October Jobs Report: Jobs rebound in October; Wages drop one cent.

Note: The Evil Black Economist is  demphasizing the monthly labor market report. The labor economy is close to full-employment a the current wage.  It is likely to remain there for the forcible future. Instead,  the fundamental problem in the US economy is now wages and inequality not employment. 

October Jobs Report

The labor economy in the US is added 251,000 jobs in October 2017 as the unemployment rate dropped to 4.1% . It has been stable within a narrow band for the past two years. Wages dropped by -0.01 cents in October. The number of unemployed was 6.5 millon down 281k from last month and the number of long-term unemployed was recorded at 1.621 million.

However, the unemployment rate dropped because a record 765,000 people left the labor force. Different racial groups left the labor market at different rates: -662,000 Whites left the labor force while only -88,000 Blacks and -310,000 Hispanic/Latinos left.  And 21,000 Asians joined. Of the 765K that left 367,000 were men and 241,000 were women.

There were gains in healthcare, business services and food services. Since October 2015, the national unemployment rate has dropped about one percentage point (from 5.5% to 4.1%).  Blacks have made the largest gain during the period as the Black unemployment fell from 10.2% in October 2015 to 7.5% in October 2017.

Black Labor Force Participation Rate set to pass White Rate in next two years

On an interesting economic note, the Black labor force participation rate is going to pass the White and US average participation rate in the next year or two. Whites are dropping out of the labor force at record numbers. 

The chart below looks at participation rates by race.

Black Unemployment Rate

The calculated Black U-6 rate, the widest measure of unemployment. 

Ratio of Black Unemployment to White Unemployment Remained Close to the Average

Economists look at the ratio of Black Unemployment to White Unemployment as a good proxy for discrimination in the employment market. The long term Black unemployment rate has remained at about 1.8 times the White unemployment rate for 20 years.

Economic Challenges in the Black Community: Nice Summary

The Joint Economic Committee of the US Congress issued a report in April, 2015 on the Economic Challenges in the Black Community.  It looked at three areas: Unemployment, Wealth and Poverty. Black people are still far below Whites by many economic measures.

So little has changed that the report could have been written yesterday.

Off Shore Tax Avoiders in the Spot Light

Paradise Papers

The International Consortium of Investigative Journalists has released a collection of articles on global tax avoiders called the "Paradise Papers." They look at strategies corporations like Apple, very rich people like Wilbur Ross or public figures like the Queen of England use to minimize their taxes.

The OCED estimate that tax avoidance costs governments around the world up to $240 Billion dollars a year.

The exposure of the super-rich tax avoiders is a good way to build support for cracking down on these tax cheaters. All of us honest taxpayers have subsidized these tax avoiders for too long. Mixed into the money from these tax avoiders is money from drug dealers, kleptocrats, greedy corporations, and oligarchics. It is passed through shell companies and hidden by legal foreign and domestic secrecy laws.

People are realizing how much damage this missing tax revenue does to the real economy.

1) Tax avoiders cheat all of us. They make us all pay more for education, cops, schools, roads, military and social programs.
2) The show there is no need for a corporate tax cut as proposed by the Trump administration and the US republicans. Nor should there be a lower rate on the repatriation of foreign profits. If anything, a tax cut will force other jurisdictions to lower their own taxes.
3) States and nations have to work together to stop tax rate shopping by companies
4) The US and the UK are the biggest sponsors of tax avoidance.

Tax avoidance issues previously arose in 2015 when Google, Apple and Starbucks reported close to zero taxes on more than $200 billion in income. The EU is in court seeking to force Ireland to collect back taxes from Apple.

The US also practices tax avoidance. Delaware is the largest US tax haven

https://qz.com/656998/if-you-think-panama-is-bad-wait-until-you-hear-about-delaware/

Delaware generates about a quarter of it's $4 billion dollar budget from business fees. Last year they earn $976 million in fees, while letting companies avoid much larger tax bills.

http://budget.delaware.gov/budget/fy2017/documents/operating/vol1/budget-book.pdf

Social Trust: Why the common good is so hard to achieve

Selfishness in the United States

A while back I was looking at the research on selfishness in the US. We all believe that people in the US have become more selfish over time as their economic opportunities have declined.

There was a lot of the research, but it was on individual selfish decision making not the larger effect on society. It's the kind of stuff that get a researcher academic tenure, but keeps policy makers and the public in the dark.

The best I could do was a Pew Research Survey from 2015 that said 68% of Americans believed their fellow countrymen were selfish.   Or another Pew study about how much people: "Trust their neighbors." There is some good news: a lot of research says people are naturally inclined to help one another and not be selfish.

But trying to research and measure selfishness for a whole group or population was much more difficult.  There was no selfishness index. Enter "Social Trust."

Social Trust

It turns out I was using the wrong term. Selfishness is the individual behavior; Social Trust is the collective behavior. Social trust is a great predictor of a country's economic performance; it's more accurate than skill level. It is as important as capital investment.

It's also associated with non-financial measures of happiness and well-being. Pew Research has a survey from 2007, which documents the basics of social trust.

So does a UK Goverment website. The Behavioral Insights Team has a discussion from November, 2015 on social trust.

If you are interested in how other countries score, you can check the World Values Survey.

"Economic Despair" tied to poor student performance in high inequality states

A study from March 2016 describes one of the rotten effects of inequality: "Economic Despair." People give if they don't think their efforts will be rewarded. The study finds that low-income boys in high inequality states drop-out a higher rates than low income boys in low inequality states. Regardless of school performance.

The authors attribute this to student believing: "they cannot climb the economic ladder," so they give up and drop out of high-school. They call this effect "economic despair."

The study from the Brookings Institute, is called: "Income Inequality, Social Mobility, and the Decision to Drop Out Of High School."