Deconstructing the Meltdown, National Job Losses by Sector

Here's a look at national employment change in the United States over the past 10 years. Nonfarm employment peaked in the US in December of 2007 at 138.1 million jobs. After a record loss of 598,000 jobs in the last month, we're now at 134.5 million. Thats a loss of more than 3.5 million jobs over the past year. Conveniently, 3.5 million jobs is exactly what Obama administration economists plan to create or save with the stimulus package.

If we cut it by sector, recent job losses in manufacturing, construction, and professional and business services are striking. Over this same time period, we've added roughly 4.5 million jobs in education and health and another 2.5 million in government jobs. Perhaps the president is planning to hire those 3.5 million new employees directly?

If we index each sector back to January 1999, we can begin to see the trajectory of each industry over time. For this chart, the height of each line at a given point of time indicates percent growth over the January 1999 level. The heavy black line shows growth for all sectors.

From here, the dot-com bust is obvious, as is the fact that the information sector has not recovered to pre-2000 levels. Information may be even more trouble in the short term, as that sector includes media and publishing.

The construction employment boom began in mid 2003 and eventually reached more that a 20% premium over 1999 before falling back to mid 2003 levels last month.

Manufacturing has fallen precipitously with this bust, we are now seeing marked declines in other goods-supporting industries: wholesale trade and transportation and warehousing.

Again, institutional sectors of Government (up 12%) and eds and meds (up 30%) lead the way. The other fastest growing sector since 1999? Leisure and hospitality. Staycation, anyone?

Nation Has $445 Billion in Unfunded Health Care Benefits, Nebraska Has None

Nebraska was the 37th State to join the Union, is home to the “Cornhuskers,” and currently has a $3.5 billion budget and a $563 million cash reserve.

In this time of economic hardship, the Cornhusker state has no debt, shunning all long-term financial commitments including retirement benefits.

A recent USA Today survey of state financial reports found that the other 49 states combined “have an unfunded obligation of $445 billion” owed for the medical care of retired government workers.

The formula accountants use to compute the financial health of a state government includes medical benefits, debt and pension liability. Medical benefits represent the Pandora’s Box of the three, with civil servants often retiring before Medicare benefits kick in at 65.

In contrast, Nebraska is the “only state that doesn't subsidize the medical care of retired government employees.”

Other states and local governments have debts that range anywhere from New York City’s $60 billion obligation to Los Angeles’ $544 million sum.

Some state and local governments have begun setting aside money to prepare to pay retiree medical costs. Some plan to pay nearly the entire cost, other will contribute a fixed amount, such as “$200 a month or 50% of the health insurance premium.”

In defending Nebraska’s nonexistent retiree health care coverage, Senator Dave Pankonin distills his state’s approach simply: “Nebraska is a fiscally conservative, pay-as-you-go state, and that’s the biggest reason we don’t have this benefit.” Or, he might have added, deficit.

Does a low number of home staters mean everyone has left?

Last week I took a look at the share of US born residents in each state born in their current state of residence. Some on other blogs wondered if a low share of native born in a state meant that everyone has left or if instead that state is a big lure to out-of-staters. Aside from a few outliers, it seems to be the latter. Take a look at this quick analysis: states with a low share of native born tend to have high net inmigration and states with many born in state tend to have high outmigration.

It makes sense that in tougher times (evidenced by net outmigration) those with deeper roots find a reason to stick around - or maybe they are just tied down.

High net inmigration, low native born states tend to be high in natural amenities (read: mountains) or recent boom states in the west - many of which may have capitalized on the exodus from California. Note that North and South Carolina, Georgia, and Tennessee have similar numbers.

Most interesting is the grouping towards the upper right: states with both above average number of those born in state and positive or near positive migration. Could this signal a return of the diaspora to states like Texas, Kentucky, Alabama, Utah, or even Wisconsin and Pennsylvania?

Business Journalists Blew the Story on the Economy

The business sections of newspapers have become doomsayers for the nation. Sensationalistic journalism decries of the failings and crises that have done our economy irreparable harm.

Rewind to a couple of years ago, and the print media was content with profiles of personable CEOs and pages upon pages devoted to the kitschy Mergers and Acquisitions. Where was the hard-hitting reporting that could’ve opened the public’s eyes to the failing economy much sooner?

“I'll attest that business journalists as a rule are as smart, sophisticated, and plugged-in as they seem”, notes former Wall Street Journal reporter Dean Starkman in a recent article for Mother Jones. And yet that army of professional business reporters – an estimated 9,000 or so nationwide in print alone – for all practical purposes missed the biggest story on the beat. Why?”

Starkman suggests the print industry’s own declining financial health may play a role. In the last decade alone, the New York Times profit margins have fallen from 24 percent to a meager 8.5.The newspaper industry’s failing has also resulted in a 25 percent loss of jobs in the business reporting field alone.

He adds that business journalism’s insistence on clinging to outdated formulas could play a role. The focus on consumer-pleasing and personality-driven stories – “not deconstructing balance sheets or figuring out risks” – seems part of the problem.


The U.S. is Inherently Prosperous

Obama’s $800 billion stimulus bill has both policy makers and the public wondering what the bill will actually manage to stimulate. Yet, somewhat surprisingly, a recent study shows that left to fend for itself, the United States is inherently prosperous.

The Legatum Prosperity Index recently released a study of the most prosperous nations, measuring economic growth and quality of life. The study found that the U.S. – despite its current economic situation – ranks fourth out of 104 nations.

The amount of wealth and sense of well-being enjoyed by U.S. citizens is higher than any among large countries, with no other country with more than 100 million inhabitants ranking above the top 10.

The Index measures nations overall by “how well they foster the practices, institutions, and habits that create competitive economies, stable and free political institutions, and social capital.”

When looking at prosperity in this fashion, America and its ability to foster both economic and non-economic progress is what puts it so high on the scale. The US still rewards innovation and entrepreneurship to an extent seen in few other countries. This opportunistic culture provides the basis for successful growth of commerce even in an otherwise weak environment.

The U.S. bests the other top 10 countries on personal income by 40 percent. It scores 38 percent higher than the rest of the world in its ability to “commercialize innovation through patents.”

On the flip side, the US ranks just 7th in economic competitiveness and below average on promoting international trade and investment. The stimulus bill could offer some jolt to the weak economy, but given access to capital, Americans might prove adept in finding their own path to prosperity.

NGVideo: East St. Louis (Part I)

The first in a series of videos about the economic, political, and cultural history and future of East St. Louis, Illinois.

Part II gives views of downtown today, shows how its history can be seen in the city, and explains why the city could still be a good place for new development.

Michael R. Allen is the Assistant Director at Landmarks Association of St. Louis. He edits the blog Ecology of Absence, "a voice for historic preservation and a chronicle of architectural change in St. Louis, Missouri and its region".

Alex Lotz is an undergraduate film student in his final year at Chapman University.

Wall Street Brain Drain May Not Be All Bad

President Obama’s recent executive compensation plan comes on the heels of the revelation that Wall Street firms awarded over $18 billion in bonuses last year. The plan will create a $500,000 pay cap for executives at companies receiving substantial taxpayer bailout money.

While the Wall Street salary cap – certainly well intentioned – mirrors public sentiment nationwide, the Masters of the Universe and their friends are not so pleased. Some feel it is a “killer for New York.” Kathryn Wilde of the Partnership for New York argues the lower salaries on Wall Street will lead to a “critical brain drain” in the industry and “lower tax revenues for the city and state.”

But in the longer run, is this all bad? The so-called “brain drain” of high priced talent – the same folks who got us in trouble in the first place – could be fortuitous if more creative and innovative professionals now arrive on Wall Street. A new breed of Wall Streeter might have the potential to create a sustainable industry rather than the current casino culture. What may be a superficial wound on NYC in the short term may benefit the country as a whole – and even New York – in long run.

More than Two-thirds of the Nation Still Lives in Their Home State

In which states do folks tend to stay home? Here's a look at Americans still living in their birth states. New York and Louisiana top the list. Upwards of 82% of the US-born residents living in New York and Louisiana were born there. Looking at the map, you can see that the highest numbers reside in the rust belt and northeast. The most transplants tend to live in natural amenity rich western states, except for California.

More than 72% of US born Californians were born in the state. That number is over 74% in LA county, but only about 60% in San Diego. Other high transplant areas include New Hampshire and Vermont in the northeast, and not surprisingly the Washington DC area, Florida, and Nevada.

Only 41.7% of US born Alaskans were born there. I suppose if you are living in Alaska, you've come there for good reason.

Take a look at an extension of this analysis: Does a low number of home staters mean everyone has left?

Percent of Native Population Born in their Current State of Residence
Geographic area Percent Margin of Error
New York 82.1 +/-0.1
Louisiana 82 +/-0.2
Michigan 80.6 +/-0.1
Pennsylvania 79.6 +/-0.1
Ohio 77.8 +/-0.1
Illinois 77.4 +/-0.1
Iowa 75.4 +/-0.3
Wisconsin 75.3 +/-0.2
Massachusetts 74.7 +/-0.2
Minnesota 73.8 +/-0.2
Kentucky 73.6 +/-0.2
Mississippi 73.4 +/-0.3
Alabama 73.2 +/-0.3
West Virginia 72.9 +/-0.3
Texas 72.3 +/-0.1
North Dakota 72.1 +/-0.4
California 71.8 +/-0.1
Indiana 71.4 +/-0.2
Nebraska 69.7 +/-0.3
Missouri 68.9 +/-0.2
Utah 68.5 +/-0.3
Rhode Island 67.9 +/-0.6
South Dakota 67.5 +/-0.5
United States 67.3 +/-0.1
Maine 66.5 +/-0.5
Hawaii 65.6 +/-0.5
New Jersey 65.4 +/-0.2
Tennessee 65 +/-0.2
Oklahoma 64.8 +/-0.2
North Carolina 64.1 +/-0.2
Connecticut 64 +/-0.3
Arkansas 63.8 +/-0.3
South Carolina 63.4 +/-0.3
Kansas 62.7 +/-0.3
Georgia 61.5 +/-0.2
New Mexico 57 +/-0.4
Virginia 56.3 +/-0.2
Montana 55.3 +/-0.5
Maryland 54.6 +/-0.3
Vermont 54.5 +/-0.5
Washington 53.7 +/-0.2
Oregon 50.2 +/-0.3
Delaware 50 +/-0.6
Idaho 48.7 +/-0.4
Colorado 46.9 +/-0.3
District of Columbia 45.5 +/-0.7
New Hampshire 44.4 +/-0.4
Wyoming 43.3 +/-0.8
Alaska 41.7 +/-0.6
Arizona 41.7 +/-0.3
Florida 41.4 +/-0.1
Nevada 27.8 +/-0.4

Source: U.S. Census Bureau, 2005-2007 American Community Survey

A (New) Place to Call Home

A recent survey by Pew Research finds that nearly half of Americans (46%) "would rather live in a different type of community from the one they're living in now," with those living in cities expressing the highest desire to live elsewhere.

Even though many Americans say they are interested in giving somewhere new a try, most of us seem to think that our current communities aren't so bad. According to Pew, over 80% of respondents rated their current community as excellent, very good, or good. The survey also reports that "ideal community type" was not dominated by any one class of place, with 30% preferring small towns, 25% suburbs, 23% cities, and 21% rural areas.

Pew also asked those surveyed about their interest in living in specific big cities. Denver came out on top, with 43% of respondents stating that they would be interested in living in its metro area. Other western cities also fared quite well, with seven of the top ten "popular" cities being located in the west. The remainder of the top ten was made up of southern cities. Cities in the north and east lagged behind in popularity, with the rustbelt cities of Detroit and Cleveland registering the lowest popularity. (8% and 10%)


MC Bailout

Thanks to Steve Bartin for pointing out this hilarious bailout video, which then led me to The Daily Bail, a new site looking at the lighter side of the financial crisis. Stockbroker thuglife? Good stuff.