Source: Amanda Logan and Christian E. Weller, Center for American Progress, June 2008
From the press release:
The Center for American Progress released a new report detailing how rising gas prices have hurt American families in more ways than just at the pump. Families will especially be hit hard during the upcoming 4th of July holiday; the report estimates that the total cost of a barbeque for 20 family members driving 30 miles round trip has soared by 8.7 percent since last year, and 46.8 percent since 2000, to $262.34 this year. This figure is up from $241.40 last year, and $178.75 in 2000, before the last recession hit.
Families across America are struggling with higher prices for gas and food along with record unemployment rates, flat wages, and the deepening housing crisis. In April 2008, gasoline prices easily shattered an inflation-adjusted record that had stood since March 1981, and they have only continued to soar since then, hitting new record highs almost weekly. Ever-higher food prices, which rose 22.7 percent from March 2001 to April 2008, are taking another bite out of families’ wallets.
The aggregate figures show that this is not an isolated case; the report points out that:
• Gasoline spending currently rivals record highs from the early 1980s. In the first quarter of 2008, families spent, on average, 4.0 percent of their after-tax income on gasoline, the highest level since the fourth quarter of 1983.
• Higher gasoline expenditures are especially painful to people in rural areas. Families living in rural areas have an average commute to work that is four miles greater than urban families.
• Increased gasoline expenditures disproportionately affect lower-income families. The second lowest income quintile devoted 5.4 percent of their average annual expenditures to gasoline and motor oil in 2006, while the highest income quintile devoted just 3.7 percent.
• Minorities are particularly affected by soaring prices at the pump. In 2006, Hispanic households devoted 5.4 percent of their average annual expenditures to gasoline and motor oil purchases, while black households devoted 5.0 percent, and white households devoted 4.5 percent.
Source: Christian E. Weller, Jeffrey Wenger, Center for American Progress, July 16, 2008
From the introduction:
Economically Squeezed Families Are Turning to Their 401(k)s to Make Ends Meet
Imagine that you or someone in your family who relied on you for financial help were faced with unexpected medical bills that you could not afford with your current income. Luckily, you have managed to save a nest egg for retirement through your 401(k) plan, the most common defined-contribution retirement savings plan in the United States today, and you can simply borrow against that to keep the bill collectors at bay. Since the money is yours, there is no approval. You may borrow up to half of your retirement savings with no penalty so long as you pay it back within 5 years. Even better, the interest rate on these borrowed funds is lower than those on many other loans.
Source: Dean Baker and David Rosnick, Center for Economic and Policy Research, June 2008
From the press release:
Former GAO Comptroller General David Walker testified today before the House Budget Committee about a proposed commission to cut Social Security and Medicare for future retirees. However, as Congress debates this issue, they must take into account the financial situation of near retirees. A new report from the Center for Economic and Policy Research (CEPR) shows that, due to the collapse of the housing bubble, the vast majority of near retirees have accumulated little or no wealth. This means that they will be almost completely reliant on Social Security and Medicare to support them in their retirement years.
The study, “The Housing Crash and the Retirement Prospects of Late Baby Boomers,” analyzed the wealth holdings of families headed by people between the ages of 45 and 54 in 2004 and projected the wealth of these families in 2009. The findings are presented by income quintile under three scenarios- real house prices remain at current levels, real house prices fall by 10 percent, or real house prices fall by 20 percent. In all three scenarios, the vast majority of these families will have little or no housing wealth in 2009.
Source: Jared Bernstein with research assistance from James Lin, Economic Policy Institute, Jobs Picture, July 3, 2008
The U.S. job market continues to weaken, as payroll contracted for the sixth straight month and unemployment remained at 5.5%, according to today’s jobs report from the Bureau of Labor Statistics. Weekly paychecks for most workers over the past year are up only 2.8%, well below the growth of inflation.
The number of jobs in America has now fallen every month this year, and is down 438,000 since it peaked last December. Also, in another sign of expanding weakness, the BLS revised employment counts down for April and May by 52,000 jobs. It also helps to look only at what is happening in the private sector. Since government jobs are less sensitive to the business cycle, private sector employment is a more telling indicator of the impact of market conditions. Having peaked in November of last year, non-government payrolls are down 578,000, including 91,000 in June.
Source: Yaraslau Kryvoi, Bulletin of Comparative Labour Relations, Vol. 66, 2008
From the abstract:
The World Bank’s Doing Business report has become one of the most influential, yet the most controversial instruments which affect labour law reforms around the world. This study discusses the controversy between the World Bank’s and the International Labour Organization’s approaches towards flexibility of employment regulation with special emphasis on fixed-term contracts.
The ILO employment regulation targets are balanced to harmonize the interests of all three stakeholders – employers, employees and governments, while the Doing Business targets clearly favour the interests of employers. What is more important, the Doing Business targets on fixed-term contracts and dismissals seem to contradict the international labour standards as reflected in the ILO conventions and recommendations.
Although both organizations ultimately have the same goal – to help economies and people prosper, their visions of the proper mixture of flexibility and security are clearly different. It is hardly possible to expect that Doing Business reports would lobby for the interests of employees because this will not necessarily stimulate more favourable businesses environments. However, as this study suggests, there are ways to reduce tensions between these two visions.
Source: Brookings Institution, Blueprint for American Prosperity, June 2008
The current economic downturn forces us to confront America’s ability to compete in a global economy. We expect that the next president and Congress will turn their attention immediately to bolstering our nation’s economic health, and they should focus not just on easing short term pain, but also on setting our nation on a sustainable track for prosperity. The purpose of the Blueprint for American Prosperity is to ensure that our leaders are focused on those assets that drive national prosperity and those places where the assets are overwhelmingly concentrated–America’s 363 metropolitan areas. The Blueprint’s MetroNation report has already made the case for the economic and demographic primacy of metropolitan America in the face of withering global competition. Its companion piece, MetroPolicy, provides an integrated policy agenda to meet that challenge. Simply put, national prosperity hinges on metropolitan prosperity.
MetroPolicy: Shaping a New Federal Partnership for a Metropolitan Nation
Source: Monique Morrissey, Economic Policy Institute, Snapshot, June 25, 2008
Younger workers struggling to find a job now have something else to worry about: older workers with little choice but to keep working, even in a weak labor market.
The decades-long postwar trend toward earlier retirement reversed itself in the 1990s, as fewer workers found themselves covered by traditional defined-benefit pensions or had access to retiree health care benefits.
Source: David Madland, Center for American Progress, June 20, 2008
From the summary:
The mainstream media has a profound impact on politics, helping everyday Americans determine what topics people think are important, shape how they feel about issues, and even how they vote.
Alternative media outlets such as blogs and social networking sites have proliferated in recent years, yet most people still receive their news from the mainstream media, which is especially true for economic news. This report focuses on how the mainstream media covers the economy, a subject where fundamental political questions arise about how income is generated and allocated among individual Americans and the businesses and companies they work for and sometimes invest in. Specifically, in its coverage of economic issues, does the media provide a balanced discussion of who gets what and why? Or instead is coverage biased toward a particular interest group?
Source: Government Accountability Office, GAO-08-912T, June 17, 2008
GAO was asked to provide its views on the long-term fiscal outlook. This statement addresses four key points: (1) the federal government’s long-term fiscal outlook is a matter of utmost concern; (2) this challenge is driven primarily by health care cost growth; (3) reform of health care is essential but other areas also need attention which requires a multipronged solution; and (4) the federal government faces increasing pressures yet a shrinking window of opportunity for phasing in needed adjustments.
Source: Charles W. McMillion, MBG Information Services, April 2008
The Commonwealth enters the new recession with jobs downgraded from trade losses, household incomes down even during the expansion and far deeper in debt.