Kevin Drum

Plenty of Jobs, Not Enough Workers?

| Mon Aug. 9, 2010 12:33 AM EDT

The Wall Street Journal reports that even with unemployment at 9.5%, employers are having trouble finding workers:

In Bloomington, Ill., machine shop Mechanical Devices can't find the workers it needs to handle a sharp jump in business. Job fairs run by airline Emirates attract fewer applicants in the U.S. than in other countries. Truck-stop operator Pilot Flying J says job postings don't elicit many more applicants than they did when the unemployment rate was below 5%.

Sounds puzzling. Unless you read the rest of the story. The truck stop job, it turns out, pays minimum wage. The airline job requires you to move to Dubai. And the machine shop company pays only $13/hour but requires people with very specific skills. When they set up a ten-week training course of their own, they got plenty of applicants and 16 out of 24 graduated. But apparently we've gotten to the point where blue collar employers are barely willing to invest even ten weeks in training new workers for high-skill entry level positions.

There seems to be a common disconnect in stories like this. On the one hand, as the Journal notes, there really is some evidence that employers are having difficulty finding workers:

Since the economy bottomed out in mid-2009, the number of job openings has risen more than twice as fast as actual hires, a gap that didn't appear until much later in the last recovery....If the job market were working normally — that is, if openings were getting filled as they usually do — the U.S. should have about five million more gainfully employed people than it does, estimates David Altig, research director at the Federal Reserve Bank of Atlanta. That would correspond to an unemployment rate of 6.8%, instead of 9.5%.

....Researchers at the Federal Reserve have estimated that [unemployment] benefits could account for between 0.4 and 1.7 percentage points of the unemployment rate. That doesn't cover the 2.7-percentage-point gap between the current jobless rate and what Mr. Altig's analysis of job openings suggests the rate should be.

But on the other hand, the examples they come up with are pretty lame. So what's up? Even if there's a shortage of high-skill workers, that's a long-term problem, not something caused by the recession. In fact, as the chart accompanying the story shows, the number of high-skill job openings has declined since 2008. At the very least, then, companies should be having an easier time — slightly easier, anyway — filling their open positions unless either (a) they've lowered their wages or (b) high-skill workers are literally retiring en masse. Whatever it is, something doesn't quite add up here.

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Quote of the Day: The Future of Schools

| Sun Aug. 8, 2010 12:39 PM EDT

From Berkeley professor Michael O'Hare, promoting the value of online pedagogy:

All the research I’ve seen indicates lectures are really lame devices for retention or any real learning. If the ego boost for the prof of having a roomful of students listening to him for ninety minutes twice a week is important, let’s find a cheaper way to deliver it, maybe with medals or parking spaces.

Or jetpacks. Weren't we supposed to have jetpacks by the time all this primitive face-to-face learning stuff became obsolete?

Is Paul Ryan a Flimflam Man?

| Sat Aug. 7, 2010 7:42 PM EDT

Paul Krugman says Rep. Paul Ryan is a flimflam man because he claims his Roadmap would cut the federal deficit. The problem is that although the CBO scored his spending cuts, they didn't score his tax plan, and when the Tax Policy Center took a look at it they concluded that his plan would reduce taxes a whole bunch, thus creating a considerably larger deficit than Ryan says. Megan McArdle pushes back, explaining that it's the JCT that scores tax plans, not the CBO:

As a matter of fact, Paul Ryan is willing to work on the revenue side. And he has explained this — on his web site, in February, when these complaints were first aired.

....My recollection is also that Paul Ryan couldn't get the JCT committee staff time anyway because they were a wee bit busy doing all the forecasts for health care reform....At any rate, the answer to Paul Krugman's question "Why didn't he ask" is that "He did, and they said no."

While I remain skeptical that anything like the Roadmap is politically possible, Paul Ryan is doing exactly what any sensible congressional sponsor with limited access to CBO time does; he's saying "Well, when this is getting close to being an actual bill, we'll work with the CBO and the JCT to tweak the tax rates in order to provide the amount of revenue we need." This is entirely normal.

Well....OK. Up to a point. But look: Ryan surely has some responsibility to make the tax side of his plan as realistic as possible, especially given his chosen role as toughminded truthteller. And the Tax Policy Center made it pretty clear months ago that he wasn't even close to his revenue goal. It's easy to wave this off as requiring mere "tweaks" to the tax rates, but those tweaks are exactly the place where anyone would quite reasonably be most suspicious of Ryan's willingness to play fair. After all, two or three points of GDP is a lot of money, and a tax skeptic like Ryan is going to have a very hard time making the changes necessary to come up with that kind of dough.

Ryan's Roadmap is 70 pages long and obviously the result of a lot of work. So why not put in a little more work and bring the tax side of the plan into the realm of reason? Is it really that cynical to think it's because he's trying to get credit for being a deficit fighter without having to give up the dramatic tax cuts for the rich he so obviously has his heart set on?

The Latest on Bell

| Sat Aug. 7, 2010 2:42 PM EDT

I've been remiss in keeping you up to speed on the almost comically egregious self-dealing at the city of Bell. The city manager (salary: $800K), asst. city manager (salary: $400K) and police chief (salary: $500K) are gone, but it turns out there's more!

The city's director of administrative services, Lourdes Garcia, was earning $422,707, and the director of general services, Eric Eggena, earned $421,402, officials said. Those amounts include salary, deferred compensation and some benefits, which city officials did not fully detail. In addition, Bell's director of community services, Annette Peretz, earned $273,542, a deputy city engineer earned $247,573, the business development coordinator earned $295,627, a police captain earned $238,075 and a police lieutenant earned $229,992. Their names were not immediately released.

This was all in the midst of rising taxes because, you know, the city was hurting for cash. And what were all these high-paid geniuses doing? Check it out:

The small and cash-strapped city of Bell is on the hook for a $35-million bond debt that voters didn't approve — and that the city can't afford to pay off, The Times has learned.

The debt, which Bell took on three years ago to buy land near the 710 Freeway, is more than twice the size of Bell's annual operating budget. Come November, the city could lose the land to foreclosure. The city's hope to profit from the purchase fell apart in 2008 after city officials failed to conduct basic environmental reviews.

....In October 2007, East Yard Communities for Environmental Justice, a citizens group that tries to blunt the effect of industrial pollution on the 710 corridor, filed suit against the city and the railroad....In July 2008, Los Angeles County Superior Court Judge James C. Chalfant agreed; he scolded Bell officials for ignoring their obligations under the California Environmental Quality Act. "The whole idea of CEQA is that you are supposed to prepare your environmental review before you enter into the lease with the railroad," the judge said. The law "is supposed to be followed for a project. They didn't do anything."

Nice work, overpaid officials! I know the DA is looking into whether the law was broken when the city council and the city managers all agreed to raise each other's salaries to the moon, but if it turns out there's no applicable law I'd be willing to just make one up.

Real Housewives of the Oval Office

| Fri Aug. 6, 2010 11:01 PM EDT

Michelle Obama's vacation in Spain is causing jaws to drop and tongues to wag:

A quiet holiday in a lavish Spanish villa for the first lady and her daughter has turned into a bit of a headache for a White House trying to battle bad economic news at home.

....The first lady is paying for her own room, food and transportation, and the friends she brought will pay for theirs as well. But the government picks up security costs, and the image of the president’s wife enjoying a fancy vacation at a luxury resort abroad while Americans lose their jobs back home struck some as ill-timed. European papers are having a field day tracking her entourage, a New York Daily News columnist called her “a modern-day Marie Antoinette” and the blogosphere has been buzzing.

Now see, that's why Americans preferred the down home common sense of the Bush family. Laura didn't go gallivanting off with her friends and a squad of Secret Service agents every year, she just joined George for quiet getaways clearing brush at the ranch in Crawf — oh, wait. What's that? She didn't?

Laura Bush took solo vacations without her husband each year of George W. Bush’s presidency, likewise traveling with her Secret Service detail on a government plane to meet friends for camping and hiking excursions to national parks. But it never generated the sort of furor Mrs. Obama trip’s is causing, at least in part because visiting national parks in the United States is not as politically sensitive.

Uh huh. That's it. Laura's vacations generated no furor because "visiting national parks in the United States is not as politically sensitive." I imagine that partisan cranks will try to gin up some other reason that no one made a fuss over her vacations, but you can't take these special pleaders seriously. Laura just had the good sense to visit places that weren't as politically-wink-wink-nudge-nudge-sensitive. Facts are facts.

Friday Cat Blogging - 6 August 2010

| Fri Aug. 6, 2010 3:05 PM EDT

Every week it's the same old thing: pictures of the cats' faces. But what about the rest of them? Well, here you go: some nice artsy photos of Inkblot and Domino from the back. The one on the left somehow reminds me of an Andrew Wyeth painting. Let's call it Domino's World. The one on the right is more like — I dunno. Some Ansel Adams photograph? Maybe Moonrise Over Inkblot. Except it's actually a sunset. But I bet you guys can come up with something a lot better.

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Quote of the Day: Geese and Ganders in the Senate

| Fri Aug. 6, 2010 2:50 PM EDT

From Sen. Sheldon Whitehouse (D–RI), who decided not to push through the nomination of a Rhode Island judge after Republican senators had all left town even though Republicans had declined to give him the usual home state deference on proceeding with a vote:

It is frustrating to be in this position of holding myself back out of respect for the traditions and courtesies of the Senate when I feel that at the moment I’m on the losing end of a violation of the courtesies and traditions of the Senate.

Ladies and gentlemen, the U.S. Senate, greatest deliberative body etc. etc.

Will Our Kids Be Better Off Than Us?

| Fri Aug. 6, 2010 1:51 PM EDT

Peggy Noonan's weekly attempts at sounding both deeply wise and gravely troubled have about the same effect on me as nails on a chalkboard, so I don't usually read her columns. But I did today, and this passage struck me:

The country I was born into was a country that had existed steadily, for almost two centuries, as a nation in which everyone thought — wherever they were from, whatever their circumstances — that their children would have better lives than they did....Parents now fear something has stopped....They look around, follow the political stories and debates, and deep down they think their children will live in a more limited country, that jobs won't be made at a great enough pace, that taxes — too many people in the cart, not enough pulling it — will dishearten them, that the effects of 30 years of a low, sad culture will leave the whole country messed up.

The reason it struck me is that I agree but — unsurprisingly — for an entirely different reason than Noonan's. It's not high taxes (which are lower than any time in recent history) or social changes (which have been overwhelmingly positive) that bother me, it's the fact that we increasingly seem to be led by a social elite that's simply lost interest in the good of the country. They were wealthy 30 years ago, they've gotten incomparably more wealthy since then, and yet they seem to care about little except amassing ever more wealth and endlessly scheming to reduce their tax burdens further. Shipping off our kids on a growing succession of costly foreign adventures is OK, but funding healthcare or unemployment benefits or economic stimulus in the midst of a world-historical recession is beyond the pale.

So yeah: when Noonan says of our political leaders, "I think their detachment from how normal people think is more dangerous and disturbing than it has been in the past," I agree. But where she sees social breakdown and anomie, I see something more like the patrician thugocracy of Rome, dedicated to ever more sybaritic pleasures and blithely willing to suck the marrow out of the vast middle class in order to get it.

Apocalyptic? Yes! What's more, Scott Winship says our entire premise is wrong: polling suggests that parents still think their kids will have it better than they do. He's got a raft of polling results to back this up, and they roughly show that in good economic times parents are optimistic about their kids' future and in bad times they're pessimistic. Not exactly a startling result. And since we're in the middle of some very bad economic times, the Pew result above, showing that only 46% of parents think their kids will be better off than they are, is unsurprising.

But Scott's results only go back to the early 90s, and they bounce around a fair amount (the average seems to be around 55%). What I'm more curious about is what this looked like in the 50s, 60s, and 70s. Was optimism about our kids' futures substantially higher then? Or has it bounced around at 55% during the entire postwar period? Any polling gurus out there know if there's an outfit that's been asking this question for a long time and has decade-long trends to show us?

UPDATE: I should probably be a little clearer here about what I myself think. Will our kids be better off than us? Almost certainly. Will they be a lot better off — as they should be given the likely economic growth of the next few decades? That I'm not so sure about.

The Future of the Supreme Court

| Fri Aug. 6, 2010 12:20 PM EDT

Elena Kagan was only barely confirmed to the Supreme Court yesterday, continuing a recent trend of court picks becoming ever more partisan. Jon Chait comments:

Kagan’s meager tally is five fewer than Sonia Sotomayor last year, 15 fewer than John Roberts got in 2005 and pales in comparison to the 96-3 coronation of Ruth Bader Ginsburg in 1993. That trend has many legal observers lamenting a Supreme Court confirmation process on a steady trajectory toward complete polarization and a seemingly inevitable filibuster.

....And this has all taken place in a landscape where Obama has merely been replacing liberal justices with other, possibly less liberal, justices. Can you imagine what will happen if one of the five conservatives retires on Obama's watch? It's entirely possible that Senate Republicans will simply refuse to confirm any more justices, period.

So what happens if this becomes institutionalized? It means that no president with a Senate controlled by the opposite party will ever be able to place someone on the Supreme Court. So then what? Perhaps the new norm will become automatic recess appointments without even the pretense of a Senate hearing. And since recess appointments only last through the end of a president's term (assuming he continually reappoints his candidates at the beginning of each new Congress), this would place a premium on justices resigning only when a congenial president is in office (already a well accepted norm) and doing it early in his first term in order to give the new folks at least seven or eight years on the bench. Keep this up for a couple of decades, and you'd essentially end up with a system in which incoming presidents replaced virtually the entire court during their first year.

Needless to say, no one would like this system much. But it's the inexorable end game unless something changes. So perhaps some change is in order?

Senate Norms Take Yet Another Hit

| Fri Aug. 6, 2010 11:48 AM EDT

Xinhua/zumapress.comXinhua/zumapress.comPeter Diamond, one of Barack Obama's nominees for an empty Fed seat, was "sent back" by the Senate yesterday. But what does that mean, anyway? BusinessWeek explains what happened after Diamond was approved last week by the Senate Banking Committee:

Under Senate rules, all nominations that aren’t completed before a lengthy recess go back to the White House and have to be resubmitted unless the Senate unanimously agrees to hold onto them and act later, Stewart said. Routinely, the Senate does agree to retain the nominations.

If a single senator objects, the name goes back to the president’s office. In Diamond’s case, at least one senator did that. Stewart said he didn’t know the identity of the lawmakers.

Italics mine. So yet another Senate norm gets tossed on the ash heap of history. Nice work, Republicans. As an aside, note that the "Stewart" in the passage above is Don Stewart, a spokesman for Senate Republican Leader Mitch McConnell, and the proposition that he doesn't know who held up Diamond's nomination is pretty unlikely. It was Richard Shelby, the increasingly cranky senator from Alabama who, as near as I can tell, is still nursing a farrago of grievances over the fact that Senate Democrats weren't willing to capitulate completely to his notions of how the financial reform bill should have looked. His reason for opposing the noted MIT economics professor? "I do not believe the current environment of uncertainty would benefit from monetary policy decisions made by board members who are learning on the job," Shelby said mysteriously, and it's true that Diamond isn't an expert on macroeconomics — though Wikipedia tells me that he is an expert on government debt and capital accumulation, capital markets and risk sharing, optimal taxation, search and matching in labor markets, and social insurance. In any case, last night I decided to go to bed rather than investigate this further, but today Matt Yglesias provides the requisite googling:

Governor Kevin Warsh, who George W Bush appointed in 2006 to no controversy, is 40 and has a JD but no advanced degree in economics or academic research in the field at all. Elizabeth Duke who Bush also nominated and who Shelby doesn’t seem to have a problem with has no advanced degree in any subject and has a bachelor’s degree in drama. Daniel Tarullo, who Barack Obama appointed and who was confirmed with no controversy, has a JD and a MA, but again no PhD. Sandra Pianalto, President of the Cleveland Fed, has an MBA and a MA but no PhD.

Not that there needs to be a rule that FOMC members should have PhDs in economics. But the point is that Diamond would clearly raise the level of macroeconomic expertise on a board that’s currently dominated by bankers and bank regulators.

So Shelby is, to use a technical term, just being a prick. Diamond is perfectly well qualified, but apparently has views (for example, that deflation is bad and Social Social Security taxes should go up) that Shelby doesn't like. So he's going to force Obama to renominate him just because he can. Ladies and gentlemen, the United States Senate. Greatest deliberative body in the world. Don't let anyone tell you otherwise.