Mar
22
Post #10- Nick Djamalidinov
March 22, 2015 | Leave a Comment
When I first heard that the unemployment rate was dropping, I thought that signaled the end of the recession. But then in Macroeconomics class, my professor talked about “discouraged” workers, people who stopped looking for jobs. This issue is covered by the NY Times article. The usmayors.org article talked about another issue of the recession: the wage gap. It claimed that the jobs lost during the recession paid more than the new jobs gained during the recovery. And finally, another article on minimum wage showed data that states that raised minimum wage had higher growth in employment.
The NY Times article expressed the dark side of falling unemployment. It is less that people are finding work, it is that more people are leaving the workforce. I do not like the way our country defines unemployment because it seems to paint a better picture of the economy and tries to hide the reality that some people have given up on our economy. I understand it is to exclude people who simply cannot work from the labor force statistics, but like I said it makes the numbers look misleading. Examining the trends, people overall are leaving the workforce to the point where the rate of women entering the workforce has halted when it had always been positive. I do not know what it would take to motivate people to stop leaving the workforce. I feel like it could only happen one of two ways. Either the government could make it unsustainable to live on government benefits which would draw back some of the discouraged workers but would hurt people who seriously cannot find work despite their best efforts. The other way would be to make getting a job have a higher incentive than sitting on government benefits but that would take legislation and cooperation on the part of businesses.
The article addressed one explanation for people leaving the workforce, which was the baby-boomers retiring. But The article brought up that workers between the ages 25-54 are also leaving the work force. This means that people are genuinely giving up on finding work. It even talked about people who would rather sit on government benefits rather than find work which is a entirely different issue on its own. I have been back and forth on this issue because I do not feel it is right for people who struggle to find work to simply starve to death and die but there are actually people who would rather sit at home and collect checks from the government than find work. I know not everyone does that but it is a very polarizing issue in America. I hear people complaining all the time that their tax money goes to support some lazy (often implied to be black) family in the city living on welfare. Racist undertones aside, it is still an issue with people.
The article on usmayors.org talked about a coalition being formed between several mayors, including Mayor De Blasio. They want to combine their municipal governments to fight against the wage gap. The article said that the wage gap has increased from 12% to 23%. It is often repeated and it is not a surprise anymore but still it should be a concern. The article attributed the wage gap to new jobs paying less than the jobs lost during the recession. It also showed an interesting way to determine income inequality. If the median income is growing less than the mean income, income inequality is increasing. That does make sense because if the rich re getting richer, it inflates the number and skews the data up. But Median income would be what the people right in the middle make. To be honest, I do not know what this conference of mayors can really do. I think they can share policies and help uncover better ways of dealing with the wage gap, but I do not think they will really have much in terms of combined resources or authority because they are from different, non-connected cities. As for the wage gap, the article was right in my opinion that legislation needs to mitigate the trends of the 21st century economy.
The last article cepr.net talked about how states who increased minimum wage usually increased employment. out of the thirteen states that increased minimum wage in 2014, all but one saw increases in employment. This does not show causation but could be grounds for further study and maybe implementation. But it does run into the chicken and the egg type problem. Did the states that increased the minimum wage see employment gains because they did raise it or did they raise because they had the economic capability? After all, states California, New York, Washington, and others had strong economies. But I do think states like Arizona increasing minimum wage and increasing employment can perhaps counter the issue. Arizona is not powerful state economically and I would have thought it would increase in unemployment but is doing pretty well with .91% increase in employment. Perhaps minimum wage can make a difference.
