[OPE] Common dreams

David Leonhardt, "Broader Measure of U.S. Unemployment Stands at 17.5%", NYT
November 7, 2009:

"It is a strange combination: workers who still have a job are doing better
than in other deep recessions, but the unemployment and underemployment have
risen to their highest level since the Depression."
http://www.commondreams.org/headline/2009/11/07-3

This is based on the idea that since average prices have fallen, "the
average worker has received a 1 to 2 percent inflation-adjusted raise over
the last year".

There is truth in what Leonhardt says, since as I have argued before, the
unemployed effectively absorb the crisis, but like, in Lousiana the average
salary is $35,620 and in Washington DC it is $67,810. That's a 90%
difference despite similar living costs.

The lowest unemployment rate according to BLS is in North Dakota (4.7%) and
the highest is next door in Michigan (15.3%). In Michigan the U6 is more
than 20%. The US has just about reached the general unemployment level of
1982, i.e. 10.8%.

In reality, average urban consumer prices as measured by the CPI fell only
in the second half of 2008, by about 4.5% . This year, US urban consumer
prices have increased by an average of 2.42% so far. In reality, real
average gross earnings have fallen this year by about 1.9%, according to the
BLS. In the European Union, the CPI increased between 3.3% and 3.7% last
year, and this year at least 1.1% so far.

If anybody thought the buying power of earnings from their current job is
increasing, happy dreams...

Jurriaan

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Received on Sun Nov 8 13:24:19 2009