Casaubon's Book

Everyone needs to read Don Peck’s superb Atlantic Magazine piece on why the jobs aren’t coming back anytime soon. It confirms what I began writing back in late 2008 – that most often economic crises of the kind we have been seeing last a decade or more.

Most recessions end when people start spending again, but for the foreseeable future, U.S. consumer demand is unlikely to propel strong economic growth. As of November, one in seven mortgages was delinquent, up from one in 10 a year earlier. As many as one in four houses may now be underwater, and the ratio of household debt to GDP, about 65 percent in the mid-1990s, is roughly 100 percent today. It is not merely animal spirits that are keeping people from spending freely (though those spirits are dour). Heavy debt and large losses of wealth have forced spending onto a lower path.

So what is the engine that will pull the U.S. back onto a strong growth path? That turns out to be a hard question. The New York Times columnist Paul Krugman, who fears a lost decade, said in a lecture at the London School of Economics last summer that he has “no idea” how the economy could quickly return to strong, sustainable growth. Mark Zandi, the chief economist at Moody’s Economy.com, told the Associated Press last fall, “I think the unemployment rate will be permanently higher, or at least higher for the foreseeable future. The collective psyche has changed as a result of what we’ve been through. And we’re going to be different as a result.”

One big reason that the economy stabilized last summer and fall is the stimulus; the Congressional Budget Office estimates that without the stimulus, growth would have been anywhere from 1.2 to 3.2 percentage points lower in the third quarter of 2009. The stimulus will continue to trickle into the economy for the next couple of years, but as a concentrated force, it’s largely spent. Christina Romer, the chair of President Obama’s Council of Economic Advisers, said last fall, “By mid-2010, fiscal stimulus will likely be contributing little to further growth,” adding that she didn’t expect unemployment to fall significantly until 2011. That prediction has since been echoed, more or less, by the Federal Reserve and Goldman Sachs.

The economy now sits in a hole more than 10 million jobs deep–that’s the number required to get back to 5 percent unemployment, the rate we had before the recession started, and one that’s been more or less typical for a generation. And because the population is growing and new people are continually coming onto the job market, we need to produce roughly 1.5 million new jobs a year–about 125,000 a month–just to keep from sinking deeper.

Even if the economy were to immediately begin producing 600,000 jobs a month–more than double the pace of the mid-to-late 1990s, when job growth was strong–it would take roughly two years to dig ourselves out of the hole we’re in. The economy could add jobs that fast, or even faster–job growth is theoretically limited only by labor supply, and a lot more labor is sitting idle today than usual. But the U.S. hasn’t seen that pace of sustained employment growth in more than 30 years. And given the particulars of this recession, matching idle workers with new jobs–even once economic growth picks up–seems likely to be a particularly slow and challenging process.

This is important for a huge number of reasons. The first and most obvious are that increasing poverty is tough on people. But almost every assumption we have made about how the coming decades will play out has assumed we were wealthy enough to do most of what we wanted or needed to do – that we could expect to be able to invest where we wanted, make what changes we wanted. But that’s not true of countries in the grips of an economic crisis – the combination of our enormous indebtedness and dependency and the lingering effects of the crisis, *even if nothing else happened* should call into question where the money will come from for vast projects like a conversion over to renewable energies, or how people will pay for energy when carbon is more appropriately priced.

Our assumptions about the baby boomers and what they can expect economically, about how our children will grow up and what they will do, about college and education – all of these things are brought into play simply by our economic crisis. Racial inequities, inequities between the sexes and among immigrant communities are heightened by this situation. Add in the other crises and things get complicated and painful indeed. We have somehow managed to compartmentalize our thinking – so our assumptions about the future still include the idea that we can grow and expand as much as we like. But those days are over.

And none of that pays proper attention to the human costs, which Peck does an excellent job of describing:

Strong evidence suggests that people who don’t find solid roots in the job market within a year or two have a particularly hard time righting themselves. In part, that’s because many of them become different–and damaged–people. Krysia Mossakowski, a sociologist at the University of Miami, has found that in young adults, long bouts of unemployment provoke long-lasting changes in behavior and mental health. “Some people say, ‘Oh, well, they’re young, they’re in and out of the workforce, so unemployment shouldn’t matter much psychologically,’” Mossakowski told me. “But that isn’t true.”

Examining national longitudinal data, Mossakowski has found that people who were unemployed for long periods in their teens or early 20s are far more likely to develop a habit of heavy drinking (five or more drinks in one sitting) by the time they approach middle age. They are also more likely to develop depressive symptoms. Prior drinking behavior and psychological history do not explain these problems–they result from unemployment itself. And the problems are not limited to those who never find steady work; they show up quite strongly as well in people who are later working regularly.

Forty years ago, Glen Elder, a sociologist at the University of North Carolina and a pioneer in the field of “life course” studies, found a pronounced diffidence in elderly men (though not women) who had suffered hardship as 20- and 30-somethings during the Depression. Decades later, unlike peers who had been largely spared in the 1930s, these men came across, he told me, as “beaten and withdrawn–lacking ambition, direction, confidence in themselves.” Today in Japan, according to the Japan Productivity Center for Socio-Economic Development, workers who began their careers during the “lost decade” of the 1990s and are now in their 30s make up six out of every 10 cases of depression, stress, and work-related mental disabilities reported by employers.

A large and long-standing body of research shows that physical health tends to deteriorate during unemployment, most likely through a combination of fewer financial resources and a higher stress level. The most-recent research suggests that poor health is prevalent among the young, and endures for a lifetime. Till Von Wachter, an economist at Columbia University, and Daniel Sullivan, of the Federal Reserve Bank of Chicago, recently looked at the mortality rates of men who had lost their jobs in Pennsylvania in the 1970s and ’80s. They found that particularly among men in their 40s or 50s, mortality rates rose markedly soon after a layoff. But regardless of age, all men were left with an elevated risk of dying in each year following their episode of unemployment, for the rest of their lives. And so, the younger the worker, the more pronounced the effect on his lifespan: the lives of workers who had lost their job at 30, Von Wachter and Sullivan found, were shorter than those who had lost their job at 50 or 55–and more than a year and a half shorter than those who’d never lost their job at all.

It is not a perfect response by any means, but the one thing that perhaps can be offered to people outside the conventional workforce is a chance to make a real economic contribution in the informal economy. Building on the work of Teodor Shanin and other Peasant Economists, I argue in _Depletion and Abundance_ that the informal economy, the world outside of GDP statements that includes subsistence labor, household labor, under the table labor, barter, crime (note, I’m not suggesting crime as a career here, just including this for the sake of accuracy – at this point, crime is often the only segment of the informal economy available to people, as Peck points out in his sections on minority and urban unemployment – strengthening the non-criminal informal economy is obviously to everyone’s advantage) and other work that exists outside conventional calculations can do something not only to mitigate the economic costs of unemployment, but also to mitigate the social costs – that living in the informal economy, as hard as it can be, can offer people a place rather than the “no place” of unemployment.

Edited to add: I should add that I don’t agree with all the article’s assumptions – Peck assumes that young people who are marginally attached to the workforce, maybe living with parents will experience the same ills from unemployment as past generations, and the case he makes about false expectations may be right. It may also be the case that this is a generation more open to complex employment options and instability than past ones. My observation is that the culture of younger, unemployed folk that I know tends to seem like less of their identity is bound up in their jobs than past generations – after all, when your job sucks, why identify with it? Again, this is overly simplistic and I don’t mean to understate the difficulty that unemployment represents – but I also think that Peck leaps to the conclusion that the extended family model that seems to be emerging as younger people return home is a failure, not a success, and I’m not sure that’s true.

The cost ot men is something I’ve written about before, but this seems to be bearing out my concerns. My own father, I think was never quite the same after an extended period of unemployment in the early 1990s, and it has given me a sense of the ways in which extended unemployment scars people. I think Peck is right here:

In this respect, the recession has merely intensified a long-standing trend. Broadly speaking, the service sector, which employs relatively more women, is growing, while manufacturing, which employs relatively more men, is shrinking. The net result is that men have been contributing a smaller and smaller share of family income.

“Traditional” marriages, in which men engage in paid work and women in homemaking, have long been in eclipse. Particularly in blue-collar families, where many husbands and wives work staggered shifts, men routinely handle a lot of the child care today. Still, the ease with which gender bends in modern marriages should not be overestimated. When men stop doing paid work–and even when they work less than their wives–marital conflict usually follows.

Last March, the National Domestic Violence Hotline received almost half again as many calls as it had one year earlier; as was the case in the Depression, unemployed men are vastly more likely to beat their wives or children. More common than violence, though, is a sort of passive-aggressiveness. In Identity Economics, the economists George Akerloff and Rachel Kranton find that among married couples, men who aren’t working at all, despite their free time, do only 37 percent of the housework, on average. And some men, apparently in an effort to guard their masculinity, actually do less housework after becoming unemployed.

Many working women struggle with the idea of partners who aren’t breadwinners. “We’ve got this image of Archie Bunker sitting at home, grumbling and acting out,” says Kathryn Edin, a professor of public policy at Harvard, and an expert on family life. “And that does happen. But you also have women in whole communities thinking, ‘This guy’s nothing.’” Edin’s research in low-income communities shows, for instance, that most working women whose partner stayed home to watch the kids–while very happy with the quality of child care their children’s father provided–were dissatisfied with their relationship overall. “These relationships were often filled with conflict,” Edin told me. Even today, she says, men’s identities are far more defined by their work than women’s, and both men and women become extremely uncomfortable when men’s work goes away.

The national divorce rate fell slightly in 2008, and that’s not unusual in a recession: divorce is expensive, and many couples delay it in hard times. But joblessness corrodes marriages, and makes divorce much more likely down the road. According to W. Bradford Wilcox, the director of the National Marriage Project at the University of Virginia, the gender imbalance of the job losses in this recession is particularly noteworthy, and–when combined with the depth and duration of the jobs crisis–poses “a profound challenge to marriage,” especially in lower-income communities. It may sound harsh, but in general, he says, “if men can’t make a contribution financially, they don’t have much to offer.” Two-thirds of all divorces are legally initiated by women. Wilcox believes that over the next few years, we may see a long wave of divorces, washing no small number of discarded and dispirited men back into single adulthood.

The high cost to women and men, and growing social and racial inequities are among the things that worries me enormously – rises in domestic violence and family poverty and instiability, exacerbated by stress, divorce and discrimination are a really bad thing – and dramatically reduce our ability to respond to our situation.

Again, while hardly a panacea, here I think the valorization of the informal economy is an essential response – only if people can get identity and value from the subsistence and informal work they do can the unemployed not suffer the loss of identity that comes with it. No, you can’t fix everything by growing food, but the sense of contribution and participation itself is as valuable as the real economic considerations.

This is an important article, but like so many articles good at showing us the data, it has a terrible, weak conclusion. The conclusion is that given the class and economic disaster that accompanies an extended period of job growth, we should borrow more money, raise more taxes and make jobs growth “an unflagging national priority,” But of course, Peck has already shown us the complete ridiculousness of any hope that jobs could grow fast enough to get us out of the before enormous damage is done – so the higher taxes and debt difficulties that come with this will fall upon the already burdened folks he describes in the article. Having made such a compelling case against potential jobs growth, he then falls back on the obvious.

The reality is that the odds are good jobs aren’t going to grow quickly – in fact, there’s a real chance that they will continue to decline. Yes, we should do what we can to soften the employment blow, but most of the money we’ve spent has done no such thing. Instead, we need to invest money in creating an informal economy that can support people and give them a reason to go forward – we need to invest in our safety nets, of course, to keep them stable as people struggle, but also in ways of decoupling identity from employment, and providing ways to live outside the formal economy without feeling like a failure.

The informal economy constitutes 75% of the world economy – most people don’t instinctively realize that the world of GDP statements is the smaller, rather than the larger components. This size implies a resilience that the formal economy manifestly does not have. Removing the stigma from subsistence labor, from household work, from cottage industry and other subsistence work, and valorizing it is a far more possible reality than magically creating full employment. It is not a magic bullet – but it isn’t based on false assumptions, either.

Sharon

Comments

  1. #1 DennisP
    February 12, 2010

    Very interesting post, Sharon. Some facts I was not aware of and yes, the future looks scarey. But you write “to soften the employment blow, but most of the money we’ve spent has done no such thing.” The real problem is that Obama asked for too little and Congress gave him too little. The stimulus package should have been much, much larger. And it will be running out during this year. We may yet have a double-dip recession. The Senate is now talking about a $15 billion “jobs bill”! That’s nothing. The damn place is totally dysfunctional and should be abolished!

    You also write of Peck’s article that “it has a terrible, weak conclusion. The conclusion is that given the class and economic disaster that accompanies an extended period of job growth, we should borrow more money, raise more taxes and make jobs growth “an unflagging national priority,” But of course, Peck has already shown us the complete ridiculousness of any hope….”

    But I guess I would also say the same of your conclusion that “we need to invest money in creating an informal economy that can support people and give them a reason to go forward… Removing the stigma from subsistence labor, from household work, from cottage industry and other subsistence work….” I agree that it would be a good thing to do, but in our socio-economic climate, how will that be done to any significant effect? You are both right, but you both appear to me to offer equally weak conclusions.

  2. #2 Deen
    February 12, 2010

    …he has “no idea” how the economy could quickly return to strong, sustainable growth.

    What do they mean return to sustainable growth? Have we ever had sustainable growth?

  3. #3 Rob Monkey
    February 12, 2010

    Here in MI (and 13 other states), we’ve legalized medical marijuana, providing a lot of people with exactly this kind of informal economy you’re talking about. Personally I laughed at the fact that our legislature half-assed the law to the point that nobody growing weed for patients has any obligation to report it on their taxes. Unfortunately I can’t expect it to last forever, but it is one of the few informal economies left in this country, and in a state with the highest unemployment, it might keep a few people in their houses (and oh those houses smell nice).

    Really though, I just keep hoping there will be an anti-Reagan Revolution in this country. People rise up and tell politicians in no uncertain terms, that the government should provide jobs, and good ones at that. If the private industry isn’t hiring, then find something for people to do, a la the WPA and CCC, and tell the I’m-scared-of-deficits-when-Democrats-are-in-charge Republicans to either get on the wagon or get the fuck outta the way. Anyone who says providing someone with meaningful and profitable work isn’t worth the cost should be taxed at 95% just for being a rich asshole ;) And what will we end up with? I’m no economist, but all of a sudden we’ll have a crapload of people with paychecks who want to spend some money, get their heat turned back on, and maybe even catch a movie. Huh, that might involve them patronizing businesses and helping the economy after all! To quote Tyler Durden: “I’ll bring us through this. As always. I’ll carry you – kicking and screaming – and in the end you’ll thank me.”

  4. #4 Sharon Astyk
    February 12, 2010

    Dennis, that’s fair enough, although I think there’s a difference between Peck’s Atlantic article and my response, written in an hour and a half before signing off for the weekend ;-). I don’t think I’m as obligated to offer a full analysis of how to do it – particularly since I’ve done some of that in other materials I’ve written.

    I agree that the proposed stimulus is inadequate, but remember, anything we do now comes on top of many trillions of paid out and committed dollars into Wall Street and other black holes – what we can do now is being rapidly reduced by what we’ve already done.

    I’m going to follow this up with an article about the informal economy, but not until next week – this at least gets the initial article up on people’s radar.

    Sharon

  5. #5 Rob Monkey
    February 12, 2010

    Deen, your comment was pithy and flippant. And exactly on target ;) I think “sustainable” is some sort of 4 letter word to Greenspan et al, like “diplomacy” is to Dick Cheney, “education” is to Michelle Bachmann, and “sobriety” is to Rush Limbaugh.

  6. #6 Greenpa
    February 12, 2010

    Sharon- I still vote for “real” economy, instead of “informal”. We had that discussion back there a ways. Might be interesting to link to that?

    I know “real” is occupied, but “informal” is actually pejorative, no matter what economists say.

    Or possibly we could come up with an alternative. Remember the catastrophe of calling global climate change “warming” – staying with informal carries the same possibilties.

    Some possibilities:

    Fundamental economy
    First economy
    Core economy
    Bedrock economy

    I like First, I think. It’s true, for one thing, and also carries the correct weight for the importance.

  7. #7 darwinsdog
    February 12, 2010

    When you speak of crime as a component of the underground economy, Sharon, in my opinion you need to distinguish between crime that actually harms others and “crime” that is so-called simply because the activity has been deemed illegal by the authorities. If I sell value added produce that hasn’t been processed in an approved & licensed kitchen and don’t collect & submit sales tax on it, I am committing a “crime.” Such “crime” is a far cry from armed robbery or extortion. I’ve stopped participating in the local farmer’s market because I don’t want to be prosecuted for the former type of “crime.

  8. #8 darwinsdog
    February 12, 2010

    Economic or population growth can be sustainable, Deen, so long as it doesn’t exceed the carrying capacity of the environment. If photosynthesis can add 100 units of biomass to my woodlot per year, and I ramp up wood harvesting from say, 20 units to 30, this is sustainable growth, so long as I don’t ramp up to >100 units. If an insect or other animal colonizes an island, its population can grow sustainably up to whatever the island ecosystem can support indefinitely, i.e., up to the island’s carrying capacity. If predators & disease keep the insect’s population at or below the carrying capacity, it can persist on the island indefinitely. Once the population exceeds the carrying capacity it will consume its resource base faster than said resource base can be renewed. Hence, population must come down. Unfortunately, the resource base will be degraded by carrying capacity having been exceeded. In other words, the island’s environment will no longer sustainably support as large a population as it would before it became degraded.

    Populations that exceed carrying capacity can undergo gradual reduction but often they crash. The greater the extent to which the population exceeded carrying capacity the more likely the crash is to be abrupt and catastrophic. Populations that exceed carrying capacity by a large extent often crash all the way down to zero, to extinction. Sometimes they crash to near extinction, after which the greatly reduced population oscillates around for several generations before genetic stochasticity, by which I mean the random elimination from the population of genes selection needs to work with, coupled with the depleted resource base of the environment, serves to snuff them out altogether.

    What the carrying capacity of the biosphere is for humans is controversial. Based on what it was after the invention of agriculture but before the industrial revolution, a good estimate is in the vicinity of 200 million people, perhaps half a billion at most. 200 million is about what the human population was at the time of Christ (if he actually ever existed). Since then, human population has soared by over an order and a half of magnitude, to its current census of 6.8 billion. This inflated populational overburden has been supported, obviously,first by deforestation and then by the exploitation of fossil fuels, which are finite and rapidly depleting resources. It has also been supported by the elimination or control of natural human predators & pathogens. Never in Earth’s history has a large vertebrate exceeded the carrying capacity of its environment to anywhere near the extent humans have done. Earth’s huge human population is patently unsustainable and will crash, and with the crash carrying capacity will be degraded to a very large extent. Rapid climatic warming, the acidification of the oceans, the mass extinction of species and collapse of ecosystems, are already occurring and will accelerate until and even after human population collapses. These insults will degrade the carrying capacity so that whatever carrying capacity was before human populational overshoot (~.2 – ~.5 billion) it will be much lower following collapse. So low, in fact, that the genetic stochasticity mentioned above will likely make isolated relict populations, if there are any, unviable over the course of several generations.

    This is the situation humanity and the biosphere faces.

  9. #9 Brad K.
    February 12, 2010

    Would the IRS complain if the brother in law on the sofa, or a farm hand and family working for board and shelter, or domestic help working for room and board, were listed as dependents instead of employees?

    This is a time to be concerned about legislative efforts. The House-passed version of the Food Safety Modernization act, that creates Food Safety Administration, appears to bring gardens intended to produce for road side stands, farmers markets, or barter *into* the formal economy, including federal registry, audits, and fines. S.510, at least the Senate version, appears to be *able* to be written with small business and individuals in mind – but that would depend on who implements it. There is a rule making phase mandated, but whether inputs are ignored or incorporated won’t be known until it is imposed. It does seem to exempt, for now, growers certified under the Federal Organic Grower program.

    I would be happier if the FSA were limited to those producing enough product for 10,000 retail sales and larger.

  10. #10 caterpiggle
    February 12, 2010

    How about “off-grid economy”? Another reason it should grow is that all the bailouts/stimuli are going to be paid for (if they are) by future taxpayers. Hence, the sensible thing to do is to not be a taxpayer.

  11. #11 Tim Bartik
    February 12, 2010

    Sharon:

    I think you need to distinguish between short-term employment problems and long-term employment problems.

    Your argument seems to be that nothing much that is very effective can be done to boost conventionally-measured employment growth in the short-run. This is simply not true. There are a variety of job creation measures that could be undertaken, from well-designed employer tax credits to public service jobs, that could create jobs relatively cost-effectively. I’ve written extensively on this topic. I don’t know if you allow links, but anyone interested can go to the Upjohn Institute website and read my article on job creation policies in our January 2010 newsletter, which outlines some options, what they would cost, and how many jobs they might create in 2010 and 2011.

    The long-term issues with employment and the economy are more complicated. But in the short-term: we could significantly boost employment if there were the political will and votes to do so.

    Tim Bartik

  12. #12 Greenpa
    February 12, 2010

    Tim Bartik – I really got the attention of a meeting in Des Moines where I was speaking when I said “There IS no short term. Whenever you hear someone say “this won’t help the long term, but there are short term benefits- I think they should be killed, immediately.”

    Boy, they remembered that line.

    And to a large extent it’s true. We have limited resources, yes? If you take some of those, and put them into a project which you know will not work in the long run- you’ve wasted those resources. Assuming of course, that they could have been used to even partially fund something that WOULD work in the long run.

    Now- I’m aware of all kinds of practical difficulties, and problems with situations where nobody knows what would work in the long run. What I would like is for people to be extremely wary of investing in anything “short term”.

    An example of exactly what I’m talking about – all the societal capital and energy that has been poured into corn ethanol. In reality, scientists with no vested interest in the projects pointed out all the problems with it long ago; saying “this will not work, or be beneficial, in the long run.”

    How much further ahead we would be, if we’d taken all those resources and put it into something that works; even wind, perhaps.

  13. #13 Tim Bartik
    February 12, 2010

    Greenpa:

    One of the big points of Don Peck’s Atlantic Monthly article is that short-term policies to reduce joblessness DO have significant long-run benefits.

    As someone who has done some research on this topic, I think he is quite correct. Reducing joblessness in the short-run increases job skills, self-confidence, mental and physical health, and many other things, and these short-run improvements all have significant long-run benefits. A great deal of research from a wide variety of social science disciplines supports this conclusion.

    I don’t think the environmental cause is advanced by treating the problems of joblessness with neglect.

    Tim Bartik

  14. #14 Sharon Astyk
    February 12, 2010

    Tim, I don’t buy the idea that you can make the kind of dent you’d need to in the unemployment problem rapidly – I think you can certainly do things to develop short term jobs, and those things probably should be done. But will it change the overall picture? I’d be glad to read your case, but so far, I’ve seen no proposals that make a large enough short term dent that are truly viable that matter.

    Sharon

  15. #15 Tim Bartik
    February 12, 2010

    Sharon:

    As one idea that might appeal to you and your readers, how about public service jobs? A variety of studies suggest that one can create public service jobs for the unemployed at a cost of about $30,000 per job. And it can potentially be done quickly. For example, during the Great Depression, the WPA was up to 2.7 million job slots within 8 months of enactment.

    The gross annual costs of 2.7 million job slots would be a little over $80 billion per year. Feedback effects on tax revenue and reduced unemployment benefits probably would cut the net fiscal costs by over one-third from that number.

    The current employment to population ratio is about 10 million jobs short of what it was in December 2007, when the recession officially began, so such a program would deal with one-quarter of the problem.

    I also go into other policies in my January 2010 newsletter piece, such as employer tax credits and job sharing proposals, but I think that the public service jobs example suffices to show that something significant could be done about short-term joblessness.

  16. #16 Sharon Astyk
    February 12, 2010

    Tim, I’d love to see a WPA style program enacted – I think the chances of getting another 800 billion for such a program are enormously unlikely, and I have doubts that you could produce a living wage program for 30K per job including admin costs, but I’ll take your figure. But I think we’ve blown a lot of our wad, to put it crudely, and getting that 800 billion passed will be enormously unlikely – and it won’t fix the economy, because these aren’t living wage jobs you are describing if they cost 30K. But yes, I’m for it.

    But I also do see the need to focus on the informal economy as well – I was talking recently to a woman who is working with unemployed kids below the poverty line, and she reports from her research that she estimate that one out of every 3 young women in her program (she deals with unemployed 16-25 year olds) has traded sex for food, transportation or housing within the last month. That is, these women are *living* in the informal economy right now – and they are being forced by economic circumstances into low level prostitution. The worst side of the informal economy is all that’s available right now, because we’ve ruthlessly destroyed most of the positive elements of the informal economy – the subsistence, barter and familial economy. IMHO, coming at this from the jobs end only deals with part of the problem – if you could wave a magic wand and get them out of poverty, awesome. But if you create a lot of low wage, high work hour jobs – even ones that do good and useful things – we don’t lift them out of the kind of poverty that enables them to stop using the ugly side of the informal economy.

    Sharon

  17. #17 Tim Bartik
    February 12, 2010

    Sharon:

    The estimated costs are $80 billion, not $800 billion. Even if you increase the costs per job to $50,000 per job, you could run a WPA sized program for $135 billion. In the context of the federal budget, or the enormous size and wealth of our economy, this is quite economically affordable. Whether it’s politically feasible is another issue. Job creation packages of this magnitude have been discussed in Congress.

    Furthermore, with the Earned Income Tax Credit and food stamp supplements, even modest wage jobs could be extremely valuable to many households. In addition, all the available research suggests that compared to prolonged joblessness, employment at modest wages is far preferable for the individual.

    Once we’ve gotten employment rates back up to pre-recession levels, then we need to figure out policies that will help raise wage rates. This is a more difficult challenge.

    Tim

  18. #18 Anna
    February 12, 2010

    I don’t think we need to spend money to de-marginalize subsistence living — we need to work on changing the way people react to it. My husband and I choose to live close to the poverty line, growing most of our own food and not buying into the “need” to have a fancy house and car and all the gadgets. It’s actually still quite easy to make a living in the U.S. if you’re willing to live simply and cut back on your needs. And the unsung benefits are so great — we’re happy and healthy and have everything we want!

    I think that, as a nation, we need to realize that a “growth economy” is completely unrealistic and just cut back to live within our means! People don’t need jobs — the informal economy is plenty to keep you rolling along if you don’t need much.

    By the way, I totally agree with Greenpa that calling it the “informal economy” minimizes it, which is antithetical to what you’re trying to do!

  19. #19 Greenpa
    February 12, 2010

    Tim- I’ve got no problem whatsoever with short term job programs that also have long term benefits. It’s the short term ending in a brick wall I have problems with.

    I think you and Sharon may be talking a little at cross-purposes; I know she understands perfectly the benefits of being employed vs unemployed, and all the ramifications.

    If I actually understand her correctly, she’s concerned mostly about two things- a) the programs she’s seen are simply too small to make any significant difference, and b) quick make-work jobs plugged into the old economy do not teach any skills that will be needed 20 years from now.

    Ok, Sharon- tell me how I screwed up. :-)

  20. #20 curiousalexa
    February 13, 2010

    I don’t understand this emphasis on *jobs* being the end-all be-all panacea. Maybe that’s because I’m further into the ‘off-grid economy’ than most folks in the US (I like the term caterpiggle!)?

    I grant that my life would be different if/when more people don’t have wage jobs – currently my gas money comes from working for neighbors, my books come from tax-supported libraries, and my internet comes from a job-working roommate. I can see how totally losing the job economy will affect even those of us who are not in it. But it seems like the arguments are that (nearly) everyone must have a standardized wage-paying position! Why is this so critical? What is so horrible about a skill-bartering economy?

    Humans existed for gazillions of years (depending on how you define humans) without wage-paid labor. I refuse to believe that all of those ‘economies’ depended on slave labor either. I wish I had a better anthropology background upon which to base my thoughts and arguments, but I don’t think my lack of education prevents me from making suppositions (it certainly doesn’t stop many other people!)

    I think people in general need to be able to contribute to their cultures and societies. A lot of the apparent problems with unemployment seem to be a sense of worthlessness and loss of direction. But why does the lack of a paycheck prevent someone from contributing? What is it about a paycheck that seems to validate our very existence, that high rates of unemployment, instead of freeing people from wage-slavery to focus on other things, leads to hand-wringing and wailing?

  21. #21 Edward Bryant
    February 13, 2010

    Hi Brad K.

    You asked:

    “Would the IRS complain if the brother in law on the sofa, or a farm hand and family working for board and shelter, or domestic help working for room and board, were listed as dependents instead of employees?”

    I claimed my “brother(not-in-law) on the couch” last year. You can claim unrelated people living with you as long as they make below a certain amount and you provide the majority of their support.

    I do not know how the IRS handles domestic help but barter is taxable. I think we are looking at two different issues.

    As long as your “dependents” don’t file, claim them.

    Of course, I do permaculture and geology, not tax accounting but…

  22. #22 curiousalexa
    February 14, 2010

    however if you claim someone on your taxes, they have to report that dependency in any other financial assistance they might seek.

    my boyfriend joked about claiming me on his taxes while I was in school, but since my Pell grant was need-based, I would have had to report my dependency and lose that grant due to *his* income level. (besides the fact that I was supporting myself with student loans, not his income – I just didn’t have to pay rent!)

  23. #23 Claire
    February 14, 2010

    Years ago, a former boyfriend told me that he wouldn’t be able to be married to me if I made more money than he did. Since I was then applying to grad school for my PhD in chemistry and he had dropped out of college and was working as a computer operator (this was in the late 1970s), that doomed that relationship ;). But I got the broader point: he and a lot of other men needed to feel that they supported the family in order to feel right about themselves. Not all men, as I was making almost twice what my DH made when we married. But a very substantial number of men do still feel this way, from what I can tell – and that’s one of Sharon’s points above, that unemployment in the formal economy tends to be emotionally harder on men than on women.

    If the informal economy is to prosper, not only do we need people selling into the informal economy, we need people to be buying out of it as well. Maybe households can (informally, of course ;)) shift some of their purchases from conventional stores toward those attempting to make their living in the informal economy. I’ll see what I can do along that line.

  24. #24 CLOUDSHADOW
    February 14, 2010

    I enjoy reading your writtings and the ideas that are willing to tackle.
    this subject is one that you are going to always have trouble on for you are an educated, liberal woman who will never understand working class males.
    take me for example, I am the sole support for my family of 4,I don’t have the option of job choice for I don’t have any college so I take what I can. there is no my money and your money every thing is the familys money(most men I know whos wives make more than them seperate there money as there money,something most men dont consider).
    Most men outside your ivory tower perspective just try to do the best they can with what society has given them and it seems that you really need to try to have some understanding frum the bottom up insted of the top down

  25. #25 Sharon Astyk
    February 15, 2010

    It is true that there is a whole range of perspectives I’ll never be able to have – on the other hand, my family has lived in a traditional model marriage, where my husband was our sole support. We still have only “our money” and we’ve never made as much as 50K a year – mostly vastly less – last year we made 41K for a family of six. My husband may well become unemployed soon, and we’d be back to the 20k or so that I earn as a writer and farmer – and we’ve lived on that. We’ve both taken whatever work we could find in teh past – and spent a lot of time doing things like working in nursing homes and washing dishes. So we might have more in common than you think ;-).

    Sharon

  26. #26 Eric
    February 16, 2010

    Which just goes to show that you can’t tell where someone has been by where they are now. As an impressionable teen, I saw a cartoon of two smiling men walking past each other, thinking the same thought. One man was dressed in a suit and tie, the other in worn-out clothes – the thought was, “I used to be like that!”

  27. #27 Sital
    March 2, 2010

    “The recession or its remnants are going to be with us for many years as far as job creation is concerned.” Many employers lost their job due to economic slowdown but recession didn’t affect Education and healthcare field. And these two fields look very relevant to women. So we can give stress to make career in these two fields to overcome this recession. I came to known one job portal which is totally dedicated to female job seekers http://naukriforwomen.com According to me it’s a good step towards women empowerment……

  28. #28 Katherine Watt
    November 27, 2011

    Hi Sharon –
    I’m curious about the source for the 25-75 statistic for formal-informal economy, and also whether you have numbers for the pre-2008 proportional split in the u.s. I’m write about these topics for my local paper, and would like to include some of this information in a column I’m working on currently.
    Thanks!

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