If you pay even cursory attention to the financial commentators these days, you've probably heard a lot of muttering about "populist anger" that could push Washington into "overreacting" to the nation's financial and economic crisis.
Populism is a slippery noun, but so far anyway, nobody seems to be demanding a silver-backed currency or arguing for the single tax. What we are seeing, in fact, is popular anger, and if you want to better understand why, consider a couple of sets of numbers released Friday. The first is the national unemployment rate, which stands at 8.5%, the highest level in more than a quarter of a century.
Most economists believe the figure actually understates the jobs crisis because a record number of unemployed workers have simply stopped looking, and those who continue to search are taking a record amount of time to find a job. Moreover, according to labor economists, when people do find new employment, it often pays less, in part because an oversupply of job-seekers is exerting downward pressure on wages. That has further depressed consumer spending, which is required for any real economic recovery. To make matters worse, the average workweek in sectors paying hourly wages has shrunk to a record low of 33 hours.
As bad as the national picture is, it's worse in California, one of six states where more than one in 10 workers is jobless. Although Michigan has the highest unemployment rate at 12%, the nation's three worst-hit municipalities are in California -- El Centro (with a rate of 24.5%), Merced (19.9%) and Yuba City (18.9%). Updated percentages for the state and L.A. County as a whole won't be available until April 17, but economist Jack Keyser, who's parsed the local numbers for years, called Friday's national figures "very grim." He expects that the statewide unemployment rate will climb to 11% and that L.A. County's level may grow to 11.3%.
Southern California is being hit particularly hard by this downturn, Keyser explained, not only because it -- like the rest of the state -- was "a hot spot in the housing boom and bust" but because the pillars of the local economy are construction, international trade and the manufacture of consumer goods, all of which have been hard-hit. "We have a diversified local economy," he said "but all the sectors into which we've diversified have been hammered."
Like other local economists, he also believes that blacks and Latinos, who dominate the construction trade and trucking out of the ports, have been the most deeply affected. Although precise ethnic and racial breakdowns aren't available, you can get the picture by looking at local civic and neighborhood unemployment figures. In Commerce, Bell Gardens and Huntington Park, which are overwhelmingly Latino, the jobless rates are 19.5%, 17.4% and 16%, respectively. In the Florence-Graham and Willowbrook neighborhoods of Los Angeles, which are heavily African American and Latino, the rates are 20.8% and 19%, respectively.
Although Keyser forecasts a modest economic recovery late this year, he believes unemployment will continue to grow through 2010.
If you really want to cringe, consider those statistics against the historical picture that's been developed by MIT's Frank Levy, called "a leading scholar of income trends" by the Wall Street Journal. His work shows that although American families' incomes more than doubled in the years between the end of World War II and 1980, they haven't -- when measured in constant dollars -- risen since. In fact, during the eight years of George W. Bush's presidency, they actually fell. Meanwhile, from 1986 to 2005, the median annual income of the nation's wealthiest 1% of households actually increased by $250,000.
Nice work, if you can get it.
The other set of numbers that help explain some of the anger circulating at the moment came in an annual survey of CEO pay commissioned by the Journal. For only the second time in two decades, the median compensation paid to people who run the 200 largest U.S. companies fell -- though you're unlikely to run into them at the local food pantry, because the average CEO still makes $2.24 million a year. That represents an 8.5% decline over last year. But burrow into the numbers a bit and you'll discover that the decrease was entirely attributable to smaller performance bonuses and the falling value of stock given as direct compensation. The CEOs' base salaries actually grew by 4.5%.
In other words, the very people who laid off millions of American workers, involuntarily furloughed hundreds of thousands of others, demanded that their employees take pay cuts and froze pensions and benefits gave themselves a raise.
These are the people who helped run the world economy into a ditch -- is it any wonder the rest of us are angry?