Tag Archives: Unemployment

The Populist Agenda: Jobs and Inequality

Paul Krugman links jobs and inequality in yesterday’s New York Times column.  He notes that job instability has led to deepening inequality because workers do not feel confident to search for higher paying employment.  At the same time he points to the work of Steven Fazzari that shows that inequality was a contributor to the economic collapse in 2007.  Fazzari shows that simple job creation — especially at the bottom of the income distribution — led to significant increases in debt and the ultimate crash.

The relationship between inequality and jobs is “bi-directional” where changes in one influence the other and likely create a reinforcing feedback.  Wages cannot be so unequal that lower income workers have to borrow to get by — when households reach their borrowing maximum, recessions happen (part of Fazzari’s point).  We need a job creation system to get people back to work as well as an inequality strategy that helps workers benefit from economic growth.

Getting people back to work isn’t enough, nor is simply solving inequality.  Jobs and inequality are hand in glove.  The goal, as daunting as it may sound, is to “grow the pie” to solve unemployment and inequality, not just “re-slice the pie” (borrow the analogy from Chris Benner and Manuel Pastor’s Just Growth).

Encouraging Jobs Report

The recent jobs report shows that unemployment is down to 7.0 percent and that the economy grew by 203K jobs.  The most encouraging part of the report is that unemployment was down because of increased hiring, not because the labor force shrunk.  More people who wanted work had it rather than people giving up on finding work.  455K people joined the workforce in November.

203K jobs is steady (if not grand) improvement in hiring.  The Washington Post suggests that this report shows that the government shut down had little effect on the economy and that the Federal Reserve could consider pulling back its bond buying program to support economic recovery.  They also suggest that holiday sales will be 3 percent higher than last year – another sign of recovery.

How Long Will It Take To Get to 6.5% Unemployment – Brookings Investigates

The Brookings Institute examined how long it will take to return to 6.5% unemployment recently.  The level is important because the Federal Reserve set it as the benchmark rate at which it would begin to increase interest rates again.  This matters for anyone thinking about starting a business, buying a home, or borrowing money.  They conclude that even under the most optimistic of scenarios, we won’t hit 6.5% until early 2014, but it could be as long as 2018 if we continue sluggish job growth.  Read the report for a deeper look and an interactive tool!