[Peace-discuss] Champaign economy
David Green
davegreen84 at yahoo.com
Sun Jun 5 11:36:43 CDT 2011
To those interested in actual economic data, this piece was written and
submitted to the NG a week ago, but serves as an unintended antidote to a puff
piece in this morning's paper by the state commerce department official touting
the creation of "100,000" jobs in Illinois. Perhaps they'll print it next week.
DG
Despite increased production, employment and earnings data show long-term
economic decline in Champaign-Urbana region
David Green
Recent economic data show decreases in unemployment. Such reports are
uninformative if not deceptive for at least three reasons: First, decreases in
the rate of unemployment are largely attributable to a decline in labor force
participation since its peak prior to the recession, in late 2008. Second, a
focus on unemployment since the beginning of the current recession obscures a
long-term decline in employment—relative to population—over recent decades.
Third, emphasizing unemployment rather than production and earnings data
obscures long-term trends regarding productivity, profits, wages, and
inequality.
These trends belie what little optimism can be manufactured from trivial and
unstable employment gains. Employment and earnings of the median (middle) earner
and household have suffered from long-term decline; barring radical or at least
rational political measures, there’s no reason to predict a brighter economic
future for most of us.
These observations generally apply to the nation as a whole, and can be
characterized by local data, which highlight the difference between worker
productivity and general prosperity. The Champaign-Urbana Metropolitan
Statistical Area (MSA) is a geographic definition used in data collected by the
U.S. Census, the Bureau of Labor Statistics (BLS), and the Bureau of Economic
Analysis (BEA). All the data below are accessible at government websites.
The C-U MSA includes Champaign, Ford, and Piatt counties. Between 1990 and 2010,
its population grew from 203,000 to 231,000, or 14%. During that same period,
the number of employed grew by 5%. Employed workers as a percentage of the
entire population decreased from 52.5 to 48.5; in current terms, this means over
9,000 fewer jobs. There are currently nearly 112,000 jobs in the C-U MSA, but
this number was first surpassed in April 2000, over 11 years and 20,000
residents ago.
Decreased unemployment rates currently reflect decreased labor force
participation more than job creation. In March 2010 there were over 111,775 jobs
and a 9.2% unemployment rate, while in March of this year there were 111,930
jobs, and a rate of 7.8%. Over the past year, lower unemployment rates primarily
result from nearly 2,000 discouraged workers dropping out of the labor force, a
perspective regularly omitted from newspaper articles on the job market.
Nevertheless, data over the past decade show increased worker productivity,
lower collective compensation, and growing economic equality among workers and
households. From 2001 to 2009, the gross domestic product of the C-U MSA, which
includes both private and government investment and spending, continued to grow
steadily, from $6.2 billion to $7.5 billion in constant 2001 dollars. This
reflects an overall 8-year absolute increase of 21% in output concurrent with a
population increase of less than 10% and a numerically stagnant labor force—a
steady increase in the productivity of local workers.
By two measures of compensation, it’s clear that earnings do not reflect this
increased output. Per capita income, which reflects the average income of all
residents in the C-U MSA, decreased by 2.7% when adjusted for inflation. In
2001, each resident earned on average $34,600 in 2009 dollars, while in 2009
only $33,700 in current (2009) dollars. While output grew steadily in real
terms, total earnings and purchasing power declined.
Second, median household income declined even more rapidly during this
eight-year period, from over $48,000 in 2001 (in 2009 dollars), to under $44,000
dollars in 2009 in current (2009) dollars. This entails an 11% decrease in the
real earnings of households at the middle rung of the income ladder.
Throughout the vicissitudes of the bubble economy, tri-county workers continue
to expand the per capita real output of all residents. Fewer workers as a
proportion of the population are employed to produce this output, leaving more
unemployed. Well over half of all households are rewarded with lower incomes,
while the vast majority at best break even. All economic rewards accrue either
to the top 20% or fewer of local households, or to non-residents who are
beneficiaries of corporate profits and/or management earnings.
If management salaries and corporate profits increased at a rate that reflected
increases in worker productivity, then all workers’ earnings would also increase
at that rate if those increases were fairly divided among them. In neither case
is this true. Moreover, high unemployment and lower earnings constitute a
vicious cycle of desperation and lowered expectations.
These realities are the result not of markets but of public policies. But it’s
clearly not in the interest of the beneficiaries of these policies for the
majority of the population to understand either the realities or the policies.
From the media to academia, economics has to be made to seem more technical or
mysterious than it really is. Meanwhile, the data show that our economy is one
of legalized theft.
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