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Title: Mystery for White House: Where Did the Jobs Go?
Source:
NYT
URL Source: http://thecaucus.blogs.nytimes.com/ ... e-house-where-did-the-jobs-go/
Published: Jul 19, 2010
Author: John Harwood
Post Date: 2010-07-19 08:07:16 by Badeye
Keywords: None
Views: 6463
Comments: 10
Mystery for White House: Where Did the Jobs Go? By JOHN HARWOOD Welcome as it is, progress toward finally capping the gulf oil leak hasn’t resolved the biggest conundrum facing President Obama before the midterm elections. That conundrum, which reclaims center stage in Washington this week, is this: Why is unemployment so high? The whodunit has flummoxed economists in both parties for a year. In 2009, as the new Obama administration grappled with the financial crisis, joblessness rose nearly two points beyond customary recession forecasts. Part of the uncertainty concerns why. More consequential now, as the administration and Congress determine what to do, is whether the unemployment spike reflects a short-term or permanent shift in demand for workers. “The stakes are enormous,” said Alan S. Blinder, a Princeton economist who advised President Bill Clinton, because the answers are “going to dictate the pace at which jobs come back.” And that, in turn, may dictate whether Democrats keep control of Congress or surrender at least one chamber to Republicans. So long as the job market remains weak, even substantial achievements like the passage of new financial regulations won’t alleviate voter discontent with the party in power. With eight million jobs lost since the recession began, “We’re climbing out of a gigantic hole,” said David Axelrod, Mr. Obama’s top political adviser. “Until we fill the hole, we’ll get limited credit.” Breaking Okun’s Law Unemployment began rising steadily as Mr. Obama, then a senator, wrapped up the Democratic presidential nomination in 2008. That May, the jobless rate increased to 5.4 percent; by December it reached 7.4 percent. In January 2009, Mr. Obama’s economic advisers predicted that unemployment would peak around 8 percent if Congress passed their recommended stimulus program. As Republicans never tire of pointing out now, the rate hit 10.1 percent by October and has fallen less than one percentage point since. In part, the White House responds, that’s because contraction of economic output was much larger than expected. Yet the rise in unemployment far exceeded what economists would have forecast even had they known that. Under Okun’s Law, a formula for the relationship between output and unemployment described by the 1960s-era White House economist Arthur Okun, the jobless rate at the end of 2009 would have been around 8.3 percent instead of 10 percent. “I don’t blame the administration for being off in these forecasts,” said R. Glenn Hubbard, dean of the Columbia Business School and chairman of the Council of Economic Advisers under President George W. Bush. He called the rise in unemployment “a mystery.” Christina Romer, who leads the council now for Mr. Obama, said, “We’ve done a lot of things to look at possible explanations.” Analysts looked into whether the troubled housing market created “job-lock” by preventing potential employees from selling homes and moving toward new opportunities. They also considered whether extended unemployment benefits deterred others from going back to work. But they concluded that such factors couldn’t explain the magnitude of job losses. Instead, their analysis pointed toward the effect of the financial crisis on business owners who reacted to the fear and uncertainty by laying off employees in extraordinary numbers. The $787 billion stimulus law has lifted employment by roughly 2.5 million jobs, outside analyses have found, but that has not been enough to reduce the unemployment rate substantially. Nor are there signs that business investment or consumer demand will do so soon. Finding a Path Out A rapid productivity increase, as businesses got more output from fewer workers, raises the possibility that employers might make do with smaller payrolls long after economic conditions improve. “That’s the million dollar question,” Ms. Romer said. She and Mr. Hubbard agree that such a permanent shift is unlikely. But unsurprisingly, they disagree sharply on how to accelerate hiring now. Mr. Hubbard suggests reduced business taxes. And he insists that Mr. Obama will deter small business hiring if he allows the Bush tax cuts for the highest earners to expire, since many of those earners run small businesses. Obama advisers say extending those cuts would be an inefficient way to spur hiring. They favor two measures the Senate returns to this week: extended benefits for the unemployed, who they say are more likely to spend and spur the economy than top-earners are, and a new $30 billion small business lending program. For Mr. Blinder, the former Clinton adviser, that doesn’t go far enough. He favors New Deal-style hiring of workers onto public payrolls, since “we’re in pretty much a jobs emergency.” At the White House, Mr. Axelrod says voters “aren’t necessarily prepared to turn back” to the Republicans he says “dug the hole” of joblessness to start with. But unless Democrats make that argument more effectively, the jobs emergency will remain a political emergency for Mr. Obama and his party.
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#1. To: All (#0)
There is no such thing as a 'jobless recovery'. Thats pure political spin. As we are about to see in November, ineffective political spin at that.
Obama's first all-by-his-lonesome budget, btw, calls for a $1.17 trillion deficit.
Hmmmmm . . . Sounds like this could be a case for Plugs Biden to solve If I could, I would. The Dumbest Man in the Senate keeps living up to his billing as Vice President. I particularly enjoyed hearing him blame Snowe, Collins and Spector for high unemployment this past weekend....(chuckle)
Obama's first all-by-his-lonesome budget, btw, calls for a $1.17 trillion deficit.
First. The Dragon King in the GoM collapses the Gulf Coast. That's $2.2 Trillion cut in half. Second. There has been ZERO attempt to create jobs. Just to keep the Kleptocratic Plutarchy going. It takes a lot of theft to keep Wealth this concentrated. You have to work and use lots of violence. 24/7/365. From 2000 to 2007 weak growth in the real economy didn’t stop housing from going up because lax lending and easy credit created a shadow economy based on funny money and neurotic real estate passion. It seemed like times were good but I’m sure a drunk also enjoys his buzz and isn’t thinking about the next day hangover. As of today, the entire housing market is being held up by a thread spun by incredible government intervention. When 95+ percent of all loans being originated come from Fannie Mae, Freddie Mac, and FHA insured loans you know this is unsustainable.
Working at McDonalds isn’t going to buy you a $175,000 median priced home. Has anyone looked at what people earn in China? The real estate cheerleaders make little attempt to connect macro level economic movements with what is going on with housing prices. The Fed is vigorously trying to inject inflation into the market. But most of the money is going to the banks!
Where Did the Jobs Go? Manufacturing jobs went to China. Technology jobs went to India. Customer Service jobs went to the Philippines.
Yep. And why did this happen? Its the corporate tax code, stupid! (not you personally jwpegler) Companies do whats best for their financial health. We've made America inhospitable to business, and then whine when those businesses - the one's that can - leave. Its like beating your wife, then whining 'she left me!'.
Obama's first all-by-his-lonesome budget, btw, calls for a $1.17 trillion deficit.
I completely 100% agree. We tax investment (capital gains), we tax productive activity (our corporate income tax rates are the second highest in the developed world), and we tax job creation (payroll tax). Then we subsidize inefficient economic activity by diverting money from investments to big houses because of the home mortgage deduction. On top of it, we also burden businesses with some of the most complicated and contradictory regulations on the planet. There's not doubt that we've dug our own grave.
The only reason Japan builds car plants here is because THEIR corporate tax code is higher than ours.
Obama's first all-by-his-lonesome budget, btw, calls for a $1.17 trillion deficit.
Yep, Japan's top corporate tax rates are just barely larger than ours -- about 1%.
#2. To: Badeye (#0)
Mystery for White House: Where Did the Jobs Go?
But I can't, so I won't.
#3. To: Ignore Amos (#2)
#4. To: Badeye (#0)
#5. To: All (#4)
#6. To: Badeye (#0)
#7. To: jwpegler (#6)
Where Did the Jobs Go? Manufacturing jobs went to China. Technology jobs went to India. Customer Service jobs went to the Philippines.
#8. To: Badeye (#7)
(Edited)
Its the corporate tax code
#9. To: jwpegler (#8)
#10. To: Badeye (#9)
The only reason Japan builds car plants here is because THEIR corporate tax code is higher than ours
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