23.07.2012
Policy Points
Writing in the Sunday Review section of The New York Times, economist Teresa Ghilarducci explains the United States’ “ridiculous approach to retirement.”
Not yet convinced that failure is baked into the voluntary, self-directed, commercially run retirement plans system? Consider what would have to happen for it to work for you. First, figure out when you and your spouse will be laid off or be too sick to work. Second, figure out when you will die. Third, understand that you need to save 7 percent of every dollar you earn. (Didn’t start doing that when you were 25 and you are 55 now? Just save 30 percent of every dollar.) Fourth, earn at least 3 percent above inflation on your investments, every year. (Easy. Just find the best funds for the lowest price and have them optimally allocated.) Fifth, do not withdraw any funds when you lose your job, have a health problem, get divorced, buy a house or send a kid to college. Sixth, time your retirement account withdrawals so the last cent is spent the day you die.
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As we all know, these abilities are not common for our species. The current model for retirement savings, which forces individuals to figure out a plan for their retirement years, whether through a “guy” or by individual decision making, will always fall short. My friends are afraid, and they are not alone. In March, according to the Employee Benefit Research Institute, only 52 percent of Americans expressed confidence that they will be comfortable in retirement. Twenty years ago, that number was close to 75 percent.
20.07.2012
News Releases, Policy Points
CHAPEL HILL (July 20, 2012) – Job growth in North Carolina turned positive in June, with the state gaining 16,900 more jobs than it lost. This marked the first month of positive job growth posted in the state since February. While the statewide unemployment rate remained at the lowest level recorded since early 2009, unemployment in North Carolina remained disturbingly high. These findings come from new data released by the Labor and Economic Analysis Division of the NC Department of Commerce.
“Over the first half of 2012, North Carolina gained 30,900 more payroll jobs than it lost,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “This slight gain unfortunately was insufficient to provide jobs for all those North Carolinians who wanted and needed work, and as a result, the state was home to an average of 451,094 unemployed persons in each month of 2012.”
In June, North Carolina employers added 16,900 more jobs than they cut (+0.4 percent). This was the second largest monthly gain recorded since January 2011. Last month, private-sector payrolls netted 11,700 positions (+0.4 percent), and public-sector employment levels expanded by 5,200 positions (+0.7 percent). Within the private sector, professional and business services gained the most jobs (+6,400, +1.2 percent), with 64.1 percent of that growth occurring in the administrative and waste management subsector. The education and health services sector netted 2,000 positions (+0.4 percent), followed by manufacturing (+1,500, +0.3 percent) and construction (+1,400, +0.8 percent). The other services sector shed the most jobs (-900, -0.6 percent), followed by leisure and hospitality services (-700, -0.2 percent).
A positive revision to the May payroll data found that the state lost 7,200 fewer jobs than first reported (-9,300 versus -16,500). With that revision, North Carolina now has, on net, 213,600 fewer payroll positions (-5.1 percent) than it did in December 2007. Since bottoming out in February 2010, the state has netted an average of 4,025 payroll jobs per month, leading to a cumulative gain of 112,700 positions (+2.9 percent).
“North Carolina recently had managed to close some of the job gap caused by the recent recession,” noted Quinterno. “Yet the progress has been too slow to both replace the jobs lost during the downturn and accommodate the state’s growing workforce. Compared to December 2007, North Carolina has fewer payroll jobs in every major private industry sector except for educational and health services and professional and business services.”
The household data for June provided further evidence of a struggling labor market. While the unemployment rate held constant at 9.4 percent, the number of employed North Carolinians fell by 7,909 persons (-0.2 percent) between May and June. Over the month, the size of the labor force fell by 5,312 individuals (-0.1 percent), while the number of unemployed Tar Heels increased by 2,597 (+0.6 percent). Compared to a year ago, however, the state’s labor force is larger, more people are employed, and fewer individuals are unemployed.”
While the unemployment rate of 9.4 percent is the lowest one recorded in the state since early 2009, unemployment remains widespread across North Carolina. Not only is the statewide unemployment rate 4.4 percentage points greater than it was 4.5 years ago, but the number of unemployed Tar Heels also is 91.9 percent higher. During the first half of 2012, an average of 451,094 North Carolinians were unemployed in any given month.
To place the scale of unemployment in context, consider how the number of unemployed North Carolinians in June (439,134) exceeded the total population of the City of Raleigh, which is the state’s second most populous municipality. Furthermore, the number of people added to the unemployment rolls since 2007 (+207,188) is roughly equivalent to the population of the City of Fayetteville, which is the state’s sixth most populous municipality.
Other troubling labor market indicators include a statewide unemployment rate that has exceeded 10 percent in 35 of the last 42 months, a labor force participation ratio that has fallen steadily during the year, and an employment-to-population ratio that remains near a 36-year low.
“North Carolina’s job market made little headway during the first half of 2012,” observed Quinterno. “While monthly job growth numbers have fluctuated widely, when the dust settled, the state had just 0.8 percent more jobs than it did last December. The job market is in no way, shape, or form mending itself.”
19.07.2012
Policy Points
Recent research from the Economic Policy Institute explores the extent to which austerity on the part of state and local governments has dragged down job growth.
How many more jobs would we have if the public sector hadn’t been shedding jobs for the last three years? The simplest answer is that the public sector has shed 627,000 jobs since June 2009. However, this raw job-loss figure understates the drag of public-sector employment relative to how the economy functions normally.
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Over this same period, the overall population grew by 6.9 million. In June 2009 there were 7.3 public-sector workers for every 100 people in the U.S.; to keep that ratio constant given population growth, the public sector should have added roughly 505,000 jobs in the last three years. This means that, relative to a much more economically relevant trend, the public sector is now down more than 1.1 million jobs. And even against this more-realistic trend, these public-sector losses are dominated by austerity at the state and local level….
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It should be noted that this counter-factual of 1.1 million additional public sector jobs is a perfectly reasonable benchmark. Before the Great Recession, the number of public-sector workers per 100 people had averaged right around 7.3 since the late 1980s. In other words, having 1.1 million more public-sector workers, which would put us back at 7.3 public-sector workers per 100 people, would simply restore our economy to a normal level of government employment.
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