Wages of top 1% rise much faster than bottom 90%

Income growth for the top 1% of households has far outpaced that of all other households over the last two decades, bolstering the theory advanced by groups such as Occupy Wall Street that conditions are improving much more quickly for people outside the "99%."

An economic snapshot from the Economic Policy Institute shows that inflation-adjusted incomes of the top 1% of households increased 224% from 1979 to 2007, while incomes for the bottom 90% grew just 5% in the same time period. Those in the top 0.1% of income fared even better, with incomes growing 390% over that time period.

The top 1% of households still fare well from President Bush-era tax cuts and from a decrease in the estate tax, according to the EPI. Its authors argue, in a separate paper, that in light of these rising incomes, high-income households should be taxed more to reduce the deficit.

The average tax rate for the top 1% of households has fallen since 1979, even as their incomes rose. High-income households paid a tax rate of about 37% in 1979 and about 29.5% in 2007.

Taxes are a hot topic these days in light of proposals by Republican presidential candidates to change the tax code. Herman Cain would scrap the current progressive income tax system and replace it with a 9% income tax, as well as a 9% sales tax and a 9% corporate tax.

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Chart courtesy of EPI

Industrial production shows gains in September

The country's machines continued to whir in September, as industrial production increased 0.2% after remaining unchanged in August, boosted by strong manufacturing figures. Industrial production rose 5.1% in the third quarter.

Manufacturing, once a sector all but left for dead in the U.S. economy, is playing a big role in the country's recovery. Auto companies are making cars again, spurring demand for suppliers and parts manufacturers. Production of motor vehicles and parts rose 0.7% in September.

In the third quarter, the output of business equipment rose 12.6% and the output of transit equipment — including trucks and civilian aircraft — jumped 31.8% in September, according to the report from the Federal Reserve.

As the dollar loses value, more companies are expanding U.S. manufacturing operations at the expense of their overseas ones, said Mitch Free, chief executive of MFG.com, a website that connects businesses and factories. They often produce smaller batches of goods in the U.S. because they don't have to ship them in bulk, he said, which may be leading to the relatively slow growth.

"I think it's still touch-and-go," he said.

Production of food, beverage and tobacco products grew in the third quarter after declining the previous quarter.

"This is a 'not-bad' report," said Patrick Newport, of IHS Global Insight, in a note. "It shows the manufacturing sector moving forward during September, though at an uninspiring rate during a very rocky quarter."

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Photo: Workers assemble truck components at a Volvo plant in Virginia. Credit: Steve Helber / Associated Press

Union calls for removal of member from Obama's jobs council

President Obama met with leaders from his Council on Jobs and Competitiveness in Pittsburgh today, where they presented him with proposals including upgrading the nation's transportation infrastructure and attracting foreign investment.

But some labor advocates are growing increasingly upset with the makeup of the council, which includes CEOs of companies such as Boeing and GE that have received bad marks from unions on labor issues, according to a story in Monday's Los Angeles Times.

Discontent grew Tuesday, when members of the Newspaper Guild of New York called on the President to remove Monica Lozano, CEO of ImpreMedia, from the panel. ImpreMedia wants to lay off a third of unionized workers at El Diario, the guild says, and is outsourcing jobs. The guild created a website, outsourcemonica.com, to host its grievances.

"The hypocrisy of Monica Lozano serving on President Obama’s Jobs Council is shocking," said Bill O’Meara, president of the New York guild. "ImpreMedia is outsourcing American jobs to other countries and undermining hard-won protections for middle-class workers."

University of California students have protested against Lozano in the past. She is a UC regent and has served during a time of tuition hikes, and also serves on the board of Disney, which students say unfairly receives tax breaks.

Many of the CEOs on the jobs council have also overseen significant layoffs this year. Companies such as Xerox and American Express have cut jobs. Other companies whose CEOs serve on the panel have received hundreds of millions of dollars of stimulus funding, without creating many jobs.

"They call it the jobs and competitiveness committee, but what they mean by competitiveness is massive concessions being imposed on working people," said Chris Townsend, political action director of United Electrical, Radio and Machine Workers of America, in Monday's story.

The White House says that members of the Jobs Council serve as independent advisors, and that the President makes economic decisions on his own.

-- Alana Semuels

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Photo: President Obama in Pittsburgh after meeting with his jobs creation panel. Credit: Jonathan Ernst/Reuters

 

California unemployment rate rises to 12.1% in August

California's unemployment rate ticked up a notch in August, to 12.1% from 12% the month before, according to new data from the  U.S. Bureau of Labor Statistics. Employers shed 8,400 jobs from payrolls.

The numbers were little surprise to economists, who had anticipated no growth after national data showed that employers added no jobs nationally in August, when the U.S. unemployment rate stayed steady at 9.1%.

"Businesses are very reluctant to hire people," said Sung Won Sohn, an economist at Cal State Channel Islands in Camarillo. "The last thing they want to do is hire people and then fire them again a few months later."

California has the second-highest unemployment rate in the nation, after Nevada, where 13.4% of the people in the labor force are out of work.

 California  lost jobs in construction, financial activities and government. Sohn says that California's dependence on the real estate industry is going to continue to cause pain until home-building starts again. But with uncertainty throughout the economy, few businesses in any field seem willing to hire.

"Businesses are adopting a wait-and-see attitude," he said.

Jesse Medel just wants a job. The 37-year-old recently got out of prison, and says his chances of finding work are slim, since there are so many other people looking. It's much different than when he last looked for employment, five years ago.

"It's bad out there," he said. "I'm competing against kids with college degrees for entry-level jobs."

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Photo: A job fair for veterans in Culver City. Credit: Francine Orr/Los Angeles Times

Census: Nearly 1 in 5 Californians lack health insurance

 
New U.S. Census figures paint a grim picture of California when it comes to health insurance: Nearly one in five residents lacked coverage on average during the last three years, one of the highest rates in the nation.

On average from 2008 to 2010, 18.9% of Californians had no insurance, the census reported. That equates to nearly 7 million people.

Nationally, 15.8% of Americans -– or nearly 48 million people -– went without health insurance on average during the three-year period, the census reported.

California was among the top seven states with the highest average rates.

It fell behind Texas (24.8%), New Mexico (21.8%), Florida (20.7%), Nevada (20.0%), Arizona (19.1%) and Georgia (19.0%).

The census also showed that the absence of insurance is a growing problem in California and nationally, largely the result of employers laying off workers and cutting health benefits during the recession.

In California, 19.4% of people on average had no insurance in 2009-2010. That was up from 17.8% in 2007-2008.

Nationally, the figures were 16.2% in 2009-10 and 14.8% in 2007-08.

“The depth of the problem has gotten worse,” said Shana Alex Lavarreda, director of health insurance studies at the UCLA Center for Health Policy Research. “The private sector is not able to cover this population.”

Lavarreda and other healthcare analysts said the figures underscore the need for healthcare reform. They point out that the federal healthcare overhaul will require millions of Americans to buy insurance, starting in 2014, and will provide subsidies for those who can’t afford it.

An estimated 4.7 million uninsured Californians will be eligible for insurance when the new requirement takes effect, the UCLA center estimated. Many will get subsidies or receive coverage through Medi-Cal, the joint state-federal insurance program for the poor.

“That’s when we’ll see the numbers of uninsured drop,” Lavarreda said.

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Photo: A patient is examined by his doctor in California.

Credit: Mel Melcon / Los Angeles Times

GDP grows in metro areas, including a turnaround in Indiana

Metropolitan areas across the country began to bounce back in 2010, producing more goods and services than they had in 2009, but areas across the West, including some in California, continued to stagnate, according to the Bureau of Labor Statistics. Real gross domestic product by metropolitan area increased by 2.5% last year, after declining 2.5% the year before, the bureau said. It grew in 304 of 366 metro areas.

The Los Angeles metro area had the second-highest GDP in the nation last year, $670 billion, a 2.5% increase from the previous year. The New York metropolitan area still leads the nation in GDP at $1.3 trillion.

Information and professional and business services led GDP growth in Los Angeles in 2010, the bureau said, while government, construction and transportation slowed it down. Areas where construction was a heavier burden on the economy saw GDP drop last year, especially in the West. In Las Vegas, GDP fell 1.9%, mostly due to construction. In the Riverside-San Bernardino metro area, GDP slipped 0.6% because of declines in construction and manufacturing.

Of the country's largest metro areas, the three with the fastest GDP growth in 2010 were Boston-Cambridge-Quincy, which grew 4.8%, New York-northern New Jersey-Long Island, which grew 4.7%, and Washington-Arlington-Alexandria, which rose 3.6%. The Boston area's growth was led by strength in information, financial activities and professional and business services. New York saw huge growth in financial activities.

Contributing to GDP growth, manufacturing returned in many metropolitan areas in 2010, notably including portions of Indiana. Manufacturing boosted GDP in Elkhart-Goshen by 11.4 percentage points, leading to a whopping 13% rise in GDP. GDP in Columbus, Ind., grew by 10.1% over the year.

The Elkhart-Goshen area could be considered a positive story in the economic recovery. Elkhart County had an unemployment rate of 20.3% in March 2009, and was visited by President Obama that year as he pushed his stimulus bill. The unemployment rate has since fallen to 10.6%. Growing demand for Humvees and RVs helped put some people back to work, economists say.

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Photo: President Obama in Elkhart, Ind., in 2009. Credit: Charles Dharapak / Associated Press

California workers may be undereducated for available jobs, study says

Unemployment may be high in some areas because workers just aren't educated enough, according to a new study by the Brookings Institution, which lends some credence to an economic theory that there is a structural problem in the nation creating unemployment.

That problem may be getting worse: The years of schooling required by the average job grew between 2005 and 2009, the study says, outpacing the growth in the supply of educated workers.  

"This report provides evidence that there is an education gap in most metropolitan areas, and that this gap is responsible for higher unemployment," said Jonathan Rothwell, one of the authors of the study, Education, Demand and Unemployment in Metropolitan America.

An education gap is when the demand for educated workers is greater than the supply in any given market. Brookings calculated the gap by taking the years of schooling required to do jobs in an area and dividing it by the years of education attained by the average working person there. 

The Riverside-San Bernardino-Ontario area had one of the highest education gaps in the nation, on average, between 2005 and 2009. Its ratio was 1.026, the fourth-highest after Chattanooga, Tenn.; Lakeland, Fla.; and Youngstown, Ohio. 

The average job in the Riverside area required 13.35 years of education in 2009, the most recent data available, while the average working resident had 12.92 years of education, Rothwell said. In the Los Angeles area, the average job required 13.58 years of education, while residents had, on average, 13.38 years.

Across the nation, this gap has been exacerbated by the recession, Rothwell said, as construction and manufacturing jobs, which required less schooling, disappeared, while the health and education sectors continued to grow. But areas where the education gap was the highest, such as Riverside, had consistently higher unemployment rates than those that didn't.

They also fared worse during the recession. California areas including Stockton, Fresno and Modesto all saw their unemployment rates rise more than 8 percentage points from their pre-recession lows to May 2011. All were among those with the highest average education gaps. Areas such as Madison, Wis., and the Washington, D.C., metro area had the lowest education gaps, on average, and their unemployment rates changed just 1.9 and 2.7 percentage points, respectively, over that time.

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Photo: An education center in Virginia that specializes in retraining. Credit: Steve Helber / Associated Press

California exports return to pre-recession levels

Finally a bit of good news for the struggling U.S. economy -- exports jumped in July, indicating there is still global demand for U.S. goods. The Commerce Department said that exports grew by $6.2 billion in July, to $178 billion, thanks to increased demand for industrial supplies and automotive goods. Imports dropped slightly from June.

The growth in exports means the nation's trade deficit contracted in June by $6.8 billion, which is the largest monthly decline since February 2009, according to Gregory Daco, principal U.S. economist with IHS Global Insight.

"Demand for U.S. goods should continue to hold, supported by robust emerging markets growth and a historically weak U.S. dollar," he wrote, in a report.

California performed well on the export front too, according to an analysis by Beacon Economics. July was the 21st consecutive month in which the state's export trade increased on a year-over-year basis, said Jock O'Connell, international trade adviser to Beacon.

"We have resumed pre-recession levels of exporting," he said.

Exports of raw materials and agricultural products grew by 24.7% from the same month last year, while manufactured exports jumped 6.1%. California exported $13.15 billion worth of goods in July, which is 11% more than the state exported in July 2010.

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Photo: Increased exports helped keep the ports busy. Credit: Alana Semuels / Los Angeles Times

 

 

Despite growth in job openings, job seeker ratio remains high

Employers posted 3.2 million job openings in July, a slight uptick from June, as industries such as manufacturing, arts and entertainment added positions, according to new data from the Bureau of Labor Statistics. There were 1.1 million more job openings in July than there were the previous year, according to the Job Opening and Labor Turnover Summary, or JOLTS.

Good news, right? Not exactly. The labor market is still pretty grim. In July, there were 13.9 million unemployed workers, which means there's a 4.3-to-1 ratio of unemployed workers to job openings.  That's two years and seven months during which the job seeker's ratio has been "substantially above" 4-to-1, according to Heidi Shierholz with the Economic Policy Institute.

By comparison, the job seeker's ratio in December 2000 was 1.1 to 1. By industry, unemployment workers vastly outnumber openings in wholesale and retail trade, construction, leisure and hospitality, professional and business services, and education and health services.

The high ratio of unemployed workers to jobs manifests itself in long lines at job fairs, where dozens of people apply for the same position, and only one receives it, and in companies being swamped with so many resumes they can't even read them all.

This economy is creating significantly fewer jobs than economy has during previous recoveries, Shierholz writes. In the first 25 months of the recovery in the early 2000s -- December 2001 through December 2003 -- there were 85.4 million job openings in the recovery. Between July 2009 and July 2011, however there were just 68.4 million.

"Our labor market has a significant shortfall of new job openings even when measured against the exceptionally weak recovery of the early 2000s," Shierholz says.

What's holding back job growth? Demand. But what can create demand, few economists agree on.

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Graphic courtesy of the Economic Policy Institute

Is California economy improving, or worse than ever?

Depending on who you ask this Labor Day, California's economy is either on its way up or headed straight for the crapper.

A report released today by the California Budget Project finds that the state has a historically low level of employment, even as earnings are declining for most workers. By July, the report says, the state had gained back only one out of six jobs lost during the recession. The state added only 2,760 jobs a month between February and July.

Government is dragging down the economy, the report says. Over the last three years, the state has lost public sector jobs at a rate twice that of the nation as a whole, the report says. Inland areas aren't helping either -- between June 2010 and June 2011, the Inland Empire lost 10,300 jobs.

Finally, inflation-adjusted earnings in California declined 1.9% between 2006 and 2010, the report says, making a typical worker have less purchasing power in 2010 than at any point in the last 10 years.

"Coupled with the latest figures showing extremely slow growth in the national economy, these state trends make it clear that we're a long way from a recovery that makes a real difference for California's workers and their families," said the report's author, Alissa Anderson, deputy director of the California Budget Project.

But according to a Labor Day Briefing from the state Employment Development Department, California "has been gaining jobs at the fastest rate since the boom year of 2006" and more quickly than the nation as a whole. California is also outpacing the nation in private job growth, the EDD says.

The EDD says California added 189,400 jobs from July 2010 to July 2011, which is a 1.4% growth rate at a time when the nation's employment picture grew just 1%. The state's year-over-year July job growth rate is the strongest in five years.

Industries that managed to grow year over year in July included professional and business services, education and health services, and even construction, the EDD points out. It says there are occupations that are projected to grow in the state: executive secretaries, registered nurses and accountants.

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ADP jobs report shows paltry growth again

Economists are looking to Friday's jobs report with trepidation -- if the nation again adds a paltry number of jobs, fears of another recession will grow. But August job growth isn't likely to be impressive, according to the ADP National Employment Report, released Wednesday, which shows that employment in the private sector rose by just 91,000.

The average job growth during the previous three months has been just 72,000, which leaves millions still out of work. The nation added just 117,000 jobs in July.

ADP's National Employment Report, which focuses only on the private sector, showed gains in construction, which had shrunk for three months in a row. The service-providing sector provided the most employment growth. Employers with payrolls of fewer than 50 workers added the most jobs in August, while employers with more than 500 workers added the fewest.

The jobs report from the Bureau of Labor Statistics will include both private and government jobs. Economists say the private sector needs to perform well to offset losses in state and local governments, which are shedding jobs.

The firm Challenger, Gray and Christmas said Wednesday that employers planned to cut 51,114 workers from payrolls in August, fewer cuts than they had made in July. The government sector has announced more than 100,000 job cuts this year, the firm said.

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Photo: A job fair in Anaheim. Credit: Luis Sinco / Los Angeles Times