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January 26, 2006
Six States in Search of A Theme
What do Alabama, Florida, Idaho, Montana, Nevada, and New Mexico have in common?
Answer down below:
Answer: In December, each of these six states reported their lowest unemployment rate since at least 1976, when the data starts. (for the data, see here)
Yes, you read that right?? lower unemployment rate than the tech boom of the 1990s, and lower than the free-spending days of the 1980s. For example, Florida?? unemployment rate, which never fell below 3.8% during the tech boom, is now at 3.3%.
What?? more, several other states are close to their historical lows for unemployment, including Arkansas, California, Hawaii, and West Virginia. California, despite being pounded by the bust, had an unemployment rate of 5.1% in December, barely above its low of 4.7% recorded in February 2001.
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It's great to see that people are working, but I do wonder what the average wage has been doing in those states. Another question comes to mind, for me: What has happened to overall *compensation* in those states (and the whole nation) in the past 25 - or even 50 - years? Raw wages may have been increasing, but how much have they increased when you subract inflation and account for differences in bonuses, perks, personal leave days (vacation, etc.), and of course the added costs of health benefits (or lack thereof). In other words, what has been the change - positive or negative - in actual, complete compensation with which employees can pay a house mortgage, make a car payment, eat food, send their children to college, invest with, and take a vacation with (remembering that a paid week off is a positive compensation compared to taking that vacation week unpaid). Anyone who's read my comments will know that my suspicion is that overall, functional compensation is negative in the past 5 years, at a minimum, and perhaps even over the last 20 years or so.
Posted by: Brandon at January 26, 2006 12:05 PM
Yes, pretty amazing. I also have to point out that those first 6 states all voted for the GOP in 2004. High employment will drive large increases in population, so that when the 2010 census comes around, the redistribution of electoral votes will cause a net gain for Republican-leaning states.
In California, most of the new jobs are due to the Real Estate bubble, which will probably be reversed soon. Silicon Valley (specifically Santa Clara County) still has 20% fewer jobs than at the peak of the boom, and is currently at the same levels as 1996. The unemployment rate is not high there because 200,000 households moved out after the bust.
A sector-by-sector breakdown for California could be interesting.
Posted by: Kartik at January 26, 2006 12:53 PM
In relation to my last comment, this article is interesting...
Posted by: Brandon at January 26, 2006 02:53 PM
I'm willing to bet that Florida is not moving ahead on the wage gains.
Many jobs being created are the result of tourism and consequently are low paying service jobs. Hotel maids, grocery store clerks, restaurant servers. Lots of jobs have been created in construction and real-estate, and I have a great bit of confidence those sectors will suffer a decent retraction.
Even some of the higher level jobs being created are being offset by the increased costs in insurance, housing, and general living. We are no better off than we were 5 years ago in FL.
Posted by: Wes at January 26, 2006 03:05 PM
Take a look at table 4 in this report from the BLS (http://www.bls.gov/news.release/pdf/cewqtr.pdf).
The year over year wage gain for Florida was 5.2%, compared to 3.9% for the U.S. overall. The only states with bigger percentage gains were Nevada and Virginia.
Posted by: Mike Mandel at January 26, 2006 03:42 PM
Why do we even bother tracking total job creation/loss, then try to explain that the stat. doesn't mean much because of the jobs we are tracking are low paying. Lets face it if you lose your life sustaining job and get hired at Wal-Mart making $7.50 an hour, you are still going to lose your house, your car and your livelihood. Your clothes will wear out, you will start eating beans and noodles for dinner, and you will stick aluminum foil in your TV wire to get the local channels. Why not track only the jobs that matter; the ones pay enough money to provide food, shelter, and transportation. We should have a well publicized stats. for FULL TIME jobs that pay at least _____. I'd fill that blank in today with a pay rate of $15 per hour and adjust it each year with the cost of living. That is $30,000 a year. At $30,000 a year one can just begin to afford the basics; food, shelter, etc. Now you can see what I mean when I say a job that pays $7.50/hr is worthless, so lets not even track them. It would be much easier to understand if politicians/economists said "I created 10,000 life sustaining jobs" than "I created "30,000 jobs" after which the reporter chimes in and informs us that a large yet unknown number of those jobs are worthless.
Posted by: Joe at January 26, 2006 04:46 PM
Surprisingly to me, the jobs weren't worthless, at least in some of these states. Here's the numbers for the wage gains, second quarter of 2004 to second quarter of 2005 (the last numbers available).
New Mexico 4.5%
Not bad, actually.
Posted by: Mike Mandel at January 26, 2006 04:56 PM
So, did a majority of the households in these states benefit from these macro-based wage gains (meaningful), or did most of the wealth end up in the hands of a few (meaningless)? If so many folks are finding significant wage gains, it might be useful and interesting to note what types of jobs these are, so the rest of us might grab a piece of the action. Hopefully they don't all require unaffordable PhD's!
Posted by: larry b in OP at January 26, 2006 08:55 PM
I disagree with the assertion that any job paying less than a given amount provides no value. Our economy has a lot of people working for a lot of different reasons. While many heads of households certainly do hold jobs that do not pay a living wage, it is unfair to dismiss the wage gains we have seen as valueless. Particularly at this lowest rung of the jobs ladder, any increase in wages is very valuable, and likely represents economic strength, not weakness. - pjw
Posted by: Patrick J. Walker at January 27, 2006 10:18 AM
Michael, thanks for the link.
That report is very interesting especially for Pasco (Co), FL. That county is simply a bedroom community for the Tampa metro area and the only jobs being created there are either construction, restaurant, or retail. The county is being transformed into acres of tract homes surrounded with fast-food & casual restaurants and strip malls. No lasting (highly paid) industries have moved into Pasco that I recall reading, seeing, or hearing about. Seminole county (FL) is similar since it's a bedroom community of Orlando but I know there are some large office complexes there, unlike Pasco county.
Regardless, a 5.2% wage gain pales in comparison with the 27% increase in the median home price in the Tampa Bay area. The fundamentals are completely out of whack. (Slightly related, 2 of the 4 2004 hurricanes went directly through Pasco co).
Posted by: Wes at January 27, 2006 05:05 PM
I live in Nevada, I KNOW what most of the casinos pay their workers. Most make less than a LIVING WAGE, & surive at a home with other working members of the household making less than a living wage. The construction worker makes, from just above a living wage to just under twice the living wage, with little or no benifits. The Nevada worker can have a job and buy food though.
Posted by: george at January 29, 2006 09:24 PM
unfortunately in my country 9-10% unempolyment is quite common and nobody seems to care, though media goes gaga over rising super power. i need not bash about telling the name.
Posted by: anonymous at March 1, 2006 03:00 AM
I live in the Pasco County area and I agree 100%. I am 24 and I have a B.A. degree from Michigan and there is NOTHING here but A LOT of minimum wage jobs. Nearly all the jobs here pay $8-$10 an hour, and if you want to travel to Tampa you may be able to get $12 an hour with your degree. I work in a restaurant and I have FSU GRADS working with me! This place is a go-nowhere trap. Yeah, we have very nice weather! We can sit in a hottub in December, but that doesn't pay our bills! And cost of living went up 18% last year and salaries only went up 3%. Any numbers that you can come up with, if you don't already have a house, or some major money to throw down on a house, you better start a successful business or be heavy in the construction industry or you are quickly in poverty. I hate snow, but at least in the Midwest you can make a respectable salary, pay your bills, have a nice wife with a nice house. Florida is a tough place to make it with a lot of traffic!
Posted by: John at October 7, 2006 01:45 AM