The Boom in the Midst of a Malaise

It’s Friday afternoon and the sidewalks at Main Street and Roosevelt Avenue in Flushing, Queens are saturated with bargain hunters.  Awning-draped storefronts and their street vendor competitors vie for shoppers’ attention while commuters, arriving on the 7 train, veer off the walkway to maneuver around the slower-footed traffic here at New York City’s third-busiest pedestrian intersection.  

 
The small retailers at the center of the cacophony of commerce form the spine of this largely Asian immigrant community that has seen job growth and new businesses throughout the Great Recession and its aftermath.

 
While much of Queens flounders with low investment this neighborhood’s retail economy is the force behind its steady expansion. 

 
“Unlike some other areas we don't have vacant store fronts,” said Grace Meng, Flushing’s representative in the New York State Assembly.  She adds, “I think it is because we have a lot of small businesses and many of them are first generation immigrants who really work hard.”

 
According to a report from the New York State Comptroller Flushing experienced continuous job gains from 2005 through the end of 2010.  This was the result of a decade of new businesses and entrepreneurs setting up shop.  In 2009 there were almost 40 percent more companies operating here than 10 years before.

 
While some of this growth is attributable to the entrance of large retailers, such as Target, Old Navy, and Best Buy, this community – where 90 percent of companies have fewer than 10 workers – continues to depend on the energies of its more diminutive enterprises.

 

Will Baby Boomers Fix Unemployment?

Maybe the recent drop in the job market’s participation rate wasn’t entirely due to discouraged workers giving up on finding a job.
 
Earlier this month the Bureau of Labor Statistics (BLS) released a lower unemployment figure and the component data showed that it was a result of both an increase in jobs and a decrease in the number of potential workers.  When examining these numbers I assumed the decrease was due to frustrated job seekers putting their searches on hold.
 
But according to a recent Bloomberg article some of the drop in the overall size is of the workforce is because baby-boomers are starting to hang up their business suits for good.
 
Think of all those 50 and 60-somethings.  As they retire opportunities arise for the jobless. And, because their numbers are large and their unemployment rate relatively low, many additional jobs will become available as more hit the 65-year milestone.
 
There’s one caveat that is important to note, however.  A retirement decision is often contingent on the performance of an investment portfolio.  The stock market, although still showing volatility, rebounded well from its low in 2009.  But if a future shock – like a unexpected European sovereign default – causes equity prices to plunge potential retirees may decide to stay in their occupations well past their 65th birthday.
 

IRS Is Getting In The Way

The federal government allows job seekers to deduct from their taxes costs incurred while looking for work, according to a recent press release from the IRS. 

Travel expenses or fees to employment agencies can amount to a significant chunk of cash for the unemployed, particularly at a time when every extra dollar becomes increasingly valuable. Fortunately a tax write-off can lesson the burden of these costs and, for some, keep these job placement avenues available.

But, as always, there’s a catch. You have to be seeking employment in the same field as your previous occupation.

The problem is that in today’s shifting economy many of the more than 13 million unemployed workers come from shrinking sectors where new job openings are often accompanied by crowds of other applicants.  As jobs in manufacturing contract, for example, the best option for those unemployed workers is often to find a new career in a different field.

But by taxing funds used toward finding a job outside of one's established trade, the federal government is, in effect, providing a disincentive for workers to move toward the most dynamic and efficient businesses.

Job Gains But Fewer Workers

The Bureau of Labor Statistics (BLS) released its November employment report on Friday revealing a seemingly promising drop in unemployment as job seeker rolls reduced by 594,000.  This new data generated a jobless rate of 8.6 percent, down four-tenths of a point from last month and 1.2 percent year-to-year. 

But fewer unemployed workers doesn’t necessarily mean more people have jobs.

Further into the report the BLS stated, “the number of unemployed persons, at 13.3 million, was down by 594,000 in November. The labor force, which is the sum of the unemployed and employed, was down by a little more than half that amount.”

So over half of the workers accounting for the drop in the official unemployment rate didn’t find jobs.  Instead they stopped looking for work.

Where's The Recovery?

There has been an abundance of column inches devoted to the weak job recovery following the Great Recession.  Analysts from the left and right have offered opinions about why employment didn’t spring back after the official end of the downturn in July of 2009.   

But what many have missed is that this phenomenon isn’t new.  In the three most recent economic downturns the US job market has been noticeably less fluid than in earlier times.  Unemployment – after the recessions of 1990, 2001, and 2007 – was slow to rebound, and in all three cases continued to increase even after the end of the economic contraction. 

This is in stark contrast to our earlier postwar recessions as illustrated clearly in the graph at the top.  In those instances joblessness fell as soon as the economy began to grow. 

A dissection of higher prices...

Inflation is back in the news. Outspoken president of the Minneapolis Federal Reserve, Narayana Kocherlakota, said yesterday that the current monetary policy - attempting to free the stuck labor market - could cause “dangerous” inflation. 

But I wonder if higher prices are really such a bad thing right now. 

The obvious downside is their affect on consumer spending. But, considering the uncharacteristically low levels of core inflation since the recession began, the benefits might outweigh any sticker shock that arises with a modest price increase over the short-run.

Inflation, when it is consistent and predictable, can act like a reset button on the economy. It doesn’t change the potential for production in a country but it does alter the impact of past events on decisions today. The benefits can include less debt pressure on homeowners, more investment by businesses and, finally, a more efficient distribution of wages.

Debt burden: One widely recognized problem with our economy now is deleveraging. Workers are applying more of their income to mortgages and other debt and, consequently, are spending less on trips to the mall. For many, who invested at the height of the housing bubble, the immensity of these liabilities can be nearly insurmountable. Those in the most trouble, who don't qualify for a refinance, can only watch helplessly as their house payments barely make a dent in the principal.

But in an economy with a higher inflation rate the real value of these loan burdens would be reduced. As wages adjusted upward to the new price of money less of a workers’ income would be devoted to debt. 

Investment: Businesses are holding record levels of cash today, which effectively takes it out of the hands of workers and consumers. They’ve made this decision because the current investment opportunities don’t provide a high enough return for the risk. If the value of that cash reduced over time, however, those businesses would have to reevaluate these positions. A bit of inflation would give then the necessary jolt to change that cash into something tangible like a new employee. 

Opponents argue, instead of investing this idle cash in job creating activities, businesses would buy commodities and, as a result, create a new bubble. This is a compelling argument but I think these opponents see our economic situation in too dire of terms – they don’t perceive any good business investments today. 

On the contrary, I think companies are near the point of investment, but remain in a holding pattern because of low demand and uncertainty caused by events like the Euro crisis. A rise in prices would be the spark needed to kick them out of this fruitless circle of stagnancy.  

Job Market: Wages are stickier than consumer prices and don't move so freely up and down. So inflation would initially lower real levels of income as prices moved upward.  Worker contracts would eventually follow, however, and this adjustment period would allow employers to reassess their previous wage decisions. 

As the economy continues to shift, certain sectors have asserted themselves - such as high tech. But because of past labor contracts and established wage norms these new efficient areas may not be able to attract the best workers. With a reset of wages caused by higher inflation, however, income for the most productive people in the most productive and competitive sectors would increase the most. This would allow the job market to more accurately indicate which sectors are efficient and growing, and guide new workers to those new jobs.
 

For those wanting to read more, Planet Money recently examined the economy-wide benefits and drawbacks of a 5% inflation rate.


 

Journalism when it's done well: A case study

For my writing class I examined this article written over 14 years ago by an investigative journalist at the Seattle Times.  It was an award winning piece that led to sweeping legislation and eventually a book.  It is the type of story that all journalism students hope to complete sometime during their careers.

  

The Writer: Duff Wilson is an investigative journalist who currently covers the pharmaceutical and tobacco industries for the New York Times.  Prior to arriving on the East Coast in 2004, he was the investigative projects reporter at the Seattle Times where he was a three-time finalist for the Pulitzer Prize. 

The Story:  " Fear in the Fields – How Hazardous Wastes Become Fertilizer” is a two-part investigative report published in the Seattle Times on July 3rd and 4th, 1997.  The piece described how certain companies avoid the high costs of hazardous waste disposal by legally ‘recycling’ these toxic substances into fertilizer.

Part One of the story follows Patty Martin, mayor of the small town of Quincy Washington, in her effort to alert the public that farmers in her area were unknowingly using fertilizer made from hazardous waste.  She was prompted to investigate fertilizers after the local branch of the agricultural supply company, Cenex, disposed of hazardous material on a nearby farm and claimed it would benefit the crops. 

A Mashup of Deficits

The US congressional committee responsible for striking a deficit reduction deal ended its work without an agreement on Monday.  In the debt-ceiling negotiations, politicians (were) debating how to reduce the federal deficit by $2 trillion to $4 trillion over the next 10 years. 

But, you may ask yourself: How did we get here?  

Some say it’s thanks in large part to the stimulus. Others counter, contrary to popular assumption, stimulus spending under the American Recovery and Reinvestment Act has been a very small factor in the expansion.

Possible Sign of Life?

There was no obvious indication of an overall impending recovery in last month’s jobs numbers. At 9 percent, October’s unemployment didn’t change much from previous months. 

But one outlier existed amongst this clutter of figures.  Job prospects for workers without a high school diploma apparently increased as their year-to-year unemployment rate dropped by 1.5 percent.  That’s over seven times the drop witnessed by workers with some college experience. 

Of course, at 13.8 percent, the highest jobless rate of all workers, this demographic has the most room for improvement. 

As I outlined in an earlier post these numbers should be viewed with a degree of skepticism.  Month-to-month and even year-to-year estimates are subject to change as more information is examined. 

But let’s assume this decrease is accurate and will continue over the next few months.  What would that tell us about the job market? 

It’s safe to assume that workers without a high school diploma are low-wage earners.  If they are finding a more receptive job market, then perhaps the freeze on investment by businesses is beginning to thaw. 

It isn’t surprising that preceding a recovery, low-income workers would be the first hired, largely because they were the first fired at the beginning of the downturn.  But, also, a company with only tepid confidence would likely want to initially test the waters with the cheapest labor available. 

I will keep an eye on this stat when November’s numbers are released and, perhaps, if unemployment continues to drop amongst this group it will indicate a trend that foments a larger labor market recovery. 

Profit Sharing and Unemployment

More employers should link worker pay to the success of their company.  A profit-sharing arrangement or a system of bonuses pegged to fluctuations in revenue would increase worker engagement and, consequently, productivity.  But equally important, if adopted on a large enough scale, it would reduce unemployment during bad times.  

When a recession hits, demand for goods typically drops and, as a result, prices fall.  But wages are stickier and don’t usually move in a downward direction.  Instead, when low prices cause a company's earnings to go down, employers cut their workforces leading to long lines at the unemployment office. 

But what if employee pay was largely based on revenues?

During a downturn, a company’s cost of employment would decrease with the drop in revenue eliminating much of the need for layoffs.  For the workers, pay cuts aren’t pleasant, but knowing your job is safe is a tradeoff I think many would take. 

Additionally, this gives employees a stake in the company's recovery and provides an incentive for everyone to help right the ship.

New Numbers Hot Off The Presses.....

It was the second of September and the Bureau of Labor Statistics (BLS) released a particularly distressing jobs statement for the month of August. 

Zero growth in employment was the figure that jumped off the page – a number equally gloomy and unexpected.  Publications quickly made room in their headlines for this breaking news and commentators began tossing blame around to their preferred scapegoats. 

The only problem?

This number was revised up in the next month’s BLS report. And when I looked at the October info released last week, I found this sentence at the bottom of the page.

The change in total nonfarm payroll employment for August was revised 

from +57,000 to +104,000.

So initially there were zero new jobs, then 57,000, and finally 104,000. 

Jobs and Electricity

Upgrading the system of power lines crisscrossing the US seemingly satisfies two prominent goals of President Obama’s jobs agenda – growing the renewable energy sector, and rebuilding public infrastructure. 

But as far as I’ve seen, no large-scale plans to do this are in the works. 

Last week I attended a lecture by an analyst from Bloomberg New Energy Finance who argued that wind and solar power from the middle of the country have the potential to satisfy much of our country’s energy needs. 

The problem? 

An antiquated electrical transmission system keeps this energy stuck in those relatively sparsely populated areas. 

Are Top Incomes Risky?

On Wednesday Greg Mankiw, a professor of economics at Harvard published a post on his blog entitled “The Rich Get Poorer.” In it he explained how in 2008 and 2009 the incomes of the top one-percent of Americans dropped more as a percentage than the median income, and concluded that the well-to-do’s earnings are exceptionally risky.

He also subtly ridiculed the ‘Occupy Wall Street crowd’ for not recognizing this data.

But a discussion of income trends and their volatility should examine a wider window. Fortunately, also on Wednesday, another member of my blog list commented about the movement amongst various income brackets. In"Why Has Income Gone Up So Much For The Top 1 Percent?” Planet Money fills in the data for the 28 years before 2008. Here they illustrate how ‘real after tax income’ increased about 275 percent for workers at the top.

And for those in the 'Occupy Wall Street crowd' whose incomes are in the bottom fifth?

Over a period of unprecedented expansion in the US economy, they saw their real earnings go up 18 percentage points, or less than one-fifteenth the increase experienced by those at the pinnacle of all salaries.

Viaduct Demolition Provides Jobs But....

Construction sector job prospects should improve in the Seattle area as demolition of the old Alaskan Way Viaduct began a week ago and the preliminary excavation for boring a tunnel to replace it will commence next year.

Mirroring the employment situation nationally, almost one-third of Seattle’s job losses during the recession occurred in the construction industry. Consequently,despite the funding problems with the project (particularly the potentially crippling plan for cost overruns), this is a positive development. More people working means a more assured and confident society.

But after viewing pictures of wrecking equipment smashing through this crumbling highway structure yesterday, it’s tough not to feel a bit glum for this 60 year-old staple of Seattle’s waterfront.

It was a freeway with a view. You didn’t need a window office in a downtown skyscraper to get a pretty spectacular sight of the ships in Eliot Bay or the Olympic mountains across Puget Sound, you could just head north on the top deck of highway 99.

So, as it often goes with progress, a piece of the old-times becomes a memory.

The Gambles of Jeff Bezos

Here's another post originating from my news writing class. Although it's not about jobs and unemployment directly, the continued success of the US high-tech sector and those employed there will hinge on the possibly bold or foolish decisions of companies like Amazon. 

“How affordable is Kindle Fire?” Jeff Bezos asked at a press conference in Manhattan last month for the release of Amazon.com’s incursion into the tablet market.

Looking to stun his audience with the answer itself, he flatly answered, “it’s a hundred and ninety-nine dollars.”   

This announcement raised eyebrows amongst some industry followers who believe the online retailer will lose money each time a customer places a Fire in their digital cart.

Dan Geiman, an analyst for the brokerage firm McAdams Wright Ragen, predicted a fifty-dollar loss per unit, while IHS forecasted a less-extreme ten-dollar loss.  At least one authority, however, thinks Amazon will end up in the black. UBM TechInsights sees Fire’s production costs at one hundred and fifty dollars.

But gambling on big ideas and low margins is nothing new for Bezos, the CEO and chairman, who turned away from a promising career on Wall Street to start the internet retailer at a time when most consumers didn’t understand what the world-wide-web was

Unpredictably Rational

For my news writing class, I read a book on behavioral economics titled, Predictably Irrational, by Dan Ariely.  It explained how individuals will often make irrational decisions because of seemingly insignificant factors.  For example, Ariely, argued that people often don't know how to value goods and, consequently, will choose an item whose price is at the midpoint of all the others.  He illustrated how restaurants can persuade diners to spend more by adding a few exceptionally expensive items to the menu not necessarily to sell but, instead, to increase the value of the median priced dish.  

Following the themes presented in his book I created my own predictably irrational experiment. Here it is. 

Students at the Stern School of Business are taught the basics of economics, including monetary policy.  Therefore I chose this group to test my hypothesis of whether people who are generally knowledgeable about a policy proposal (in this case a switch to the gold standard) will alter their opinion if they are told that it is supported by a highly respected individual.

Over two days I questioned 40 Stern students in and around the Kaufman Management Center on the topic of the gold standard.  I chose this theme because it generally maintains little support amongst business people and economists and, consequently, my first round of questioning would provide a baseline with plenty of room for change in opinion.  

As it turned out, that is what happened.  The first day I asked twenty people at random the following question.

“Should the US revert back to the gold standard, that is should every dollar be backed by a specific amount of gold?”

Wall Street Protesters Respond to Oakland Police

In response to police actions at the Occupy Oakland protest, Occupy Wall Street participants marched from Zuccotti Park to Union Square last night, chanting, “let’s go Oakland.” 

Police in that California city reportedly shot projectiles at demonstrators injuring one man who was hit above the eye.   

“They shot a guy who turned out to be an Iraq War veteran and he’s now in critical condition,” said Lawrence, a student from Montreal who asked me not to his report his last name.   

“I still have to get a corporate job in the future,” he added.  

The marchers followed a mostly sidewalk only course but at times were allowed to absorb the entire roadway such as on Broadway near NYU.   

Additionally, according to multiple protesters, homeless individuals, some with drinking problems, have moved into Occupy Wall Street’s encampment at Zuccotti Park creating a challenge to the image demonstrators are attempting to portray.   

But Josh Mochamer, a student from Manhattan, explains the demonstration's general policy . “Since it’s open to all, no one’s going to kick anybody out unless they’re hurting someone,” he said.     

Don't Sacrifice Clean Energy Availability

A generation after Jimmy Carter installed solar panels on the White House roof in an effort to promote alternative energies, solar power is back.   

Costs are finally going down and, despite the recent bankruptcy of Solyndra, US jobs in this sector grew 6.8 percent last year and are expected to expand another 24 percent next year according to The Solar Foundation, a research and advocacy organization.

One obstacle to growth for some American solar producers, however, is Chinese competition.  They claim China is selling solar panels below the cost of production and, as a result, have an unfair advantage in the world marketplace.  On Wednesday, seven solar panel producers took this claim to the US Department of Commerce and called for new tariffs of more than 100 percent against Chinese panels.

An analysis by Keith Bradsher in the New York Times yesterday stated that this move, if adopted, might have unintended consequences.  He compared today’s US solar sector to the Detroit auto industry of the 1970’s and ’80.  At that time American car companies were similarly calling for tariffs on Japanese autos. 

Toyata, Nissan, and Honda’s response? 

60 Years of Too-High Unemployment?

“I found that the men and women who got to the top were those who did the jobs they had in hand, with everything they had of energy and enthusiasm and hard work.” 
-Harry Truman

Show up, work hard, and you will get ahead.  That was the mantra championed by the leaders of our society for at least two generations. This message, despite its inconsistencies with reality in many communities, nevertheless retained followers. 

But times have changed and the veracity of this idea has eroded. New innovations in manufacturing and the expansion of worldwide trade have eliminated many jobs that US workers ‘had in hand.'  While jobs went away, a housing bubble – created by perverse incentives in the financial sector – was able to take up the slack for a while.  But as we all know by now that phenomenon was simply unsustainable. 

Now individuals who spent decades gaining knowledge and skills in one sector are forced to start anew.  But, of course, that isn’t easy.  Economists call this difficulty, ‘labor market friction,’ and it’s a hotly debated topic.

Idle Politicians Today Make Idle Workers Tomorrow

I happened upon an astute insight regarding our jobs problem and the debate over structural and cyclical unemployment – an insight that is not often considered by policy-makers.

Economists and politicians go back-and-forth over why businesses aren’t hiring.  Some say it is mostly due to low consumer spending (cyclical unemployment), and can be solved through public projects to bridge this void in demand until buyers regain their confidence.

Others counter that companies want to hire but simply can’t find enough skilled workers (structural unemployment).  Solving this sort of challenge can take years because it involves either worker retraining programs, or a large-scale migration by those with job-skills to areas with job-openings.

Stark Recession-Era Rise in Unemployment

So I'm reading a bunch of material – on structural versus cyclical unemployment, labor mismatches, and long-term job growth potential – and I happen upon this graph in a Reuters blog by Felix Salmon.

It shows that the change in the United States unemployment rate during the Great Recession was twice that of any European country. It’s astonishing for both the data it illustrates, and the lack of attention it’s drawn from policy makers.

Salmon explains this change in job seekers is likely due to the US’s previously low structural unemployment rate adjusting to European levels.

I have to learn more before commenting on this contentious economic and political issue, but this graph is too good not to post now.

Wall Street Protests Gain Visibility

Now in its third week, the Occupy Wall Street protest is steadily growing by both its amount of supporters and number of sound bites in the media.

An estimated 5000 people participated in the rally on Saturday, and the events that day on the Brooklyn Bridge were described on every major news network in the United States.

On Monday, the White House expressed tepid sympathy for the protesters. “We understand,” stated Press Secretary Jay Carney when asked about the Wall Street demonstration. “And that’s why we’re so urgently trying to focus Congress’s attention on the need to take action on the economy and job creation.”

If this movement continues to gather steam, the White House will, likely, solicit support from the Occupy Wall Street participants for initiatives like President Obama’s Jobs Act. It is unclear, however, if this mostly left-leaning movement would help or hurt Mr. Obama. While many protesters have supported him since his presidential campaign, some believe the system needs to be changed at a more fundamental level.

“I fell, just from the general conversations that have taken place, the intention is to dismantle the system,” said Charmaine Bee, a photographer from Brooklyn.

Advice for NYPD and Occupy Wall St

Norm Stamper is a 34-year veteran of the San Diego and Seattle police departments. He was chief of the Seattle police during the 1999 World Trade Center protests – a demonstration that, by some estimates, numbered 100,000 people.

Over the past decade he has spoken candidly about his career, police culture, and the decisions he made during that protest. He regularly contributes to the Huffington Post, and is the author of Breaking Rank: A Top Cop's Exposé of the Dark Side of American Policing.

I contacted him Sunday and asked if he could comment on the Occupy Wall Street demonstration.

Here is his response.

Wall Street Protests in their 15th Day

Three Saturdays ago, I stumbled upon the opening march and rally of the Occupy Wall Street protests. This past week I returned to New York City’s financial center to examine whether the intensity of these demonstrations had diminished after two humid weeks of rallies, sleeping in parks, and confrontations with police.

To my surprise, it hadn’t. On Friday and Saturday, for example, I witnessed significantly larger crowds than at the start.

My next blog entry will examine the potential effects this movement may have on the political process if it continues to gain steam. Will a populist anti-Wall Street movement, for example, help or hurt Obama? What about his initiatives like the jobs bill?

I will write more in-depth on this soon. But for now, I'd like to briefly comment on the demonstrations I witnessed yesterday.

There was a lot of commotion as the protest veered onto the Brooklyn Bridge. I was slow to catch up to the scene and, as a result, I was merely a faraway spectator as the police blocked off access to both sides of the expanse after demonstrators proceeded across.

At this point the story is disputed. The police claim protesters moved off the sidewalks and into vehicle traffic despite official warnings, while protesters counter the police officers led them onto the lanes of the bridge. The New York Times City Room did a complete report of this event.

Observers – many of them tourists – began to congregate at my vantage point in City Hall Park near the entrance to the Brooklyn Bridge subway station. Slowly individual protesters were seen returning toward Manhattan from the bridge.

Monica Bethelwood, a musician from Albany, New York, was one. “Some people are getting out, I don’t how they would take us all away. There’s, like, hundreds of people there.”

As more passersby amassed at City Hall Park, police officers began to approach various individuals in the crowd, ordering them to leave. One came up to me while I was taking notes. He scrutinized my notebook and, without looking up, said, “keep walking.”

The NYPD needs to reevaluate these tactics. Ordering bystanders to vacate a public park, not only alienates the police force, but also hurts citizens’ ability to observe a potentially important political event.

For a more detailed, albeit somewhat chaotic, report check out this audio commentary from Democracy Now’s Ryan Devereaux who was on the bridge.

Frustrated Workers, Few Options

Are you fed up with your job but have nowhere to go? You’re not alone.

Despite high rates of workplace frustration, fewer Americans are switching jobs today than at the start of the Great Recession.

According to a report released this month by the Bureau of Labor Statistics (BLS), two million people quit their jobs in July. This “quits rate,” used by the BLS to determine the American workforce’s willingness to switch jobs, was 40 percent higher in December of 2007.

Additionally, a recent Gallup poll found that fewer Americans are satisfied with their jobs than in early 2008.

The stubbornly high unemployment rate, which currently stands at 8.8 percent, is the likely cause of this convoluted phenomenon of low worker-mobility despite high worker-dissatisfaction.

“Like most people, I probably have issues with my job,” commented Vi Sherman, a systems analyst for MetLife’s Long Island City office.

“But if you’re in a position that’s paying all of your bills, it might not be what you want or what you hope or dream about, but it is getting you across the finish line…..it would have to be really horrible where you’re just going to abandon something and roll the dice on finding something out there.”

Not everyone, however, follows this pragmatic approach when evaluating future employment prospects. Danny Pfeffer, a freelance film producer, believes the long-term benefit of remaining capricious outweighs the security of a regular nine-to-five.

“I would rather jump ten dollar-an-hour to ten dollar-an-hour jobs, then have to permanently instill myself in a corporate office for too long because that’s actually a nightmare.”

In spite of all the negative employment news, there are individuals still able to find their ideal job. Sometimes, however, they have to tread off of the traditional job search avenues. Natanya Silverman recently found a teaching position at a private school in the Hudson River Valley north of New York City.

“What I found was the work that’s now going to sustain me was work that my friends connected me with.” She adds, “it’s really about who you know to help you get a foot in the door.”

The BLS did publish one bright piece of information recently. According to their future projections, the American economy is expected to add 15 million jobs by 2018, and as job creation gathers steam in the future, a related increase in the quits rate may follow.

If this forecast does not come to pass, Danny Pfeffer has an alternative life plan.

“Worse comes to worse we move to the Virgin Islands, live in a hut, eat fish and octopus all day.”

Euro Travelers Find Surprising Deals in Soho

NOTE: This article is apart of my news writing workshop and is a slight deviation from the normal jobs theme.

If European tourists didn’t already have enough reasons to visit New York City, maybe this will tip the balance and bring them across the pond – cheap high-tech consumer goods. A simple internet search illustrates the notable discrepancy in electronics prices between the United States and Europe.

A new Macbook Air, for example, retails in Paris for almost 1300 dollars. But at the Apple Store in Soho the same computer will set you back a mere 999 bucks, and Apple products aren’t alone in demonstrating this difference. A Sony Tablet S is listed at 499 dollars at Best Buys throughout the United States. In contrast, Media Markt, a similar German retailer, sells it for 479 Euros. Converted to dollars that’s 652.

“A lot of people ask me if I can find them a tablet device,” comments Jean-Philippe Lumia, a New York City vacationer who works in information technology for Hewlett Packard in France. “But I just buy what I need.”

He adds, however, that the deal becomes less lucrative if the French customs learn of his purchase. “If they catch me then I have to pay the tax.”

Large corporations aren’t the only ones benefitting from this phenomenon. NY Electronics, a small retailer near Times Square, relies heavily on purchases by tourists from Europe. “Our electronics sell for 20 percent less than ones in Europe,” states Nabil, the shopkeeper.

It may be tempting to attribute this difference to the periodic fluctuations in the price of the dollar against the Euro. But, since 2008, although there have been significant peaks and valleys, this price has not trended much of either direction. This monetary topography, however, does offer another way for foreign tourists to squeeze out as much savings from their trip as possible.

Lumia elaborates, “I changed my money when the dollar was a good change with the Euro.”

Nabil at NY Electronics credits another cause for the relatively low prices of high-tech goods.

“New York is the Mecca of electronics.”

Wealth and the Job Market

I’ve noticed an uptick in news coverage recently regarding the overall levels and distribution of wealth in the US. PBS Newshour, for example, recently produced a feature highlighting an increase in the disparity of this distribution, and how many Americans are unaware of this trend.

The precipitous drop in housing prices since 2008, likely, fuels this conversation as most middle class wealth is held in real estate. As homes lost value so did wealth for the average American.

This is an alarming indicator for the job market because when it comes to job searches, wealth is about more than owning stuff.

Unemployed people who possess some personal wealth can use it as a backstop for their finances while they search for work. It allows them to base their future employment decisions on long-term factors and, as a result, levels of wealth for the unemployed can indicate the vitality of an economy.

Let’s look at a hypothetical.

Imagine two bank tellers who work at the same bank in a midsize-American city, let’s call them Robert and Sara. They are alike in a number of ways, they both earn about 32,000 dollars a year, both are single parents of one child, both rent a small house, and both are 30 years old.

One key difference separates them, however. Robert holds 35,000 dollars in stocks and bonds.

Now imagine both our tellers lose their jobs.

They find themselves unemployed at the worst moment. Tens of thousands of other unemployed people in their city are competing for work at a time when most companies aren’t hiring.

Both Robert and Sara make the rounds at various banks submitting resumes and speaking with managers. But after a few weeks of scouring the banking job market they both decide to broaden their search.

Up to this point, both paid their bills through a combination of unemployment insurance and, when necessary, swiping their credit cards. They realize, however, these resources are not everlasting.

Here’s where their paths diverge.

Robert scrutinizes his finances. He determines, if he liquidates his 35,000 dollars in investments, finds a part-time (albeit low wage) job, and uses parts of his state’s safety net, he can return to school and get a degree in electrical engineering. A field of personal interest for him, and one with long-term job potential.

Sara, on the other hand, similarly examines her personal finances and determines school to not be a viable option. Without the wealth to help finance a few years of education, she determines student loans would be prohibitively large. The risk is too much particularly for a parent who is already facing a significant amount of debt.

As a result, she continues to search for work.

The point of the story is to illustrate that when examining the tiers of our economy, income isn’t everything. Wealth, especially amongst the lower half of the income spectrum, is a factor that can indicate the dynamism of an economy.

Team Building

Note: This report is apart of a series coming from activities done with my news writing class.

Yesterday, in my weekly news-writing workshop, our class formed into three groups and completed an interactive scavenger hunt on and around Wall Street. The game involved one designated smart phone user within each group texting or emailing answers to questions about various locations in this financial center.

It was cool. I had fun chatting with my group and seeing our collective competitive spirit arise. We also received a brief history lesson from a pleasant New York woman about the relationship between the song “New York, New York” and the War of 1812.

The only downside, we lost.

But this activity got me thinking about team-building exercises in general. In a time of slow growth, does it make sense for businesses to spend money on activities that don’t directly relate to the production of their product? Also, other than anecdotally, how does one measure an idea as subjective as workforce compatibility?

SO I did some Google searches to find out more. The first thing I learned is it’s a large industry. Various corporate excursion companies offer activities ranging from expensive retreats at mountain resorts to more basic day field trips, similar to my scavenger hunt.

Also, speaking of Google, I found a 2009 article explaining their cutbacks due to the down economy. One of the things to go…..their annual employee retreat to Lake Tahoe. That one must’ve hurt.

I think it’s wise for companies to drop the extravagant excursions to distant resorts, but I see the advantage of small-scale activities where workers can get to know each other outside the office. If employees are comfortable around each other, I think there is a good chance they will also willingly challenge each other. And, a robust marketplace of ideas within an office should lead to better products.

At the very least if they’re doing a scavenger hunt, they might learn some handy Jeopardy facts from friendly locals.

The Opaque Future of Jobs

An increase in productivity is a good thing, right?

For the consumer the answer is undoubtedly yes. Increased productivity means the price of an item should go down. But the answer is less clear for jobs.

Literally, productivity measures how much you get from how much you put in. If I took three hours to build a chair a month ago and today I can do it in two, and produce the same result, my productivity increased. But it also means I now only have two hours worth of work.

What if economy wide all carpenters similarly increased their productivity? The price for chairs would probably drop. In normal times this would cause a few more chairs to be sold, and may also encourage chair-building companies to expand their workshop and produce new products.

But the economy behaves differently in a time of crisis. Consumers bogged down in debt become frugal and, rather than buying more chairs when the price drops, they may choose to use that savings to pay down their mortgage or credit cards. As a result, that expansion the workshop considered might just be put on hold until consumers are more willing to spend. Also, in this crisis economy, the shop may find it difficult to secure a loan to finance an expansion.

In the end, some of those carpenters with an extra hour of time on their hands could lose their jobs. A company cannot afford to pay idle employees and if expansion is discouraged by a lack of demand or a lack of business credit or both, some of those employees will likely find themselves in an unemployment line.

Over the long-term this may prove beneficial. Those unemployed carpenters will be able to shift to new dynamic industries or start their own businesses. But until that time, it will be tough-going for both the individuals and their community. Those carpenters may no longer pay their house payments causing the credit situation to worsen; and, they will more than likely stop buying as much stuff, exacerbating the problem of anemic demand.

I wonder to what extent this phenomenon describes the US today? We have witnessed some recovery but one without many added jobs. Will this situation constitute a new normal of high unemployment for the foreseeable future?

Send me your thoughts.

A Clearer Understanding

I’d like to launch this site with a discussion of fiscal stimulus. With the US economy confronting anemic growth and high unemployment, recent efforts to prop up aggregate demand has made this, perhaps, the most noteworthy debate in macroeconomics (and politics) today. China’s 586 billion dollar spending package revealed in late 2008, and the US’s 787 billion dollar bill passed in 2009 are two of the most ambitious programs of this type in years.

So when President Obama outlined his jobs proposal last night in a speech to congress, many commentators not surprisingly called it a stimulus. Whether the plan really is one is up to interpretation because, as Mr. Obama noted, it doesn’t increase the deficit. It did, nevertheless, bring about similar comments and criticisms heard during earlier stimulus legislation.

Paul Krugman from the New York Times, although supportive, stated, “It’s not nearly as bold as the plan I’d want in an ideal world.” While Dan Danner of the National Federation of Independent Business wrote in the Washington Times, “Rather than the retread failed ideas we heard…..we want government to get out of the way to let us do what we do best: create jobs.”

In order to accurately consider these arguments, I think a clear understanding of their theoretical underpinnings is necessary. On that thought I’d like to post the best summaries I’ve found describing the benefits and drawbacks of a fiscal stimulus. And, they happen to be from the same book, Crisis Economics, by Nouriel Roubini, professor at NYU’s Stern School of Business.

On page 160, Roubini describes the rationale for stimulus as first championed by the British economist John Maynard Keynes in the 1930’s;

“…..in an economic downturn, the total demand for goods and services falls far below the supply, triggering unemployment and a drop in production. Writing in the shadow of the Great Depression, Keynes concluded that this cycle, if permitted to go unchecked, could feed on itself. If the crisis got bad enough, the ‘animal spirits’ of the economy would perish, and fearful entrepreneurs and consumers would curtail spending more than was justified by weakened incomes and economic woes. Despite a surplus of desperate workers and idle factories, a vicious cycle of ever falling demand, employment, production, and prices would grip the economy in a deflationary spiral and result in a permanent state of stagnation.
Keynes believed that the economy would not emerge from the doldrums on its own. Only if the government stepped into the breach and directly or indirectly picked up the slack in demand relative to the glut of excess supply and idle supply could the economy stabilize itself, let alone return to prosperity.”

Two pages later Roubini continues by discussing the drawbacks of Keynes’s idea;

“…..a few words of caution are in order. For starters, fiscal policy isn’t a free lunch: if a government increases spending and cuts taxes – and does so during a recession when tax revenues decline – the budget deficit will soar. The government will have to issue more debt, which it will eventually have to pay. If it doesn’t pay the debt, and the deficits grow larger every year, then it will have to entice investors to buy more debt by raising interest rates. Those higher returns will then compete with interest rates on other investments – mortgages, consumer credit, corporate bonds, and auto loans – and can drive up the cost of borrowing for everyone else, thus reducing debt-financed capital spending by firms and consumption spending by households.”

Rather than fuel an ideological divide, Roubini demonstrates that fiscal policy needs to be fluid and tailored to a specific situation. In the US’s case, borrowing is cheap because interest rates on federal treasury bonds are low. Therefore, it’s as good a time as any to upgrade the country’s weathered public infrastructure, not to mention provide jobs for many of the unemployed.

Two questions remain, however. First, can a government afford to prop up demand if a recovery lasts years; at what point will the debt be too much to service in the future? And finally, will public borrowing draw capital away from important private sector projects as gun-shy banks happily move their money to the security of government bonds?