Home > Uncategorized > New geography, old inequality

New geography, old inequality

from David Ruccio

fredgraph (2)

It’s true (as I have argued many times on this blog), the number of U.S. manufacturing jobs has been declining for decades now—and they’re not coming back. Instead, they’ve been replaced (as is clear in the chart above) by service-sector jobs.  

jobs

source

And, not surprisingly, most new jobs (during the past year, as in recent decades) have appeared in urban centers.

But the idea that service-sector job growth in some urban centers—or “brain hubs,” as The Geography of Jobs Enrico Moretti likes to call them—is going to solve the problem of the growing gap between haves and have-nots is simply wrong.

Moretti (and, with him, Noah Smith) would have us believe that everyone in the one America that is “healthy, rich and growing” (as against the other America, which is “increasingly being left behind”) stands to benefit. And they don’t need manufacturing jobs to do so.

But looking at the wages of those workers in the local service jobs celebrated by Moretti and Smith tells a very different story. Here they are, from the Bureau of Labor Statistics:

OCCUPATION MEDIAN HOURLY WAGE
Teachers $22.70
Registered Nurses $32.45
Licensed Practical Nurses $20.76
Carpenters $20.24
Taxi Drivers $11.30

 

So, no, the growth of local service jobs in so-called brain hubs is not going to solve the problem of inequality that plagues the United States.

income-1980

Nor for that matter is Trump’s promise to return manufacturing jobs to the United States.

Neither the old nor the new geography of jobs is going to solve the problem of the growing divergence between a tiny group at the top and everyone else. The cause lies elsewhere—in the same old story of a growing surplus that is captured by large corporations and wealthy individuals.

That’s the real problem that needs to be solved.

  1. March 12, 2017 at 10:18 am

    One idea is to hire off the bottom by a job guarantee:

    The Job Guarantee: A Government Plan for Full Employment
    http://www.thenation.com/article/161249/job-guarantee-government-plan-full-employment

    “The benefits of full employment include production of goods, services and income; on-the-job training and skill development; poverty alleviation; community building and social networking; social, political and economic stability; and social multipliers (positive feedbacks and reinforcing dynamics that create a virtuous cycle of socioeconomic benefits). An “employer of last resort” program would restore the government’s lost commitment to full employment in recognition of the fact that the total impact would exceed the sum of the benefits.”

  2. patrick newman
    March 12, 2017 at 11:16 am

    The hourly rate is not the whole story, of course. Along with the shift to service jobs usually having lower skill and education requirements goes the poorer terms and conditions with the base being Uber style zero hours, pretend self employment ‘gig’ economy. This has historical resonance with the British dock workers of the last two centuries who had to gather each day at the dock gates and wait to be chosen by the gang masters. (Always more people than jobs!).
    It goes without say the modern equivalent also ensures a constant downward pressure on wage rates and working conditions. For example it was discovered that the DPD delivery firm (UK) not only does not pay sick pay (pretend self employment again) but insists drivers pay for a relief driver.
    In terms of economic policy full employment is not good enough. We need over full employment where vacancies are three times (on average) unemployment and the latter is more of a reflection of workers voluntarily changing jobs.

    • March 12, 2017 at 12:25 pm

      Ahhh, the good old times. Now if we could just bring back debtors prisons we could *really* feel what third world society is like. (I am kidding. Please don’t let Trump read this…)

  3. March 12, 2017 at 8:55 pm

    “Neither the old nor the new geography of jobs is going to solve the problem of the growing divergence between a tiny group at the top and everyone else. The cause lies elsewhere—in the same old story of a growing surplus that is captured by large corporations and wealthy individuals.

    That’s the real problem that needs to be solved.”
    ********Please, any profound reply.(Justaluckyfool@aol)

    “The gist of my view is that inequality is always part of capitalism (and for that matter class societies, by definition) and rising inequality from the 1980s in the neo-liberal period went on for decades before there was the crash. It is more convincing that rising profitability and a rising share going to capital from labour in accumulation was the cause of rising inequality, not vice versa. So the underlying cause of the eventual slump must be found in the capitalist accumulation process itself and some change in the profit-making machine.”
    ( https://thenextrecession.wordpress.com/2017/03/09/learning-from-the-great-depression/) , Michael Roberts Blog.
    ***Any profound repy would be appreciated.Justaluckyfool@AOL.

    WE MUST FOLLOW THE MONEY FLOW !
    As Nobel Laureate Frederick Soddy stated, “Money now is a license to live.”
    “Since, in all monetary civilizations, it is money that alone can effect the exchange of wealth and the continuous flow of goods and services throughout the nation, money has become the life-blood of the community,and for each individual a veritable license to live at all…”(The Role Of Money.)
    It is time to claim “Your FAIR SHARE of the American Dream.”
    Make the money flow for the betterment “Of The People”, a reversal, a change “For The People”.
    THIS FLOW WILL BE GENDER NEUTRAL, RACE NEUTRAL AND BASED ONLY on the fulfillment for LIFE, LIBERTY AND THE PURSUIT OF HAPPINESS.
    Now is the time to create the laws that would allow this change in direction.
    Help to decrease the gaps of inequality, help decrease the numbers of those
    in the grip of poverty,help raise the standard of living; all at the same time..
    WE MUST REVERSE THE DIRECTION OF THE PRESENT FLOW !
    “It’s time to rewrite the rules―to curb the runaway flow of wealth to the top one percent, to restore security and opportunity for the middle class, and to foster stronger growth rooted in broadly shared prosperity.”( Economic Nobel Laureate Joseph Stiglitz)
    “Trickle Down” now doesn’t work.
    Yes, OCCUPY, Yes, Pope Francis, the “Trickle Down” system doesn’t work.
    It doesn’t work because the establishment impedes the flow.
    REPEAT: It doesn’t work because the establishment impedes the flow.
    This must change.
    We must remove these impediments and create a flow of wealth directly to the “PEOPLE”.
    The system is meant to “reward all”, to allow all “Their Fair Share”.
    Millions now realize;… the economy is rigged, …the justice system is rigged, …the health care system is rigged, …the employment system is rigged.
    All part of an economic system that is really just a rigged political system.
    Fortunately, this past November voters across America have made the choice to cast a revolutionary vote to “MAKE AMERICA GREAT AGAIN”
    SEVENTY percent of the people believe the American economy is rigged. And they’re right.
    EIGHTY percent of the people desire a change, a revolution. And they’re right.
    History has allowed an opportunity for “AMERICA TO MAKE ITSELF GREAT AGAIN.”
    We must mandate a reversal of “… an economic recovery program that has… fueled the increase in wealth inequality…”
    Reverse that program, make the money FLOW to “…help form a more perfect Union,
    establish Justice, insure domestic Tranquility, provide for the common defense, promote
    the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity,…”
    “Yes, We Can Lower Taxes, Pay Off The Debt, And At The Same Time Increase Revenue.”
    This administration will begin with two immediate actions:
    Step One:
    “INEQUALITY and POVERTY REDUCTION ADJUSTMENT PROGRAM”
    ( I.P.R.A.P. )
    Capitalism demands inequality as a just proportional reward.
    It is the size of the “Gaps” where the administration of inequality becomes distorted.
    The size of the ‘Gaps’ are a demand of the administration of the quality and quantity of these ‘gaps’.
    Taxation is a ways and means by which a government controls the quality and quantity of its currency already in circulation.
    Currency that it can redistribute without changing the quality or quantity of the entire currency.
    American Capitalism should allow everyone to achieve
    ‘The American Dream’ and to retain that “Fair Share”.
    But that dream should not impede the poor and elderly from achieving their FAIR SHARE.
    Nor should it impede the risk and reward which will ultimately lead to a betterment for all.
    A federal taxation of personal income must recognize the sanctity of “The fruits of mankind’s labor”
    A federal taxation of personal income should be used to control the distribution of income to obtain
    a fair and just sharing of the American Dream, a just and fair sharing of the worlds riches while
    maintaining the greatest standard of living.

    “Inequality and Poverty Reduction Adjustment Program” ( I.P.R.A.P. )
    “THE NEW ONE PAGE:Federal Personal Income Tax: 2017”
    Brackets & Rates for Joint filers with:
    GROUP ONE- income less than $100,000:
    GROUP TWO- income more than $100,000 but less than $225,000:
    GROUP THREE-income more than $225,000:
    *Brackets for single filers are ½ of these amounts.
    ALL income is taxable and must be reported.
    All income is to be taxed at the same rate-30%.
    NO exemptions. NO loopholes.Period.
    Deductions:
    This plan will increase the standard deduction for joint filers to $80,000,
    and the standard deduction for single filers will be $40,000.
    Tax must be paid, any claim of injustice may be filed for a proportional refund, if approved, it shall become
    a tax credit in the next year.
    ***The Tax Group One:
    A… will receive a 6% distribution to replace their losses caused by sales taxes which are a detriment to their ‘standard of living’. This 6% will also replace any Social Security loss.The rebate will help grow our economy as well as allow wage earners to keep their share of the American Dream and raise the standard of living.
    B… will receive a 15% ‘take home’ pay increase.There will be no FICA payment taken out of their pay.This is at ZERO cost to production (The minimum wage concept would cost jobs as well as increase production cost). This merely places what was earned into their paycheck; it is the 15% F.I.C.A. that was withheld from them; now going directly into their take home pay.
    ***The Tax Group One and Tax Group Two:
    A… will receive a direct tax credit as provided for ‘Child and Home Care’(Up to $2500).
    Tax credits that become ‘overages’ will become an immediate cash refund.
    B… will receive a direct tax credit of $2,000 for each child under the age of 18 for HEALTH AND EDUCATIONAL MAINTENANCE.
    C… VETERANS WHO SERVED; DESERVE a direct lifetime annual tax credit of $3000.
    D… will receive a 15% ‘take home’ pay increase.There will be no FICA payment taken out of their pay.This is at ZERO cost to production (The minimum wage concept would cost jobs as well as increase production cost). This merely places what was earned into their paycheck; it is the 15% F.I.C.A. that was withheld from them; now going directly into their take home pay.
    ( I.P.R.A.P. ) will create a direct increase in wages, an increase in Social Security, a direct increase
    in income to more than 50% “of the people.” and it will be done “along with a
    reduction in National Debt”.
    We must mandate that the Executive branch and the Legislative branch,
    Reverse an economic privileged program that has lead to increases in wealth inequality.
    Reverse that program, make the money FLOW to “…help form a more perfect Union, establish Justice,
    insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure
    the Blessings of Liberty to ourselves and our Posterity,…”

  4. rddulin
    March 13, 2017 at 12:45 pm

    The problem needs to be defined better before it can start to be solved.
    Non-producers i.e. banks, financial products, stock marker and ponzi investments have always depended on producers, i.e. labor and productive firms being under paid for their productivity.
    This is primarily achieved by monetary manipulation.
    This is nothing new and has been practiced for thousands of years. The parties in charge of the money systems of the world just can’t bring themselves to run fair systems.
    Kind of like if the department of weights and measures adjusted the standards not for accuracy but for their own gain.
    Money as a measurement is purposely adjusted to yield inaccurate prices.

  5. March 14, 2017 at 10:54 am

    Don’t have much use for all this “theoretical” back and forth. Gets us nowhere!

    Here’s some advice, pro and con from some knowledgeable and non-economist sources.

    In a condition of society and under an industrial organization which places labor completely at the mercy of capital, the accumulations of capital will necessarily be rapid, and an unequal distribution of wealth is at once to be observed. This tendency would be carried to the utmost extreme, until eventually the largest accumulations of capital would not only subordinate labor but would override smaller aggregations.

    The one remedy for this tendency, which to all appearances has been ineradicable from the industrial system, is the cooperation and intelligent direction of labor.

    What I believe is, the time has come when the laboring men can perform for themselves the office of becoming their own employers; that the employer class is less indispensable in the modern organization of industries because the laboring men themselves possess sufficient intelligence to organize into co-operative relation and enjoy the entire benefits of their own labor. Whenever labor is sufficiently intelligent to do this, it should not wait patiently for it own employment by capital and enterprise, because whoever is competent to furnish himself employment, and therefore receive the full result of his own effort and hires out his time, is thereby rendering a voluntary servitude to capital, and every man possessed of industrial capacity is in possession of capital, for it is out of that industrial capacity that capital Is sustained in activity.

    With a greater intelligence, and with a better understanding of the principles of cooperation, the adoption of them in practice will, in time I imagine, cause most of the industries of the country to be carried on by these cooperative associations.

    (Leland Stanford, Interview 1887)

    Not evil, but good, has come to the race from the accumulation of wealth by those who have had the ability and energy to produce it.

    (Andrew Carnegie, “The Gospel of Wealth”

    It is my belief that the principal cause for the economic differences between people is their difference in personality, and that it is only as we can assist in the wider distribution of those qualities which go to make up a strong personality that we can assist in the wider distribution of wealth.

    (John D. Rockefeller, “Reminiscences”

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