Wednesday, July 27, 2016
At the Republican Party Convention in Cleveland, Ohio, on July 21st, Donald J. Trump gave his nomination acceptance speech. In his speech, he said that 58% of Black Youth were not working. This is absolutely true. Nearly 60% of Black youth are not employed. However, non-employment is not the same as unemployment. The Black unemployment rate for 16-24 years old is 22%. During the school term as many as 60% of Black kids are in school (either high school, college or trade).
First, the unemployment rate for Black youths is high but so is the rate for all youth. Many of the summer jobs that kids took to make extra cash and learn work skills are gone. They have been replaced by adults, the poor and immigrants working part-time at low wages.
Trump is correct because only 42% of Black youth are employed meaning that 58% are not working. However that does not mean they want to work. They could instead be enrolled in school.
The actual calculated unemployment for June 2016 was 22%. Of the 5.85 million Black youth in the US: 2.46 million held jobs, 710K were unemployed and 2.2 million were in school. The Black 16-24 labor force was counted at 3.2 million.
If this country is committed to any kind of fairness and decency and compassion, then the place to start is with our youth. We need to make sure our young people have the opportunity to work. That should be our number one priority. Jobs and work make both the individual and society better,
Below is a chart of some key employment statistics for Black Youth (18-24). The Labor Force Participation (LFP) rate, the Employment to Population ratio (EM Ratio) and the Unemployment rate.
Sunday, July 17, 2016
The Obama Administration agreed to raise the salary level for overtime pay. The change was released in a statement by the Department of Labor. The rule increases the threshold where workers are exempt from overtime pay regulations to $913 dollars per week or $47,476 dollars per year. The old threshold was $23, 600.
An estimated 4.2 million workers are effected. However as many as 2.5 million work less than 40 hours per week and would not be affected.
The new regulation becomes effective December 1st, 2016. Business have the option of either raising pay or limiting overtime hours.
You can read about the new regulation on the department of labor web-site. https://www.dol.gov/featured/overtime
The LA Times has an analysis of the change here.
April 4, 2016
White House limits corporate inversions
I love the innovativeness of capitalism. If there is a buck to be made or a tax to be avoided, someone somewhere is working on it. The problem is these schemes do not contribute to the over health or wealth of society. In fact they cheat the larger society and undermine collective efforts to solve societies problems. Some might call this selfish, me first attitude as unpatriotic.
Inversion is process of buying legal entity status in a low tax jurisdiction and then funneling revenues though that entity to reduce a corporation's tax rate. The reduced taxes cut into government tax revenues. This shift of revenue recognition often pits one tax location against another in a race to the bottom. Ireland, Netherlands, Switzerland, Luxumboug and the UK are well know tax havens.
So capitalism a trade off. We take the good of our system with the bad. We try and balance the two so that no gets hurt too bad. But every now then the balance in our country tips too much toward business and government must step in an level the playing field.
That's exactly what Obama did during Pfizer's recent attempt to buy Allergan. The merger made no business sense.
Note: at a previous company I worked on process to show profits in the lowest tax jurisdictions regardless of where a product was made. The processes had little real economic value. The processes continue today.
The Executive office of the President's Council of Economic Advisor's released a very interesting report on the men dropping out of the labor force. The report, released in June 2016, is called "The long term decline in prime age male labor force participation." It details a stunning number of people leaving the labor force.
While some of the disappearing workers could be blamed on baby boom retirements, continued education and cyclical trends, the losses far exceed what should be expected. Not other developed country(OECD) has such a low rate of Labor Force Participation.
The White House released a similar report in July of 2004 called "The labor force participation rate since 2007"
What I don't see the report is a discussion of job quality or wages
The authors barely touch on the issue of job quality. Right now the job quality and pay stinks compared to what my parent received. The pay is the same but the jobs have extra unpaid hours, close monitoring, ridiculous performance goals, mean supervisors and selfish management.
They also lack engagement and a career path. Who the heck wants to work in that environment. Usually only an immigrant who has seen worse in their home land. Long term, the market will clear when job-quality and wages increases, job expectations are lowered and immigration is limited to what the economy requires.
Since the big four banks make most of their retail income from from fees, we thought we wold look closer at some common fees. (Note: Author uses a credit union and use the on-site CU ATM)
The site MoneyRates.com lists average fees for banks.
Americans pay an average of $159 dollars per year for checking or about $13.29 cents for maintenance fee. Fees have risen about 18% over the past 4 years from $135 per year.
Only 25% of banks offer free checking.
Average overdraft fees were reported at $32.38.
The fee wavier minimum balance amount was report at $6,850 dollars.
Out of network ATM fees jump to $1.73 for out of network ATM access. That's up 12 cents in the last six months.
Non customer ATM fees also increased to $2.87 up 16 cents in the last six months.
Chase proposes to give employees a raise; pulls curtain on crummy world of retail banking and US economy
The major US banking corporation JP Morgan Chase has publicly announced pay raises on the editorial page of the New York Times. You can read the opinion piece in the New York Times: "Jamie Dimon: Why we are giving our employees a raise."
It's strange when a big companies pay raise makes the opinion page of the most prominent newspaper in the country. It's like a PR announcement, opinion piece and half apology rolled into one. Basically the piece admits, Chase has been sticking it to it's retail and low paid employees for years.
The Chase pay raise revels how inadequately our economy works for poorly and lower middle class people. The US economy continues to have major problems creating high quality jobs, paying decent wages and delivering a reasonable standard of living to people that work. Many of the chase employees qualify for food stamps in the states where they work.
Chase earned $24.4 billion dollars. The CEO of JPM Chase, Jamie Dimon, made $18 million in base compensation and 10 million more in options. Chase is proposing about a $3 dollar raise over the next 3 years for 18,000 employees. That's about $37.4 million a year or $112 million over 3 years.
Announcement in the New York Times
Mr. Dimon, Chase and NYT all deserve credit for making the announcement on editorial page. We initially thought it was a publicity stunt, but they were aware of the negative press and Chase-basing that was going to happen. The real motive is to have a discussion of the retail labor economy in the US.
Mr. Dimon also mentions wage stagnation, inequality and limited corporate training and education. He deserves some credit for considering Chase may have contributed to some of these problems. We laughed at his support for Earned Income Tax Credit which is a wage and corporate subsidy that lets companies under pay employees.
Diversity in Retail Banking
Chase, Bank of America, Well Fargo and Citigroup also deserve some credit for hiring diverse staffs. Every bank branch I have visited had some Black or Hispanic people working there, first as tellers and later as Branch Managers. These were some of the first "professional" jobs available in minority communities. They gave opportunity to many when the only other alternative was teaching or working for the government.
We will give Chase some credit for offering health benefits. The plan covers health, dental and vision. The Chase plan is an average health plan but above average for retail.
The down side of Chase
Chase is one of the leaders in outsourcing. In 2002, Chase signed one of the largest outsourcing deals in the US with IBM for $5 Billion dollars over 7 years.
Training, what training ?
The opinion piece also states Chase will spend money on training. However corporate training is sham. The skills being taught are those that affect the bottom line: What our financial products are, how to sell more and better and how to comply with regulations. Nothing to help an employee grow, learn a skill or move to a better job.
Banks as financial predators
The other undiscussed issue is that retail banking is basically a predatory financial service. The retail model operates on high pressure selling, high fees and limited competition. The big four and other major banks effectively collude on fees and locations limiting access to lower cost banking services. The retail banks make limited investments in the communities they serve preferring instead to play the market or fund suburban mortgages.
What's it like to work in Retail Banking ?
There are lots of comments on web-sites about working in retail banking
A prominent one is called "Chase Sucks" which details the life of a retail bank salesman (also called personal banker or relationship banker). The stories on the website and in the comments detail a lowly paid grueling job.
Financial Analysis of pay raise
Chase pays $10.15 an hour to start or $21,000 to start for a 40 hour week. But a lot of employees in retail employees work less: usually about 20-30 hours per week. Twenty hours a week earns $10,556 for 1 person and $15,834.
The federal poverty level in 2016 is, according to healthcare.gov, $11,880 for 1 person and $16,080 to two people. The federal SNAP level (food stamps) is $15,312 for 1 person and $20,712 for 2 people.
SNAP Qualification Guidelines
1 Person 2 People
Federal $15,312 $20,712
NY $17,664 $23,904 (working)
NJ $21,780 $29,472 (185% of Federal Poverty Level)
For reference, Wal-Mart employees average $9.00 an hour. CVS cashiers also average about $9.00 an hour.
Friday, July 15, 2016
The US Economy created 287,000 jobs in June according to the monthly BLS labor survey.There was a bounce due to settled labor strike and a recovery from last months number. The US national unemployment rate rose 0.2% to 4.9% as 414,000 returned to the workforce.
The Labor Force Participation rate was pegged at 62.7% around the all time low for the measure as many baby boomer retire and students stay in schoool. However, no one is quite sure why people are dropping out of the labor market.
Wage increase 2 cents and the average work week stayed at 34.4 hours.
Below is the national unemployment rate and the labor force participation rate.
On the non-farm payroll side, 287,000 new jobs were reported by business establishments. Government had a bump of 20K while services provided 256,000 positions. Healthcare and leisure and hospitality both added about 58,000 jobs each.
The mood of the country remained pessimistic as reported by the Gallup Organization with 29% satisfied with the direction of the country and 69% dissatisfied. Gallup also finds that 46% of workers held "good jobs" or jobs with 30 or more hours a week and 34% said they were "engaged" at work. ADP reported 172,000 new jobs and Paychex Small Business Index modestly increased to 100.81. The Paychex index has stayed between 100 and 101 since 2011.
Lets get to the householder numbers: 67,000 additional workers reported themselves as employed but 414,000 joined the work force of which 347K joined the unemployed. The participation rate was almost unchanged at 62.7%.
There were 1.98 million people classified as long-term unemployed (out of work for 26 weeks or longer), About 5.84 million people who were underemployed (working part time but wanted full time work). A total of 13.6 million workers were unemployed or underemployed (8.6% of the workforce).
The Black unemployment rate has continued to fall but remains about two times the white rate. The labor force participation rate also mirrors the wider trend in society. The rate is down five percentage points since 1999.
The estimated Black U-6 rate was computed to be 13.3%.
The Black unemployment rate continues to drop but remains about double the rate for whites.
The April report was revised upward +21,000 to 144,000 and the May report was altered downward -27K to 11,000 jobs.
ADP Employment Report
ADP reported 172,000 new payroll jobs split between 95,000 small business jobs (1-49 employees), 52,000 medium sized payroll jobs and 25,000 large corporate jobs(500 or more employees)
Saturday, July 9, 2016
The US economy is still suffering from considerable unemployment as measured by the broadest government unemployment indicator: U-6. Wages rose by only 2 cents in June 2016. indicating little wage pressure.
U-6 is often called the real unemployment rate. U-6 includes the unemployed, discouraged, marginally attached workers plus the underemployed. All groups who would work or work more if jobs or hours were available.
U-6 has been below 10% since October 2015.
Unemployed(U-3) -- unemployed and actively looking for work in the past four weeks. This is the official rate.
Discouraged workers --are workers who believe there are no jobs available for their skills and are not looking for work but would work if they could get it.
Marginally Attached Workers - are workers who are not working but would work if they could get it and looked in the past 12 months. Marginally Attached includes discouraged workers.
Underemployed - Workers who are working part time but want full time work.
Recessions are show in grey.
Thursday, July 7, 2016
What would a degree in Black Economics look like. It would probably look like a conventional degree in Economic but a minor in Black Economics or Black social science. There is no getting around the Econ basics of: Macro, Micro and Math. Especially Math.
To be an economist you must be able to express your ideas in both common language and the language of economics (math). So the core does not really change. But the 3rd and 4th year topics would focus on Black Economics in the US. Even conventional topics such as health care economics would focus on issues affecting Black people.
Undergraduate Level (Bachelors Degree)
Writing Seminar 1
Writing Seminar 2
Public Speaking, Presentations and Electronic Communications
European Economic History
US Economic History
Economic Mathematical Models
Optional Course Selection
Survey of Black Economics: Thought and Reality
Topics in Black Consumer Behavior
Economics of US Slavery
Labor Economics with focus on US Blacks
Urban Planning and Real Estate
US segregation and economic consequences
Political and Social Economy
Public Sector and Welfare Economics
Health care economics with focus on US Blacks
Economics of the African Diaspora
Alternative Economics ideas and system (non neo-classical): from libertarian to Marxism
Research Topic and Paper
Internship at real business
Business simulation with business school
The Economics of Historically Black Institutions: Church, Business and HBCUs
Black Entrepreneurship: Yesterday and Today
Black Strategy and Competitive Advantage
The Economic views of Booker T Washington and WEB Dubois
Business of Sports and Entertainment
Economics of Discrimination
Gender Issues in Black Economics
(assumes you know Calculus, Statistics and Basic Macro/Micro)
Advanced Macro 1
Advanced Micro 2
Economic Mathematical Models
Writing Seminar, Public Speaking, Presentations and Electronic Communications
Optional Course Selection
European Economic History
US Economic History
Complete Survey of Black Economics: Thought and Reality
US Economic History and the Economics of US Slavery
Labor Economics with focus on US Blacks
Urban Planning and Real Estate with focus on segregation and economic consequences
Political and Social Economy with focus on minorities
Public Sector and Welfare Economics
Social and Human Capital
Alternative Economics ideas and systems (non neo-classical)
Research Topic and Paper 1, 2
Grant writing and reseatch funding
Intro to Masters Thesis: Defining the solvable problem
Teacher, Professor, Researcher, Policy Analyst, Business Analyst, Public Relation, Government Policy analyst and Consultant
Estimate Income: 50K to 100K
Version 3 - July 8th, 2016
Sunday, June 26, 2016
The UK votes to leave the European Union.
On Thursday, June 25rd, 2016, the United Kingdom voted 52% to 48% to leave the European Union. The majority of voters in England and Wales (except for London) voted to leave the EU, while voters in Scotland and Northern Ireland voted to remain with the EU. Turnout was especially strong among the leave side.
The British decision to exit the EU is about the failure of globalization to improve the standard of living for the average person in the UK. The vote expresses the concern that the economic position of poor and middle class workers has gotten worse. The UK voters believe they have “lost” out due to increased competition from immigrants. And the voters want to blame and punish someone.
In addition, our western political systems have been unable “cushion the blow” on those affected by globalization. Neither the market economy nor government has delivered economic security and prosperity to the middle class. There are fewer jobs, higher prices, and less opportunity. The next generation will be worse than the current. And forget the effects on the poor in rich countries.
The theory behind globalization is an old and simple theory that is considered economic gospel. It is David Ricardo’s theory of comparative advantage that says trade make everyone better regardless of comparative position. Basically, even if I make everything better and cheaper than you trade will still help us both. Trade will increase growth and make everyone better off. The theory works great in a simplified world; but not the real world. In our world, there are layers of complicating factors such as technology, monopolies and governments. The net results of neo-liberal free trade has been a siphoning off of the benefits by corporations and the rich, leaving many in the developed world worse off. In that kind of environment, we can understand voting against trade and globalization.
Globalization has been a huge success in some places (Japan, Korea, China, Panama, India, Brazil) in the developed world. Global living standards how never been higher and the number of people in poverty, lower. A remarkable 1.5 billion people have transitioned from poverty to lower middle class in a generation.
Branko Milanovic has done some great work documenting the winners and losers over the past 20 years. Here is a link to an article from the world bank about his work.
But that transfer of wealth did not come for free. There was no magical growth pill or free lunch. It came at the crushing expense of the poor and middle class in developed countries. Through the process of immigration to developed countries, offshore manufacturing and outsourcing services to low-wage countries; large chunks of the economy were dismantled.
The chart below shows the global winners and losers for the past 20 years. (Source: Branko Milanovic)
The good news is that UK referendum on leaving the European Union opens a huge space to discuss economic inequality in the US and developed countries. This country seems ready to discuss class differences without the smokescreen of immigration and white male privilege. We are open to having a discussion (negotiation) on how to fairly allocate the bounty of our country.
We don’t have to tell you that Black, Latino/Hispanic and poor people have also suffered tremendously under increased immigration, outsourcing and poor job prospects. Rich whites and elites were unconcerned to the plight of Blacks because it did not affect them. Now that the White middle class is starting to feel the pain of zero wage growth and poor job prospects, we may see progress on changing the economic and political system to benefit more Americans.
The future may look like Japan
One developed country with few trade problems is Japan. Japan is highly nationalistic. They don’t buy foreign goods. They are intensely focused on exports. They have consistently run a trade surplus for years. Japan is also completely closed to immigration. There are limited work visas. Corporations must instead re- train workers for new positions. Japan also promotes job security as national priority. Corporations are not overly concerned with profits or shareholder returns. A complex web of corporate holdings limits the power of shareholders.
Japan also has zero population growth. Japan spends very little on national defense. Interestingly, Japan is also racist and xenophobic by our standards. But Japan policies work. They have the lowest level of inequality of all G20 nations.
Politicians and decision makers can no longer ignore the victims of globalization. The are angry and they vote.
Of related news, the UK Mirror says that 67% of UK Asian voters and 73% of Black voters chose “Remain”.
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