South By North Strategies, Ltd.

Around The Dial – July 20

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

• Economist’s View wonders what should happen to Fannie and Freddie.
• Free Exchange argues for a “durable solution to the crisis in housing.”
• Marshall Auerback is having a “Summers(s) of Discontent.”
• Robert Kuttner doesn’t want another missed opportunity.

Closing The Nation’s Job Gap

A recent report from The Brookings Institution concludes that the national “economic recovery is not yet on solid footing.” Moreover, the report discusses just how difficult it will be to close the job gap. From the report:

The “job gap” underlying these numbers is daunting. In recent months, on this blog, we described the job gap — the number of jobs it would take to return to employment levels from before the Great Recession, while also accounting for the 125,000 people who enter the labor force in a typical month. After today’s employment numbers, the job gap stands at almost 11.3 million jobs.
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How long will it take to erase this gap? If future job growth continues at a rate of roughly 208,000 jobs per month, the average monthly job creation for the best year for job creation in the 2000s, it would take 136 months (more than 11 years). In a more optimistic scenario, with 321,000 jobs created per month, the average monthly job creation for the best year in the 1990s, it would take over 57 months (almost 5 years).

Job Training Without Jobs

A report in The New York Times considers the limitations of federal job training during a time of extremely weak demand for labor.

“It’s such an ugly situation that job training can’t solve it,” said Ross Eisenbrey, a job training expert at the Economic Policy Institute, a labor-oriented research institution in Washington, and a former commissioner of the federal Occupational Safety and Health Review Commission. “When you have five people unemployed for every vacancy, you can train all the people you want and unfortunately only one-fifth of the people will get hired. Training doesn’t create jobs.”
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Labor economists and work force development experts say the frustration that frequently results from job training reflects the dubious quality of many programs. Most last only a few months, providing general skills without conferring useful credentials in specialized fields. Programs rarely involve potential employers and are typically too modest to enable cast-off workers to begin new careers.
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Most job training is financed through the federal Workforce Investment Act, which was written in 1998 — a time when hiring was extraordinarily robust. Then, simply teaching jobless people how to use computers and write résumés put them on a path to paychecks. Today, even highly skilled people with job experience of two decades or more languish among the unemployed…

This development is not unexpected. In fact, South by North Strategies, Ltd. wrote about the possibility and potential responses in the 2009 report When Any Job Isn’t Enough: Jobs-Centered Development in The American South.

Around The Dial – July 19

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

• The News & Observer reports on population growth in NC.
• Econbrowser asks how the Federal Reserve can fight deflation.
• Rortybomb offers thoughts about the new financial legislation.
• Paul Krugman writes about “the pundit delusion.”
• Free Exchange looks at changes in Chinese wages.

Nine Lives and Counting

Simon Johnson of The Baseline Scenario describes the nine political lives of U.S. Treasury Secretary Tim Geithner.

In modern American life, Treasury Secretary Tim Geithner stands out as amazingly resilient and remarkably lucky – despite presiding over or being deeply involved in a series of political debacles, he has gone from strength to strength.  After at least eight improbably bounce backs, he might seem unassailable.  But his latest mistake – blocking Elizabeth Warren from heading the new Consumer Financial Protection Bureau – may well prove politically fatal.
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With his track record of survival, Geithner and his team apparently feel they can push hard against Elizabeth Warren and give the new consumer protection job to someone closer to their philosophy – which is much more sympathetic to the banking industry.
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Financial “reform” is already very weak.  If Secretary Geithner gets his way on consumers protection, pretty much all of the Democrats efforts vis-à-vis the financial sector’s treatment of customers have been for naught.
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Tim Geithner is sometimes compared to Talleyrand, the French statesman who served the Revolution, Napoleon, and the restored Bourbons – opportunistic and distrusted, but often useful and a great survivor with a brilliant personal career.  In the end, of course, no one – including Talleyrand – proves indispensible.  And everyone of this sort eventually pushes their luck too far.