Structural Imbalances in the U.S. Economy - PowerPoint PPT Presentation

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Structural Imbalances in the U.S. Economy

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Title: Structural Imbalances in the U.S. Economy


1
Structural Imbalances in the U.S. Economy
  • The uneven pattern of employment and income
    growth in the current economic
    recovery

Phillip LeBel, Ph.D. Emeritus Professor of
Economics Montclair State University Montclair,
New Jersey 07043 Lebelp_at_mail.montclair.edu
2
  • The U.S. is a global leader in output recovery,
  • but lags in employment growth.

3
  • Lags in employment reflect a structural shift
    from traditional blue collar manufacturing to a
    knowledge-based human capital skills economy

4
  • Part of the employment shift has been driven by
    outsourcing of traditional manufacturing. The
    current rift in Congress over fast-track trade
    negotiations reflects concerns over the pace of
    adjustment, not unlike the debates over NAFTA
    twenty years ago. Today, this is being
    counter-trended somewhat by insourcing of jobs
    from foreign direct investment in the U.S.

5
  • As real wages have grown more slowly, there has
    been a major increase in two-person working
    households, in greater annual working hours, and
    in fewer vacation days. Much of this shift has
    been well documented by Juliet Schor in
  • The Overworked American (Basic Books, 1992), and
    updated periodically by many studies since then.

6
  • While productivity has grown, average wages have
    remained stagnant, with most increases in income
    accruing to those at the upper end of the income
    scale.

7
  • Some differences in income can be explained by
    the number of hours worked, and some can be
    explained by a secular decline in wage and
    salaried workers under collective bargaining
    agreements. But most of the changes reflect the
    overall shift from manufacturing to service
    employment in the economy in which human capital
    skills are key.

8
  • Women now outnumber men in terms of undergraduate
    college degree graduation numbers, account for a
    majority of law school and medical school
    graduates and other human capital intensive
    occupations. All of this is reflected in an
    uneven shift in the composition of household
    activity, and in the formation and dissolution of
    households. Hanna Rosin examines these changes
    in her book The End of Men and the Rise of Women.
    (Penguin Riverhead Press, 2012).

9
  • Not surprisingly, in a structurally changing
    economy, while nominal economic indicators point
    to more robust health, poverty has risen, as
    measured by the number of food stamp recipients,
    and the overall poverty rate.

10
  • As a result of both the deep recession that began
    in late 2007 and the uneven pattern of economic
    recovery, federal spending and federal deficits
    have been under upward pressure. Without
    structural reforms in incentives, austerity alone
    will not lead to a sustainable recovery in either
    jobs or in public deficits. Reforms need to
    address the changing nature of work in a human
    capital intensive service economy.
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