|Issue of the Day Archive for the ‘Economics’ Category|
According to a Bureau of Labor Statistics report in June 2009, compensation costs for civilian workers increased 0.4%, seasonally adjusted, for the 3-month period ending in June 2009. For businesses, wages and salaries, comprising 70% of compensation, increased 0.4%. Benefit costs, 30% of compensation, increased 0.3%, a feat considering inflation for that time was nearing -2.1% in July. With healthcare benefits costs climbing despite negative inflation, many employers are passing some of the increased cost onto their employees. In fact many employers are increasing the premiums, annual deductibles, and prescriptions co-pays.
Civilian worker’s compensation wages and salaries costs increased 1.8% (compared to a 3.2% increase in June 2008), and benefits costs rose 1.8% (compared to 2.9%) in the 12 months ending in June 2009. Private industry workers fared worse as wages and salaries increased 1.6% (3.1% in June 2008) and benefits cost increased 1.3% (from 2.6% June 2008) over the same 12 months. Public administration wages and salaries, however, increased 3.0% in June 2009 (3.4% June 2008) and benefits cost rose 3.6% (3.5% June 2008) over the same 12 months.
The demand for high school equivalency credentials has increased with the economic downturn reports the American Council on Education. In 2008, the number of adults who took the GED test rose to nearly 777,000, with an improved overall passing rate of 72.6%. The increase continued in 41 U.S. states in the beginning of 2009. Of those states, 22 have increased greater than 10%, with Louisiana and New Hampshire is seeing near 40% jumps in testing. Yet, just as the increases have coincided with the economic downturn, the adult education service has to compete with other social programs for decreased or frozen state budgets. President Obama wants the US to lead the world in the proportion of college graduates by 2020; the GED testing service Interim Executive Director Bruce Briggs states that the GED service will be vital to reach that goal.
The number of test takers has been recovering slowly from the meteoric high the GED service experienced in 2001 of 1.07 million test takers and its subsequent drop to 603,019 in 2002. However, the percentage distribution of GED test takers has remained relativly consistent with the largest group by far consisting of those 19 years old and under, with the 25-29 and 30-34 year olds increasing the most between 2006 and 2007 by 0.3 and 0.6% respectivly.
Enrollment Surge Creates Pressures on Community Colleges
Published Monday, August 3rd, 2009 by Lacey Loftin
Contrary to a system that is based on open admission to higher education all, community colleges now have to contemplate turning away students. The reasons for such a reversal of principle are fueled by the current recession, an enrollment surge greater than the past 2 decades, and tight state budgets. Normally, an economic downturn would boost community college enrollment. Yet, the current recession poses a three sided crush of students who are out of work and looking for a career boost, limited to lower tuition choices by a tighter credit market, and threat of home foreclosure requiring extra income. The tuition for a four year university and a two year community college is drastically different in that private 4-year is $25,143 and public 4-year is $6,585. Community college is less than $2000 on average.
The Obama Administration has planned to add $12 billion to the community college budget over the next decade, yet there is no immediate relief in sight. The most up-to-date information on college enrollment suggests that the growing enrollment is coming from the Hispanic college age population, which increased nearly 4 percentage points to 57.9% between 2005 and 2006. The enrollment by the white population decreased by 4.7 percentage points to 68.5%, and blacks had a -0.2 point change during the same time period to 55.5%.
The volatility of the oil market has many wondering what is fueling the rollercoaster prices at the pump. After last year’s wild run of $145 a barrel high in mid 2008 to $33 a barrel in December, the recent rise of crude oil prices to $67.97 a barrel has some wondering if demand is responsible or market speculation. All reports suggest that demand for crude oil will slip further by 3-4% in the West and 2% worldwide. Instead, experts point to the financial markets as the weak dollar made investors flee and turn to safer staple stocks such as oil and wheat, thus driving those commodity prices up. One of the red flags was the largest rise in monthly oil prices in 10 years as prices surged $11.38 from May 9th to June 9th. Also, OPEC has reduced production, and political and economic unrest have reduced output from other oil production countries like Iran, Venezuela, Mexico, Nigeria and Iraq.
World crude oil production has steadily risen since the early 1980s. OPEC reduced its production of crude oil by nearly half after 1980 whereas Non-OPEC countries continued increasing output.
The news of unemployment may be all around us right now, but what is not really understood is the makeup of the unemployment percentage. The overall number is just that: a composite of different numbers, averaged together, and displayed as a percentage of the overall unemployed among the labor force. For example, “The Labor Force” is just a way of describing us all, blue collar and white collar. Yet, there are those who can withstand recession woes (who can save for a rainy day) and those who cannot (check to check living). What is missing from that single unemployment percentage number is that the recession does not hit everyone equally.
The pre-recession unemployment was at 5% of the overall labor force. Yet, now we are edging on 9.4% unemployment with 5.7 million jobs lost since the beginning of the recession, as May provided 345,000 new jobless claims. Making up a majority of those in the unemployment line are manufacturing and construction workers who tend to be less educated and/or recent immigrants. For minorities such as the black and Latino groups, the Bureau of Labor Statistics states that the rate of unemployment is edging on 20%, leading many to fall instantly into poverty and straining State budgets.
The Rate of Savings Gets a Boost from Frugal Consumers
Published Tuesday, June 2nd, 2009 by Lacey Loftin
According to the Commerce Department, income growth is far outpacing spending as the personnel savings rate skyrocketed to 5.7%, the highest since February 1995. The level of savings has reached $620.2 billion, the most since January 1959. American incomes rose by 0.5%, which follows two straight months of declines. The increase in April is a result of tax cuts and benefit payments from President Obama’s American Recovery and Reinvestment Act. Wages and salaries were flat in April. Consumer spending has increased on services by 0.3% in April, which was up from 0.1% in March. Spending on big ticket items and ‘non-durables’ decreased by 0.6%, yet spending on services increased by 0.3% in April.
In 1952, the national savings level was 8.5 times that of the national level of liabilities, yet that level of savings has not been seen since. In 1968, the ratio trickled to 5.75 times the national liabilities; the rate rollercoastered to 3.15 in 2007. Accordingly, the percentage of Americans who are in debt has risen to 76.4% in 2004. After the new bankruptcy laws in 2005, the number of non-business and business filings was cut by 75% and 50% respectively, yet from 2006 to 2008 the number of filings for both have doubled to 1,074,255 and non-business filings reaching 43,546.
According to the Child and Youth Well-Being Index Project at Duke University, gains made since 1975 in family economic well-being could be endangered over the next few years. The measure of family economic well-being is measured by a combination of poverty rate, median annual income, parental employment and health insurance coverage for children. The report describes a connectivity between the different measures and predicts that more than one out of five American children will live in poverty in 2010, with African-American and Hispanic children experiencing twice the level of poverty.
The United States has remained near the bottom of the industrialized countries in regards to child poverty rates, exceeded only by that of Mexico. The rate of child poverty in the US has in recent years flattened at the rate of 16.9% as of 2007. As for the other measures of the index, the average hourly real earnings for US workers has shrunk to $8.23 an hour (1982 dollars) in 2008. Except for the Asian population, the characteristics of families living in poverty suggest that children are more likely to live with their mother and be impoverished. Plus, since 2000, the number of children enrolled to the SCHIP (State Child Health Insurance Program) has more than doubled from 2000 to 7.145 million in 2007.
Manufacturing’s Slip in Contributions to GDP in 2008
Published Friday, May 8th, 2009 by Lacey Loftin
According the Bureau of Economic Analysis, Real GDP (a macroeconomic measure of the size of the economy adjusted for price changes and inflation) decreased 6.1% between January and March of this year. This follows a decrease of 6.3% in fourth quarter 2008. The slightly smaller decrease in GDP reflected the upturn in consumer spending for goods and a larger decrease in imports. These were offset by larger decreases in inventory investment and in nonresidential structures as well as a downturn in federal government spending. Manufacturing saw a decrease in non-durable inventories, as well as non-motor-vehicle merchant wholesale and retail inventories. Given the timing of the passage of American Recovery and Reinvestment Act of 2009 (ARRA) and the Troubled Asset Relief Program (TARP), it is likely that the effect on the GDP was small, if any, for the first 3 months of 2009.
The contribution by Manufacturing to the GDP has increased at a steady pace since 1991 with only a sharp decrease in 2000-2001. The sector did not resume its rise until 2004; from there it increased slower and rockier than before the 2000 dip. By 2006-2007, while not as sharp as the 2000 decrease, manufacturing began to slow and has decreased from $1618.6 in 2007 to $1574.3 billion in 2008.
Within the American Recovery and Reinvestment Act (ARRA), there are provisions for those who have become unemployed. Here are some of the major benefits now available. According to the ARRA, a new temporary Federal Additional Compensation program that suggests states up the unemployment benefit $25 per week for the period beginning February 22, 2009. States may also extend the number of weeks benefits available from 13 to 20. The average length of unemployment is 22-weeks. The Act also creates a tax break which exempts the first $2,400 of workers’ 2009 unemployment benefits from taxation. As for COBRA health benefits, there are 2 changes. Eligible individuals are now only required to pay 35% of the COBRA premium instead of the full amount. Another change allows beneficiaries to elect coverage under a second special election period, which skirts HIPAA’s pre-existing condition exclusion rules. Older workers will also benefit, as an additional $120 million is earmarked for the Senior Community Service Employment Program, which trains older workers for new jobs. Further, states that modernize their unemployment compensation systems to include those workers who are looking for part-time work will receive federal dollars to compensate.
These are welcome changes as the unemployment rate for the nation has reached, as of March, 7.9% of the eligible workforce. That is a 3.4 percentage point increase from March 2008. Nationally, those who are searching for less than full-time for economic reasons have reached 8.6 million workers according to the Bureau of Labor Statistics. Also, the recession has had an adverse affect on those who are of the age to retire as the rate of those exiting the work force has decreased from 1.6 million to 1.3 million between 2000 and 2008.
According to the Commerce Department, retail sales have decreased 1.1% in March — forecasts ranging from a decline of 0.2% to a gain of 1.2% — which had followed a 0.3% gain in February. “While the March data isn’t enough to make us rethink expectations that the worst is over, it does serve as a reminder that the road out of this recession might be as painful as the recession itself,” said Guy Lebas, chief economist with Janney Montgomery Scott LLC in Philadelphia. Keeping inflation down, prices paid to US producers fell 1.2% after two months of gains. This excludes fuel and food; these were unchanged along with other core prices.
After sharp increases in retail sales, the purchase of durable goods (e.g., cars, computers, furniture) has, since 2007, started to contract to 2005 levels. And non-durable goods (e.g., food, clothing, energy) have sunk slightly on lower sales of gas and clothing. Inflation has hit Americans hard as food prices, though not changed from February to March of this year, have relatively soared, except milk, which is the only product to have decreased in 2008. Also fueling the drop in retail sales is the ever growing ranks of the unemployed, as the jobless rate hit 8.5% as of last week.