May 04, 2007
Matt gives a quick primer on the Employment-to-Population measure, an important metric that indicates how much of the population is participating in the workforce, either by working or looking for work (folks forget that our unemployment data doesn't count those who've given up on the job market and ceased searching). Brad DeLong, for his part, notes that "the employment-to-population ratio is usually a lagging indicator--it doesn't start to decline significantly until after a recession is well under way," and, as you may have guessed, we're all talking about this because it's been declining.
So is there a recession underway? Sort of. As a labor economist I was listening to on the radio the other day put it, low-income workers have been experiencing what looks like a recession for awhile now, middle income workers are beginning to, and high income workers simply aren't. This is, in other words, a phased recession, and one reason you don't hear that much about it is it's not something you see if you're, say, an affluent journalist, television personality, or newspaper columnist and mainly know others within your class.
This is, it should be noted, a direct effect of inequality. Think of the income distribution as a long staircase. Income inequality lengthens it, not only by adding more steps, but by increasing the horizontal plane between steps. And in this case, the implicit imagery of trickle down economics -- money as water -- is helpful. Economic growth starts at the top, and the longer it has to travel, the more likely it runs out of momentum fairly high up. That's why you see gains pooling in the top few percent, while the bottom four quintiles get next to nothing, and in fact have seen some losses.
Recessions (particularly those not based in stock market bubbles) start at the bottom and travel upwards. And inequality does its magic again, this time concentrating their effects at the base and making it harder and slower for them to travel all the way up to the top. This is very good for the rich, but very bad for the poor, who'll not only suffer more, but will have to wait longer for any national action, as those who control the agenda won't feel the effects for quite some time.
OT: I think your comments are displaying commneters' email addresses even though it says in the comment preview "Not displayed with comment". This sucks because email harvest bots generate spam all kinds of spam from blog comments.
Posted by: joejoejoe | May 5, 2007 2:01:31 AM
What's really, really weird, Ezra, is that month after month you post articles from economics to taxation to lifestyle and the conclusion is always "The poor are not getting what those who have money get".
While I agree with you that striving for a large middle class makes for political stability, it seems until we live in a planned economy in a classless society, you just will not be unhappy.
Instead of the constant whining and tendencies to equalize by stealing from one class to redistribute to another, you should be getting behind cultural changes, a most powerful force, that would encourage the poor to educate their children, stay off of drugs, etc. Your efforts to make sure the tools are there are also admirable, but you completely miss the responsible role of the individual and for that reason, most of these opportunites will not be utilized.
Now, before anyone decries that government should not try to influence the poor's culture like it's some religion, just try how advantageous it would be for, say, the young black community to unload the self-destructive hip-hop culture and adopt something that would honor self-reliance, education, honesty, etc.
Posted by: Fred Jones | May 5, 2007 9:22:05 AM
I guess what's bugging me is why aren't the individuals that you wish to help a part of the solution? It only makes sense.
Posted by: Fred Jones | May 5, 2007 9:23:10 AM
Jeez 'Fred Jones' is here every time I drop in.
Ezra...he's gotta be in love with you.
Y'know like a stalker person...thing.
Just kinda keep an eye out.
Any way I loved the 'trickle down' staircase image.
You can really see it.
Posted by: has_te | May 5, 2007 1:31:25 PM
Well that would follow the pattern in the 20's. Any one remember hearing about how coolidge talked about sick industries. One of them was farming and particularly in the south, after 26 when the bole weevils killed all the cotton the south was in a depression. Manufacturing wasn't doing very well either. Its just the rich didn't notice until 29 when the stock market crashed.
Posted by: Parmenides | May 7, 2007 11:55:07 AM
Posted by: judy | Oct 8, 2007 5:42:44 AM
The comments to this entry are closed.