South By North Strategies, Ltd.

When Will Job Growth Happen?

The PBS NewsHour reports on the prospects for the American economy and asks if and when robust job growth will happen.

Around The Dial – Jan. 21

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

• Paul Krugman explains the harm of China’s currency policy.
• The Stash distills the Obama administration’s regulatory worldview.
• Economix describes “the deficit we want.”
• Naked Capitalism asks what the real problem with China is.
• Robert Skidelsky wonders about “life after capitalism.”

The Stalling of Brain Gains

A briefing report from The Brookings Institution uses new data from the Census Bureau to show how the recession has slowed long-distance mobility and the movement of educated young people from one part of the country to another.

In mid-decade, top migration destinations numerically for young adults were interior West growth centers—Riverside, CA and Phoenix—and a mix of economically vibrant places like Houston, Atlanta and Charlotte.
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By the late 2000s, four of the top five mid-decade magnets were replaced.  Austin rose to the lead, and two other relatively vibrant Texas metros, Dallas and Houston, moved up the list. Other rising areas like Denver, Seattle and Portland, tended to be knowledge-based cities with lifestyles attractive to young people.
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Yet rates of gain for many popular metros are generally not as high as in mid-decade and many older Northern and coastal areas continue to hold on to young people who would otherwise be fleeing to opportunities elsewhere.
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The recent more tentative migration patterns of the younger and “best and brightest” segments of our population are holding back the free flow of human and social capital that has made our society more vital and dynamic than most of our developed country peers. This slowdown, in addition to the decline in immigration can be expected to pick up when the economy revives.  But if it takes too long, we run the risk of creating a “lost generation” of young adults, the likes of which we have not seen for some time.

Not The Best Cure

A new briefing paper from the Economic Policy Institute looks at the importance of postsecondary education and explains why more education, by itself, can’t reduce unemployment or inequality.

That being said, the challenge we face with high and persistent unemployment exceeding 9% is not better education and training for those currently unemployed. Rather, we need more jobs. Moreover, the reason we have seen a huge increase in wage and income inequality over the last 30 years is not a shortfall in the skills and education of the workforce. Workers face a “wage deficit” much more than a “skills deficit.”
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Moving forward, our primary challenge is not generating a greatly expanded supply of college graduates because otherwise employers will not have a sufficient number available to them. Rather, we need to provide access to further education (i.e., college completion) for the many working class and minority children who are now excluded from it so they can have a full opportunity to compete for the jobs that require such an education. Greatly expanding the pool of college graduates may help to lessen wage and income inequalities, but it will do so by forcing young college graduates to take jobs with lower pay and benefits than earlier cohorts and by pushing downward the average college graduate’s earnings (especially those of men). Those with advanced degrees will continue to see their salaries rise, but that group is only about a tenth of the workforce and even with rapid expansion its share will only rise slowly.

Around The Dial – Jan. 20

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

• Brad DeLong chimes in on the debate over structural unemployment.
• Simon Johnson points out that the poor didn’t cause the crisis.
• Robert Reich asks what economic lessons China could teach the U.S.
• Robert Shiller defends the role of popular economics.