State and local job losses threaten recovery

Two years ago, state and local governments began shedding workers as they struggled to balance their budgets. What began as a trickle of job losses is becoming a flood. As the chart shows, a total of more than 300,000 state and local government jobs have been lost since August 2008, with 48,000 payroll jobs cut last month alone. The pace of job loss is accelerating and threatens to overwhelm the meager job gains in the private sector.

Legislation passed the Senate last week to slow this tide of unemployment—$16.1 billion of funding for state Medicaid programs and $10 billion to save education jobs. We estimate that the Medicaid funds will save 158,000 jobs, including police officers, firefighters, and health care workers. But more than half the jobs saved will be in the private sector, including workers who contract for or supply services to state and local governments. The Department of Education estimates that the education funds will save another 161,000 jobs in public schools. These jobs and the funding to save them are desperately needed, and Speaker of the House Nancy Pelosi deserves praise for calling the House back from recess to vote on them.

Older men face longer job searches

This Father’s day, millions of fathers and grandfathers are struggling to find jobs, and data show that the older the man, the longer he is likely to remain unemployed. Long-term unemployment lasting more than six months has reached record levels during the current jobs crisis. Among male workers age 20 to 24, close to one-third are long-term unemployed. That share increases progressively with age. Among unemployed men age 55 to 64, close to half – 49.7% -- have been out of work for more than six months. The Figure shows the portion of long-term unemployed men by age. (Because monthly data are not seasonally-adjusted, percentages were calculated based on a 12-month average of monthly rates of long-term unemployment from June 2009 through May 2010.)

Across all age groups, 39.9% of unemployed men are long-term unemployed. Many of them have exhausted or are at risk of soon exhausting their unemployment insurance (UI) benefits. Unemployed workers are typically eligible for 26 weeks of unemployment insurance, but during the Great Recession, Congress extended that for up to 99 weeks in order to stimulate the economy and strengthen the safety net for millions of long-term unemployed. That extension expired last month, and although the House of Representatives voted in May to maintain extended UI benefits beyond the standard 26 weeks, the Senate has not yet voted on the extension. As a result, by the end of June, well over one million jobless workers will have lost their unemployment insurance coverage.

On net, the economy is in recession

http://www.epi.org/economic_snapshots/entry/webfeatures_snapshots_archive_09052001

A weekly presentation of downloadable charts and short analyses designed to graphically illustrate important economic issues. Updated every Wednesday.

Snapshot for September 5, 2001.

On net, the economy is in recession
Investment in computers, software, and other types of IT (information technology) played an increasingly important role in the growth of the economy over the 1990s boom. Such investment accounted for 19% of the growth in gross domestic product (GDP) between 1995 and 2000. Yet, as the figure below reveals, the increasing importance of IT has an unrecognized downside: faster depreciation.

The figure shows quarterly annualized growth rates of real GDP and net domestic product (N

DP ) -- GDP minus depreciation -- over the past few years. The level of NDP is, of course, lower than GDP at any point in time, but until the 1980s these two measures grew at almost exactly the same rate. As computers and software came to be more important in the economy, GDP growth began to exceed NDP growth by between 0.2 and 0.3 percentage points annually.

This gap, however, expanded in the recent boom, as the share of IT software and equipment in total investment grew rapidly. Over the past year, the gap has become quite large, with real NDP down by 0.1% from its year-ago level, while real GDP has grown by 1.2%. In the last quarter, real NDP was solidly in the red, falling by 1.3%, while GDP grew 0.2%. Thus, by this measure, which arguably more accurately reflects the value of goods and services available for use, the economy already appears to be in recession.

This week's Snapshot by EPI economist Jared Bernstein and EPI research associate and co-director of the Center for Economic Research Dean Baker.

Check out the archive for past Economic Snapshots.