Posted on 09/04/2009 4:04:34 PM PDT by Captain Kirk
The U.S. rate of unemployment has been rising since March 2007, when it stood at 4.4 percent. In 2007 it rose slowly, then in 2008 and 2009 much more quickly. In August 2009 it reached 9.7 percent. The increase in unemployment represents for most people the most troubling aspect of the current recession.
However, during the past year, so much attention has been focused on the financial debacle in its various dimensions, and on the Fed’s and the Treasury’s efforts to deal with it, that the growing unemployment - now amounting to approximately 15 million persons - has become almost a footnote to the welter of troubles besetting the economy, and the labor market itself has received relatively little attention. Of course, the government’s “stimulus” spending programs purport to be aimed at restoring employment, and, if we subscribed to vulgar Keynesianism, we might expect them to do so.
Sound economists know, however, that, as some of them like to say, the labor market clears in the labor market, not in the product market or the bond market. When we seek to understand changes in the volume of employment (and by loose implication, the amount of unemployment), we are well advised to pay closest attention to what is happening in the labor market.
When we shift our gaze there, we behold an interesting, almost totally neglected, yet critical fact: while unemployment has been rising steadily, the real hourly wage for all workers employed in private industries has also been rising. According to the Bureau of Labor Statistics, the average hourly earnings of workers in all private industries rose from $17.23 in March 2007 (when the rate of unemployment was 4.4 percent) to $18.59 in July 2009 (when the rate of unemployment was 9.4 percent).
(Excerpt) Read more at hnn.us ...
You meant “Rate,” Jim.
I make plenty of mistakes but not in this case. The headline is “real wage.”
More and more, stories like this come out, I firmly believe that NO ONE has even the foggiest clue what is really happening. They are in a room somewhere reading tea leaves and chicken bones...
The minimum wage hike contributed both to unemployment and to wage inflation.
Ah, yes. I see. I posted from the hip.
I’m a professional (much to my regret) of posting from the hip.
We also had a minimum wage increase. The federal minimum wage is $7.25 per hour effective July 24, 2009, the third raise in three years. In July 2008, the minimum wage increased to $6.55 per hour. And in the Summer of 2007, it went to $5.85 from $5.15.
I know it’s only anecdotal evidence, but every company I’ve interacted with in the last 18 months has had wage cuts, furloughs and large scale layoffs. The only wages growing seem to be those being supported by taxpayers.
Yes, this may be true, but what is happening in the public sector? Would bet the increase is even larger.
I don’t think it is surprising. I also don’t think you can read anything into this, not without a LOT of analysis.
See, people are being laid off. If more people below the median income are laid off than people above the median income, the median income will INCREASE as unemployment gets worse.
When employment starts rising, you will see the median income drop. If a republican is in the white house, the lefties will say this is a bad thing. But it is expected. When people get jobs back, they tend to be lower-paying jobs, below the median, which means the median income will drop.
For example, last month 150,000 teenagers lost their jobs. Most of them were probably making minimum wage, and most probably were fired because of the minimum wage increase.
But since they are gone from the average, the median income would go up.
And that probably increased the median income, but not how you think. Companies fired teenagers when the minimum wage went up, which dropped 150,000 below-average-pay workers from the wage pool. That raises the average wages.
I think you’ve nailed that spin.
What I observe are employees being cut back to a remaining “hard core” of those who can not be let go without deeply damaging the business, productivity and work flows. Most of these employees make more per hour, with more senority.
However, this remaining core is burned out, scared and overworked. I’m seeing a lot of frazzled people out there, at the end of their ropes.
I’ve heard anecdotal evidence of that, but the statistics say the average workweek is only 33 hours, which would suggest that employers have not greatly increased the hours of their remaining employees.
I don’t have a lot of first-hand information, as I live in Northern Virginia, with it’s public employment.
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