There continues to be noise from both sides, both sides, about why it is that we have more than traditional Full Employment, ~4.1%, yet wages/incomes have barely moved up since the Great Recession. Orange Julius Caesar brayed during the election that the issue was that Obama/BLS were lying, and the "real" employment rate was much, much higher; 42% was his favorite. No one who has a brain believed that. But doubting the truth of U3 is valid.

But the fact is, BLS has always published various versions (with various definitions, naturally) of the unemployment rate. The one labeled U3 is the "official" rate over the years. But that rate doesn't include folks who would be looking for new/better full time employment if they thought it mattered. Including those folks, and other marginally attached workers, makes for U6. You can play with the display.

The current U6 unemployment rate as of December 2017 is 8.10.

So, for the first time in history, Orange Julius Caesar is sort of right. The slack manifest in such a much larger U6 is why "full employment" U3 doesn't drive wage/income increase. The Right Wingnut Leona Helmsley Memorial Tax Cut for the 1% won't trickle down to drive up wages. There is zero historical evidence that such will happen.

Views: 85

Comment by koshersalaami on January 5, 2018 at 12:45pm

There is ample historic evidence that it won’t. We called it a Jobless Recovery

Comment by Maui Surfer on January 5, 2018 at 12:51pm

I have not seen a strike in forever, I do remember carrying my local sign high and proud in the 70s when we demanded what we deserved, and got it. But, how do you strike in a gig economy?

Comment by Robert Young on January 5, 2018 at 1:42pm

one thing I ought to have said.  just by eye, one can see that U6 is now about 2 X U3, but in the recent past it was 10% or 20% higher.  that makes all the difference in the world.  again, Trickle Down won't change that.

Comment by koshersalaami on January 5, 2018 at 2:09pm

As Will Rogers pointed out during the Depression, money doesn’t trickle down, it trickles up.

Comment by koshersalaami on January 5, 2018 at 2:45pm

https://www.amazon.com/Hanging-Storage-Vegetables-Kitchen-Accessori...

You might wonder why I posted an Amazon link. I did it because I can’t seem to copy the picture and I want you to look at this thing, because I can use it to make a pretty good trickle-up/trickle down metaphor. It’s a three tier hanging wire kitchen basket that collapses flat. 

Think of the top basket as the wealthy, the second basket as the semi-wealthy, and the bottom basket as everyone else. If you lay it flat, then grasp the hook at the top and raise it until the first basket is entirely off the table, that’s what happens to the economy if you give tax breaks to the rich. Now let go of the hook, put your hand underneath the middle of the now flat basket, and lift the whole thing to as high as the first basket just was. That’s what happens if you give money/jobs to people at the bottom. The first basket is at the same height either way, but only raising from the bottom raises everyone. 

That, in a visual image, is how injecting money into the economy works.

Comment by Robert Young on January 5, 2018 at 2:52pm

I've had such devices.  and your description is apt.

Comment by Tom Cordle on January 5, 2018 at 10:53pm

The Laffer Curve may be the most aptly named economic theory in history.

Anyone with a lick of sense and a smidgen of honesty – which eliminates almost all current Republicans in Congress – understands that we no longer have a manufacturing economy - a necessity for a trickle-down to semi-function – but a consumption economy, one that depends utterly on masses of consumers with at least some measure of discretionary income. What's keeping the current ponzi scheme afloat is masses engaging in indiscretionary spending, that is people consuming way beyond their means. Couple that with disposable products, and you have a recipe for disaster. Looks to me like some among Congressional Repugnants understand this and simply picking the last rotting flesh from the body politic.

Comment by Robert Young on January 6, 2018 at 6:19am

I don't have a link near to the forebrain, but the USofA economy hasn't been majority manufacturing for at least a hundred years.  for most of the 19th century, we got what we had from Europe.  most innovation in goods were done by Europeans, and stolen by us.  Colt devised interchangeable parts, but that's about it.

the composition of sectors' in the economy has little to do with whether trickle-down will "work", i.e. grow the income of the 47%.  economic growth is always driven by growing real demand for the simple reason:  capitalists don't increase production facing static or falling demand; there's no reason to make more if you can't sell as much as you make today.  that's true whether you're making physical widgets or financial services.  in the latter case, of course, your clients are more likely the 1% with enough money to desire financial services.  funny how that works.

Comment by koshersalaami on January 6, 2018 at 6:44am

The US innovation in manufacturing was mass production, at least in application. The car was invented in Germany but cars for the masses were an American development. The computer was invented in England but got its real development and early production here. The jet aircraft was invented in Germany but commercial jets developed here. That was all twentieth century, of course. Light bulb production, though the biggest manufacturer of those eventually became Dutch. In the sixties, consumer electronics was an American industry, particularly television sets, until the industry was mugged by Japan in the mid seventies after the US gave Japan color TV set technology for free. 

“Capitalists don’t increase production facing static or falling demand.” Exactly. That’s why the Bush tax cut didn’t work and the Trump tax cut won’t either - because what they’re doing will reduce demand, not increase it. 

Comment by Tom Cordle on January 6, 2018 at 8:27am

I'm with Kosher here; it simply doesn't comport with the facts to suggest the US economy wasn't based on manufacturing for most of the 20th Century. One could argue that the Allies won WW II thanks to US manufacturing and US workers – including young American women. It's also fair to say young Russian men provided much of the cannon fodder that bought victory in Europe.

US manufacturing dominance continued  in the aftermath of WW ll, since factories – not to mention young working-class men – had been decimated in much of Western Europe. Thanks to that and to labor unions, workers in the US – particularly blue-collar workers – shared in the wealth created during that period. One by-product of that was a stable, large and growing middle class. And one by-product of that was two decades of relatively stable, relatively conservative politics in the US. That began to change with Civil Rights legislation and the Vietnam War, but that's another story.

My view of all this is undoubtedly a product of my own experience, since I am a product and a beneficiary of that time and place. My father, who was a tenth-grade dropout, made a decent living for himself, his wife and his five children thanks in large part to being a lifelong member of the Teamsters Union, which in spite of its faults, did much to improve the lot of truck drivers and those associated with that industry. Though not well-educated, my father was an intelligent man; he was also something of a prophet. He once told me something that has unfortunately come true. Son, he said, this isn't going to last; rich men can't have guys like me getting paid fairly – we get independent and hard to control. That they will never abide.

I could go on, but I probably ought to save the rest for a post of my own.

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