South By North Strategies, Ltd.

Job Openings In September

From the Economic Policy Institute’s analysis of the September version of the Job Openings and Labor Turnover Survey (JOLTS) …

By comparison, in December 2000 the job-seeker’s ratio was 1.1-to-1. Furthermore, the highest this ratio ever got in the early 2000s’ downturn was 2.8-to-1. September marks just over three years in a row that the job-seeker’s ratio has been at or above 3-to-1. Put another way:  We’ve been above the highest level of job seekers to jobs reached in the early 2000s’ recession for the last three years. And we’ve been substantially above 4-to-1 for the last two years and nine months. A job-seeker’s ratio of more than 4-to-1 means that for more than three out of four unemployed workers, there simply are no jobs. Because the job-seekers ratio has been above 4-to-1 for this long—two years and nine months or 143 weeks—the extended unemployment insurance benefits, which last a maximum of 99 weeks, remain crucial.

Around The Dial – November 9, 2011

Economic policy reports, blog postings, and media stories of interest:

• Paul Krugman weighs in on debates over energy policy.
• Annette Bernhardt explains the “recovery” in low-wage work.
• Felix Salmon points out Timothy Geithner’s seemingly odd idea of justice.
• Ari Berman highlights “the war on government workers.”
• Free Exchange doesn’t think young people today are so silly.

Democracy And The European Crisis

Crooked Timber considers the impact that the European Union’s “democracy deficit” is having on its response to the economic crisis.

… European politicians have preferred to integrate by stealth rather than public debate. But they cannot do that any more. They have tried repeatedly, and failed repeatedly, to treat the rolling crisis as another, albeit much more complicated, technocratic problem, which can be solved through the usual kind of technocratic solution. As they started to do this, European Union governance shifted from the so-called “Community method” (under which decisions were taken by rough consensus among the member states, with the Commission acting as a kind of neutral buffer), to Angela Merkel’s Union method in which the member states were supposed to take decisions on their own. This in turn hasn’t worked out very well (Germany and France disagree on quite a lot), leading to the effective governance of the European Union by the European Central Bank (what might be called, for all its perplexities, the “ECB method”). Each of these steps has led to an ever greater remove between actual decision making and democratic control. But, when you are asking people to accept a fundamentally different way of ordering politics than the one that they are used to, lack of democratic input is a problem. What is being debated at the moment is not a technocratic fix to Europe’s problems of economic stability. It is a long term set of institutional arrangements which, if they succeed, will shape Europe’s politics for generations to come, and if they fail will likely take the world economy down with them.

Extending Unemployment Insurance Benefits

The Economic Policy Institute estimates that an extension of the long-term unemployment insurance benefit program set to expire at the end of 2011 would help save or create 560,000 jobs and preserve or generate $72 billion in GDP through the end of 2012. From the analysis …

Spending $45 billion on unemployment insurance extensions in 2012 would increase GDP by an estimated $72 billion, raising our $15.2 trillion GDP by roughly 0.5 percent. This increase in economic activity translates into roughly 560,000 payroll jobs. In other words, extending the federally funded unemployment insurance extensions through 2012 would not only extend a lifeline to the families of millions of long-term unemployed workers, it would also generate spending that supports well over half a million jobs. If this program is discontinued, the economy will lose these jobs.

The study also weighs in on the issue of whether the benefit extension would cause some people not to seek work.

Is it possible that continuing the UI benefit extensions could weaken the labor market by providing a disincentive for UI recipients to return to work? The answer is a very clear “no.” In the most careful study to date on the effects of UI extensions on job searches in the Great Recession, Jesse Rothstein (2011) finds that the unemployment rate in December 2010 would have been about 0.3 percentage points lower if UI benefits had not been extended. The unemployment rate that month was 9.4 percent, up from 5 percent in December 2007, an increase of 4.4 percentage points. Thus, he finds that a very small fraction—0.3 out of 4.4—of the increase in the unemployment rate during the Great Recession and its aftermath can be attributed to the UI benefit extensions. Furthermore, Rothstein shows that at least half of the extension-induced increase in the unemployment rate is due to the fact that workers who receive UI benefits are less likely to give up looking for work. His estimates suggest that less than 0.2 percentage points of the 4.4 percentage point increase in the unemployment rate in the three years from December 2007 to December 2010 was due to an extension-induced reduction in the rate at which workers get a new job.

Around The Dial – November 8, 2011

Economic policy reports, blog postings, and media stories of interest:

• Jan-Werner Mueller wonders “what does Germany want?”
• Jared Bernstein describes “warning signs” of diminished income mobility.
• Ezra Klein mulls what went wrong with the Obama administration’s economic policy.
• Robert Kuttner is not wild about the Super Committee.
• Nancy Folbre asks “who rules the global economy?”