February 25, 2024

Economix: Podcast: Jobs, Wages and Middle-Class Costs

A drop in the unemployment rate and a jump in job creation must count as good news, but this is no time for celebration.

After all, at 8.8 percent, unemployment is still very high,even if the current rate is down slightly from 8.9 percent a month ago, and at the current pace of growth in jobs, a painfully large number of people will be out of work for years to come.

Still, as Michael Powell says on the new Weekend Business podcast and writes in The Times, there are some very positive signs embedded in the Labor Department’s monthly report. Manufacturing, for example, a downtrodden sector that has been in decline in the United States for decades, has been reviving in the economic recovery. Most sectors reported net job gains in March, and they occurred despite several global crises — the turmoil in the Middle East, the disasters in Japan and the debt problems in Europe.

In the United States, it’s tough enough to get a job in the current environment. It’s even tougher to get one that pays a living wage, as Motoko Rich observes in another discussion on the podcast. She talks about a new study, which she covered for The Times, indicating that many working people are unable to make ends meet.

The study, by Wider Opportunities for Women, a nonprofit group, found that a single worker needs an average income of $30,012 a year — or just above $14 an hour — to cover expenses and save for retirement and emergencies. That’s nearly three times the 2010 national poverty level of $10,830 for a single person, and nearly twice the federal minimum wage of $7.25 an hour.

Recent census data indicates that 14.3 percent of Americans were living below the official poverty line in 2009, and many working people are undoubtedly living below the income level defined in the study.

Robert Frank, the Cornell economist, looks at the cost of a middle-class existence in the Economic View column in Sunday Business. In the podcast, he notes that the most commonly used measure of average income — per capita gross domestic product, or G.D.P. — has gone up fairly steadily in the United States, but says it doesn’t give the full picture.

Among other shortcomings, he says, it doesn’t reflect the effects of growing income inequality. In reality, median wage earners now have a much heavier burden than those of previous generations, when you measure the work required to give a family an average home and children access to an average school.

The unusually tight synchronization of global financial markets is the subject of my Strategies column in Sunday Business, which I discuss with Motoko Rich on the podcast. Markets in various regions and for a range of asset classes — including stocks, bonds and commodities — have been moving together to a very extreme degree, recent studies have shown.

“Risk on, risk off” trading helps to explain some of this pattern. The phrase is trading jargon referring to a central decision these days — whether to hold high-risk, high-reward assets, or to move to a position of greater safety. Since the shocks of the financial crisis, this focus on risk has helped to increase the correlations of diverse markets, as has the growth of advanced communications and trading technologies.

The high correlation implies that many portfolios may be less well diversified than investors believe. In addition, financial institutions themselves may be exposed to greater risks than anticipated.

The podcast also discusses Tiger Woods’s stalled career in golf course design, which Paul Sullivan writes about on the cover of Sunday Business. He tells David Gillen that the troubles of the great golfer extend to his ventures in creating courses in the United States and abroad.

In the podcast’s news summary, I discuss a resignation at Warren Buffett’s Berkshire Hathaway and the controversial trades that preceded it, the compensation of executives at Fannie Mae and Freddie Mac, and a flare-up in the European debt crisis.

You can find specific segments of the show at these junctures: jobs report (33:13); news and wage study (26:47); Tiger Woods golf courses (19:48); Robert Frank (13:39); risk on, risk off (6:31); the week ahead (1:43).

As articles discussed in the podcast are published during the weekend, links will be added to this posting.

You can download the show by subscribing from the New York Times podcast page or directly from iTunes.

Article source: http://feeds.nytimes.com/click.phdo?i=0c0b29b1903e7111e85a1ec8e35e99d2

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