Basic Facts about Wealth and Poverty

[Brad De Long]

>Rob Schaap wrote:
>
>>Doug says of US 'fundamentals:
>>
>>'A balanced budget, 1.4% inflation, 4.3% unemployment, 296,000 new jobs in
>>May, 3% year-to-year real wage increases....
>>
>>It may not be utopia, but who's doing better?'
>>
>>The Yen, every other Asian currency, and the Ozzie took a bath today.  Last
>>year the Oz was above US 0.80, now a couple of quarters'll get you one.
>>And Oz can boast items 1,2,4 and (nearly) 5 of Doug's list - we can't boast
>>(3) coz we have fewer 'working poor' and consequently a more accurate (if
>>still dodgy) unemployment index.
>
>Why do people find the U.S. unemployment stats so hard to believe? The OECD
>reports two sets of unemployment rates, one according to national
>definitions and one standardized to a common definition. The most recent
>standardized U rate they report is for 1996, and we see:
>
>U.S.       5.4%
>Japan      3.4
>Germany    8.9
>U.K.       9.7
>Canada     9.7
>Australia  8.6
>
>Since there's no difference between their two reported rates for Australia
>and the U.S., I'm assuming that the definitions are roughly comparable. For
>1998, the OECD estimates U.S. unemployment at 4.8% and Australia at 8.1%.
>
>We may have more "working poor," but they are working, if poor.
>
>Doug

David Levine points out that temp workers are counted as employed but are
still putting some downward pressure on wages: most of them *want*
permanent jobs and workers bargaining for wage increases are aware that
there is this large group of temp workers out there who could replace them.

My guess is that the rise in the number of temp workers is responsible for
perhaps an 0.3% wedge between the unemployment rate the BLS reports and the
"unemployment rate" that would be the best measure of how much downward
pressure unemployment and underemployment is putting on nominal wages.

Still, speaking as someone who thought at the time that the Clinton boom
was likely to top out in the summer of 1995, things look much much nicer
than I expected they would...

Brad DeLong