Sunday, December 4, 2011

A Tale of Two Economies

Americans' living standards are permanently in decline:
Katie O’Brien Mowery is one of the lucky ones. After losing her job in the marketing department of a luxury resort in Santa Barbara, Calif., in early 2010, she eventually found a position with better benefits and the promise of a brighter future.

“I wished that it happened sooner than it did,” said Ms. Mowery, who is in her mid-30s, referring to her nearly yearlong job search. “But looking back, my new position wouldn’t have been available when I was laid off, and now I’m very happy.”

Even though the Labor Department is expected to report on Friday that employers added more than 100,000 jobs in November, a new study shows just how rare people like Ms. Mowery are. According to the study, to be released Friday by the John J. Heldrich Center for Workforce Development at Rutgers, just 7 percent of those who lost jobs after the financial crisis have returned to or exceeded their previous financial position and maintained their lifestyles.

The vast majority say they have diminished lifestyles, and about 15 percent say the reduction in their incomes has been drastic and will probably be permanent.

The news is strikingly bad,” said Cliff Zukin, a professor of public policy and political science at Rutgers who compiled the study, which was based on surveys of a random sample of Americans who were unemployed at some point from August 2008 to August 2009. The numbers represent “a tremendous impression of dislocation and pain and wasted talent,” he said.

More than two years after the recovery officially began, American employers have reinstated less than a quarter of the jobs lost during the downturn, according to Labor Department figures. Of the 13.1 million people still searching for work, more than 42 percent have been unemployed for six months or longer. About 8.9 million more are working part time because they cannot find full-time work.
Few Workers have fully recovered, study says (New York times)

The few fields that are hiring are members of the corporate technocratic elite who can count on overseas profits (computer systems, accounting, managment consulting [whatever that means]). Of course, these jobs are only available to small portion of society with the proper social connections. In America, it's who you know as well as what you know (the real reason elite colleges can charge so much). For the rest of us ordinary folk, we can kiss our jobs goodbye:
Bill Loftis is one of the unfortunate ones. He is without a college degree or specialized skills and also worked in an industry, manufacturing, that has added back only about 13 percent of the jobs that it lost during the recession.

After 22 years on the job, Mr. Loftis, 44, was laid off from a company that produces air filters and valves in Sterling Heights, Mich., three years ago. Managers “looked me dead in the eye,” he recalled, “and said, ‘We’re laying you off, but don’t worry, we’re calling you back.’ ”

He has heard nothing since. Despite applying for more than 100 jobs, he has been unable to find work. He has drained most of his 401(k) retirement fund, amassed credit card debt, and is about to sell his car, a 2006 Dodge Charger. “It’s looking hopeless,” he said.
Yet for the corporate elite, things have literally never been better in history:

IN the eight decades before the recent recession, there was never a period when as much as 9 percent of American gross domestic product went to companies in the form of after-tax profits. Now the figure is over 10 percent.

During the same period, there never was a quarter when wage and salary income amounted to less than 45 percent of the economy. Now the figure is below 44 percent.

For companies, these are boom times. For workers, the opposite is true.

The government’s first estimate of corporate profits in the third quarter was released two days before Thanksgiving, at the same time it revised the rate of G.D.P. growth in the quarter down to an annual rate of 2.0 percent.

The report showed that effective tax rates, both corporate and personal, are well below where they were during most of the post-World War II era.

Corporate profits after taxes were estimated to be $1.56 trillion, at an annual rate, during the quarter, or 10.3 percent of the size of the economy, up from 10.1 percent in the second quarter. Until 2010, the government had never reported even a single quarter in which the corporate share was as high as 9 percent, as can be seen in the accompanying charts.

Wage and salary income was only 43.7 percent of G.D.P., the lowest number for any period going back to 1929. That figure first fell below 45 percent in 2009.

Compared with the final three months of 2007 — as the 2007-9 recession was beginning — wage and salary income was just 1.8 percent higher in the third quarter of this year. By contrast, overall corporate profits before taxes were 35 percent higher. With estimated corporate taxes just 1.5 percent higher, after-tax profits were up 49 percent. Those figures are not adjusted for inflation.

In the quarter, corporate taxes amounted to 21 percent of corporate profits, a figure that is lower than in all but two previous periods, the first two quarters of 2009, during the recent recession.

During the half-century from 1960 through 2010, corporate taxes averaged almost 34 percent of net income, so the current figure is about a third lower than average.
For Companies, The Good Old Days are now (New York Times).

So can we finally throw the last shovelful of dirt on "trickle-down" economics? Too bad the Republicans are stil running on it.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.