The Private Sector’s Doing Just Fine

From The Big Picture (Barry Ritholtz)

A list of middle-class miseries by economist David Rosenberg (as told by Anthony Mirhaydari)

• Forty-five million Americans (one in seven) are on food stamps.

• One in seven is unemployed or underemployed.

• The percentage of those out of work defined as long-term unemployed is the highest (42%) since the Great Depression.

• 54% of college graduates younger than 25 are unemployed or underemployed.

• 47% of Americans receive some form of government assistance.

• Employment-to-population ratio for 25- to 54-year-olds is now 75.7%, lower than when the recession “ended” in June 2009.

• There are 7.7 million fewer full-time workers now than before the recession, and 3.3 million more part-time workers.

• Eight million people have left the labor force since the recession “ended” — adding those back in would put the unemployment rate at 12% instead of 8.2%.

• The number of unemployed looking for work for at least 27 weeks jumped 310,000 in May, the sharpest increase in a year.

• Just 14% of high-school graduates believe they will have a more successful financial future than their parents.

• The male unemployment rate for ages 16 to 19 is 27%; for ages 20 to 24, it is 13%.

• Because of structural problems such as negative home equity (which keeps people from moving for work) and skills erosion (from long-term unemployment), UBS economists estimate that the economy’s natural unemployment rate has increased from 5.7% before the recession to 8.6% now. This acts as a speed limit on potential economic growth.

• Between 2007 and 2010, median family net worth fell nearly 40%, while median inflation-adjusted incomes before taxes fell nearly 8%.

http://money.msn.com/investing/washington-vs-the-middle-class-mirhaydari.aspx?page=0

In the meantime, the American manufacturing sector continues to become less labor-intensive. Despite the quintupling of its output since 1960, manufacturing has shed roughly three million jobs. In fact, multinational companies have found they can distribute the various parts of their operations in the countries that suit them best: manufacturing in countries with copious cheap labor, customer service in countries with low-wage English speakers, back office in countries with an underpaid but educated professional class, and headquarters in a tax haven. This trend will continue, and the question will echo again from the point of view of the American worker: what will I do to make a living ten, twenty, or thirty years from now?

Daniel Altman

Outrageous Fortunes