economics

Cross-posted at Montclair SocioBlog.

What’s familiar isn’t so bad, even if it’s bad.

One of the things I remember from my days in the crim biz is that people’s perceptions of crime don’t have a lot to do with actual crime rates.  This was back in the high-crime decades, and people were more afraid of crime than they are now.  But people felt safer in their own neighborhoods than in other neighborhoods, even when their own neighborhoods had a higher crime rate.

These were the days when I would give someone directions to my building — “Get off the IRT* at 72nd St…” — and they would often ask, “Is it safe?”

“Of course it’s safe.  It’s my neighborhood,” I would say, “I live here. I ought to know.”   Yet when I would go to a party in the East 20s or, God forbid, Brooklyn, I would emerge from the subway and follow the directions with a certain sense of apprehension and caution.

Apparently, the same link between far and fear holds true for people’s perceptions of economic well-being.  A recent Gallup poll asked people how the economy was in places ranging from their own city or area to the world generally.  The closer to home, the better the economy.  The farther from home, the lower the percent of people rating economic conditions as excellent or good.And the farther from home, the higher the percent of people rating economic conditions as “only fair” or poor.Republicans were the most pessimistic about the economy, regardless of location.  Democrats were the most sanguine, with Independents in between. The graph shows the percent who rated the economy positively minus the percent who rated it Poor.This obviously has nothing to do with familiarity but with contempt.  Apparently, for Republicans, a Democrat – especially a Kenyan socialist Democrat – in the White House means that the economy must be bad everywhere.

* These old subway line designations – IRT, BMT, IND – are no longer in official use.  But when did the MTA jettison them?  If you know the answer, please tell me.

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UPDATE, June 22:  Andrew Gelman has formatted the data as line graphs, making the comparisons and trends clearer.  He has also added his own observations – things I wish I had known or thought of.

Cross-posted at Jezebel.

I’ve been watching the response to Anne-Marie Slaughter’s Why Women Still Can’t Have It All roll out across the web.  Commentators are making excellent points, but E.J. Graff at The American Prospect sums it up nicely:

Being both a good parent and an all-out professional cannot be done the way we currently run our educational and work systems… Being a working parent in our society is structurally impossible. It can’t be done right… You’ll always be failing at something — as a spouse, as a parent, as a worker. Just get used to that feeling.

In other words, the cards are stacked against you and it’s gonna suck.

And it’s true, trust me, as someone who’s currently knee-deep in the literature on parenting and gender, I’m pleased to see the structural contradictions between work and parenting being discussed.

But I’m frustrated about an invisibility, an erasure, a taboo that goes unnamed.  It seems like it should at least get a nod in this discussion.  I’m talking about the one really excellent solution to the clusterf@ck that is parenting in America.

Don’t. Have. Kids.

No really — just don’t have them.

Think about it.  The idea that women will feel unfulfilled without children and die from regret is one of the most widely-endorsed beliefs in America.  It’s downright offensive to some that a woman would choose not to have children.  Accusations of “selfishness” abound.  It’s a given that women will have children, and many women will accept it as a given.

But we don’t have to.  The U.S. government fails to support our childrearing efforts with sufficient programs (framing it as a “choice” or “hobby”), the market is expensive (child care costs more than college in most states), and we’re crammed into nuclear family households (making it difficult to rely on extended kin, real or chosen).  And the results are clear: raising children changes the quality of your life.  In good ways, sure, but in bad ways too.

Here are findings from the epic data collection engine that is the World Values Survey, published in Population and Development Review. If you live in the U.S., look at the blue line representing “liberal” democracies (that’s what we are).  The top graph shows that, among 20-39 year olds, having one child is correlated with a decrease in happiness, having two a larger decreases, and so on up to four or more.  If you’re 40 or older, having one child is correlated with a decrease in happiness and having more children a smaller one.  But even the happiest people, with four or more children, are slightly less happy than those with none at all.

Don’t shoot the messenger.

Long before Slaughter wrote her article for The Atlantic, when she floated the idea of writing it to a female colleague, she was told that it would be a “terrible signal to younger generations of women.”  Presumably, this is because having children is compulsory, so it’s best not to demoralize them.  Well, I’ll take on that Black Badge of Dishonor.  I’m here to tell still-childless women (and men, too) that they can say NO if they want to.  They can reject a lifetime of feeling like they’re “always… failing at something.”

I wish it were different. I wish that men and women could choose children and know that the conditions under which they parent will be conducive to happiness.  But they’re not.  As individuals, there’s little we can do to change this, especially in the short term.  We can, however, try to wrest some autonomy from the relentless warnings that we’ll be pathetically-sad-forever-and-ever if we don’t have babies.  And, once we do that, we can make a more informed measurement of the costs and benefits.

Some of us will choose to spend our lives doing something else instead.  We’ll learn to play the guitar, dance the Flamenco (why not?), get more education, travel to far away places, write a book, or start a welcome tumblr.  We can help raise our nieces and nephews, easing the burden on our loved ones, or focus on nurturing our relationships with other adults.  We can live in the cool neighborhoods with bad school districts and pay less in rent because two bedrooms are plenty.  We can eat out, sleep in, and go running.  We can have extraordinary careers, beautiful relationships, healthy lives, and lovely homes.  My point is: there are lots of great things to do in life… having children is only one of them.

Just… think about it.  Maybe you can spend your extra time working to change the system for the better.  Goodness knows parents will be too tired to do it.

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.

A report at Planet Money suggests that Americans are getting our wallets lifted at the bar these days.  In 1982, 24% of our liquor budget went to bars and restaurants; today it’s 40%.

This isn’t because we’re eating or drinking out more, it’s because the price of spirits has gone down at the grocery store, but way up at establishments.

On average, $1 out of every $100 earned by Americans goes to liquor, and that hasn’t changed since 1982.  But how much we pay where has shifted quite dramatically.

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.

Peter Nardi, from Pitzer College, let us know that the McKinsey Global Institute recently released a report on U.S. cities and the economy. Large cities (those with 150,000+ residents), are more dominant in the U.S. than in Western Europe, China, and India. More of both the national population and economic productivity (measured by GDP) is concentrated in cities in the U.S. than in those other areas, with the exception of the concentration of GDP in large cities in China:

So overall, the vast majority of the U.S. population lives in cities, and they drive economic development and change here. But of course, the fortunes of cities within the U.S. have varied greatly. If we look at the top 30 cities (by GDP) in 1978 and 2010 (in constant 2010 dollars), we can see the decline of many older manufacturing and transportation centers in the northeast and Great Lakes areas. Milwaukee, Indianapolis, Columbus, and Buffalo fell out of the top 30 altogether, while Philly, Detroit, Pittsburgh, Cleveland, and Cincinnati experienced decreases in their contributions to the overall economy, as did three river port cities — New Orleans, Kansas City, and St. Louis. On the other hand, the Sun Belt has become much more prominent, with cities in the South and Southwest entering the top 30 or rising in the rankings (and 6 of the top 30 from California alone):

Most of the economic growth, the study finds, is due to expanding populations. Large cities aren’t becoming much more productive — cities with high overall GDP growth didn’t have higher per capita growth rates than other cities, so it isn’t that their economies are transforming in ways that make workers tremendously more productive individually. They’re growing much faster in terms of population, and that expansion pushes economic growth.

The report also found there’s no single path to successful economic growth for cities. Some with diversified local economies did very well, but others were below average; similarly, some cities that were largely dependent on just one or two economic sectors have suffered, but others did quite well. Check out the full report for a much more detailed analysis on the factors that influence the rise or decline of the economies of U.S. cities, as well as future challenges.

(Via The Atlantic.)

The phrase “service economy” — commonly used to describe the U.S. economic profile these days — refers to a decrease in manufacturing (where we make things for people) and an increase in the service sector (where we do stuff for people).

Planet Money put together stacked bar graphs to illustrate the increasing importance of service in our economy (1972 on the left, 2012 on the right).  Manufacturing (making things) is in yellow, so you can clearly see its decline in prominence.  Service sectors include “professional and business services,” “leisure and hospitality,” and “education and health services.”

So, when people talk about the move to a service economy, these are the changes they’re talking about.  We also see the “servitization of products” (don’t you love academics?), or a tendency for products to come with more and more service.  A restaurant, for example, offers a product (made by the chef), but also a degree of service (offered by the wait staff).  Both the quality of the food and the service vary as you move from fast food restaurants to high end eateries. When we see a servitization of products, we see a ratcheting up of the level of expected service that attends any given product.

The U.S. economy, by the way, is more heavily characterized by service than most of the world.  The map below is colored to indicate the relative balance between service (blue), manufacturing (red), and agricultural (green) industries in each state.  You can see that the U.S. is among the bluest country on the map:

One of the concerns with the move to a service economy is that service jobs on the low end of the occupational hierarchy tend to be “bad” jobs, while manufacturing jobs, even when they’re on the low end, tend to be “good.”  Service jobs are “bad” in the sense that they tend to have low wages, underemployment, little chance for advancement, and poor or no benefits.  We’re talking, here, about jobs in sales, cashiering, food preparation, and the like.  Because of this tendency, the move to a service economy is taking some of the blame for the shrinking of the middle class.

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.

This spring the Chronicle of Higher Education offered an in-depth look at the number of highly educated people receiving federal aid.  Though, on average, they are still doing better than people without college degrees, these populations have not been immune to the recession.

While I sensed an undercurrent of classism in the article (e.g., “how could someone like me be on aid”), it offered an interesting profile of the post-graduate degree job outlook, especially for people with a PhD.  Notably, it reminds us just how risky pursuing graduate work can be; 70% of all faculty are now off the tenure-track.  That often means that they teach part-time, have no benefits, and face semester-to-semester job insecurity.

These faculty could probably do something else, but many of them are trying to realize a dream that they’ve spent 10 to 15 years of their lives working towards.  So, they continue to teach part-time for relatively low pay and participate in a job market that, for the most part, opens up only once a year.

For more on the economics and politics of academic labor, read Keith Hoeller’s The Future of the Contingent Faculty Movement.

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.

The conventional wisdom seems to be that our biggest economic challenge is runaway government spending. The reality is that government spending is contracting and pulling economic growth down with it.  And worse is yet to come.

Perhaps the best measure of active government intervention in the economy is something called “government consumption expenditure and gross investment.”  It includes total spending by all levels of government (federal, state, and local) on all activities except transfer payments (such as unemployment benefits, social security, and Medicare).  

The chart below shows the yearly percentage change in real government consumption expenditure and gross investment over the period 2000 to 2012 (first quarter).  As you can see, while the rate of growth in real spending began declining after the end of the recession, it took a nose dive beginning in 2011 and turned negative, which means that government spending (adjusted for inflation) is actually contracting.

The next chart, which shows the ratio of government consumption expenditure and gross investment to GDP, highlights the fact that government spending is also falling as a share of GDP.

Adding transfer payments, which have indeed grown substantially because of the weak economy, does little to change the picture.  As the chart below shows, total government spending in current dollars, which means unadjusted for inflation, has stopped growing.  If we take inflation into account, there can be no doubt that total real government spending, including spending on transfer payments, is also contracting. 

The same is true for the federal government, everyone’s favorite villain.  As the next chart shows, total federal spending, unadjusted for inflation, has also stopped growing.

Not surprisingly, this decline in government spending is having an effect on GDP. Real GDP in the 4^th Quarter of 2011 grew at an estimated 3 percent annual rate.  The advanced estimate for 1^st Quarter 2012 GDP growth was 2.2 percent.  A just released second estimate for this same quarter revised that figure down to 1.9 percent.  In other words, our economy is rapidly slowing.

What caused the downward revision? 

The answer, says Ed Dolan, is the ever deepening contraction in government spending:  

What is driving the apparent slowdown? It would be comforting to be able to blame a faltering world economy and a strengthening dollar, but judging by the GDP numbers that does not seem to be the case. The following table (see below) shows the contributions of each sector to real GDP growth according to the advance and second estimates from the Bureau of Economic Analysis. Exports, which we would expect to show the effects of a slowing world economy, held up well in the first quarter. In fact, the second estimate showed them even stronger than did the advance estimate. The contribution of private investment also increased from the advance to the second estimate, although not by as much. Exports and investment, then, turn out to be the relatively good news, not the bad, in the latest GDP report.

Instead, the largest share of the decrease in estimated real GDP growth came from an accelerated shrinkage of the government sector. The negative .78 percentage point decrease of the government sector is the main indicator that we are already on the downward slope toward the fiscal cliff.

If current trends aren’t bad enough, we are rapidly approaching, as Ed Dolan noted, the “fiscal cliff.” That is what I was referring to above when I said that worse is yet to come. As Bloomberg Businessweek explains:  

Last summer, as part of its agreement to end the debt-ceiling debate (debacle?), Congress strapped a bomb to the economy and set the timer for January 2013. Into it they packed billions of dollars of mandatory discretionary spending cuts, timed to go off at exactly the same time a number of tax cuts [for example, the Bush tax cuts and the Obama payroll-tax holiday] were set to expire  

The congressional deficit supercommittee had a chance to disarm the bomb last fall, but of course it didn’t. And so the timer has kept ticking. The resulting double-whammy explosion of spending cuts and tax increases will likely send the economy careening off a $600 billion “fiscal cliff.”

The fiscal contraction will actually be even worse, since the extended unemployment benefits program is also scheduled to expire at the end of the year.  

So, what does all of this mean?  According to Bloomberg Businessweek:

If Congress does nothing, the U.S. will almost certainly go into recession early next year, as the combo of spending cuts and tax hikes will wipe out nearly 4 percentage points of economic growth in the first half of 2013, according to research by Goldman’s Alec Phillips, a political analyst and economist. Since most estimates project the economy will grow only about 3 percent next year, that puts the U.S. solidly in the red.

One can only wonder how it has come to pass that we think government spending is growing when it is not and that it is the cause of our problems when quite the opposite is true.  Painful lessons lie ahead — if only we are able to learn them.

Remapping Debate has posted an interactive graph that lets you look at the decreasing relative value of the federal minimum wage. The graph shows the gap, at various points in time, between the annual income of a full-time worker earning minimum wage and the poverty line for a family of four (all expressed in 2011 dollars; you can see specific historical, unadjusted minimum wage rates here). In 1968, a single minimum-wage earner made about 94% of the federal poverty line for four people:

By 2011, the gap had widened significantly; one minimum-wage worker earns about 66% of the poverty threshold for a family of four:

Though the federal minimum wage has gone up over time, its relative value covers less and less of the costs of living in the U.S.