South By North Strategies, Ltd.

An Unworkable Swap

The Economic Policy Institute explains why most workers can’t offset cuts to Social Security benefits by working longer.

Further, the evidence does not support the claim that benefit cuts such as further increases in the full retirement age can be implemented in a way that would hold harmless those older workers who either cannot or are not well positioned to continue to work.
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Raising the retirement age might make sense if longevity gains were equally shared by all workers, regardless of income group, educational status, or race; if increased longevity meant continued good health; and if older workers had opportunities in the workforce equal to those of younger workers. But none of these conditions is true; thus, a further increase in the Social Security retirement age would impose hardship on many older workers. In any case, there is no need to cut benefits at all if Americans prefer to contribute more to the program to restore it to long-term solvency. Closing the projected shortfall on the revenue side makes sense given the weaknesses in employer-based plans and personal savings—the other two legs of the retirement stool.

Job Openings In April

From the Economic Policy Institute’s analysis of the April version of the Job Openings and Labor Turnover Survey (JOLTS) …

The April Job Openings and Labor Turnover Survey (JOLTS), released today by the Bureau of Labor Statistics, underscores the sluggishness of the recovery, showing that job openings declined by 325,000 in April. Given April’s drop in unemployment of 173,000 (unemployment data are from the Current Population Survey …), this means that the “job-seekers ratio”—the ratio of unemployed workers to job openings—increased by three tenths, to 3.7-to-1.
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Despite this increase, the ratio has been slowly but steadily improving since its peak of 6.7-to-1 in summer 2009, and it is likely that April’s increase represents month-to-month variability in the data rather than a reversal of that overall trend. However, the odds are still stacked strongly against job seekers; a job-seekers ratio above 3-to-1 means that for more than two out of three unemployed workers, there simply are no jobs.

Around The Dial – June 19, 2012

Economic policy reports, blog postings, and media stories of interest:

• The Progressive Pulse analyzes manufacturing employment in North Carolina.
• Macroblog mulls possible changes in rates of labor force participation.
• Off the Charts graphs some of the benefits of the recovery act.
• Policy Shop expresses concern about “master’s degree mania.”
• Tapped notes that “far-off state capitals are more corrupt.”

The Politics Of Public Sector Layoffs

Rortybomb flags a disturbing trend related to public sector layoffs.

This drop in public-sector workers is well documented, and it is great to get more economists ringing the bell on it. But I think there needs to be more research into how this has happened. As my colleague Bryce Covert notes over at The Nation, “the massive job loss we’ve been experiencing in the public sector is no random coincidence or unfortunate side effect. It is part of an ideological battle waged by ultra conservatives who were swept into power in the 2010 elections.”
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As we’ve written before (article, white paper), the 11 states that the Republicans took over during the 2010 midterm elections – Alabama, Indiana, Maine, Michigan, Minnesota, Montana, New Hampshire, North Carolina, Ohio, Pennsylvania, and Wisconsin – account for 40.5 percent of the total losses. By itself, Texas accounts for an additional 31 percent of the total losses. So these 12 states account for over 70 percent of total public sector job losses in 2011. This is even more important because there was a continued decline in public sector workers in 2011 even though the economy was no longer in free fall.
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The 11 states that the Republicans took over in 2010 laid off, on average, 2.5 percent of their government workforces in a single year. This is compared to the overall average of 0.5 percent for the rest of the states. So while it is a nation-wide event, it is concentrated in states that went red in 2011….

The Future Of The Middle Class

Writing in The American Prospect, Jeff Faux asks, “Who will save the middle class?”

After three decades of policies that have undermined the country’s global competitiveness and the bargaining position of its workers, the United States economy can no longer provide the means to support its three most politically important American dreams: Wall Street’s dream of subsidized limitless profits; the military-industrial complex’s dream of global supremacy; and the middle class’s dream of rising incomes.
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One out of three? Certainly. Two out of three? Perhaps. All three? No way.
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The deal is done. The middle class will be sacrificed. The partisan disagreement is now over the details: how much pain there will be and how fast it will come.