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Article Artículo

Workers

What the Unemployment Rate Doesn’t Capture

This morning the Bureau of Labor Statistics released its newest jobs figures for the month of October. In the household survey, the unemployment rate fell to 5.0 percent, the lowest rate in over seven years. Perhaps more importantly, the unemployment rate today is now the same as it was at the beginning of the recession in December 2007.

Undoubtedly, this will be cheered as a positive development for the economy, and other things equal, a low unemployment rate is preferable to a high unemployment rate. But, unemployment is only part of the story of a weak labor market. There are other categories of non-employed workers which can be described as follows:

  • Discouraged Workers: Persons who have searched for a job within the past year but not the past four weeks and gave up their search because they were discouraged over their job prospects.

  • Marginally Attached Workers: Persons who have searched for a job within the past year but not the past four weeks. (Discouraged workers are a subset of marginally attached workers.)

  • Persons not in the labor force who would like a job: Persons who haven’t searched for a job within the past four weeks but report to the Bureau of Labor Statistics that they want to be employed.

CEPR and Nicolas Buffie / November 06, 2015

Article Artículo

Economic Growth

Globalization and Trade

The Strong Dollar, Import Competition, and Lost Jobs

Earlier this year, CEPR released a report titled From Recession to Collapse: The Bush Administration and the Over-Valued Dollar. The report shows that the strong value of the dollar during the Clinton-Bush years led to large trade deficits which decreased demand in the economy and resulted in lost jobs.

The economics on this point is pretty simple. A stronger dollar makes imports from other countries cheaper and makes U.S. exports more expensive. So when the dollar strengthens, American producers end up selling less merchandise, leading to job losses in sectors specializing in tradable goods.

However, some media outlets seem to view a strong dollar as a positive. Reporting on the dollar sometimes takes for granted that the term “strong” has a positive meaning and that the term “weak” conversely has a negative meaning.

CEPR and Nicolas Buffie / November 06, 2015

Article Artículo

Another Battle in the War to Get the Losers in Class War to Blame Their Parents

Most young people today are having tough times economically. As we know, the main reason for this fact is that so much income has been redistributed upward over the last thirty five years. (Also, we have a cult of deficit reduction in which our leaders in Washington insist on keeping deficits small even when this means slowing growth and keeping people out of work.) Their parents are not doing notably better, with most approaching retirement with little to support them other than their Social Security and Medicare. The wealth holdings of the middle quintile of households headed by someone between the ages 55–64 averaged $165,700 in 2013. Excluding home equity it was just $89,300. 

But Social Security and Medicare are still something. And the guiding philosophy of many in Washington is that a dollar that is in the pocket of a poor or middle-class person is a dollar that could be in the pocket of a rich person. Furthermore, if they can get the kiddies to complain about their parents' Social Security and Medicare they may not notice all the money that the Wall Street gang, the pharmaceutical companies, and the rest are pocketing at their expense.

Hence we get folks like private equity billionaire Peter Peterson devoting much of his fortune to perpetuate attacks on Social Security and Medicare. The Washington Post has also been a major actor in this effort using both its news and opinion pages to advance the cause. Unfortunately, they appear to have enlisted a relatively new economics reporter, Jim Tankersley, who should know better.

Tankersley used his column to complain that "baby boomers are what's wrong with the economy." He adds in the subhead, "they chewed up resources, they ran up the debt, and escaped responsibility."

He lays out the case in the third and fourth paragraph:

"Boomers soaked up a lot of economic opportunity without bothering to preserve much for the generations to come. They burned a lot of cheap fossil fuels, filled the atmosphere with heat-trapping gases, and will probably never pay the costs of averting catastrophic climate change or helping their grandchildren adapt to a warmer world. They took control of Washington at the turn of the millennium, and they used it to rack up a lot of federal debt, even before the Great Recession hit.

"If anyone deserves to pay more to shore up the federal safety net, either through higher taxes or lower benefits, it’s boomers — the generation that was born into some of the strongest job growth in the history of America, gobbled up the best parts, and left its children and grandchildren with some bones to pick through and a big bill to pay. Politicians shouldn’t be talking about holding that generation harmless. They should be asking how future workers can claw back some of the spoils that the “Me Generation” hoarded for itself."

Dean Baker / November 06, 2015

Article Artículo

United States

Workers

Strong Job Growth in October Pushes Unemployment Rate Down to 5.0 Percent

The Labor Department reported the economy added 271,000 jobs in October. With slight upward revisions to the prior two months data, this brought the three month average to 187,000. This job growth was sufficient to push the unemployment rate down slightly to 5.0 percent. While the employment to population ratio edged up slightly to 59.3 percent, it is still below the 59.4 percent high for the recovery. The labor force participation rate is actually down 0.4 percentage points from its year-ago level.

Dean Baker / November 06, 2015

Article Artículo

The Rationale for High Drug Prices: Incredibly Inefficient Research

Insanely high drug prices have been in the news lately. We are regularly hearing about new miracle drugs like the Hepatitis C drug Sovaldi. Sovaldi comes with an $84,000 price tag for a 3-month course of treatment. Many of the new cancer drugs cost well over $100,000 for a year's dosage. And of course we had the case of Turing Pharmaceuticals, which raised the price of a Daraprim, an old but important anti-infection drug, by 5000 percent. 

These stories of extraordinarily high drug prices are especially painful because they are unnecessary. In almost all cases drugs are cheap to produce. The reason they are expensive is because the government grants them a patent monopoly. (In the case of Daraprim, at the moment Turing is the only licensed manufacturer, even though the drug is off-patent.) Generic Sovaldi is available for just $300 a treatment in Egypt, less than one percent of the U.S. price. Most of the cutting edge cancer drugs would also be available for less than one percent of the U.S. price if they could be sold as generics in a free market.

The rationale for patent monopolies is that the drug companies need high prices to recover their research costs. And, they claim they have very high research costs. According to Joe DiMasi, an economist with close ties to the industry, the research and development costs of the pharmaceutical industry averages almost $2.6 billion for each new drug they produce that is a new molecular entity. (New molecular entities account for only about 15 percent of the new drugs approved by the Food and Drug Administration.)

Patent monopolies are not the only way to support research. There are other mechanisms. For example, the U.S. government spends over $30 billion a year on biomedical research through the National Institutes of Health. There are also various private initiatives that support research.

One such initiative is the Drugs for Neglected Diseases Initiative (DNDI). This is a research network, led by Doctors Without Borders, that was established to develop treatments for diseases that primarily affect poor people in the developing world. It was created in 2002. On their tenth anniversary, DNDI produced a report describing some of their accomplishments. The figure below shows some of the highlights and their price tag and compares them to DiMasi's estimate of what it costs the big pharmaceutical companies to develop a single drug.

Book2 28641 image001

Source: DNDI and DiMasi, 2014.


As the figure shows, DNDI was able to develop ASAQ, a combination drug for treating Malaria, for $17 million. More than 250 million dosages have been distributed since 2007. It developed Fexinidazole, a new drug candidate and new chemical entity, intended to treat sleeping sickness, at a cost of $38 million. DNDI developed SSG&PM, a combination therapy for visceral leishmaniasis at a cost of $17 million. DNDI's entire budget for its first 10 years of existence was $242 million, less than one-tenth of what DiMasi estimates it costs the pharmaceutical industry to develop a single new drug.

Dean Baker / November 06, 2015

Article Artículo

Inequality

United States

Workers

The Problem of Black Unemployment: Racial Inequalities Persist Even Amongst the Unemployed

In October 2009, the unemployment rate peaked at 10.0 percent. That same month, unemployment was 9.2 percent for white Americans and 15.8 percent for black Americans. While unemployment then began falling for whites, the black unemployment rate rose for another five months before it started declining. As of September 2015 the black unemployment rate was 9.2 percent, the same as the white unemployment rate from the peak of the recession.

Much reporting has focused on the fact that unemployment is higher for blacks than for whites. While this is an important point, it actually understates the level of racial inequality in the labor market for a number of reasons. One often overlooked point is that the experience of black unemployment is different than the experience of white unemployment.

This study shows the extent to which racial inequalities persist even amongst the unemployed. By a variety of measures unemployment is likely to be an even worse experience for black Americans than for whites.

CEPR and Nicolas Buffie / November 04, 2015

Article Artículo

Haiti

Latin America and the Caribbean

World

Presidential Elections in Haiti: The Most Votes Money Can Buy

On Monday, Haiti’s Provisional Electoral Council (CEP) announced that the preliminary results of the October 25 presidential and legislative elections, expected to be announced today, would be delayed until Thursday. The delay has been attributed to the formation of a committee by the CEP to investigate allegations of fraud coming from political parties and local observer groups. The committee consists of five members of the electoral council. Of the 162 complaints received, the committee says 43 are being followed up on, though few are placing their trust in the process. 

The elections were praised after there were only a few sporadic outbursts of violence, leading many in the international community to quickly conclude that there were few problems. Just as it had done in August, the Organization of American States (OAS) proclaimed the day after the vote that any problems “did not affect the overall course of the election.” After violence shut down nearly one out of every six voting centers in the August legislative elections, this was apparently the new standard by which to judge the elections.

At least a half-dozen leading presidential candidates have come out before results are even announced to denounce widespread fraud in favor of the government’s candidate, Jovenèl Moïse. The allegations have been wide ranging: replacement of ballot boxes with fakes distributed by ambulances, mass ballot box stuffing, and burning of ballots for opposition candidates. Little proof has been provided to back up these claims. But the most blatant example was there for everyone to see on election day, and was in fact anticipated by electoral officials and international observers.

In Haiti’s elections, political party monitors, called mandataires, are allowed inside voting areas in order to ensure the impartiality of electoral officials and to sign off on the count at the end of the day. In August’s first-round legislative election, these party monitors cried foul, as not enough accreditation passes were printed and only some were allowed in during the vote.

In response, the CEP flooded the parties with passes. In total, over 916,000 were distributed according to the organization’s president, Pierre Louis Opont. Unlike average voters, whose identification must be checked with the electoral list at the polling center where they are registered, monitors are allowed to vote wherever they are present. This became, in many ways, an election of mandataires.

International and local observers have estimated turnout at between 25 and 30 percent, meaning there were roughly 1.6 million voters. With over 900,000 accreditation passes for monitors, and thousands more for observation groups (whose members are subject to the same open voting rules), it means over 50 percent of votes could come from these groups.

All 54 candidates vying for the presidency received more than 13,700 passes, enough to be present at each voting booth in the country. Few, however, had the capacity or the money to actually use them. The result was that parties sold them to the highest bidder in the days leading up to the vote. Local observers said passes were going for as much as $30. By Sunday, they were going for as little as a few dollars.

The system for monitoring the vote had turned into a black market for vote buying, where those with the most money were most able to take advantage. And it was entirely predictable.

Jake Johnston / November 03, 2015