Every Month a CPEG member will be posting a brief issue analysis for discussion and comments. This month’s discussion piece was authored by CPEG member Ron Baiman, with additional commentary from CPEG member Mel Rothenberg. More information about both can be found in the “About Us” section of our site.
One of our premier cities, sitting at the center of the industrial heartland, once a symbol of democracy, upward mobility, racial integration, a growing and vibrant middle class, and opportunity and a better life for immigrants from all over the world, has gone bankrupt. The cause has been obvious for at least three decades: massive de-industrialization, free-trade, union busting, white flight and suburban sprawl, deregulation, and “Financialization.” Similarly, for the same reasons, the Illinois economy, the largest and most important in the Midwest, has been in a downward spiral for decades.
The BLS labor market bulletin for July reports total non-farm employment increased by 162,000 jobs and the unemployment rate inched down to 7.4 percent (down 0.2 percentage points from 7.6% in June). A closer look at the fine print of the gross statistics reveals that structural problems remain.
The report includes a downward revision of 26,000 from the previously reported May (175,000) and June (195,000) jobs’ totals. Thus the reported 162,000 jobs gain is in fact 13,000 below a 3 month average of 175,000.
Part of the drop in unemployment is accounted for by drop outs from the labor market (the so-called discouraged workers). The labor force participation rate declined 0.1% (from 63.5 to 63.4%), while the portion of the population employed remained at 58.7%. So despite the decline in the unemployment rate the number of workers unable to find work increased and no new jobs were created relative to the size of the working age population.
CPEG’s Dr. Bill Barclay testified recently before the Illinois Pension Conference Committee regarding the state’s underfunded pension plan. Dr. Barclay’s solution-focused testimony included a presentation on a Financial Transactions Tax, a Graduated Income Tax, and Closing State Tax Loopholes, all of which would provide revenue solutions to aid Illinois’ ailing pension plan without punishing the public employees who earned those benefits after years of service to the state.
Video of the testimony can be found here. Dr. Barclay’s presentation begins at the one hour 29 minute mark.
The accompanying powerpoint presentation can be downloaded here.
The June unemployment situation, as depicted by the Bureau of Labor Statistics in its July 5 report, looks like May redux: Unemployment rate stuck at 7.6%; number of persons unemployed stuck at 11.8 million; number of persons unemployed for at least 27 weeks stuck at about 4.3 million or 36.7% of all unemployed persons. Even the increase in the number of persons employed (195,000 vs. 175,000 in May) was far too small to force a change in the long term trajectory of job creation, which has averaged 182,000 per month over the last year.
This Lesser Depression has, indeed, been devastating, especially for the less educated, for African Americans, and for Latinos. After 4 full years of economic “recovery” the number of unemployed persons is still 5 million greater than it would be if the unemployment rate had dropped by now to its eve-of-Lesser Depression low of 4.4% (May, 2007.) And it should be noted that 4.4% unemployment is higher than its historic lows and probably does not represent “full employment.”
On July 3rd, CEPG’s Ron Baiman provided testimony before a group of Illinois lawmakers serving on a special Pension Conference Committee regarding the state’s underfunded pension plan.
Baiman presented findings in collaboration with research from CPEG’s Bill Barclay regarding potential solutions to Illinois’ structural revenue problem including closing huge tax loopholes, a financial transactions tax, and a graduated individual income tax. The powerpoint referenced in the video can be downloaded here.