Monday, November 17, 2014

Joe Six Pack Is a Terrible Labor Economist

As David Atkins points out at Political Animal, your average American is very very bad at guessing labor economics figures (but then again so are most citizens of industrialized nations).

Danielle Kurtzleben at Vox has a fascinating article about real unemployment versus perceived unemployment. It turns out that not only Americans but workers all around the world vastly overestimate the number of people who are out of work.In America, people think the unemployment rate is an astonishing 32%, though the official figure is closer to 6% and wouldn’t top 12% even using much more relaxed definitions of “out of work.” Citizens of other countries are similarly wrong about their own unemployment rates. 
Why does this matter? Well, first of all because you’ll be likelier to oppose social welfare programs for the jobless if you believe that one out of every three people isn’t working at all. 
But second, it leads people to believe that the problem is that there aren’t enough jobs, when the bigger problem is that people with jobs are struggling due to low wages. That has an impact, for instance, on immigration policy: no one believes that undocumented immigrants are taking high-wage jobs, so you’ll be likelier to oppose immigration reform if you believe that there just aren’t enough even low-wage jobs, as opposed to that the jobs that exist don’t pay well enough. 
While mechanization, outsourcing and flattening are eliminating industries and jobs entirely, the bigger impact is to flatten wages. This is the first recovery in modern history in which median wage growth has actually fallen.

Now my guess is that Americans are including the number of retired people in these figures, and if this is a guess at how many Americans are considered to be out of the labor force, they're actually both closer to the answer and underestimating it a bit (it's 37.3%, which means Americans are actually better economic ballpark figure guys than people give them credit for.)

The rest of Atkins's stuff holds true however:  median wages have fallen because corporations are hoarding record profits, then complaining about labor costing too much.  The last six years has been the best opportunity ever to shift wealth upwards and that's exactly what's happened.  The richest Americans are super-wealthy, and average Americans haven't seen wages go up in 40 years.

So yeah, "immigrants are going to take our jobs" plays really well in white middle-class America right now.  It's not immigrants, it's the one percent.  And in the end, neither party is willing to take those guys on too much.

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