Sunday, July 31, 2011

Black/Hispanic vs. Wealth Gap Takes Huge Jump - 300%

The Pew Research Center has publish a report that show the asset ratio between Whites as compared to Blacks and Hispanics has has jumped from 7:1 in 1995 to 20:1 in 2010. An increase of nearly 300%. The primary reason is the increase in Black unemployment and the number of sub-prime foreclosures.

The summary is here and the full study is here.

Unfortunately, the heart of the problem is that the assets were reported at paper value not a the risk adjusted price. So Black and Hispanic asset values (houses) were overstated. We the housing bubble popped you got a more realistic view which coupled with the recession explains the wide gap. Things have not really changed.

Everyone should be unemployed for a short-time

Certain things you cannot fully understand until you experience them. Love, raising kids, racism & sexism, travel, prison, and sex. Another experience I wish more people shred is nemployment. Until you have experienced the frustration and idleness; you cannot fully understand.

So, here is wishing you a little bit of unemployment.

Discrimination against the long term unemployed

The New York Times had a story about discrimination in web job postings. The ads were asking for applicants that were currently working or had been recently laid off. They admitted that did not want the long-term unemployed to apply.

The story is here in the New York Times, July 26th, 2011 edition.

There are three things going on here:

Discrimination is here and real and wrong. Here is a clear, documented example of discrimination.

This discrimination shows some one of the effects of long-term unemployment. The unemployed may have their skills degrade. Employers and the public believe the long term unemployed are less qualified or may not want to work. And for the long-term unemployed there is a stigma is attached to being unemployed.

Finally, it is so rare to get a news story covering discrimination and unemployment, in the same story. I am glad some has the interest and guts to cover this story.

Tuesday, July 26, 2011

"The White Man's Ice is Cooler ?"

When I first heeard that quote, "The white man ice is cooler ?," I bursted out laughing. That's some funny stuff.

I think I was a high school kid and my dad was talking about where people bought their cars. Then I stopped laughing. I thought about it and said, "Hey wait a minute. Ice is Ice."

Everyday, black consumers spend over 2 billion dollars. We are some of the world's best consumers. We are gifted with incredible wealth. And with that wealth comes power. Our weakness is our aspirational spending on material goods.

We spend like we have a inferiority complex. We spend like we are trying to prove our worth and our value. We spend because we want the respect of the larger society that has denigrated us. "See, look, we are equal because I can buy whatever you buy." We spend rich; we spend white.

Unfortunately for black people, all major consumer companies are only to happy to oblige. They are willing to sell us something that will cure our inferiority complex, for a price.

A great example is the slimy salesmen our lack of self-esteem against us with the classic BS comment: "You can't afford it."

Sadly, this fundamental flaw in our character causes a lot of Black unemployment. Why do we lag in jobs, assets, entrepreneurship. Because we are short sighted about long term happiness. We are short-sighted about were we spend our money.

We spend too much on fleeting short term happiness from products and under invest in long term happiness from friends, family, schools and stable neighborhoods. "I going to get mine" is a familiar saying. So you got it, what then ? Many of us "got ours," what do we do next ? Well we spend some more. We don't know how rich we really are. We even gave our retirement money to the bankers who ruined the economy.

So, ask you self this this question when you shop.  "Do the people who own the shop look like me ?", "Could me or my kid work there, if I needed a job ?" Carefully, look at the place where you spend your money ? Could your kid work there if he needed a job ? Do you see anyone who looks like you? Did their advertisements include people like you ?

As well all know, it is easy to find fault, but proposing some real solutions is difficult.   Here are some suggestions:

1) Spend your money wisely. Use the rule of thumb: Am I spending money at a place that would hire me or my kids ? It is as simple as that.

2) Spend money at places that employ Black people. So that is Walmart, CVS, safeway, Ford and Chrysler, McDonald's, American Airlines. Not subway, abercrombe and fitch, coach or american apparel.

3) Buy your car or house from a Black salesperson. Or best yet a Black car dealer. I know sales people are nice, but nice doesn't cut it. They work on commission. And the level of service is the same. All the sales reps have access to multiple listing service, ebay, yahoo or carfax.

4) Eat out at places that employ Black people. There is nothing wrong with TGIF Fridays, Burger King or White Castle. Think twice about McDonalds or 7-11 when no one looks like you. I am not saying don't go, just look for an alternative. Or eat healthy at home.

5) Get competitive bids: For every major purchase greater than $1000 consider getting three bids including a Black business or business person. It takes work but you can go to sleep knowing you tried.

6) Look for Black sales people and managers when you shop. Business that pay sales people commission are commodities (houses, cars, appliances) and count on sales people to make a difference. You will probably never see a them again, so make you purchase count.

7)Complain. Let Black business know when something is wrong, but then go back and make sure it is corrected. We will give the benefit of the doubt to everyone but our own people.

8) Hustle. Start a business yourself. A business is an education for free. Business truly understands their consumers. The off the books economy pays for itself.

Summary: Until Black people consider how every purchase help you community, our community will suffer. Always ask yourself this question, "Could my kid work here if he needs a job ?"


Monday, July 25, 2011

Our Black Year: One couple buys only from Black Businesses for a Year

One couple has decided to buy from only Black Owned business for a whole year. There website is here.

Sunday, July 24, 2011

Teachers: Pay More, Demand More

We at the Evil Black Economist are definite pro-teacher. But we aren't stupid either. Most of all we a pro-value added. Meaning a teacher must deliver in value more than they earn in salary. We are also for a individualized, child specific educational system.

Basically, teacher salary, effort and quality are one of the few things that can be changed in the education system in the medium term.

We believe in paying teachers more and asking them to do more. We are fully in favor of testing and rewarding good test scores. But we are also in favor of teachers as social workers, substitutes parent and life guidance counselors. We favor internet monitoring and 24 hour access along with a reduced paperwork burden.

Dropouts: The high cost to society of dropping out

NPR is about to start a series on people who drop out of high school. Dropouts have an enormous total cost on society. The series is here. Mr. Sanchez explores the true cost to society of the lost potential of dropouts.

The issue is a perfect microcosm for US society and it's growing inequality. You can just as easily switch "dropout" with poor person or Black or Hispanic person. I must congradulate Claudio Sanchez for finding a way to discuss what the majority do not want to discuss: The growing US underclass. The unwritten theme is what do we owe our fellow citizens ?

We love this new focus on education. Education is the one workable lever in the US for reducing inequality in society. The GOP has stopped all others. Everyone is pulling on the lever: Obama, Bill Gates, Congress, Bloomberg, Jeffery Canada. But no one knows what to do.

Tuesday, July 19, 2011

Brazil as a 6.2% unemployment rate

Just in case you wanted to know where your job was.

It's right here.

The is the Brazilian Government's statistical service web site. They are gloating over a 6.2% unemployment rate and 3 million new (reported and taxable) jobs. Who knows how many off the books jobs were created. bem feito o Brasil!

Monday, July 18, 2011

How to create jobs

The consulting firm Mckinsey & Company and the Atlantic Magazine have assembled some commentators to write about creating jobs. Here is the Link. Most of the comments are great ideas but difficult to implement. Some are self-serving and short sighted. Some are just warm and fuzzy like improve education or "invest in American Brain Power."

The two best ideas are job credits for hiring the long term unemployed and increase the inflation rate by a small percentage. The jobs subsidy might work if it was disguised as a tax-cut.

It is nice to know other people are struggling with this difficult issue.

By the way the Evil Black Economist also has a list of of unworkable proposals for creating jobs. We believe the way to increase jobs is a national infrastructure program, import limits(or more nationalistic consumption), import labor substitution, slightly higher inflation targets at the fed, job subsidies for hiring the unemployed, redirecting big business subsidies to small business, stricter anti-monopoly enforcement, create additional education jobs, and national healthcare. Just so we are on the record.

Saturday, July 16, 2011

June unemployment report is worse than May. Black unemployment rises to 16.2%; National rate 9.2%

June unemployment report is worse than May. Black unemployment rises to 16.2%; National rate 9.2%

The June unemployment report was flat out bad. You have to wonder how much bad news is enough and when will something be done about unemployment. Only 18,000 net new jobs were created. That is the lowest since September 2010 when the economy was still losing jobs. The national unemployment rate rose to 9.2% and the Black unemployment rate rose to 16.2%. Economists had predicted over 100,000 new jobs. The lower than expected number has caused a stock market drop. You have to ask if anyone really cares about the unemployed.

Private non farm payroll increased +57,000 which was off set by a drop of -39,000 government workers. Employment increased in business services by just +12,000 while healthcare went up by +17,000. Manufacturing added +6K(durable +15K, non durable -9K). Construction also lost -9K. The biggest drop was in local government jobs which fell by 28,000.

Black Unemployment Up Again

Black unemployment increased again to 16.2%. It was 15.3% in Feb. 2011. The 16.2% was close to the BU peak of 16.5% in Mar/Apr 2010. In Jan 2007, the rate was 7.9 percent. About 2.88 million Black people remained unemployed in June, 2011 about the same number as May. The Black labor force participation rate was reported at 61.0%. In February 2010, it was 62.7. The number of Blacks holding jobs shrank by 15,000. An additional 47,000 Blacks dropped out of the labor force in June.

In other bad news, the long-term unemployed (out of work for more than 26 weeks) increased to 89,000 to 6.29 million. The long term unemployed are 44.4% of the total unemployed.

The number of part-time workers for economic reasons was 8.6 Million. These are people who would like full-time work but cannot find it. Marginally attached workers stayed around 2.7 million. These are people who have looked for work in the past 12 month but are not counted as part of the labor force. If they were included in the labor force, unemployment rate it would be 1.4% higher: 10.6%.

The number of discouraged workers dropped year-to-year. Last June there were 1.2 million. Currently there are 922,000 discouraged workers, a 18% drop. Discouraged workers have stopped looking for work because they believe no work is available for their skills.

Establishment Data

Non farm Payrolls recorded a token increase of 18,000. The private sector added only 57,000 jobs which were offset by a -39,000 drop in government jobs Retail trade stores added +5,000 and business and professional services added a meager 12,000. Health care added 17,000 and manufacturing added 6,000.

In other bad news, Temporary Help Services(THS) shrank by -12,000 jobs. THS is a closely watched, bell-weather category. Traditionally, it has grown during recessions as employers are unwilling to make the investment of hiring long term employees, then when the economy picks-up, the demand for temporary help drops. Lately, as employers’ use of “temps” has changed, temporary help has stayed strong.
The drop in THS coupled with a slow economic growth singnals a widespread lack of job opportunities across the economy. “Even temps can’t find jobs!”

Construction was down -9,000 jobs.. Construction employment is also closely watched as an economic indicator. Construction employment has been depressed since the collapse of the housing “bubble” in 2007.

And finally some downward revisions of prior month payrolls. The April new job creation number was revised down from +232,000 to +217,000 and May was revised down from +54K to +25K.

ADP reported 157,000 new jobs were added.

The monster help wanted index was at 146 , the highest level of demand since October 2008.

The weekly initial unemployment claims was at 427,00 for the week ending July 7th, 2011, still above 400,000 below which the US economy is considered to be adding jobs.


Build national bike lanes for jobs, environment and health

Intra-city and inter-state bike lanes are the answer

Every now and then you here an idea that is win, win, win. And idea that can improve the quality of life for everyone. National bike lanes are exactly that. We, Evil Black Economist Blog, propose creating and inter-city bike lanes to create jobs, reduce pollution, and improve public health and well being.

The project address three key areas. It puts people to work, it improves the economy and reduces energy consumption and it improves the health of the nation.

The country needs a labor intensive public works project to boost the economy. We have enough roads already. High speed rail and big energy have a very low job intensity. We need projects that have a very high labor component. National bike paths are that type of project.

The type of bike paths we propose are the high quality, high volume, commuter bike path found in some places in Germany, Scandanavia and the Netherlands.

The path are almost as wide as road(they are roads actually), well paved and drained and completely separate from vehicle traffic. The have separate signs and signaling.
The paths require construction and on-going maintenance.

A second huge benefit is improved quality of life: reduced pollution, congestion and environmental damage. Energy and gas consumption would also be reduced.

The biggest benefit would be in the improved health of our citizens. The US could reverse the trend in obesity.

So how do they work in practice.

Certain low traffic streets in each city would turned in to bike lanes(truck deliveries permitted during certain hours). Higher volume streets would have separate, partitioned bike lanes. Separate bridges or bridge lanes would be constructed. Separate inter-city bike paths would be constructed along highways.

How would bike projects be financed? We are asking for no changes in the existing subsidies for roads, rails, air-ports and mass transit. Existing program would remain fixed at there current levels. We are calling for an end to gas, road and airport subsidies. Let the prices of these services rise to their natural level. Then use the extra revenue to fund bicycle projects.

There is a lot of work ahead to change the "car" first mentality, but the benefits could be huge.

The real debate in Washington and John Rawls

The "real" debate in Washington is not about the debt limit. The real debate is not even about the size of the government and which social programs. The debate is about government itself, especially the federal government, and whether it has a role in our lives. The republicans seems dead set against any form of government what so ever other than police, fire and the military.

They seems to dream of a lassiez-faire, winner take all society, where the "best" people do well and everyone else is on their own.

I would just ask that everyone at least consider John Rawls, veil of ignorance thought experiments. His experiment is brilliant.

Rawls basically asks what kind of society would you set-up if you did NOT know before hand what you position would be. He believes that people would chose a society with liberty and a certain level of equality. Also that society help the disadvantaged.

Here is a link to justice as fairness.

Tuesday, July 12, 2011

Monster Employment Index: MEI

Monster, a job search internet web site, has an employment index called the Monster Employment Index. The MEI tracks the number of on-line ads places on monster websites. You can read the press release for the site here.

The index seems like an electronic version of the old help wanted index from the news paper days.

The conference board publishes a Help Wanted Online Index here. The news paper based help wanted index was discontinued in October of 2008.


Monday, July 11, 2011


One of the main points of this Blog is that Western, Democratic Capitalism (WDC) could produce more jobs and thus increase the overall happiness of society. We believe the unemployment rate at the point of maximum profit is above the unemployment of maximum happiness in post industrial societies. The US economy is run to maximize profits not create jobs. Many people believe that profit maximization in the most efficient way to run a corporation. It may be the "best" way to run a corporation, but not necessarily a society.

Our economy runs an below the full happiness level because businesses want to operation at the profit maximization level not a full happiness level.

We believe WDC culturally support work. It is part of our heritiage. We also assume a society is happiest when everyone who wants to work can do so at a living wage.

The current economic theory looks at jobs as cost or profit makers, not as a object unto itself with value. Jobs, themselves, have intrinsic value. Jobs have value for a wide range of reasons: self esteem in a society that values work, the opportunity to train and learn a new skill, to meet and network with people and to earn income.

The value of a job needs to be considered when we discuss the cost of creating jobs by the government.

Sunday, July 10, 2011

Debt crisis was caused by tax cuts, two wars and additional domestic spending

Basically, the current debt crisis was caused by several huge tax cuts (2 large by Bush and 1 medium sized by Obama), additional spending on two wars and the military, and additional prescription drug coverage.

The Washington Post does a really nice job of summarizing the facts: here.

Wednesday, July 6, 2011

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