Friday, February 04, 2005

Bad News Friday

Two reports today put a cold bucket of water on the cheery "good times are here" folks. First, a report on the quality of life in SoCal gives the region a weak "D," which should give Arnold pause:

The seventh annual State of the Region report by the Southern California Association of Governments ranks the quality of life in the region as a D-plus --potentially failing.

Housing and air quality worsened in 2003, while the grades for traffic, education, household income and public safety remained static. And while the number of jobs in the six-county region rose by 14,000, personal income for its 17.7 million residents stayed flat.

"The fundamental issue this region faces ... is the income issue. Without an increase in wages and per capita income we're not going to have the resources to deal with these issues," said Mark Pisano, executive director of SCAG.

The report details a slate of interconnected problems plaguing Southern California.
Students perform below the national median on reading and math test scores, while 76 percent of residents do not have a college degree -- elements that limit their ability to get high-paying jobs.

Meanwhile, an exodus of well-paying manufacturing jobs to less-expensive areas have been replaced by lower-paying service jobs. With less wealth, residents have to travel to far-flung suburbs to be able to afford a home, which then worsens congestion and pollution.

And on the national level, the latest jobs report shows a slight increase in overall employment from 2001, but a closer look reveals that while the unemployment rate fell, the actual number of people in the labor market is down by 3.4 million! (From the Economic Policy Institute)

The nation’s payrolls increased by 146,000 last month, and the unemployment rate fell to 5.2%, its lowest level since September 2001, according to today’s report from the Bureau of Labor Statistics.

The decline in the unemployment rate was, however, due to a fall in the labor force participation rate (LFPR) from 66.0% to 65.8%, the lowest LFPR since May 1988 and 1.5 percentage points below its most recent peak in April 2000.

Given today’s adult population, this translates into 3.4 million fewer persons in the job market. Since only active jobseekers are counted in the official unemployment rate, this long slide in the LFPR has artificially depressed the jobless rate, which would be higher if some of those who left the job market were actively looking for work.

As of last month, payroll levels have finally surpassed their pre-recession peak. In February 2001—the month before the recession was declared to have begun—payrolls stood at 132,546,000. Thanks in part to an addition of 203,000 jobs as part of the BLS annual revisions, payrolls stood at 132,573,000 last month, 27,000 jobs above the last peak. (Note, however, that this is due to the growth of government employment; private sector employment remains 703,000 jobs below its pre-recession level).

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