- Joblessness in America: A stickier problem, August 26, 2010, The Economist: “The economy stopped shrinking a year ago, but America’s unemployment problem is as big as ever. The official jobless rate was 9.5% in July, and would be higher still had many people not given up searching for work. Some 45% of the unemployed have been out of a job for more than six months-the highest proportion since the 1930s. And judging by the recent rise in applications for unemployment benefits, the situation may soon get worse rather than better. Why is joblessness still so high? The prevailing view among policymakers is that unemployment is a painful reflection of the economy’s weakness. Americans are out of work because the slump was deep and the recovery has been lacklustre. Stronger demand will eventually solve the problem…”
- Unemployment and the mid-terms: To help or not to help, August 26, 2010, The Economist: “The gargantuan statue of a dining-room chair that graces the centre of Martinsville is a tribute to the legacy of the local furniture-making industry. That legacy is grim, however: for decades, local factories, bested by foreign competition or automating to keep pace with it, have been shedding workers or shutting up shop altogether. Earlier this year American of Martinsville, a 100-year-old furniture manufacturer whose headquarters overlooks the giant seat, declared bankruptcy and closed its local factory, eliminating 225 jobs. Another local firm, Stanley Furniture, recently laid off 530 workers. Two other big local industries, textiles and tobacco, are equally sickly. Unemployment in the town, which was already 9% before the recession, is now 20%. Martinsville also happens to sit in one of the most marginal congressional districts in the country. At the most recent election, in 2008, Tom Perriello, a Democrat, ousted the Republican incumbent by just 727 votes, even as the district voted against Barack Obama for president. In November Robert Hurt, a popular state senator, aims to recapture the seat for the Republicans. Both candidates agree that the biggest local concern is unemployment. The same is true of America as a whole, where polls consistently rank the state of the economy, and unemployment in particular, as the voters’ main worry (see chart). But the two candidates, in keeping with the orthodoxy of their parties, have very different ideas about how to reduce it…”
- Economics focus: Bad circulation, August 26, 2010, The Economist: “Americans are used to thinking of their job market as lithe and supple. Employment snaps back quickly after recessions. Workers routinely shuttle between industries and cities to wherever jobs are abundant. But in the past decade, the labour market has resembled an ageing athlete. Each new injury is more painful and takes longer to heal. More than a year into the current economic recovery the unemployment rate remains stuck close to 10%, raising concerns about the kind of sclerosis that continental Europe suffered in the 1980s. The slow rehabilitation is in part because the economy suffered a trauma, not a scrape. The fall in GDP during the last recession was easily the largest of the post-war period, and output remains well below its potential. Few had expected a rapid return to full employment, but even modest expectations for jobs growth have not been met. Employment has actually fallen since the end of the recession; and unemployment would be even higher than it is were it not for discouraged would-be jobseekers quitting the workforce. Some economists now fret that other barriers besides weak demand stand between workers and jobs, and that high unemployment is partly ‘structural’ in nature…”
Day: August 27, 2010
Flooding in Pakistan
Pakistan flood sets back infrastructure by years, By Carlotta Gall, August 26, 2010, New York Times: “Men waded waist deep all week wedging stones with their bare hands into an embankment to hold back Pakistan’s surging floodwaters. It was a rudimentary and ultimately vain effort to save their town. On Thursday, the waters breached the levee, a demoralizing show of how fragile Pakistan’s infrastructure remains, and how overwhelming the task is to save it. Even as Pakistani and international relief officials scrambled to save people and property, they despaired that the nation’s worst natural calamity had ruined just about every physical strand that knit this country together – roads, bridges, schools, health clinics, electricity and communications. The destruction could set Pakistan back many years, if not decades, further weaken its feeble civilian administration and add to the burdens on its military. It seems certain to distract from American requests for Pakistan to battle Taliban insurgents, who threatened foreign aid workers delivering flood relief on Thursday. It is already disrupting vital supply lines to American forces in Afghanistan…”