Category Archives: Economy

The Dismal Job Prospects in America’s Future

Source: Herbert J. Gans, Challenge, Volume 56, Number 3, May-June 2013
(subscription required)

What if the United States cannot create enough jobs, not merely for this decade but for a generation? Asking
the question is perhaps even more important than answering it…If one adds to the high number of bad jobs the jobless, the known and unknown discouraged workers, and the older long-term jobless who involuntarily retire and drop out of the labor market, the percentage of Americans getting the short end of the economic stick rises yet further. If all or most of these indicators continue to grow in the years to come, the United States could reach a now unimaginably horrific level of economic and social inequality…

The Great Recession and Its Implications for Community Policing

Source: Matthew J. Parlow, Georgia State University Law Review, Vol. 28, No. 4, 2012

From the abstract:
During the last twenty years, community policing has been the dominant approach to local law enforcement. Community policing is based, in part, on the broken windows theory of public safety. The broken windows theory suggests a link between low-level crime and violent crime — that is, if minor offenses are allowed to pervade a community, they will lead to a proliferation of crime and, ultimately, a community plagued by violent crime. To maintain a perception of community orderliness, many local governments adopted “order maintenance” laws — such as panhandling ordinances and anti-homeless statutes. This emphasis on cracking down on such low-level offenses brought with it an increase in the needs and costs of policing, prosecutions, jails, social services, and other related resources.

When the economy was flourishing, local governments were able to pay for the time- and resource-intensive broken windows approach to community policing. The Great Recession, however, has forced localities to think critically about whether they can sustain these practices given budget cuts. This Article analyzes the effects that the downturn in the economy has had on public safety budgets and the changes that many local governments have made, and are continuing to make, to adjust to decreasing revenue and resources. This Article will also explore proposed changes to the current criminal justice and social service systems that seek cost-effective approaches to deliver the same level of public safety to which communities are accustomed. In particular, this Article will assess and evaluate evidence-based decision-making — an emerging trend in some criminal justice systems — as part of an evolving trend driven by the effects of the Great Recession, but also stemming out of community policing. Finally, this Article will use Milwaukee County, Wisconsin, as an example of an evidence-based decision-making approach and explain how it can fulfill the public safety goals of the broken windows theory of community policing while creating a framework that provides for “smart” decision-making that accounts for the financial realities that most cities face.

The Capitalist Machine: Computerization, Workers’ Power, and the Decline in Labor’s Share within U.S. Industries

Source: Tali Kristal, American Sociological Review, Vol. 78 no. 3, June 2013

From a press release:
A new study suggests that the decline of labor unions, partly as an outcome of computerization, is the main reason why U.S. corporate profits have surged as a share of national income while workers’ wages and other compensation have declined. …The study, “The Capitalist Machine: Computerization, Workers’ Power, and the Decline in Labor’s Share within U.S. Industries,” which appears in the June issue of the American Sociological Review, explores an important dimension of economic inequality that has been largely overlooked in research and the national discourse….”It was highly unionized industries — construction, manufacturing, and transportation — that saw a large decline in labor’s share of income,” Kristal said. “By contrast, in the lightly unionized industries of trade, finance, and services, workers’ share stayed relatively constant or even increased. So, what we have is a large decrease in labor’s share of income and a significant increase in capitalists’ share in industries where unionization declined, and hardly any change in industries where unions never had much of a presence. This suggests that waning unionization, which led to the erosion of rank-and file workers’ bargaining power, was the main force behind the decline in labor’s share of national income.” In addition to the erosion of labor unions, Kristal found that rising unemployment as well as increasing imports from less-developed countries contributed to the decline in labor’s share….

The Economic Impact of Shale Gas Development on State and Local Economies: Benefits, Costs, and Uncertainties

Source: Jannette M. Barth, New Solutions: A Journal of Environmental and Occupational Health Policy, Volume 23, Number 1, 2013
(subscription required)

From the abstract:
It is often assumed that natural gas exploration and development in the Marcellus Shale will bring great economic prosperity to state and local economies. Policymakers need accurate economic information on which to base decisions regarding permitting and regulation of shale gas extraction. This paper provides a summary review of research findings on the economic impacts of extractive industries, with an emphasis on peer-reviewed studies. The conclusions from the studies are varied and imply that further research, on a case-by-case basis, is necessary before definitive conclusions can be made regarding both short- and long-term implications for state and local economies.

The Arts Are Definitely Good for Business

Source: Robert Lynch, PM Magazine, Vol. 95 no. 3, April 2013

Last article in a three-part series on the value of nonprofit arts and culture organizations to local governments. … In previous articles published in the January/February and March 2013 PM magazines, I wrote about how nonprofit arts organizations contribute to a local government’s economy and create jobs, economic impact, and tax revenue. For this final article, I am going to switch gears and discuss how the arts are used to attract non-arts businesses to communities, how they help keep skilled employees at those businesses, and how they improve local schools. …

How Smaller Cities Hold onto Major Employers

Source: Mike Maciag, Governing, Vol. 26 no. 7, April 2013

When a city’s economy depends on one employer, leaders will go to great lengths to make them happy. But to survive, towns need to attract new businesses….Some cities in similar positions live in constant fear that the big employer in town could pull up roots and take thousands of jobs with it. As a result, municipal leaders will go to great lengths to keep a major employer happy…. At root of the problem for many towns with a strong manufacturing base is a wage structure that creates an uncompetitive environment for new firms to grow, Erickcek says. Companies are hesitant to set up shop where another employer pays more for the same skills in a thin labor market, fearing they may simply become training grounds for larger businesses. …

….Some succeed by shedding industry labels and leveraging their specialties. Toledo is known as the “Glass City” because of its history of auto manufacturing, but it’s no longer just auto glass that’s buoying the Toledo economy. The area supports an increasing number of companies making glass for cellphones and other devices. First Solar Inc., for example, began manufacturing solar panels in Toledo in 2002 and now employs about 1,200 locally. In nearby Henry County, a Campbell Soup Company plant began producing beverages as sales of canned foods sank and the company’s other facilities laid off workers. Between 2009 and 2010, the area saw exports jump 17 percent, the nation’s third highest increase, according to a Brookings Institution study….

The Great Reversal in the Demand for Skill and Cognitive Tasks

Source: Paul Beaudry, David A. Green, Benjamin M. Sand, National Bureau of Economic Research, NBER Working Paper No. 18901, March 2013
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From the abstract:
What explains the current low rate of employment in the US? While there has been substantial debate over this question in recent years, we believe that considerable added insight can be derived by focusing on changes in the labor market at the turn of the century. In particular, we argue that in about the year 2000, the demand for skill (or, more specifically, for cognitive tasks often associated with high educational skill) underwent a reversal. Many researchers have documented a strong, ongoing increase in the demand for skills in the decades leading up to 2000. In this paper, we document a decline in that demand in the years since 2000, even as the supply of high education workers continues to grow. We go on to show that, in response to this demand reversal, high-skilled workers have moved down the occupational ladder and have begun to perform jobs traditionally performed by lower-skilled workers. This de-skilling process, in turn, results in high-skilled workers pushing low-skilled workers even further down the occupational ladder and, to some degree, out of the labor force all together. In order to understand these patterns, we offer a simple extension to the standard skill biased technical change model that views cognitive tasks as a stock rather than a flow. We show how such a model can explain the trends in the data that we present, and offers a novel interpretation of the current employment situation in the US.

The Slowdown In Health Care Spending In 2009–11 Reflected Factors Other Than The Weak Economy And Thus May Persist

Source: Alexander J. Ryu1, Teresa B. Gibson, M. Richard McKellar and Michael E. Chernew, Health Affairs, Vol. 32 no. 5, May 2013
(subscription required)

From the abstract:
During and immediately after the recent recession, national health expenditures grew exceptionally slowly. During 2009–11 per capita national health spending grew about 3 percent annually, compared to an average of 5.9 percent annually during the previous ten years. Policy experts disagree about whether the slower health spending growth was temporary or represented a long-term shift. This study examined two factors that might account for the slowdown: job loss and benefit changes that shifted more costs to insured people. Based on an examination of data covering more than ten million enrollees with health care coverage from large firms in 2007–11, we found that these enrollees’ out-of-pocket costs increased as the benefit design of their employer-provided coverage became less generous in this period. We conclude that such benefit design changes accounted for about one-fifth of the observed decrease in the rate of growth. However, we also observed a slowdown in spending growth even when we held benefit generosity constant, which suggests that other factors, such as a reduction in the rate of introduction of new technology, were also at work. Our findings suggest cautious optimism that the slowdown in the growth of health spending may persist—a change that, if borne out, could have a major impact on US health spending projections and fiscal challenges facing the country.

Should the United States Have 2.2 Million More Jobs?

Source: Michael Greenstone and Adam Looney, Brooking Institution, Hamilton Project, May 3, 2013

…In this month’s employment analysis, The Hamilton Project examines the trajectory of public-sector employment since the onset of the Great Recession and contrasts this decline to periods of economic recovery after previous recessions. We find that the last several years’ policy choices are starkly different from those following previous recessions. Specifically, there are 2.2 million fewer jobs today, relative to what would have occurred with the policy response typical of the five preceding recessions. We also continue to explore the “jobs gap” and find that the country needs to add about 10.0 million jobs to return to pre-recession employment levels….

An Uneven Recovery, 2009-2011- A Rise in Wealth for the Wealthy; Declines for the Lower 93%

Source: Richard Fry and Paul Taylor, Pew Research Center, Social & Demographic Trends project, April 23, 2013

From the summary:
During the first two years of the nation’s economic recovery, the mean net worth of households in the upper 7% of the wealth distribution rose by an estimated 28%, while the mean net worth of households in the lower 93% dropped by 4%, according to a Pew Research Center analysis of newly released Census Bureau data.

From 2009 to 2011, the mean wealth of the 8 million households in the more affluent group rose to an estimated $3,173,895 from an estimated $2,476,244, while the mean wealth of the 111 million households in the less affluent group fell to an estimated $133,817 from an estimated $139,896.

These wide variances were driven by the fact that the stock and bond market rallied during the 2009 to 2011 period while the housing market remained flat….Because of these differences, wealth inequality increased during the first two years of the recovery. The upper 7% of households saw their aggregate share of the nation’s overall household wealth pie rise to 63% in 2011, up from 56% in 2009. On an individual household basis, the mean wealth of households in this more affluent group was almost 24 times that of those in the less affluent group in 2011. At the start of the recovery in 2009, that ratio had been less than 18-to-1. …
Related:
A Recession for the 93 Percent, Good Times for the 7 Percent
Source: Mijin Cha, Dēmos, Policy Shop blog, April 24, 2013