October 1st, 2013 is a great day !!!

Many people may not realize it, but tomorrow maybe the greatest day for social justice in the past / next 20 years. It is a historical day.  It is the day the United States extends health coverage to every Citizen of the United States. Every man, woman and child will have the opportunity to buy health insurance at a reasonable price.  It will take years to cover everyone, but 30 years from now society will look back and wonder what took so long.   Tomorrow is a great day for America. 

Conservatives have been wrong about every major government policy over the last 50 years

The Evil Black Economist was reading a story about the affordable care act(ACA - Obamacare). In the article someone pointed out that conservatives have been wrong about every major public policy over the last 80 years. We immediately thought: that cannot be possible.  So we tried to find a counter example and tried and triedand tried...

Here is what conservatives have been wrong about...

Integrated armed forces
Civil RIghts
The New Deal
Social Security
Medicare
Food Stamp
Unemployment Insurance
Enviromental protection
Food and Drug laws
Minimum Wage
Child labor laws, OSHA, 40 hour work week
Marriage Equality


What they have gotten right...

General support for business and the economy(all adiministrations)
National Highway system(eisenhower)
No Child Left Behind(Bush)
Pubic Safety (all conservatives emphasis public safety, usually overdoing it like stop and frisk or spending too much money on local police when there is no crime)
Counter Terrorism(too much money wasted on contractors and privacy invasion)
Family Values (except Marrige Equality)

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Bank of North Dakota: The best state run bank in the United States

The only state run bank in the US is the Bank of North Dakota. It is a well managed, profitable institution operating in the public interest. The bank operates in areas other banks ignore.  It makes student loans, rural loans, affordable housing loans and economic development loans.

Bank of North Dakota

Here is a good summry presentation evaluating the idea of creating a bank in Massechuettes similar to the Bank of North Dakota.


The bank is periodically studied as an example for other states to imitate.  But the proposals never go very fars because of entrenched business interests.

Here is a review paper from the Boston Fed on the possibility of starting a similar bank in Massacheuetts. Here is the formal paper. They also have a nice video presentation on the same topic.

Biased reporting of study results from Cato Institute: Work versus Welfare Trade-Off

The Cato institute published an update to a 2005 study on financial inventives that may discourage work. The work is actually quite good factually.  It's when the Cato Insititue reports the results that the poblems arise.

The most biased part of the report is to call any government beneift: "Welfare" because it goes to help poor and middle class people. Most of the benefots are not cash benefits but other forms like foods stamps or healthcare.

The Work versue Welfare Trade-Off

The work itself is a pretty good review of the total benefits available to families in proverty.

How to buy black 2013 !!!

Ok, if you read the blog, you know we try to buy Black when ever we can. But there are few black businesses.  So we have developed some other strategies around employing black people, supporting black communities,  supporting progressive causes and treating employee fairly.

If you read Our Black Year, you realize how hard it is to support black business even in a wealthy, segregated black area like Chicago.

I recently had to buy a computer software package (Microsoft Access) for a job I am doing. Obviously, nobody black wrote Microsoft Access and yet I had to have the package.  The going price was $110.  So we can assume the all in cost to Microsoft is about $25.00 (R&D, software development, overhead). Microsoft probably keeps $100 dollars ($75 dollars) profit and flips the office supply store $10 dollars to carry the product.

So, I had to decided where to buy the product and what I would pay.
Here is the prce menu.
Microsoft $110 - Electronic Download
Staples $109
Office Max $109

So, I decided, I would do the next best thing.  I would buy it from the place that employed the most black people.  So that not microsoft.  Instead it's a place like best buy, staples or office depot.

Staples founder has criticized Obama and Staples was run by Bain Capital -- probably internally very conservative.

Meanwhile Office Depot (OD) sponsored lady gaga. OD has a "diversity",a "community involvement," and a women in business" button on it's home page - probably relatively moderate

Office Max - No information found but did merge with office depot. A conservatice strategy that usually reduces competition and lays people off. OM has a "Environmental" button on webpage.  Conservative

So I ended up buying the software from Office Deport.  I then check to see if their is a store near by since a retail business creates more jobs and found one.  So I made the purchase at the local retail store for $110 and taxes.

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May, 2013 Jobs Report Review

The economy add 175,000 new jobs added in May, 2013

The May jobs report from BLS showed slow, consistant growth in the workforce. The labor market added 175,000 jobs in May.  The private sector added 178,000 jobs while government lost -3,000 jobs. The national unemployment rate stayed at 7.6%, the black unemployment rate stood at 13.5%, and the total unemployed persons was 11.8 million.  There were 4.4 million people classified as long-term unemployed (out of work for 26 weeks or longer and looking). Matching last month, about 7.9 million people were underemployed (working part time but wanted full time work) which is the same as last month. About 19.7 million workers are unemployed or underemployed. That is about 12.6% of the workforce.

The unemployment rate for women declined to 6.5% while the rates for other groups remained unchanged: men (7.2%), teenagers (24.5%), whites (6.7%), blacks (13.5%) and Hispanics (9.1%) were not significantly changed. Black teenage unemployment was 43%.

The number of people working as measured by the labor force participation rate was 63.4%. The employment to population ratio also did not change(58.6%).

The Big Story

On the day the report was released, the Dow Jones Industrial Average broke 15,000 for the first time before sliding back.  Later in the week, the index made a strong move over 15,000 and stayed there. In political news, Alan Kruger, Chairman of the Presidents Council of Economic Advisers issued a standard statement welcoming the news while criticizing the government cuts led by Congress known as the sequester.

Second big story is that no construction or manufacturing jobs were created. One hundrend percent of the new jobs were in the service sector.

Business Employment 

Non Farm Payroll increased by 175,000 which is just above the 12 month average of 170K jobs created.   All of the private sector growth was in the service sector. Retail trade added 28,000 postions, business services jumped 57,000, healthcare increased by 26K and leisure services jobs jumped 43,000. Government lost -3,000 jobs.

Black Unemployment

The black unemployment rate was set at 13.5%. The number of black people holding jobs grew by 35,000 while the labor force grew by 106,000 causing a 0.3% increase in the unemployment rate. The 12 month average black unemployment rate is 13.75%

The chart below shows the slow decline in the national unemployment rate(U-3) and the recent flattening of the black unemployment rate.

. 

Household Survey Details for May

The household data survey reported that the total labor force expanded by 420,000 people while the number of people working expanded by 319,000. 

The long-term unemployed (27 weeks or more) was 4.4 million people which represents 37% of the unemployed.  The median duration of unemployment was 17.3  weeks  while the average duration was 36.9 weeks.  A drop in the mediam duration of unemployment (half above/ half below) means people are finding jobs slightly faster.

The “work part-time, wants full-time,” number stayed 7.9 million.  This is a measure of excess labor in the marketplace. About 2.1 million workers were marginally attached to the labor pool.  They have looked for work in the last 12 months but not in the last four weeks.  It seems as if people are either dropping out of the labor market or finding some work.  The report estimated that there were 780K discouraged workers (part of marginally attached) who are not looking because they believe there are no jobs for them.  This statistic has also dropped recently.

There are some small but good signs in the report: the numbers of both marginally attached and discouraged workers have been dropping for several months.

Establishment Survey Results for February

Non-Farm Payrolls rose by 175,000 positions in May. All of the new job growth came in services. The jobs were in business services, temp help, retail trade, healthcare and leisure. Construction added 7,000 while Manufacturing lost -8,000 and government lost -3,000.  

Below is chart of steady job growth which on average is about 170,000 jobs  each month. 

The following chart show the increase in jobs for the month split into different sectors. High wage sectors like construction, manufacturing and federal government had employment decreases during the month.  

Note: Starting this month we are splitting out temporary help workers.  Many temporary help employee are really permenant replacement employees working for shell companies helping large companies reduce pay and benefits.

Non-Farm Payroll Revision

March was revised upwards(+4K)  from +138K to +142K and April was revised downwards(-16K) from +165K to +149K. The total downward revision was -12,000 jobs.

The average work week decreased to 34.5 hours and wages added 1 cent in April 2013.

Note: Reporting the average wage increase is always a jokes because it has not changed on inflation adjusted basis for 30-years.  If anything, it is has gone down.

ADP

ADP reported an increase in private payrolls of 135,000 positions for May.  Small business (1-49 headcount) added 58,000 jobs; medium size (50-499) added 39,000 and large companies (500+) increased workers by 39,000.

The breakdown is important because large business are more productive than small and medium size businesses. Because of the productivity defference, large businesses tend to add fewer jobs and pay more in wages and benefits. However, large businesses, with better systems and processes, also squeeze out small and medium size business who create more jobs and have lower profits, resulting in fewer good jobs in the economy. 

Fast food company profits could support higher wages

Looknig at the profits for companies in the fast food industry, there seems to be plenty of money to pay workers $15 dollars an hour.  Macdonalds is doing incredibly well as are starbucks and Yum Brands(taco bell, KFC and Pizza Hut). 

Operating surplus for eating and drinking establishments increased by 3%.

Personal reaction to President Obama's speech on the Middle Class Economy

On a personal note,  We find the President's speeches very good but crafted from the same, simple formula. And we are getting a little tired of it. So much of the great rhetoric is gone. It now feels like a market tested, grade school level  campaign speech not a major adress on the economy.  Either he is tired or too much of a politician.

At some point during his speechs, Obama does dip into great speech making. Here is my favorite quote (context: Obama is discussing do nothing to improve the economy as some Republicans propose):

"Social tensions will rise, as various groups fight to hold on to what they have, or start blaming somebody else for why their position isn’t improving.  And the fundamental optimism that’s always propelled us forward will give way to cynicism or nostalgia. And that’s not the vision I have for this country.  It’s not the vision you have for this country.  That’s not the America we know.  That’s not the vision we should be settling for.  That’s not a vision we should be passing on to our children. "

Of course he has said this many times before.

Anyway most of Obama's speechs are very similar to the following:

1) (5 Minutes). Go local: thank those who have invited you. Tell one local joke. Recognize several local people in the crowd who are popular.
2) Start upbeat by discussing great things the US or locals have done in the past.
3) (5 Minutes). Create general unease. Begin to paint the picture of what is wrong and what needs to change in general.
4) (2 Minutes). Let them of the hook: Tell people it's not your fault or their fault. Blame current problems on past decisions: wall street, big banks, prior presidents, congress or foreign competition. Discuss something good done recently.
5) (2-5 Minutes). Change the tone to serious with a "But..." or a "We have more work to do..." or "We can do better.."
6) (10-15 Minutes). Create specific unease: Introduce main theme and specific examples the audience can relate to
8) (10 Minutes). Introduce proposal to fix the problems. Include one specific proposal in each area.
9) (10 Minutes). Circle back with specific benefits if programs go forward and specific evils if they don't.
8) (5 Minutes). The close: Call for support and consensus. Paint larger picture of good vs. evil.
9) (5 Minutes). Close with a historic reference (preferably local) renforcing the correctness of the idea and the need for consensus.
10) Thank you, and God bless the United States of America

Send speech to Valerie Jarett and Michelle Obama for vetting.

Hard work: President Obama's Speech on "A Better Bargin for the Middle Class" at Knox College in Galesburg, Illinois

On July 24, 2013, President Obama gave a major economic speech at Knox College in Galesburg, Illinois.

Here is the text of the President's speech.

What can you say ?  As good journalist you need to first layout the facts and as a blogger you must give your opinion.

Facts

Obama discussed the changing economy and the effect of the changes on the middle class in the United States. He discussed the economic environment that everyone is now aware of.  He reviewed the decline in manufacturing, the growth of the service economy, and flat wage growth.

He talked about the main policies that would help the middle class such as healthcare, expanded education opportunities and support for a secure retirement.

Opinion

The presidents team has realized that the US economy is fundementally a middle class economy. However the middle class has long been disinterested in the US political economy. For the last 30 years, the US middle class had enough material comforts and distractions to not worry about larger issues.    Now, people are faced with a declining living standard not just for their children but themselves.  They are ready to listen.

Obama, is trying to use the opportunity to discuss sound economic and political values that will steer the country for the next 30 years. Some of the principles such as caring for the unemployed, poor, sick or elderly did not connect with an selfish public until enough of them faced a similar situation. Not they are ready to listen.

It's just hard work discussing a compliated, long-term topic with the American People.

New Jersey tries to raise minimum wage with November ballot initiative

In my state, New Jersey, the minimum wage is only $7.25. In June of 2012, the NJ senate and house voted to increase the NJ minimum wage to $8.50. However, Gov. Christie vetoed the bill in January of 2013. Now the legislature is proposing a constitutional amendment to raise the wage to $8.25 and index it to inflation. The amendment will appear on the November ballot.

A survey show that about 3/4 of the registered voters favored the initiative. NJ.COM has the story here.

Many states are planning initiaitve to raise the minimum wage. The department of labor has a map of the current minimum wage pay rates in the US. The DOL map is here. Some big Northeastern states like NY, NJ, PA and MD pay only the federal minimum wage rate.

Recent research has shown that minimum wage increases are employment neutral to employment positive because the people who receive the minimum wage spend almost 100% of their money. It also has less of an impact on small business since the majority of minimum wage employers are large companies.

Politically, the issue has gotten little attention and is expected to pass easily.  Christine, who has presidential ambitions, will mostly likely ignore the issue or make half-hearted arguments against it, to provide cover against the national Republicans.

The reason we noticed the issue was because of a group called  EPI -- The Employment Policies Institute has been running ads in New Jersey against the increase. NJ.COM has the ad for the group here. The Employment Policies Institue is a front for a convervative public relations company called Berman and Co. who's clients include companies in the low wage food and beverage industry.  You can read about Berman & Co. here and here.

EPI has two web sites opposed to raising the minimum wage.  One called EPI-Online is against raising the minimum wage and health insurance. The second called Minimumwage.com is purely against raising the minimum wage. Both sites have few facts or research based ideas and instead offer the standard convervative ideas on raising the minimum wage.

Gov. Christie refused to sign a bill during the summer of 2012 that would have raised the wage to $8.50. That led to the current ballot measure. It will interesting to see if he takes a stand on the popular issue. Opposing any minimum wage increase has become a test for republicans.

The ballot measure reads:

"Do you approve amending the State Constitution to set a State minimum wage rate of at least $8.25 per hour? The amendment also requires annual increases in that rate if there are annual increases in the cost of living. 
YES 
NO"