  Stock prices and jobs are rebounding, but investors are not doing all that well, and job-seekers are doing worse.

The Dow Jones average for the past six years has not kept up with inflation, even though the rate of inflation is extremely low.   And the bottom chart shows just how slow the rebound in jobs has been compared to previous economic recoveries.  Just as the stock market ought to keep up with inflation, the job market ought to keep up with population growth.  In other words, even when the number of jobs gets back to what it was in 2007, we’ll still be behind.

The official unemployment rate for April was 7.5 percent.  Economist David F. Ruccio pointed out that this means there are 11.6 million Americans still looking for work, four years after the supposed beginning of the economic recovery.

The Bureau of Labor Statistics reports its U-6 rate of unemployment, which includes jobless people who’ve given up looking for work, and part-time workers who want to work full-time, is 13.9 percent.   This is 21.9 million Americans, roughly one in seven eligible workers.

Click on Why Good People Can’t Find Jobs — What You’re Up Against for a good report on why it’s tough to find a job.

Click on occasional links and commentary for David F. Ruccio’s web log, which is crammed with good information.

Benchmarking the U.S. employment recovery

Double click to enlarge.

Double click to enlarge.

I’ve posted a number of charts like the one at top showing how much worse the current employment recovery is than the recoveries following previous recessions since World War Two.   But the second chart provides another and maybe more meaningful comparison—the U.S. recovery versus employment recoveries in foreign nations following financial crises.  The current U.S. recovery is not out of line with the experience of foreign nations.

The most significant comparison, though, is with the current U.S. recovery, shown by the thick red line, with the aftermath of the 1929 stock market crash, shown by the dotted black line.  What it indicates to me was that the United States was on a slide toward another Great Depression, like that of the 1930s, but that the slide was prevented by the bank bailouts and the Obama stimulus plan.

I’ve criticized the Obama administration for failing—really, not seriously attempting—to put anything in place that would prevent a repetition of the recent financial crash.  The Obama administration has blocked prosecution of financial fraud and meaningful legislation to regulate or break up the “too big to fail” banks, while the Federal Reserve Board, through its Qualitative Easing programs, has given money to the big Wall Street banks at near-zero interest rates without any requirement that the money be lent in the real American economy.  I think the United States is on track for a bigger crash and a bigger bailout, if indeed a bailout is possible the next time around.

But give credit where credit is due.  The swift action of the Bush administration, the teamwork of the Bush and Obama administrations during the transition, and Obama administration’s follow-through prevented a collapse of the financial system, and the Obama stimulus plan also helped shore up the economy.   I can’t prove this.  There is no way to turn back the calendar and see what would have happened with no bailout and no stimulus, but I think the Hoover administration’s experience after 1929 provides a good indication of what would have happened.   But now that the collapse has been averted, the U.S. government and banking system is busy recreating the circumstances that led to the collapse in the first place.

Click on Does this graph prove the recovery has been impressive, after all? for the thoughts of Ezra Klein on the Washington Post’s Wonkblog.

Click on Checking In on Financial Crisis Recoveries for the source of the chart in a report by Josh Lehner of the Oregon Office of Economic Analysis.

Only the retirement-age workers are increasing

This chart from May is making the rounds on the Internet.  It shows that the number of retirement-age workers still in the work force is increasing, and the number in their prime working years is decreasing.

The theory was that the work force would shrink when the Baby Boomers reached retirement age.  Instead the Boomers are staying in the work force in larger numbers than their immediate predecessors.  I imagine this is because many lost part or most of their retirement savings in the financial markets crash, and many are working at lower-paid jobs than they figured on.  The fact that the Social Security retirement age is creeping up doesn’t help.

Keep in mind that the people in the various age segments in 2012 are not the same people who were in these segments in 2008.  My guess is that, because of the bad job situation, a lot of young people are staying in school longer or being supported by their parents.  But there is a decline in the number of working-age people in the work force in all age brackets.  Not a good sign.

Click on Is the Labor Force Shrinking Due to Boomer Retirement? (Not Mostly) for the original post on Political Math, which tells how the figures in the chart were calculated, and has more information on Baby Boomer employment and retirement.

Click on The young are leaving the labor force, the old are flocking to it for a report by Suzy Khimm in the Washington Post.

Hat tip to  The Dish.

Corporate profits highest on record, wages lowest

Corporates profits are taking the largest share of the national output on record.

Wage-earners are getting the smallest share of the national output on record.

The fraction of Americans with jobs is the smallest in more than 30 years.

It does no good for corporations to do well if people aren’t doing well.  Things need to be brought back into balance.

One thing I learned in 24 years working for Gannett newspapers was that when you want to present economic data, one good chart can be worth a thousand words.  For more good charts, click on Dear America: You Should Be Mad As Hell About This and The Economy: Time for Companies to Pay Their Employees More by Henry Blodget of Business Insider, where I first saw the charts above.

Long-term unemployment not going away

Double click to enlarge.

The number of Americans who’ve been out of work for more than a year is at the highest level at at least 44 years.  These charts from the Pew Foundation tell the story.

Click to view.

Click to view.

The longer you’re out of work, the less likely you are to be reemployed in your occupation, or employed at all.   The current recovery in U.S. economic output does not necessarily mean work for the people who’ve been unemployed the longest.

Double click to view.

Click on Five Long-Term Unemployment Questions for the Pew Charitable Trusts report, which is the source of the charts.

Click on US unemployment “progress” for a differing view of the real unemployment rate, which would include the so-called discouraged workers. [Added 2/4/12]

Click on America’s Jobs Deficit, and Why It Is More Important Than the Budget Deficit for the view of Robert Reich, former U.S. Secretary of Labor.  [Added 2/4/12]

U.S. employment recovering, slowly

Double click to enlarge

The U.S. Bureau of Labor Statistics announced U.S. jobs figures as of January 2012.  The good news is that employment in the United States is slowly recovering.  The bad news is that the economy has a long way to go before jobs get back to pre-recession levels.  The chart above, which compares the current recession with previous recessions tells the story.  Note that the current recession started in December 2007, and President Obama was sworn in Jan. 20, 2009, about 14 months later.

The unemployment rate for January was 8.3 percent, the lowest level since February 2009.  The U.S. economy added 257,000 private sector jobs during the month, while an estimated 250,000 people entered the work force.

If we’re in a recovery, where are the jobs?

Job recovery in 12 recessions.  Double click to view.

This time it really is different.  Double click to view.

Double click to view.

Bad news and (not so) good news on jobs

The good news is that private sector jobs are increasing, no longer declining.  The U.S. economy gained 64,000 private sector jobs in September, and that’s the ninth month in a row of job growth.

But the U.S. economy has lost 8 million jobs since the start of the recession.  According to Paul Krugman, you would need to add 300,000 jobs a month – including the 125,000 needed to keep up with population growth – to get back to 5 percent unemployment in five years.

Also in September, the U.S. lost 159,000 government jobs.  Most of these were Census workers who’d completed their tasks, but there also were 76,000 employees of state and local governments.

Now government doesn’t determine how many private sector jobs there are.  But it does determine how many government jobs there are.  It doesn’t make sense to lay off public workers during a recession.  It’s important to maintain vital public services – schools, libraries, maintenance of roads, water systems and sewerage systems – in good times and bad.

Beyond that, public sector layoffs are an anti-stimulus program.  Laid-off school teachers and firefighters stop buying goods and services, which leads to less business activity and job growth in the private sector.