Off Point: Correction and Clarification

As I blogged here yesterday, Erik and I were on WBUR’s On Point with Tom Ashbrook yesterday. As I listened to the audio, I heard myself say something really dumb: that since the unemployment rate was less than 10%, this meant that over 9o% of working-age Americans had jobs.

Of course, this is not the case at all. The main unemployment rate – the U1 – is 9.1%. But the broader U6 unemployment rate stood at 16.5% in September 2011. As Portal Seven explains

The U6 unemployment rate counts not only people without work seeking full-time employment (the more familiar U-3 rate), but also counts “marginally attached workers and those working part-time for economic reasons.” Note that some of these part-time workers counted as employed by U-3 could be working as little as an hour a week. And the “marginally attached workers” include those who have gotten discouraged and stopped looking, but still want to work. The age considered for this calculation is 16 years and over

So fewer than 85% of working age Americans who want jobs have them. My bad for stating otherwise.

I also want to make a clarification. I said to Tom that, largely because of technological progress, the average American worker today has a standard of living that in many ways is superior to that of the Rockefellers. I still believe that’s true, but I brought it up not to tell people to quit whining, but only to highlight the great gifts of technology.

And I learned today that according to new census data, 6.7% of Americans – 1 in 15 – now live in extreme poverty, which is defined as 50% or less of the official poverty level. To make this concrete, extreme poverty is annual income of $5,570 or less for an individual, or $11,157 for a family of four. The more than 20 million Americans in this category are not living better than the Rockefellers. They’re in a dire place, and I never want to suggest otherwise.

  • Bill

    There is another perspective of the machine’s impact on the economy, which also explains how the necessary number of workers is declining. As more and more goods and services “go virtual”, fewer workers are needed to produce them.

    I just downloaded the book and have not yet gotten to read it, but my quick scan did not reveal any discussion of this trend. Virtual goods can be infinitely replicated. New technology such as 3D might drive new purchases of a video game but the marginal improvement of the video experience is declining. Even if there are hardware advances, it is just as likely the existing content will be able to drive it.

    It would be interesting to determine exactly how much of our GDP has been virtualized.

  • Chuck

    As input to the current debate on what to do about unemployment, “Race Against the Machine” can be of great influence to the current policy debate because it is politically impartial yet understandable to most readers. It says, “Here are facts and dispassionate analysis, looking at a root cause of economic issues …step back from personalizing the economic problems; beware of simple solutions……chew on the beginnings of pragmatic advice offered here.” In this vein, although heavy with economic terms and less broadly readable is “The Way Forward” from New America Foundation, by Roubini and others (http://newamerica.net/publications/policy/the_way_forward). It is a good analysis with specific policy recommendations. It would be good to think through this era’s technological disruptive force in the particular context of the collapse of the real estate bubble as a basis for recommendations.