Media Bias on the Economy
The "problems" of 3% unemployment
By Adam C Posted in Culture — Comments (52) / Email this page » / Leave a comment »
In an article that seems to try to prove that a media bias exists, the AP reports that:
The region hit an all-time low of 3.4 percent in May. The effects are everywhere. Logging equipment in Idaho sits idle as companies have a tough time finding workers. A shortage of lifeguards has forced Helena to shorten hours at children-only pools. A local paper in Jackson, Wyo., has page after page of help wanted ads....The problem has created longer hours and tougher working conditions for current employees....
The problem could get worse as more baby boomers retire....
Surely there is some silver lining to having unemployment under 3%. Oh, the AP notes at the end of the article that, "workers have benefited. Utah workers saw a 5.4 percent average wage increase in 2006". But in case you thought they end with that thought, they make sure their thesis is clear:
But questions remain about how long the West can weather the problems that come with low unemployment.
So if unemployment was at 10% that would be bad news, if it's at 3% that's bad news. Maybe it has more to do with the party of the President than actual economic news. To be clear, the Mountain West is booming and it creates increases in wages for working families. That is the private sector doing its thing, making people richer for their hard work. Perhaps reporters in NYC and DC no longer understand basic economics, but we should all be happy that the Mountain West is doing so well and we should be thankful that we are in a major economic boom with historically low unemployment.
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that the AP knows that we even exist in the Intermountain West. I'm a little flattered really.
Its not the facts that count, its how you can use them to hurt conservatives.
______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777
I read that article too. It's so mindboggling that they write a story about low unemployment as some kind of horror story. I don't see how anyone who has taken one course in macro-economics would think anything else.
btw, we all know that Wyoming, Utah, Montana, and Idaho are mythical places like the Holy Land and Holland. I defy anyone to find Holland on the map.
--
I'm looking for an entry level job in D.C. or Maryland.
I earned a Government and Politics major at the University of Maryland, College Park and have experience interning on Capitol Hill.
You know, take some of the burden.
...I'll be happy to trade employment rate "problems". You may have the second-worst unemployment rate in the country, but ours is over a full percentage point higher...
"I don't understand why the same newspaper commentators who bemoan the terrible education given to poor people are always so eager to have those poor people get out and vote." - P.J. O'Rourke
This article is trying to stoke fuel into fears that have grown over the past month from the stock market correction imo. The economy is going to be fine, and 3% unemployment is a non-story.
I don't know how I feel about Greenspan's policies at the Fed. He engineered the tech bubble of the late 90's and now the housing bubble of the late 00's. Both have popped with a significant market correction. Is high growth of the stock market worth the price of building and popping these bubbles?? I'd kinda rather sail on flat seas.
Mike Gamecock DeVine @ The Charlotte Observer
www.race42008.com
www.hinzsightreport.com
www.theminorityreportblog.com
"One man with courage makes a majority" - Andrew Jackson
It took place in the early 17th century in Holland. And it didn't actually involve trading in tulip bulbs, but rather in tulip-bulb futures.
And you might think the "repos" that the Fed used to quell the Subprime Crisis are advanced and exotic, but I've been told they were actually invented in the Middle Ages. Because certain sects of Orthodox Jews weren't allowed to be debtors or creditors during the High Holy Days. So they worked around that with contracts that unwound their debt obligations and re-established them automatically several days later. Cute, huh?
And of course lending money at interest is prohibited by Islam, which makes banking... problematic in places like Saudi and the Emirates. They have similar bizarre workarounds.
that Islam doesn't appear to be against borrowing of money, it is merely the paying back of interest the religion seems to object to. Makes me wonder just what happened in the prophet's life to make him throw THAT prohibition into the religion!
for a while as well. IIRC my history correct, one of the reasons the Jewish people are associated with finances is because they didn't have the same restrictions as the Christians in their financial dealings (i.e. not being able to charge interest). I will admit my knowledge in this area is mostly from casual conversation and not research.
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Bobby Jindal Saves Louisiana
If I recall correctly, the laws in Christian countries typically forbade "usury," which is charging excessive interest, whereas in Muslim countries usury is defined as charging any amount of interest.
Another very key reason that Jewish people in Europe became skilled in finance was simply because in most places they were prohibited from holding the most important asset, namely land, which by definition was owned by aristocrats.
So instead they mastered the ways of storing wealth in portable forms like precious metals and jewelry.
In most of Christendom, the demand for money was extremely low, so the fact that Jews held much or most of it didn't really bother anyone. Money was in demand primarily by political leaders, as a means of paying mercenaries, and in cross-border transactions like ransoms for prisoners. Until the Industrial Revolution. At that point, money became very interesting as a way of facilitating the construction of railroads and other capital infrastructure.
the usery laws in the US had to be revised during the President Carter administration due to the rising inflation rate -- which is why we can NOW have interest on credit cards as high as 30% today. Before President Carter THAT was considered usery!
Mike Gamecock DeVine @ The Charlotte Observer
www.race42008.com
www.hinzsightreport.com
www.theminorityreportblog.com
"One man with courage makes a majority" - Andrew Jackson
There is a reason that so many of the major banking institutions in the UK (Lloyds, Barclays and more) along with several older significant ones that date back to the start of the USA were founded and controlled by Quakers (the Religious Society of Friends). If you deny any organized, self-identifying group of people political power, then you can bet they will apply their intelligence, motivation and insight elsewhere. In the case of the Quakers, the prohibition on them holding any kind of political office in the UK led to their more aspirant members focusing on banking, insurance and other financial business. A number of them moved the much more Quaker-friendly US, and started similar enterprises here.
Usury originally referred to lending poor people money at any interest. The idea was that if a neighbor is desperate enough to need money, you have no business reducing him to debt-slavery. This was preached as evil during the Middle Ages in Christendom. Even Jews were to charge interest only to Gentiles. That this didn't stop people shouldn't be surprising, given human nature. (The differing laws certainly did stir up animosity against the Jews, though.)
Now what we do when we lend capital is different. We're not exploiting the need of our neighbor. We're providing raw materials to a business, with the expectation of sharing in the rewards. That's quite different; Mosaic law permitted the hiring of an ox to plow one's fields. What it didn't permit was making the hirer take all the risk. If that ox died while plowing, the price of the hire served as full restitution.
Of course, we don't live in Old Testament Israel, and our nation is free to make different laws. The primary moral obligation here is the protection of the poor.
It was fees charged to have the money you borrowed carried out to you. Once again a work around for not being able to charge interest.
______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777
about nothing. I read the entire article and didn't really see this as falting Bush. The author is telling the story - tight employment markets do create problems for small business owners. Not every story is intended to be a Bush-bash - settle down a little bit.
Can you find a few AP articles talking about the fact that unemployment is at a historic low? How about the fact that minority unemployment is nearing a historic low?
And if unemployment were 10%, there would not be an article talking about how it helps small businesses keep wages down and stay in business.
Despite a 4-5 year boom, we have not seen very much positive economic news reporting. Here is an issue that is perfect for a left-of-center reporter to write a positive report about quick growing wages for working families and the great opportunities for new high school and college graduates. And if this was during the Clinton years, it probably would have said just that.
The stats in this article also show how a booming economy is more important than raising the minimum wage in helping low income workers. But the writer would never say such a thing, why?
The article does not bash the President and I never claimed that. The spin off the article is low unemployment is bad. And that fits the model of "______ is bad" which seems to be the template for the past 5-6 years.
______________________________________
Bobby Jindal Saves Louisiana
news on any particular day during the boom!
Plus, one wonders if more want ads would be responded too if millions of potential want ad readers weren't aborted.
as if
Mike Gamecock DeVine @ The Charlotte Observer
www.race42008.com
www.hinzsightreport.com
www.theminorityreportblog.com
"One man with courage makes a majority" - Andrew Jackson
Listen, I'm not saying there aren't biases in the media, especially at the AP. All I'm saying is that fretting about every article that comes out of there really distracts readers of the blog. It also detracts from arguments to be made when the article is blatantly biased. Certainly it would be nice for them to be a little more upbeat, but would you rather read another AP article about the mortgage meltdown?
and give us an accurate, fact-based appraisal of the economy rather than conveniently finding negative stories during a boom.
______________________________________
Bobby Jindal Saves Louisiana
...a long habit of not thinking a thing wrong, gives it a superficial appearance of being right...
---Thomas Paine---
his job, his job is making the world a better place to live. Check out a journalism 101 book. I'd look it up in mine, but it was one of the few I sold back to the college book store. The physics, math, and art books I kept.
ask a journalism student WHY they are chose Journalism and the will tell you "I want to make a difference."
If you want to make a difference, join the Peace Corps! Volunteer for a soup kitchen! Become a priest!
If you want to be a journalist -- learn to write!
First of all, let me state that I'm not disagreeing with the notion that the media have a big leftleaning bias. I'm not even claiming that this piece isn't influenced by it.
However, low unemployment can indeed be a problem. First for employers, later for employees as well. Here's how it works:
If unemployment is low and you run a business, there are 2 possible unpleasant scenarios:
1. You may not be able to find workers at all. Unemployment is counted over the entire workforce. In a way it's an average. 5% unemployment may mean that all metalworkers are unemployed, but all accountants are in fact having a job. In that case, you have a problem: you cannot hire the metalworkers as accountants. (or vice versa, for that matter)
2. You can find workers, but they demand high wages. Ofcourse this is good for the employees, at least in the short run. For business it can be bad, cause your competitiveness may be hurt. If they can pay lower wages 4 counties away, and have lower costs and hence prices over there, customers may place their orders in that county.
Ofcourse, higher wages (and employers offering incentives) will get people to move to that area or enter the workforce. But as the boom is more widespread, the first option helps less, and the second one operates with a delay. The higher the qualifications you need your personel to have, the longer the delay.
So if your unemployment is very low (everything under 4% generally qualifies), the boom isn't just local and you need trained staff - none of them rare conditions - you're in trouble. As an employer, you start to pay more, driving up costs and lowering turnover (or profits). In the end this drives business out, potentially leading to a bust (especially if it affects a few large companies providing much of the work in a region), and at that stages workers loose too. If the businesses stay, they still have the problem that wages adjust a lot easier when they go up than when they go down. (especially when unionized) If wages aren't lowered after the boom, the only alternative for employers are layoffs, which usually leaves everyone worse off (those laid off, as well as those who stay, who need to deal with more stress, as well as employers, who need to run a business that's esentially understaffed.)
Conclusion: unemployment is bad, but near full employment isn't perfect either. The labor market needs some unemployment as 'lubricant', generally some 4% (some of those may be completely unemployable though, so the percantage needed to overcome frictions is lower). As long as people are between jobs for short periods that isn't a social problem. If the labormarket is overheating it tends to selfdestruct after a while, leaving everyone worse off. A nice, steady economic growth with modest but not near-zero unemployment is often the better than a turbulent boom-bust-boom-bust cycle.
"A nice, steady economic growth with modest but not near-zero unemployment is often the better than a turbulent boom-bust-boom-bust cycle."
Mike Gamecock DeVine @ The Charlotte Observer
www.race42008.com
www.hinzsightreport.com
www.theminorityreportblog.com
"One man with courage makes a majority" - Andrew Jackson
______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777
distant relatives I haven't seen in ages. Just before we were leaving, the host suddenly started talking about this candidate for President -- the guy who REALLY won the Iowa straw poll.
Yeah, you guessed it! RonPaul™
And yet, he had seemed so sane throughout the evening!
Mike Gamecock DeVine @ The Charlotte Observer
www.race42008.com
www.hinzsightreport.com
www.theminorityreportblog.com
"One man with courage makes a majority" - Andrew Jackson
Which some minor hicckups along the way (and some local exceptions) it's true that the US economy has been moving along just fine for over 2 decades. In fact, at lot of attempts to dampen the economic cycle end up magnifying it. As stated below the economy can sort itself out pretty nicely most of the time. However, that doesn't mean you cannot ignore the fact that an overheated labormarket can be a problem of its own for a while.
bit the apple till Jesus comes back (and even then for 1000 years?) and maybe its the remains of having been a democrat for 20 yrs pre-2000 conservative epiphany, but actually, I have been praying for a tight labor market so wages would go up more!
But your point is well taken
Mike Gamecock DeVine @ The Charlotte Observer
www.race42008.com
www.hinzsightreport.com
www.theminorityreportblog.com
"One man with courage makes a majority" - Andrew Jackson
"1. You may not be able to find workers at all. Unemployment is counted over the entire workforce. In a way it's an average. 5% unemployment may mean that all metalworkers are unemployed, but all accountants are in fact having a job. In that case, you have a problem: you cannot hire the metalworkers as accountants. (or vice versa, for that matter)"
You can in the long run. Moreover, as demand increases in various labor markets the supply of workers with the sought after skill will also increase (often very quickly).
"2. You can find workers, but they demand high wages. Ofcourse this is good for the employees, at least in the short run. For business it can be bad, cause your competitiveness may be hurt. If they can pay lower wages 4 counties away, and have lower costs and hence prices over there, customers may place their orders in that county."
High wages can also serve as an impetus for innovation and invention. If an employers is feeling pressure from rising wages he/she has a greater interest in developing/purchasing new labor saving devices for his/her employees, which will of course lead to an increase in demand for labor saving devices. The increased demand for labor saving devices will act as a stimulus for invention and innovation. This stimulus will usually result in increases in standard of living and GDP.
...a long habit of not thinking a thing wrong, gives it a superficial appearance of being right...
---Thomas Paine---
Sorry, I intended to reply to Conservative in Exile.
...a long habit of not thinking a thing wrong, gives it a superficial appearance of being right...
---Thomas Paine---
However, read closer. I acknowledge that over time the problem will be adressed by the influx of workers from elsewhere. I see I wrote out education from an earlier version for the sake of brevity. Ultimately innovation will help a lot too. However, these processes take time. A boom-bust cycle may go a lot faster than the adjustment offered by the normal economic processes. Even the by international standards rather flexible US labormarket still has considerable frictions.
All else being equal, low unemployment is vastly better than high unemployment. However, overheating an already hot market may hurt both in the short and longer run, and to come to the subject of this post, an overheated market can (not will, but can) in fact give employers massive headaches and sow it's own demise.
like we have had since 1983, you have bubbles within certain industries that can never pre prevented except by the kind of measures that would kill the overall economy. The key to our success since 1983 and even since the great depression has been Milton Freidman-like management of the money supply. Esp since 1981. Thanks to reagan giving Volker the green light to kill inflation and Greenspan's generally consistent good policies.
Mike Gamecock DeVine @ The Charlotte Observer
www.race42008.com
www.hinzsightreport.com
www.theminorityreportblog.com
"One man with courage makes a majority" - Andrew Jackson
Bubbles happen. I'm not advocating any interference at all (except perhaps that if the state wants to cut some pork spending, doing so during an overheated market may make it an even better idea than it is already). I do think that journalists (and business owners) may complain a bit along the way without necessarily being biased.
but I doubt we find the scare columns in 1998 when the Clinton economy was booming and wages were rising much faster for a long time.
Mike Gamecock DeVine @ The Charlotte Observer
www.race42008.com
www.hinzsightreport.com
www.theminorityreportblog.com
"One man with courage makes a majority" - Andrew Jackson
Cutting pork could also free up government workers to find better and more productive vocations.
...a long habit of not thinking a thing wrong, gives it a superficial appearance of being right...
---Thomas Paine---
I am agreeing with the pork part, not the journalists part.
...a long habit of not thinking a thing wrong, gives it a superficial appearance of being right...
---Thomas Paine---
Both the growth in GDP and the shrinkage of the national unemployment rate are not anywhere near the levels that would cause the types of problems that you are suggesting.
Questions: Is the US labor market currently at full-employment?
...a long habit of not thinking a thing wrong, gives it a superficial appearance of being right...
---Thomas Paine---
"full employment" is a not so specific term. But most economists think full employment in the US has been around 5-5.5% unemployment from the 1960s until recently. Due to the 1995-present period of low unemployment, there are now academic debates about whether the level of full employment has shifted thanks to technology and lower levels of regulations and taxes since the 1980s reforms.
No matter if the shift has happened, I don't think anyone thinks the line is as low as 4.6%. Thus, we are above full employment currently, but not by a large amount.
______________________________________
Bobby Jindal Saves Louisiana
the past year or so is good evidence for same.
For the unversed, it is near impossible to get below a certain level and down to zero due to transition times between jobs and those slothful individuals that make half hearted occasional forays into the job market by applying for jobs they can't get.
Mike Gamecock DeVine @ The Charlotte Observer
www.race42008.com
www.hinzsightreport.com
www.theminorityreportblog.com
"One man with courage makes a majority" - Andrew Jackson
...a long habit of not thinking a thing wrong, gives it a superficial appearance of being right...
---Thomas Paine---
"Both the growth in GDP and the shrinkage of the national unemployment rate are not anywhere near the levels that would cause the types of problems that you are suggesting."
The national unemployment rate may not suggest this, and I never said so. However, the local situation may be different, and the original article mentioned unemployment rates of 3.4% and even below 3%. That's not the national rate. And as long as it takes time and money for people and/or businesses to move from high unemployment areas to low unemployment regions (if they ever move at all) there will be differences in unemployment rate across states and even counties.
Back to the local rate mentioned in the OP. It more than qualifies, again because people need time to move from one job to another (and are counted as unemployed in between), as well as the fact that a certain percentage of the population may be trying to find a job that gets them included in the statistics, but have are completely unemployable. If unemployment goes below 4%, it's a fair bet that the effects I described are occuring. Below 3%, it's almost a certainty.
"You can in the long run. Moreover, as demand increases in various labor markets the supply of workers with the sought after skill will also increase (often very quickly)."
That depends on the job and skill required. For example it takes between 6-10 years to train a highly skilled biotech worker. Also while someone might move to take a job I doubt many would move to Helena to work as a lifeguard.
There is also the problem that people are not wholly rational. In a pure economic sense your right, people and business migrate around to the best possible location to maximize utility. However a quick look around will show that people rarely if ever do this, especially at the lower end of the economic scale. People will lstay in a town with no jobs and when moving often consider noneconomic factors like economy, climate, etc.
"High wages can also serve as an impetus for innovation and invention. If an employers is feeling pressure from rising wages he/she has a greater interest in developing/purchasing new labor saving devices for his/her employees, which will of course lead to an increase in demand for labor saving devices. The increased demand for labor saving devices will act as a stimulus for invention and innovation. This stimulus will usually result in increases in standard of living and GDP."
Sometimes sure, but not every job can or should be automated. Again, jobs like lifeguard require a human body in a chair watching a pool. Often too the cost could be prohibitive. We have the technology to make a robot that could function as a McDonalds cashier, but the cost is way too high and the public is probably not ready.
Low unemployment, like high unemployment, tends to affect the 'bottom' of the economy, low-skill service type jobs. I have a relative that runs a decent sized janitorial company. He pays a fair wage and employees somewhere around 50 people and is always hiring. Low unemployment is certainly not a boom to him as he has trouble finding people who want to work as janitors. Now, when unemployment gets high he has turn people a way.
Like most things in the economy it’s all about a balance. There needs to be workers available so business can grow but there also needs to be some degree of shortage so competitive forces keep wages reasonably high. Just like economic growth, the stock market, real estate, etc there is such thing as to much of a good thing.
"There is also the problem that people are not wholly rational. In a pure economic sense your right, people and business migrate around to the best possible location to maximize utility. However a quick look around will show that people rarely if ever do this, especially at the lower end of the economic scale. People will stay in a town with no jobs and when moving often consider noneconomic factors like economy, climate, etc. "
Yet, regions with prolonged periods of high unemployment usually have slow or negative population growth. This suggests that people do move to find work. One good example of this is the Mongahalla-Valley in Western PA. This is a region that has had high unemployment since the 1970’s (I am going from memory), and it has also had consistent negative population growth. (See Fayette County, PA). Another good example of a region with both high unemployment and negative population growth is the textile belt of VA. (See Danville, VA)
“Sometimes sure, but not every job can or should be automated. Again, jobs like lifeguard require a human body in a chair watching a pool. Often too the cost could be prohibitive. We have the technology to make a robot that could function as a McDonalds cashier, but the cost is way too high and the public is probably not ready. “
It is not merely a matter of automating a job. Take your life guard example. In recent years better surveillance gear coupled with the use of “jet ski” type water craft have expanded the area that a given life guard can protect. In consequence fewer life guards today can protect the same or larger areas of beaches. Moreover, as wages increase the prohibitive costs of today become less prohibitive and eventually cost effective. Moreover, once introduced into the market a new productivity increasing device will usually see its price decrease.
“Low unemployment, like high unemployment, tends to affect the 'bottom' of the economy, low-skill service type jobs. I have a relative that runs a decent sized janitorial company. He pays a fair wage and employees somewhere around 50 people and is always hiring. Low unemployment is certainly not a boom to him as he has trouble finding people who want to work as janitors. Now, when unemployment gets high he has turn people a way.”
I am not sure if this is germane. It just reiterates the info in the original post.
"Like most things in the economy it’s all about a balance. There needs to be workers available so business can grow but there also needs to be some degree of shortage so competitive forces keep wages reasonably high. Just like economic growth, the stock market, real estate, etc there is such thing as to much of a good thing. "
I do not disagree that extremely high amounts of GDP growth, and extremely low rates of unemployment have adverse consequences. My point is that we are no where near either of these realities.
P.S. Markets will always find a balance.
http://www.census.gov/popest/cities/files/SUB-EST2006_42.csv
http://www.census.gov/popest/counties/files/CO-EST2006-POPCHG2000_2006-4...
http://www.census.gov/popest/cities/files/SUB-EST2006_51.csv
http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?series_id=LAUMT51192...
http://www.bls.gov/ro3/palaus.htm
...a long habit of not thinking a thing wrong, gives it a superficial appearance of being right...
---Thomas Paine---
"Ahh, if we could only go back to the good old days of Jimmy Carter...........
Chance favors the prepared mind"
This all because of that darned BushHitlerHalliburtonCheneyChimp.
A McDonalds owner in Montana had to outsource his drive through order taking. OUTSOURCING!!!!!!!
He had to outsource to a telemarketing company in Texas, proving that Bush is just out to make sure Texas benefits from this huge problem he created.
I'm really good at this, the AP should hire me.