Americans working much harder – for less pay - Eye on the Economy- msnbc.com

Americans working much harder – for less pay - Eye on the Economy- msnbc.com

Productivity surged, labor costs dropped sharply in the second quarter

By John W. Schoen \ Senior producer | msnbc.com \ updated 12:45 p.m. CT, Tues., Aug 11, 2009

John W. Schoen Senior producer • Profile • E-mail

Feel like you’re working a lot harder these days, putting in longer hours for the same pay — or even less? The latest round of government data on worker productivity indicates that you probably are.

The Labor Department said Tuesday that the American work force produced, at an annual rate, 6.4 percent more of the goods they made and services they provided in the second quarter of this year compared to a year ago. At the same time, “unit labor costs” — the amount employers paid for all that extra work — fell by 5.8 percent. The jump in productivity was higher than expected; the cut in labor costs more than double expectations.

That is, despite the deep job cuts of the past year, workers who remain on the payroll are filling in and making up the work that had been done by their departed colleagues. In some cases, that extra work came with a smaller paycheck.

...

“You have a very severely harmed, injured consumer in terms of income slow down, job uncertainly, job loss, wealth loss, inadequate savings, high debt levels,” said Laura Tyson, an Obama advisor who headed the Council of Economic Advisors in the Clinton administration. “The consumer, I don’t see powering us out of this recession.”

...

As paychecks evaporated and work hours shrank during the recession, Americans have hunkered down and begun saving more. The personal savings rate slipped to 4.6 percent in June, after rising to 6.2 percent in May, but it was still well above the 1 percent rate in 2008.

Higher savings will help rebuild batter retirement accounts. But it also creates a headwind for a pickup in consumer spending. That's troubling when you combine it with lower incomes, which are the engine of future spending. Personal income fell 1.3 percent in June, the steepest plunge in more than four years.

FACT FILE Job recovery will take years

Though GDP data show the economy may have hit bottom, the impact of the 7.5 million jobs lost to recession will linger for years. State Est jobs lost to recession Est. date of job recovery Thousands Percent Michigan -556.6 -12.7 after 2015 Arizona -264.0 -9.9 2014 Florida -699.7 -8.7 2014 Nevada -103.3 -8.0 2013 Oregon -128.6 -7.4 2014 Ohio -392.1 -7.2 after 2015 Rhode Island -35.2 -7.1 after 2015 Idaho -45.5 -6.9 2012 California -1035.0 -6.8 2013

Note: Pre-recession job level is defined as the highest employment level reached SOURCE: IHS Global Insight

China Trade Toll

China Trade Toll

Th e growth of U.S. trade with China since China entered the World Trade Organization in 2001 has had a devastating eff ect on U.S. workers and the domestic economy. Between 2001 and 2007 2.3 million jobs were lost or displaced, including 366,000 in 2007 alone. New demographic research shows that, even when re-employed in non-traded industries, the 2.3 million workers displaced by the increase in China trade defi cits in this period have lost an average $8,146 per worker/year. In 2007, these losses totalled $19.4 billion.1

... Trade

with less-developed countries has reduced the bargaining power of all workers in the U.S. economy who resemble the import-displaced in terms of education, credentials, and skills. Annual earnings for all workers without a fouryear college degree are roughly $1,400 lower today because of this competition, and this group constitutes a large majority of the entire U.S. workforce (roughly 100 million workers or about 70% of all workers, Bivens

(2008a)). China, with nearly 40% of our non-oil imports from less-developed countries, is a chief contributor to this wage pressure.

In addition to its fi nding of 2.3 million U.S. jobs lost and workers displaced between 2001 and 2007, this study fi nds:

More than two-thirds of the jobs displaced by China trade defi cits were in manufacturing, which tends to employ a higher-than-average share of workers with a high school degree or less (43.7% of workers displaced) and to provide those workers with good wages and benefi ts. More than half (55.6%) of the jobs displaced came from the top half of the U.S. wage distribution, and among this group a disproportionate share came from the top 10th of all U.S. wage earners. African Americans (230,000 jobs lost), Hispanics (339,000), and other ethnic groups (219,000) all suff ered from the loss of jobs such as these that pay substantially more and off er better benefi ts than jobs in other industries.

A major cause of the rapidly growing U.S. trade defi - cit with China is currency manipulation. China has tightly pegged its currency to the dollar at a rate that encourages a large bilateral surplus with the United States. Maintaining this peg required the purchase of about $460 billion in U.S. treasury bills and other securities in 2007 alone.2 Th is intervention makes the yuan artifi cially cheap and provides an eff ective subsidy on Chinese exports. Th e best estimates place this eff ective subsidy at roughly 30%, even after recent appreciation in the yuan(Cline and Williamson 2008).3

China also engages in extensive suppression of labor rights. An AFL-CIO study estimated that repression of labor rights by the Chinese government has lowered manufacturing wages by 47% to 86% (AFL-CIO 2006, 138). China has also been accused of massive direct subsidization of export production in many key industries (see, e.g., Haley 2007). Finally, it maintains strict, non-tariff barriers to imports. As a result, China’s exports to the United States of $323 billion in 2007 were more than fi ve times greater than U.S. exports to China, which totaled only $61 billion (Table 1). China’s trade surplus was responsible for 52.3% of the U.S. total non-oil trade defi cit in 2007, making the China trade relationship this country’s most imbalanced by far. Unless China raises the real value of the yuan by an additional 30% and eliminates these other trade distortions, the U.S. trade defi cit and job losses will continue to grow rapidly in the future. ...

Speak Up to Stop Unfair Trade | OurFuture.org

Speak Up to Stop Unfair Trade | OurFuture.org

...

China is attacking the U.S. with a stealth weapon of mass economic destruction – unfair trade. U.S. corporations – and China – that profiteer from it prefer to label this “free trade.”

But industrial carnage is the only way to describe the devastation done to the U.S. economy by an accumulated trillion dollar trade deficit with China, the destruction of U.S. jobs by off-shoring them to China, and the disintegration of the U.S. industrial sector that is foreclosing America’s ability to support itself or to manufacture weapons to defend itself.

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Much more significant, however, are other deliberate Chinese interventions in the market, such as the undervaluation of its currency, subsidization of its manufacturing, counterfeiting, forced transfer of American technology, and refusal to give American companies access to Chinese markets with licensing restrictions, complex regulations and local content rules.

China gives breaks to manufacturers on land, rent, energy and water. Manufacturers may receive bank “loans” they know they’re not required to repay. China also exempts certain industries from income taxes and gives tax rebates on exports.

China’s deliberate currency undervaluation works as a subsidy as well. The U.S.-China Economic and Security Review Commission explains it this way: “China’s undervalued currency encourages undervalued Chinese exports to the U.S. and discourages U.S. exports because U.S. exports are artificially overvalued. As a result, undervalued Chinese exports have been highly disruptive to the U.S.”

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America’s increased trade deficits with China since it entered the World Trade Organization have cost 2.3 million workers their jobs or job displacements, according to The China Trade Toll by Robert E. Scott of the Economic Policy Institute.

Most were manufacturing jobs, but, among them, Scott reports, were 127,710 professional, scientific and technical services workers. There were 66,986 managers of companies and enterprises. They even included 13,141 arts, entertainment and recreation workers.

Those, by any definition, are white collar jobs. ...

Jobs Don't Live Here Anymore | OurFuture.org

Jobs Don't Live Here Anymore | OurFuture.org

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What's really troubling is long-term unemployment.

EPI economists see the economic stimulus as alleviating the jobs crisis created under Bush. In fact, the economic recovery program already has saved or created some 750,000 jobs. Plus, says John Irons, EPI director of research and policy, the gross domestic product (GDP) report last week showing GDP shrunk far less in the second quarter of this year (-1 percent) than the first quarter (-6.4 percent). That means

we're beginning to see the fingerprints of the economic recovery package.

Yet millions of America's workers—the largest number of workers for the longest period out of any of the previous recessions—have been without jobs for more than six months. They are the long-term unemployed. And their prospects don't look so good. There are now 5.7 workers looking for every one job available. By comparison, at the start of the recession, there were 1.7 unemployed workers per job opening, less than a third of the current figure.

The more than 4.7 million long-term unemployed workers, says EPI economist Heidi Sheirholz, represent

enormous numbers. Job seekers are simply not able to find work in this labor market.

And worse:

We're looking at a really long period when long-term unemployment will continue to rise.

Many of these long-term unemployed are not casualties of the decline in manufacturing jobs. On the contrary, says Sheirholz:

Workers older and more educated are less likely to be unemployed but once they are unemployed they stay longer. They are a big contributing factor to the long-term unemployment.

Goldman Sachs $100 Million Trading Days Reach Record (Update3) - Bloomberg.com

Goldman Sachs $100 Million Trading Days Reach Record (Update3) - Bloomberg.com

Aug. 5 (Bloomberg) -- Goldman Sachs Group Inc. made more than $100 million in trading revenue on a record 46 separate days during the second quarter, or 71 percent of the time, breaking the previous high of 34 days in the prior three months.

Trading losses occurred on two days during April, May and June, down from eight in the first quarter, the New York-based bank said today in a filing with the U.S. Securities and Exchange Commission. The company made at least $50 million on 58 of the 65 trading days in the period, or 89 percent of the time. ...

Industries Hurt Most by Soaring Health Costs - Rick Newman (usnews.com)

Industries Hurt Most by Soaring Health Costs - Rick Newman (usnews.com)

August 04, 2009 03:50 PM ET | Rick Newman | Permanent Link | Print

It started as a dull throb in the economy, with the pain growing sharper. Now there's finally a diagnosis: Runaway healthcare costs are directly harming businesses and their employees.

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A new study, however, shows that some industries have become chronically hamstrung by rising healthcare costs, with lower growth and employment than they'd have if costs were lower—or somebody else paid them. Researchers Neeraj Sood, Arkadipta Ghosh, and José J. Escarce of the Rand Corp. analyzed the performance of 38 industries from 1987 to 2005 and found that sectors where a high proportion of workers have company-provided health insurance—such as manufacturing, utilities, communications, education, and finance—showed the lowest growth over the 19-year period. Industries where fewer workers get company-paid health insurance—such as agriculture, hotels, entertainment, retail, and construction—grew more.

... They also compared U.S. industries with their counterparts in Canada—where the government, not business, pays for healthcare—to see if the entire industry was suppressed because of global trends or just the American slice. Their conclusion: Rising healthcare costs in the United States have directly curtailed growth and employment. And the industries with the most generous benefits tend to be penalized for it. "Industries which provide healthcare to a large fraction of workers didn't grow as fast as industries offering health insurance to a small fraction of workers," says Sood.

[See 8 industries that will sit out an economic recovery.]

... Only 59 percent of small firms offer health insurance to their employees, down from 68 percent in 2000. Many business owners say they limit hiring or try to get by with part-timers because the costs of full-time benefits are too high. ...

One startling outcome of the Rand projections is that every one of the 15 industries they analyzed stands to suffer lost jobs and output if healthcare expenses keep rising. Agriculture and forestry, where just 19 percent of workers have company-paid insurance, would shrink the least. Utilities, which cover 83 percent of their workers, would shrink the most. Here's how 15 major industries would fare if healthcare costs swell to 20 percent of GDP by 2017: ...

U.S. Incomes Fall 1.3%, Biggest Drop in Four Years (Update3) - Bloomberg.com

U.S. Incomes Fall 1.3%, Biggest Drop in Four Years (Update3) - Bloomberg.com

Aug. 4 (Bloomberg) -- U.S. personal incomes tumbled 1.3 percent in June, more than forecast and the biggest drop in four years, signaling that consumer spending will take time to recover.

The decline partly reflected the unwinding of one-time transfer payments from the Obama administration’s stimulus plan, which boosted incomes 1.3 percent in May, figures from the Commerce Department showed today in Washington. Spending rose 0.4 percent in June as prices climbed. Adjusted for inflation, purchases fell 0.1 percent, the report showed. ...