Must Reads: In the American Prospect, the Washington Post's Harold Meyerson looks at the state of work over the last 40 years and the waning power of the U.S. worker. The Economist discusses "the new debtor's prison," which includes a "growing array of fees levied by America’s criminal-justice system." You also maybe interested in this piece from Arun Gupta in the Guardian on the fast-food worker walkout over low wages. Meanwhile, Scott Kuporin CNN Money says the market needs some inefficiency so it can support small-cap stocks and foster job creation. Lastly, check out this infographic on financial innovation in the New York Times.
Check out this 2011 cartoon from Jeff Parker:
Last week's less than that bad job report for October has people debating how bad the shutdown really was in terms of U.S. employment notes Rick Cohen in Nonprofit Quarterly, who has a nice roundup on the issue:
The government shutdown may be responsible for some of the job report statistics, perhaps some of the 700,000 people who left the labor force or the 448,000 identified as unemployed due to temporary layoffs. But the private sector seems to have withstood the shutdown, with significant job increases in hospitality and retail (sectors of low wages and largely limited or fluctuating hours) and manufacturing (just the opposite, usually higher wage and more likely than retail to offer work weeks closer to full-time).
Bloomberg's Matthew Klein has created this very interesting interactive on what last week's jobs report really means. We are also learning that post-9/11 veteran unemployment is significantly higher than everyone else, the Washington Post's Wonkblog offers up this chart:
You might be interested in this list from 24/7 Wall St. on jobs that are disappearing. Meanwhile Americans are becoming more pessimistic about college as a path to prosperity, says the NYT's Eduardo Porter:
On a pure dollars-and-cents basis, the doubters are wrong. Despite a weak job market for recent graduates, workers with a bachelor’s degree still earn almost twice as much as high school graduates. College might be more expensive than ever, but a degree is worth about $365,000 over a lifetime, after defraying all the direct and indirect costs of going to school. This is a higher payoff than in any other advanced nation, according to the Organization for Economic Cooperation and Development.
Still, the growing skepticism about the value of a degree has fed into a deeper unease among some economists about the ironclad trust that policy makers, alongside many academics, have vested in higher education as the weapon of choice to battle widening income disparities and improve the prospects of the middle class in the United States.
It has given new vigor to a critique, mostly by thinkers on the left of the political spectrum, that challenges the idea that educational disparities are a main driver of economic inequality.
The Economic Policy Institute's Lawrence Mishel and Heidi Shierholz argue in a new report that if unemployment benefit are not extended 2014 could see a loss of more than 300,000 jobs due to reduced consumption.
I think this cartoon from the Missoulian sums up how overwhelmed Americans feel in this new state of things:
An increase to $9 an hour will help only those at the very bottom of the wage scale, and those at the very bottom of the wage scale tend to be Democratic voters, because they’re more likely to be black or Latino (or maybe single white women). So naturally, only Democrats will support it. Instead, he argues that a bigger increase will have a much greater likelihood of having a positive impact on wages up the scale. There are loads of jobs, jobs that can’t be outsourced—home health care, food services, sales, office and administrative support, non-construction laborers, and more—that he said yesterday could be positively impacted by as much as $5,000 a year, which for a $25,000-a-year job is a pretty hefty increase. When you start to talk about this segment of the wage scale, Unz contends, you’re starting to talk about white working-class Republican voters. And that could create upward pressure on some GOP legislators to come around eventually to supporting this position.
Thanks to the Swiss, the idea of a "basic income" is getting another look, check out the round up on the issue from the week. Demos' Matt Bruenig looks what such a program might cost in the United States:
When a government runs a basic income program, it is not actually commanding real resources. It is not like when a government makes a road. The making of that road pulls resources out of private use and directs them towards making the road. Here, the government just moves real resources around. It just changes the distribution of them. It does not direct their use. Thus there are only two meaningful costs to a basic income program. The first is the cost of administering the program. The government would have to pay people to collect taxes and write checks. As Social Security shows, this can be done really efficiently. This is a real cost because the people doing these tasks could be doing other tasks instead. The second meaningful cost is the cost to the economy from a reduction in labor supply. This cost is the factor to look towards when determining how big to make the basic income.
Meanwhile the NYT's Annie Lowrey says we kind of already have something like it:
The advocacy group Low Pay Is Not OK posted a phone call, recorded by a 10-year McDonald’s veteran, Nancy Salgado, when she contacted the company’s “McResource” help line. The operator told Salgado that she could qualify for food stamps and home heating assistance, while also suggesting some area food banks — impressively, she knew to recommend these services without even asking about Salgado’s wage ($8.25 an hour), though she was aware Salgado worked full time. The company earned $5.5 billion in net profits last year, and appears to take for granted that many of its employees will be on the dole. Absurd as a minimum income might seem to bootstrapping Americans, one already exists in a way — McDonald’s knows it. If our economy is no longer able to improve the lives of the working poor and low-income families, why not tweak our policies to do what we’re already doing, but better — more harmoniously?
Over at Reuters, conservative thinker Reihan Salam says we need to reconsider how we pay low-skilled workers if we are in "a new reality in which good jobs are few and far between." This NPR story by Kelly McEvers with audio examines why bringing back the middle class may take a revolution.
Lutfey Siddiqi in the Huffington Post discusses the challenges of social impact measurement:
There is a phenomenon known amongst macroeconomists as Goodhardt's Law which can be paraphrased as: "That which is measured changes its character due to the act of being measured."In the same vein, it is argued that the active pursuit of output data may distract or detract a social enterprise from its impact objectives. It is also argued that impact accounting imposes a compliance burden that acts as unnecessary overhead. On the other hand, there are those who embrace the challenge of measurement not just for communicating with external stakeholders but also to be internally accountable - to better manage the enterprise.
In the Chronicle of Philanthropy, the Foundation Center's Bradford Smith looks at what he calls the brave new world of good:
Welcome to the Brave New World of Good. Once almost the exclusive province of nonprofit organizations and the foundations that support them, today the terrain of good also attracts social entrepreneurs, social enterprises, impact investors, big business, governments, and geeks... Several years ago, a Google employee told me: “I want to map all the good in the world.” At the time, I remember thinking how monstrously naïve that seemed (though if anyone could pull it off, it would probably be Google). But today, I see that comment in a different light and find myself yearning for the same thing. If so much of the world is doing good, I want to know about it. I want to count it, measure it, and map it. Some will say—as they do of philanthropy—“I don’t care how much money is being spent on X; I want to know what’s effective.” So do I, but we all know that standardizing effectiveness is elusive at best. In the meantime, let’s follow the money. We know how much money the world is spending on pet food, weapons, and war; let’s try to prove we’re spending more on good.
You may be interested in this recent annual Donor-Advised Fund Report the National Philanthropic Trust, which has shown significant growth due to various economic events including the fiscal cliff. You also might want to look at this state of the sector survey from the Nonprofit Finance Fund.
Mayor Bloomberg's office has announced NYC's poverty rate has been at a stand still since 2000. Unfortunately, out of the 20 largest cities in 2000, NYC's poverty rate was the fifth highest in the country and as of 2012 about ten other city's have overtaken New York. You might like to read this pretty thoughtful piece from Matt Levine in Bloomberg on why financial innovation is depressing. MotherJones reports on fight on court battle over Walmart's practices on how addresses worker disability claims. A Brookings blog post looks at the research involving the correlation between test scores and social mobility that might be of interest.