Explaining Southern California's economy

If you want a job in this economy, education is a must

Employment by education

Data: BLS

It isn't rocket science. If you have a college degree, you can get a job in the U.S.

In the wake of this morning's bad jobs report from the Labor Department, there's been some discussion in various media outlets about the gap between the unemployment rate for Americans over 25 with limited education and those with a college degree. This comes from the BLS's breakdown of the monthly data, which you can see here.

I've turned the headline number into a simple chart, above. And I've used the seasonally adjusted numbers, just to simplify.

As you can see, having less than a high-school education is a job-getting disaster. But if you follow the line, you'll notice that having that high-school diploma gets you only to the the current national unemployment rate, roughly: 8.4 percent, while the U.S. level is now 8.2 percent.

"Some college" doesn't even push it down that far: 7.5 percent.

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How the Ivy League brought us the financial crisis

Mercer 18501

Robert Spencer/Getty Images

Graduating Harvard University students attend commencement ceremonies in Cambridge, Massachusetts. Elite colleges like Harvard have steadily increased their efforts to admit low-income students in recent years.

Ezra Klein has an interesting but also exasperating piece at Bloomberg View about how the Ivy League continues to send graduates into high finance, law, and consulting because an Ivy League education doesn't prepare those students to actually do anything with their lives.

I'm not kidding. 

Let's allow Klein to present the case in his own words:

Wall Street -- like a few other professions, including law, management consulting and Teach for America -- is taking advantage of the weakness of liberal arts education.

For many kids, college represents an end goal. Once you get into a good college, you’ve made it, and everyone stops worrying about you. You’re encouraged to take classes in subjects like English literature and history and political science, all of which are fine and interesting, but none of which leave you with marketable skills [emphasis mine]. After a few years of study, you suddenly find it’s late in your junior year, or early in your senior year, and you have no skills pointing to the obvious next step.

What Wall Street figured out is that colleges are producing a large number of very smart, completely confused graduates. Kids who have ample mental horsepower, incredible work ethics and no idea what to do next. So the finance industry takes advantage of that confusion, attracting students who never intended to work in finance but don’t have any better ideas about where to go.

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Alert! California will be broke in a month!

Justin Sullivan/Getty Images

SACRAMENTO, CA - DECEMBER 08: California state controller John Chiang (D) looks on as California governor-elect Jerry Brown speaks during a briefing on California's state budget on December 8, 2010 in Sacramento, California. With less than one month before being sworn into office, California governor-elect Jerry Brown held a bi-partisan meeting on California's state budget. (Photo by Justin Sullivan/Getty Images) *** Local Caption *** Jerry Brown;John Chiang

Thanks to ZeroHedge for providing the grouchy heads-up on this story from the Sacramento Bee. The state needs to find $3.3 billion and find it fast. Or it will run out of money in March. Here's ZH:

If anyone is tired of the daily European soap opera with surrealistic tragicomic overtones, they can simply shift their gaze to the 8th largest economy in the world: the insolvent state of California, whose controller just told legislators has just over a month worth of cash left. From the Sacramento Bee: "California will run out of cash by early March if the state does not take swift action to find $3.3 billion through payment delays and borrowing, according to a letter state Controller John Chiang sent to state lawmakers today. The announcement is surprising since lawmakers previously believed the state had enough cash to last through the fiscal year that ends in June."

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Why is the recovery jobless? Skills, baby. Skills.

Fighting to Stay Positive

Mae Ryan/KPCC

Victoria Long has been unemployed for two and a half years and her job search continues. She spends her time in an employment recruiting office as she searches for work.

First, the good news: there are jobs available in America! Now, the bad news: there aren't enough people with the right skills to take them. This is from Bloomberg Businessweek:

The number of positions waiting to be filled this year has climbed to levels last seen in 2008, when the jobless rate was around 6 percent. The housing bust and ensuing financial crisis put people out of work whose skills may not correspond with those needed by the health-care providers and engineering firms where jobs go wanting.

[...]

A dearth of skilled applicants may prevent the unemployment rate from declining further and could crimp consumer spending, which accounts for about 70 percent of the economy. Companies also may remain reluctant to expand their workforces as the threat from Europe’s debt crisis and political gridlock in the U.S. weighs on the economic outlook.

Over the three months ended in October, the average number of positions waiting to be filled climbed to 3.26 million, the most in three years, according to Labor Department data released yesterday in Washington. The jobless rate, which averaged 5.8 percent that year, was at 9 percent in October. It fell to 8.6 percent last month, in part reflecting a drop in the size of the labor force, the agency’s data showed earlier this month.

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Jerry Brown's tax proposals: Will they solve California's problems?

California Governor Jerry Brown Unveils State Pension Reform Program

Max Whittaker/Getty Images

SACRAMENTO, CA - OCTOBER 27: California Governor Jerry Brown announces his public employee pension reform plan October 27, 2011 at the State Capitol in Sacramento, California. Gov. Brown proposed 12 major reforms for state and local pension systems that he claims would end abuses and reduce taypayer costs by billions of dollars. (Photo by Max Whittaker/Getty Images)

Yesterday, Gov. Jerry Brown laid out his tax proposals for California voters in an open letter at the governor's office website. Brown wants to go straight to the voters, via the ballot initiative process. The plan is fairly simple:

My proposal is straightforward and fair. It proposes a temporary tax increase on the wealthy, a modest and temporary increase in the sales tax, and guarantees that the new revenues be spent only on education. Here are the details: 

• Millionaires and high-income earners will pay up to 2% higher income taxes for five years. No family making less than $500,000 a year will see their income taxes rise. In fact, fewer than 2% of California taxpayers will be affected by this increase. 

• There will be a temporary ½ cent increase in the sales tax. Even with this temporary increase, sales taxes will still be lower than what they were less than six months ago.

• This initiative dedicates funding only to education and public safety—not on other programs that we simply cannot afford. 

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