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D Boyd

"Furthermore, the US now has 1 million people who earn a living through entrepreneurial Internet activity, such as ..."

Does it even matter what they switch to? If you start a business instead of looking for work I suspect you would be listed by the BDS folks as one of those poor souls that have givin up even though you might be doing quite well and in no need of their sympathy. There is a great book called "Free Agent Nation" that analyzes the trend away from work as defined by a job and towards all the modes of self-employment (25 million and growing) that makes the old concern about "unemployment" look a bit dated. It certainly has for me.

GK

D Boyd,

Very true. Hence, unemployment rate has to also be viewed in the context of consumer confidence, GDP growth, productivity, etc. All of those indicate a robust, but not overheating, economy at the moment.

Internet entrepreneurship also allows people to leave expensive places like NY or SF to a place where they can buy a house with a two acre yard, and earn the same money. The next decade could see some migration of this type as well.

jeffolie

75% of the economic growth in the last 5 years comes from the housing bubble.

As the bubble starts to burst the related employment will decline. The debt extracted from housing equity will deduct from the economy as the ATM withdrawls stop and foreclosure expand. $2.5 Trillion in ARMs reset in the next 1.5 years at much, much higher rates.

GK

jeffolie,

I used to think that, but it turns out that Household Wealth is rising even outside of Real Estate.

People leveraged in RE will lose, but the smart money will go elsewhere (like tech) and make that rise. The smart will profit while the fools will lose.

Lets see if that softens the impact of the RE bust on the total economy.

GK

The unemployment rate even in Santa Clara County is just 4.4%, or lower than the national average. As far as H1-B people getting paid less, that has been true for the last 10 years.

Almost all tech companies have US engineering openings that are going unfilled. Check out some of the websites.

In India, raises of 20% a year are common, and the shortage is desperate, even there.

Demand has grown to match or exceed the supply available in both India and the US. Even Democrats don't harp about 'outsourcing' anymore.

The software guy who got outsourced will probably find a better job in about 2 months.

You are trying too hard to be pessimistic.

jeffolie

"The smart will profit while the fools will lose."

I used to think that way, but recently a software guy I know had his job outsourced.

Smart guys are loosing out also. Tech is going, going, going, gone.(to India)

jeffolie

Foreign workers undermining US tech workers here in the US.


"A recent report suggests that US employers are using the H-1B visa program to pay lower wages than the national average for programming jobs.

According to "The Bottom of the Pay Scale: Wages for H-1B Computer Programmers — F.Y. 2004," a report by Programmers Guild board member John Miano, non-U.S. citizens working in the United States on an H-1B visa are paid "significantly less than their American counterparts."

How much less? "On average, applications for H-1B workers in computer occupations were for wages $13,000 less than Americans in the same occupation and state."

Miano based his report on OES (Occupational Employment Statistics) data from the Bureau of Labor Statistics which estimates wages for the entire country by state and metropolitan area. The report's H-1B wage data came from the U.S. Department of Labor's H-1B disclosure Web site."

GK

The unemployment rate even in Santa Clara County is just 4.4%, or lower than the national average. As far as H1-B people getting paid less, that has been true for the last 10 years. There are only 95,000 H1-B people a year, hardly enough to depress wages even in high-tech.

And aren't you also saying that we need more educated, assimilated, skilled immigrants, and less illegal, unpatriotic, uneducated ones?

Almost all tech companies have US engineering openings that are going unfilled. Check out some of the websites.

In India, raises of 20% a year are common, and the shortage is desperate, even there.

Demand has grown to match or exceed the supply available in both India and the US. Even Democrats don't harp about 'outsourcing' anymore.

The software guy who got outsourced will probably find a better job in about 2 months.

You are trying too hard to be pessimistic.

Assistant Village Idiot

I offer a slightly different look at the data.

Anything as large as the American economy has considerable inertia, and actions upon it take awhile to develop. For this reason, I do not count any president's economy as beginning when he takes office. Even economic moves of uncanny brilliance or immense stupidity will not change things much at first.

For this reason, I consider that the economy does not "belong" to the president, (or Congress) for at least a year, and I think 18-24 months a better measure of what a person did with what he inherited.

The Ford economy thus runs until 1978, Carter from 79-82, Reagan from 83-90, Bush 91-94, Clinton from 95-02, and Bush 43 from 03-10. If you superimpose lines for those years on the graph above, an even more dramatic picture emerges.

If you put a push pin into the spot where the Democratic Congress reneged on its promises to Bush 41 about spending cuts as offsets for his tax increase, all of recent American economic history lies open before you.

The political reality is that many people credit the president with the economy from the day he is elected (which is nuts), and certainly don't extend the start date more that a few months after election. But just because it seems that way to many people does not mean we have to accept the notion.

GK

Assistant,

I agree, which is why I had a sentence "For simplicity, we shall ignore the notion of inheriting an economy, whether good or bad, from one's predecessor. "

By your metric, Bush II would look to be in even better shape. In fact, everything picked up immediately after his May 2003 tax cuts.

And yes, the party dominating congress also determines whether a President looks good, or not.

From 1992-94, Clinton raised taxes. After the GOP came in after 1994, reforms, leading to a tax cut in 1997, help the economy improve. The President can easily take credit, of course.

For Bush II, the GOP got a majority in 2002, after which a tax cut was approved. This did not go through to the same degree in 2001, as he could not push it through a deadlocked Senate.

Josh

There appears to be some evidence suggesting that job growth over the last 5 years is attributable to increases in public-sector spending rather than growth in the private sector.

http://economistsview.typepad.com/economistsview/2006/02/did_budget_defi.html

GK

Josh,

Some say the job growth is through the Real Estate bubble, while others say it is through the public sector.

The two would be mutually exclusive. Plus, I think the increased defense spending has caused more hiring at Lockheed Martin, Boeing, etc. but these are still private-sector jobs.

Josh

The two would be mutually exclusive.

No they wouldn't.

Plus, I think the increased defense spending has caused more hiring at Lockheed Martin, Boeing, etc. but these are still private-sector jobs.

True, but if economic growth is attributable largely to government spending it tends to suggest that the economy is not as fundamentally strong as it might appear at first blush. Further, heightened production of war materiel is hardly a prescription for long-term growth.

GK

Maybe not mutually exclusive, but certainly not overlapping. Hence there are two distinct claims about where the job creation is from.

Total Federal spending is 18.2% of GDP, or at the long-term historical average, so there is no anomaly above normal trends.

Jason

Crossposted at my blog:

I really hate The Futurist blog. I was excited when I ran across it, but it turns out that despite the promising name, this piece of tired malarky has nothing to do with "futurism" in any sense whatsoever. Furthermore, for a blog called "The Futurist," I would think that they could configure their TITLE tag, but apparently they cannot. If you can't handle HTML 101, you should not be allowed to claim the future. Gosh.

Anyway, what launched me on this little rant was just another case of severe asshat-ery courtesy of The Futurist. In a post entitled "The US Job Market is Booming, For Those Who Can Admit It," we find this little moment of joy:

"[Those who deny that the economy is improving based on these job numbers] will say is [sic] that these jobs are all lower-skilled jobs that pay poorly. This directly contradicts their claims that all the gains of US economic growth gravitate to the top of the income latter while the rest received no benefit."

Ah, you are so right, Mr. Future! "Low-skilled jobs that pay poorly" are indeed a benefit, when compared to unemployment. They also look good when compared to leprosy! We should be grateful that our real wages are plummeting, because we don't live in a Mexican prison!

There an equally flagrant logical fallacy in the next bullet point of their article. You might just win a t-shirt if you can name it!

GK

Jason,

er.. surely you have seen the articles under the Singularity and Accelerating Change categories.

Plus, you misrepresent what is said in the above article. The jobs created are NOT low-wage, low-skill jobs. They are jobs at the higher rungs of the skill ladder.

Show me any proof in the economic data that proves your claim that the jobs are low-wage and low skilled.

Or are you just unhappy to learn that the average unemployment rate during Clinton's 8 years is the same as it has been under Bush so far?

Jason

GK, I think we both know that real wages continue to fall in this country. This is what is meant when people like me say that the benefits of our current economic boom are largely going to the already quite wealthy.

You are claiming, in your 2nd point, a contradiction that doesn't exist. The fact that you see one is somewhat baffling.

GK

Jason,

Well, not really. See this article. Wages are still rising at the same rate as in the early 1990s, but just at a lower rate than the late 1990s. This is because healthcare costs are currently eating up the money that employers would otherwise pass to employees. In the late 1990s, healthcare was not rising that much, so more could be passed to employees. That is looking more like a one-time anomaly, as per the chart.

But even then, the differences were not large. 4% growth in the late 1990s vs. 2.5% growth today (soon to turn around again as healthcare inflation is easing).

And you still have to show me proof that the new jobs are low-skilled and low-wage. It has to be from an official government source, not some left-wing op-ed piece.

Jason

Regarding "real wages" (which is my real point), we are not discussing wage growth per se, we are discussing wage growth as it rates to infation. Real wages have fallen steadily during this "recovery." I hope you are right regarding the costs of health care, but at the moment, average American families have less spending power year to year.

GK

Jason,

But your premise itself is faulty. You say 'real wages have fallen steadily'. You even suggest the recovery is not really a recovery.

This is just not true, as per the official data I have provided. I keep asking you to provide a government data source that all the newly created jobs are low-wage, and you can't do it.

Why be so convinced of something for which there is no supporting evidence that you can provide, against the many opposing pieces of evidence I provide?

Swift Boat Veterans for Appeasement

Economic Policy Institute's analysis resolves this seeming discrepancy, methinks.

Jason

GK,

Real wages are falling. This is only partily related to the character of the new jobs, but it is a separate point (you keep conflating these two points). Your data does not address real wages at all.

According to this Chicago Tribune article, real wages have been on decline since 2003 (according to the BLS, your "official source"). Furthermore, the article points out that there is a general understanding of this by people who are not rich or "in denial."

http://www.chicagotribune.com/business/chi-0607170123jul17,1,62935.story?ctrack=1&cset=true

Furthermore, using the CPI to calculate these real wages actually understates economic growth, so the numbers don't necessarily reflect the truth.

http://www.j-bradford-delong.net/Comments/FRBSF_fast_growth.html

Okay, let's move on to this idea that the burden of proof somehow on me to prove your strawman liberal's point (that the new jobs are low-wage). I'll leave it to these alleged liberals to speak for themselves, and I will reiterate my original point, which was this:

You claim that saying the benefits of the economy gravitate to the rich "directly contradicts" the claim that new jobs are crappy. In fact, if new jobs are crappy, that's just another example of the economic benefit trending to the rich. I'm still perplexed by this, and you have not explained the logic here.

As for the actual claim, the best you or I can say is that we don't know. Neither of us has presented data about these new jobs. You present data about average hourly earnings that apply to existing AND new jobs, and make a claim about the new jobs. Whatever.

Since you feel like chatting, let me address another point. Along with stagnant or slipping wages, the middle class in this country is experiencing much greater risk. Employment stability is down, retirement assistance is down, retirement assistance is also taking on risk (by moving out of pensions and into market-based savings), and personal and collective debt is at unprecedented levels. You can't blame people for looking at this and thinking, "maybe this economy isn't set up quite right."

Lastly, while the percentage of those close to or below the poverty line has shrunk just a little, it's a percentage of a growing population. That means that millions more of your fellow Americans, including children, are impoverished compared to a few years ago. That's a national disgrace, given the immense wealth and success of our nation.

GK

Jason,

First of all, you are sloppily ignoring all the positive data to show that the economy is doing well. From GDP to Consumer Confidence to unemployment rate to 2003-present stock market gains, all are favorable. So ignoring 4 metrics that prove the economy is strong, in order to fixate on one that you (incorrectly) think is doing poorly, is disingenuous. Explain why EACH of the 4 is not meaningful, if you can.

I asked you to provide official government data source, and you cannot. The BLS data does NOT support your view.

And Brad Delong's article that you linked to actually says that prosperity is rising faster than the data suggests, which more proves my point and weakens yours.

It is true that REAL wages are growing less slowly than the late 90s, but they are still growing at the rate of the late 80s and early 90s, and this is due to healthcare inflation eating up money that employers would otherwise pass to employees. Read this article again. Index it to the CPI and compare if you want.

Plus, how do you explain that per capita net worth is rising? It rose 6% ahead of inflation in 2005. It even rose outside of housing gains. Americans are getting wealthier very quickly.

Regarding poverty rates, I believe the median, not the bottom or top 10%, are a true measure of economic health. Also note the propaganda angle of 'poverty'. Many who make under $20,000 a year are college students, grad students, or people voluntarily taking a year off. None are part of a perpetual underclass. A medical resident might make only $35K in 2006, but knows that he will make $300K in 2011 as a full-fleged doctor. Such a person may be 'poor' under the unfiltered statistics, but in reality is not. He is merely in a temporary developmental stage.

The final point of the article is one that you are dangerously close to exemplifying : you (like Brad DeLong on his blog) are extremely wedded to the dogma that the economy could not possibly be doing well under Bush. You ignore the 80% of data that is strong to fixate on the 20% that might be weak (which still is not compared to 30-year averages). The abandonment of rational assessment for the sake of emotion makes you more gloomy and risk-averse, and hence inhibits YOUR OWN success in this strong (but not perfect) economy. Be truly honest with yourself about whether anti-Bush emotion has replaced objectivity as a prism through which you view the world.

Jason

Your rhetoric is so full of misdirection, I honestly do not know if you are sincerely confused or simply mendacious. I've put your quotes in italics below, and responded.

First of all, you are sloppily ignoring all the positive data to show that the economy is doing well. From GDP to Consumer Confidence to unemployment rate to 2003-present stock market gains, all are favorable. So ignoring 4 metrics that prove the economy is strong, in order to fixate on one that you (incorrectly) think is doing poorly, is disingenuous. Explain why EACH of the 4 is not meaningful, if you can.

Talk about misdirection. There are more than four metrics. There are literally hundreds, perhaps thousands. Why are you ignoring all the rest? Sloppy!

I asked you to provide official government data source, and you cannot. The BLS data does NOT support your view.

Are you going to explain why, or are you simply asserting?

It is true that REAL wages are growing less slowly than the late 90s, but they are still growing at the rate of the late 80s and early 90s, and this is due to healthcare inflation eating up money that employers would otherwise pass to employees. Read this article again. Index it to the CPI and compare if you want.

Real wages are not growing at all! No matter how many times you assert it, it is not true. Wages are growing, but real wages (defined as the actual spending power of the wages) continue to fall. To say it very, very slowly:

Wages... have not... kept up... with inflation.

Plus, how do you explain that per capita net worth is rising? It rose 6% ahead of inflation in 2005. It even rose outside of housing gains. Americans are getting wealthier very quickly.

If you include the fantastic gains of the already quite wealthy, yes, the average net worth of Americans looks pretty good. Lop the top 10 percent (and hey, the bottom 10 percent as well) of individuals out of your average and I believe you will see a very different picture.

The abandonment of rational assessment for the sake of emotion makes you more gloomy and risk-averse, and hence inhibits YOUR OWN success in this strong (but not perfect) economy.

I think it's pretty early in the argument for you to be telling me that I've abandoned rational assessment. From where I'm sitting, it looks like it's the other way around.

And, by the way, I am personally doing quite well in this economy. Your assumption that I am not is somewhat revealing, I think. As long as we're ascribing beliefs to each other, I've noticed that wealthy conservatives conveniently take on political views that a) promote their own interest at the expense of their fellow citizens and b) justify why they have the wealth and opportunity in the first place. Sounds like a load of self-serving shit, to me.

GK

Jason,

There are many metrics, but a few are the ones that are most important.

Simple question : Why do you fixate on stagnant real wages, while ignoring GDP, unemployment rate, consumer confidence, productivity, and rising household wealth? Fixating on one (which is also wrong as we shall soon see) while ignoring the other 5, is irrational and disingenuous. If you want to look at hundreds or thousands of metrics, you will still find that 80+% are favorable and under 20% are not. There has NEVER been a time, not even in the late 90s, where 100% of the data was favorable.

You just can't admit the economy is strong, just because you suffer from Bush Derangement Syndrome. Would you rather have France's economy?

You keep avoiding the fact, (from official government data), that wages are growing less slowly than the late 1990s (but still at the same rate as the 1980s) because of health care inflation and nothing more.

Real wages are not growing at all! No matter how many times you assert it, it is not true. Wages are growing, but real wages (defined as the actual spending power of the wages) continue to fall. To say it very, very slowly:

Wages... have not... kept up... with inflation.

Is this the method someone used to brainwash you? Talking slowly and haltingly?

Again, you can't provide any official government source. Repeating something again and again won't make it true. I thought you might have learned that after the humiliating 2004 election defeat.

For the fifth time, provide an official government source that shows that real wages are declining. If it is on the BLS, provide specifics. Guess what, you can't.

Your own article from Brad Delong shows that prosperity is rising faster than the data suggests.

And, by the way, I am personally doing quite well in this economy.

So your real wages ARE rising? Of course they are, as they are for most people. Thanks for admitting that.

Plus, the MIDDLE CLASS, making between $50K and $ 75K a year, voted 56% for Bush. Kerry had a strong majority only among those who earn under $50K a year. Bush certainly captured the middle class by a wide margin.


Liberal Smasher

Jason,

As Gov. Schwarzenegger would say :

Don't be an economic girlie-man!!!

GK

Jason,

No answer, eh? It appears that you have lost the debate.

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