Unemployment datapoints of the day

By Felix Salmon
January 19, 2011
Gallup global employment data are out, and there's a huge amount of meat here, including this unemployment map:

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The Gallup global employment data are out, and there’s a huge amount of meat here, including this unemployment map:

unemp.tiff

US unemployment, on this measure, is in the double-digit range — significantly above the global average of 7%. Meanwhile, Germany, with a much stronger social safety net, has unemployment of less than 5%. (Remember, these aren’t official national statistics, they’re Gallup’s attempt to apply the same yardstick to all countries.)

Zoom in on Europe, and the you can see where all the current tensions are coming from, especially in the stark contrast between Germany and Spain, and in general the difference between a relatively prosperous north and a struggling south which is also much closer to the hardships of north Africa.

yurp.tiff

David Leonhardt has a smart take on this data: essentially, the US is doing well by its corporates and its full-time employees (Caroline Baum notes that fourth-quarter withheld income tax receipts rose 17 percent from a year earlier), and is letting the unemployed fall through the cracks; Europe and Canada, by contrast, have attempted to spread the pain more widely.

I fear, however, that even if the US adopts the kind of job-boosting policies Leonhardt is extolling, ultimately Tyler Cowen and Jayme Lemke are right, and it’s going to take years of hard-won economic growth before we make a significant dent in the US unemployment rate. In the interim, it’s important for society to look after the unhappy minority which has found itself to all intents and purposes unemployable. When the median period of unemployment exceeds the maximum duration of unemployment checks, that’s a sign of a country which has simply given up on its neediest.

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Comments
16 comments so far

but…but… aren’t the rich who got that tax break stimulating the economy and making new jobs? Say

We have growing unemployment here in Canada as well, but our social nets (and yes you can have social programs without being a socialist country) and retraining have been a huge boon in keeping the numbers lower in poor economic times.

Perhaps if the Republicans all had heart replacements things might look rosier. I swear I have never seen more selfish slugs in my life as your last decade of nay saying Republicans.

What the republicans and elite don’t quite understand in their myopic and coddled world, is if unemployment rates increase (and food prices and cost of living increase), the jobless, homeless and poor will be the majority. When there is no hope, there is no civility and discourse left… only survival instincts. That’s not a conspiracy theory; that’s reality.

Posted by hsvkitty | Report as abusive

I think you’ve got to compare each country against its “normal” unemployment rate. US policies may lead to large variability in unemployment rates than German policies and so comparing point-in-time averages is not sufficient.

Also, based on one of your links (labeled huge), Gallup claims that the results are based on 1000 phone and face-to-face interviews. And yet the margin of error is only +/- 1.4 % in India. Something smells fishy. It’s even more problematic if the 1000 are global interviews not per country interviews.

Posted by junkcharts | Report as abusive

I wasn’t impressed with either Leonhardt’s analysis or his solution – unions. Unions remain fighting the last war, rather than focusing on skills and how to adapt in a world where just about everyone else is the low cost producer.

We’re fighting multiple, contradictory problems – unemployment that may (or may not, depending on who you listen to) be structural, an ongoing housing bust, credit failures, and a massive shift of job geography and skills. I don’t think you can solve one while ignoring the others. I don’t have an answer, and I really don’t think anyone else does either.

Hsvkitty, I think the Republican platform is that we’re not smart enough, or have enough information, to come up with a good solution, so the *free* markets are our best bet. Democrats tend to think they have the answers, even when they don’t. My own personal philosophy tends toward the former, but from a political standpoint perhaps it’s better to be seen doing something. Objectively, I find it difficult to fault either side in theory.

Posted by Curmudgeon | Report as abusive

“When the median period of unemployment exceeds the maximum duration of unemployment checks, that’s a sign of a country which has simply given up on its neediest.”

I fear it is even worse than that Felix… I’m seeing a growing slice of the “neediest” who have given up on their country.

I have seen first hand a new “class” grow in size but more imporntantly grow in self-confidence, even PROMINENCE. It is a class of people who belive that entitlement begins at birth and ends at death.

There are several million U.S. citizens who would MUCH rather work 20 hours weekly and live on $10,000/year than work 40 hours weekly and live on $20,000/year. This growing class values their time and their personal freedom more than the rest of society does. They are therefor less enclined to sell their time to employers.

If you set the unemployment insurance maximum at 52 weeks then this class will exhaust the benifit. If you set it at 99 weeks than they will exhaust that benifit. If Paul Krugman is elected president and he set’s it at 3 years then they would exhaust that benifit as well.

This new group makes up a minority of those collecting UI benifits, but it is a substantial and growing miniority. I would put forth that they make up an outright majoirty of the long-term unemployed.

Please don’t missunderstand me… this group is still a minority of the “lower class.” Yet they are a minority growing rapidly. What scares me most is that I know so many people who used to earn 30k,40k, even 50k that now so fully accept their “new normal” lifestyle at $10k plus the EITC, Housing assistance, and food asstance, and ER health care, that they show no outward signs of trying to return to their former 3-5x higher economic production level.

I don’t have a solution to offer… I don’t know what to “do about it.” I do know that the first step is for western society to admit that this new un-monied leasure class not only exists, but belives in it’s own right to exist.

Best hopes for a bull market in personal responsibity.

Posted by y2kurtus | Report as abusive

Unemployment is the new inflation. Before the 1970s, economists believed that there was a trade-off between growth and inflation. If you wanted low inflation, you might have to sacrifice some growth, and if you wanted growth, you might have to tolerate more inflation. When “stagflation” occurred, this broke the old economic models and ushered in a lot of changes.

I believe we are seeing the same thing today, except with unemployment instead of inflation. The assumption up until now has been that economic growth and corporate profits lead to employment. That is, low taxes, deregulation and free trade, and companies will earn a lot of profits. If they earn profits they will hire a lot of workers and everyone does well. But what we are seeing now is low taxes, deregulation and free trade, and a lot of corporate profits and rising stock market, yet society itself is dying, jobs aren’t coming. I feel this will bring a change in thinking as big as the 1970s, if not more.

Posted by BeetJuice | Report as abusive

y2kurtus, I resemble your remark — but from a different demographic. For now at least, I would much prefer to work 20 hours earning $30k than 40 hours earning $60k. Part of the reason for that is sky-high marginal tax rates. The difference in our household income between earning $60k and earning $30k is only ~$15k. And most of that would go towards additional expenses and child care if I were working full-time.

I’m educated, have marketable skills, have never had any trouble finding employment… But why should I push myself to take on more hours if almost all of the benefit goes to somebody else?

Marginal tax rates are in the 40% to 50% scale as soon as household income passes $50k. Because of the EIC, they are even higher at the bottom end of the wage scale. We desperately need tax reform to widen the tax base, reducing the marginal tax rates on working families. The overall tax burden isn’t an issue, it is the fact that working ADDITIONAL hours is counterproductive.

Posted by TFF | Report as abusive

All is not lost. God, the rising Sun and Coca cola have sent their reps to the White House to solve the unemployment problem.

http://www.washingtonpost.com/wp-dyn/con tent/article/2010/12/10/AR2010121006226. html?hpid=topnews

y2kurtus said “Please don’t missunderstand me… this group is still a minority of the “lower class.” Yet they are a minority growing rapidly. What scares me most is that I know so many people who used to earn 30k,40k, even 50k that now so fully accept their “new normal” lifestyle at $10k plus the EITC, Housing assistance, and food asstance, and ER health care, that they show no outward signs of trying to return to their former 3-5x higher economic production level.”

So they shouldn’t accept it… and not try to live within their means and you have no alternative? How can you statement not be misunderstood? Unmonied leisure class? Nice moniker for a banker to give the unemployed …ouch! That should ceate a little more animosity amongst the classes if nothing else!

And should you befall that same fate and be unable to find a job, what will you do that will make you more acceptable by those who were lucky enough not to be let go?

Perhaps the ‘monied leisure class’ need a day of reckoning… not a violent recourse, no, but one where they would be required to do an honest days work where backbone is required. But that can’t happen because the that class not only exists, but in your words ” belives in it’s own right to exist.”

There really is nothing like a little class warfare to take your mind off the poor economy!

Posted by hsvkitty | Report as abusive

TFF- Lots of successful people start to look at the income/time trade off once a household reaches a level of affluence and security. I thank the heavens my spouse is driven to work hard to get ahead… if we had a million bucks in our retirement accounts I’d be much more receptive to her working half time.

I’m talking about a totally different demographic, the people who reguardless of age or circumstance are more interested in living at what we have labled as a poverty line level income than working more hours, or working towards an accessable but more demanding job… even if it pays twice the hourly wage of their current job.

In my state if you are willing to fill out forms, sit through counceling, sessions and show up to meetings, you can procure for your family housing, food, cellular phone service, internet access service, heating asstance, and health care for low or no cost.

I’m no tea-partier… I’d vote to increase the Earned Income Tax Credit… to collect that benifit you have to earn income… that’s a behavior I’d like to encourage.

Yet when we have a debate about income inequality (which I agree is alarmingly high) I can’t help but think of all the people I know who seem unwilling to make changes or tradeoffs to get above a $10k/year lifestyle. We need to recognize that some portion of the population is willing to do whatever is required to get buy and little more. Transfer of wealth to that subset away from the working class is economically counterproductive by definition.

If you want to tax the rich to help those less fortunate get ahead… fine… do that… but spend the money on programs that benifit our entire country. Make job training at community colleges even more accessable. Pay people minimum wage to attend night school and get their GED’s.

Just don’t set up programs which perminantly subsidize able boddied people to continue to live the lifestyle which resulted in the need for goverment aid in the first place.

Posted by y2kurtus | Report as abusive

hsvkitty,

Warren Buffett was exactly right there is class warefare going on in this country and the Rich are winning in a rout. Maybe we can find some more common ground despite my being a banker…

…I’m willing to ceed to you that most of the unemployed are hard working upstanding folks who through no fault of their own were forced to take advantage of social insurance and are working their tails off to become re-employed.

…Are you willing to ceed to me that at least some meaningful percentage of those collecting unemployment insurance intend to do so until those benifits are exhausted? That this program has become to some an entitlement into which they have paid in and so it is their right to take out? If not, please google the term “funemployment” and reconsider.

You asked if those displaced by the great recession and globalization should accept their “new normal” circumstances. NO THEY SHOULD NOT.

If I were a displaced auto worker in Detroit, I’d be looking at job training in the oil & gas sector. If I had some emotional ties to Detroit and couldn’t move my family to greener pastures I’d probably look into health care training.

If you want to tax the wealthy to pay for goverment thats fine by me as long as it’s good goverment. I don’t think to many good union democrats like the idea of providing people a lifetime of transfer payments because they would prefer to working 20 hours a week rather than 40.

Posted by y2kurtus | Report as abusive

“Are you willing to ceed to me that at least some meaningful percentage of those collecting unemployment insurance intend to do so until those benifits are exhausted?”

y4kurtus,
Define meaningful. I suppose if you go as low as 2%-5% you might be technically correct, but right now I think you are just making up strawmen.

Financial stress is debilitating and everyone I know who is out of work is looking and would gladly trade their current “how do I pay my bills” stress for the hassle of working a steady job – and this includes the “lazy” ones.

Posted by libarbarian | Report as abusive

Why should hsvkitty “ceed” anything? Maybe cede (der. from “concede”) the point, but never ceed it.

But back to your point, which you keep reiterating. You sound for all the world like an early industrialist explaining to someone why you simply HAVE to pay your workers barely enough to live on, else they would work fewer hours and piss away the rest in pubs.

If it makes you feel any better, chicks don’t dig guys making 10k a year and scamming the system for welfare to make up the difference. Feel vindicated?

Posted by LadyGodiva | Report as abusive

“There are several million U.S. citizens who would MUCH rather work 20 hours weekly and live on $10,000/year than work 40 hours weekly and live on $20,000/year.”

I’m not particularly familiar with the economics at that level, but isn’t there a fairly sharp withdrawal of benefits between those two figures? The person working 40 hours a week for $20k might not have substantially more to spend than the one working 20 hours a week, and their job-related expenses are almost certainly higher.

Moreover, most of the people in the middle class would hesitate to work an additional 20 hours a week for an additional $10k of income. So I’m not going to moralize if those with less wealth happen to agree.

Posted by TFF | Report as abusive

“Moreover, most of the people in the middle class would hesitate to work an additional 20 hours a week for an additional $10k of income. So I’m not going to moralize if those with less wealth happen to agree.”

…even if it means an entire lifetime of transfer payments from those willing to work more hours, or far more impactfully those willing to gain jobskills which make each hour they do work more valuable to society?

p.s. to Ms Godiva sincere thanks for the help with my native language… I’m 32 years into it and still not fluent… I wish the comments had a spell check option!

Posted by y2kurtus | Report as abusive

y2kurtus online spell check

In Firefox browser/tools/options/general/tic on check my spelling as I type

Posted by hsvkitty | Report as abusive

Yes, y2kurtus. Even so. Though I would definitely support restructuring the incentives in the system. It is foolish to set up a system that strongly discourages people from working, then criticize them for choosing not to work. The effective marginal federal income tax rate for a Head of Household with one child is 26% to 31% in the $15k-$30k range. Add to that FICA and other paycheck deductions, state taxes, and job/child-care expenses. (Only the first $5000 of child care is tax deductible. Costs more than twice that for a single child in my area.)

http://www.cbo.gov/ftpdocs/68xx/doc6854/ 11-10-LaborTaxation.pdf

We badly need tax reform in this country, broadening the tax base and lowering the marginal rates. Arguably a consumption tax would do less to distort the system.

Posted by TFF | Report as abusive

I am a recently retired Field Representative for a 20,000 member construction union that is currently experiencing in excess of 20% unemployment. 4 years ago, most of these members were averaging 15 – 1600 hours work per year, and were hardworking providors for their families. Since the recession came full blown in 2008, the average worked hours per member have dropped to 900 -1000. These men and women are clamoring to the union for work. There are fewer than 1 – 2 % who can or are willing to accept a future of half time employment supplemented by unemployment insurance. They are people who just 5 – 6 years ago were working full time and often additional overtime. These are far from the lazy and leisurely folk that so many conservative lawmakers describe. These are people who are highly skilled craftsmen, many of whom have plied this trade for 10 and more years. They want to continue to work in the trade they take so much pride in, but many are being forced by circumstances and the unemployment laws to accept jobs that pay far less than they were earning just a few years ago, and could continue to earn if the lawmakers would provide sufficient necessary funding for more public works and infrastructure projects. I get really tired of hearing these workers being characterized as lazy worthless individuals who would rather lay about and collect unemployment that amounts to about 25% of their most recent wages, than go look for work. These industrious people are being forced to take jobs that are at or near minimum wage which is even less than the unemployment they have been receiving. I don’t write very well, but I hope I’ve gotten my point across that there are many many, perhaps even, the vast majority, of the unemployed who would far rather have a decent paying job than to accept the indignity of a continued future on the dole.

Posted by JHunter | Report as abusive
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