Family Meltdown

Via-RCP

By Robert Samuelson

WASHINGTON -- The discouraging March employment report, with a job increase of only 88,000, raises questions well beyond the dreary state of today's labor market. Prolonged high unemployment may be silently shredding the social fabric in ways that last for decades. Even before the Great Recession, men with a high-school diploma or less faced lower wages and a harder time finding work. This made them less attractive as husbands, contributing to the growth of single-parent families. Stubbornly high unemployment almost certainly aggravates these destructive trends.

It's hard to overstate the breakdown of marriage and the rise of single-parent families. Consider out-of-wedlock births. In 1980, about 18 percent of births were to unmarried women; by 2009, the proportion was 41 percent. Among whites, the increase was from 11 percent to 36 percent; among African-Americans, from 56 percent to 72 percent; among Hispanics, from 37 percent (1990) to 53 percent. Or look at the share of children living with two parents. Since 1970, that's dropped from 82 percent to 63 percent. Among whites, the decline is from 87 percent to 73 percent; among African-Americans, from 57 percent to 31 percent; among Hispanics, from 78 percent to 57 percent.

Just what caused these changes remains controversial. In his 2012 book "Coming Apart," Charles Murray of the American Enterprise Institute cited shifts in cultural norms. Having a child out of wedlock became more common and acceptable; the sexual revolution enabled men to get sex without marriage. The waning power of religion undermined the importance of family. Feminism and expanding welfare programs made it easier for women to survive -- through jobs or aid -- on their own. Liberalized divorce led to more breakups.

But there's also a more strictly economic case. In a paper for Third Way, a liberal think tank, economists David Autor and Melanie Wasserman of the Massachusetts Institute of Technology attribute the decline of marriage -- which, like Murray, they say is concentrated among the poorly educated -- to the eroding economic heft of men compared with women. Women are more independent economically; men are weaker. Marriage has lost much of its pecuniary pull.

To this hypothesis, they bring much statistical evidence. From 1979 to 2010, inflation-adjusted hourly wages for men aged 25 to 39 with only a high-school diploma fell 20 percent, while the wages of similar women rose 1 percent. Among those with some college (but no bachelor's degree), women's wages were up 8 percent; men's were down 8 percent. As important, fewer men and more women proportionally have jobs. From 1979-2007 -- prior to the recession -- the share of male high-school graduates with jobs fell 9 percentage points; job-holding by similar women rose 9 percentage points. For those with some college, men were down 6 percentage points, women up by 12 percentage points.

Women have adjusted better than men to an economy with more office work and less factory, construction and transportation activity. Autor and Wasserman fear these changes are now feeding on themselves. On average, children in single-parent homes do worse -- have lower grades, do more drugs, have higher arrest rates -- than similar children raised by two parents, who can devote more money and time to their offspring. Boys seem especially at risk because they often lack "a positive or stable same-sex role model," say Autor and Wasserman. So boys will do less well in school and less well (later) in the labor market. They will then be less appealing as husbands.

"Over the last half-century," writes Murray, "marriage has become the fault line dividing American classes." Autor and Wasserman reach the same conclusion: Their data show a tight correlation between the falling earnings of poorly educated men and declining marriage rates.

Today's dismal labor market may now further aggravate family meltdown. It's harder for men to get jobs or higher wages. Since 2007, there's been a huge exodus of people from the labor force. In March, the number was 496,000. Perhaps two-thirds of the dropouts leave because they're discouraged that they'll ever find work, estimates Heidi Shierholz of the Economic Policy Institute, a liberal think tank. (The remaining third reflects lifestyle choices and aging, including the retirement of baby boomers.) Counting many discouraged workers as jobless would raise the unemployment rate close to 10 percent instead of the reported 7.6 percent, she says.

"There are no easy public policy answers to the issues raised [here]," candidly write Elaine Kamarck and Jonathan Cowan of Third Way. And yet, there's a sliver of hope: The economic logic of marriage hasn't completely collapsed. A family consisting of one worker earning $35,000 and another $30,000 is much better off than either separately. Perhaps hardship will cause people to rediscover the cliche: Two can live more cheaply than one.

Bumper Sticker Nation

Via-RCP

By Robert Samuelson

WASHINGTON -- We are our bumper stickers. They are one way that we define ourselves and announce our various identities to the outside world: that we voted for Bush or Gore; that we're a Buckeye or a Wolverine; that we're "pro-life" or "pro-choice"; that we favor this candidate or that for school board or Congress; that our kids play soccer and won the county championship; and that we vacation in the Grand Tetons or at Disney World.

These badges of self-expression span an almost-infinite range of beliefs and behaviors. They also capture one of the enduring contradictions of American culture -- the tension between individualism and conformity. Bumper stickers are labels of personal preference and practice, but almost always, they also signal an allegiance to a larger cause or membership in some grander group. They allow us to set ourselves apart and to belong at the same time. Liberals exhort, "Wage Peace." Conservatives exclaim, "Vote Democrat, It's Easier Than Working."

Probably a majority of bumper stickers are non-political and apparently innocuous, such as the widespread bumper boast that "My Son Is an Honor Student at (whatever) School." But even these are often meant to segregate us into worthy and unworthy groups. Proclaiming the achievements of their children allows parents simultaneously to advertise their own success and to place themselves in an elite group of families who are raising exceptional offspring.

The self-congratulation offends many, including some parents who apparently think that book learning isn't the only valuable life skill or, more probably, just can't stand the condescension. In the past few months, I've jotted down some interesting bumper stickers that I've glimpsed here and there. "My Kid Beat Up Your Honor Student" was one I noticed in May in Boston. A friend reported a more poignant version outside Traverse City, Michigan:

"PROUD TO HAVE A SON IN THE ARMY: My Son Is Fighting for the Freedom of Your Honor Student."

Some bumper stickers, though biting, are just plain fun. "A Woman Without a Man Is Like a Fish Without a Bicycle" was one of 41 plastered on a Honda in Mendocino, Calif. Another was: "Inside Every Old Person Is a Young Person Wondering What Happened." A few blocks away, a carpenter's pickup had this: "So Many 2x4s, So Few Studs."

Still, politics generates the fiercest passions. "I Love My Country But I Fear My Government" was spotted on a motorcycle in Western Pennsylvania, just outside of Pittsburgh, in April. A few weeks later, I recorded "I'm Already Against the Next War" in Silver Spring, Md., a suburb of Washington, D.C.

Successful bumper stickers often inspire endless imitations. "My Other Car Is a Rolls Royce" has had many knockoffs. "HONK if You Think He's Guilty," first used in the Nixon impeachment, has been often recycled. A recent version is: "HONK if I'm Paying Your Mortgage," a protest against relief for over-borrowed homeowners.

The bumper sticker apparently originated with the introduction of the Model A Ford in 1927, according to brief histories on the Internet. The predecessor Model T had lacked bumpers, which were added as a safety improvement. Made of cardboard and metal, the first bumper stickers were attached to the bumper with wire and string. The great technological breakthrough is usually attributed to Forest P. Gill, a silkscreen printer in Kansas City who in the 1930s printed messages on canvas, a change that ultimately led to the use of adhesive paper.

We don't know much about the bumper sticker demographics: who uses them; who doesn't (certainly a majority of drivers, many of whom undoubtedly view them as eyesores); and whether use varies by income, region, religion or sex. One social psychologist claims to have discovered a relationship between bumper stickers and aggressive driving. The more bumper stickers -- regardless of their subjects or politics -- the more aggressive the driver, it's said. The theory: more bumper stickers connote greater individuality, or perhaps greater egotism, and a belief that other drivers should get out of the way.

What we do know is that the bumper sticker has now merged into the larger attack culture of slogans and sound bites. It has survived the rise of the Internet -- which is the pre-eminent platform from which Americans indulge their likes, dislikes and idiosyncrasies -- and it has the saving grace of adding more to our humor than to our rancor. Laughing does not end an argument, but it prevents it from getting out of hand.

The Big Hiring Freeze

Via-RCP

By Robert Samuelson

WASHINGTON -- Judging from corporate profits, we should be enjoying a powerful economic recovery. The drop in profits in the recession was about a third, apparently the worst since World War II. But every day brings reports of gains. In the second quarter, IBM's earnings rose 9.1 percent from a year earlier. Government statistics through the first quarter (the latest available) show that profits have recovered 87 percent of what they lost in the recession. When second-quarter results are tabulated, profits may exceed their previous peak.

So far, history be damned. The contrast between revived profits and stunted job growth is stunning. From late 2007 to late 2009, payroll employment dropped nearly 8.4 million. Since then, the economy has recovered a scant 11 percent of those lost jobs. Companies are doing much better than workers; that defines today's economy.

The most obvious explanation is that the relationship between labor and capital (to borrow Marxist vocabulary) has changed. Capital has gotten stronger; labor has weakened. Economist Robert J. Gordon of Northwestern University argues that the "shift of executive compensation towards much greater use of stock options" has made corporate managers more zealous cost-cutters in recessions and more reluctant hirers early in recoveries. Lowering the headcount is the quickest way to restore profits and, from there, a company's stock price.

In a new study, Gordon dates the economy's changed behavior to the 1980s. Until then, companies tended to protect career workers, and unemployment followed a path predicted by economist Arthur Okun in a famous 1962 paper. But now, unemployment exceeds Okun's formula, and "jobless recoveries" have become standard. After the 1990-91 recession, consistent employment growth did not resume for about a year; the lag was nearly two years after the 2001 recession. (The National Bureau of Economic Research, an economists' group, determines the end of recessions, usually when economic output begins expanding. Job growth does not automatically coincide with output expansion. The difference is accounted for by productivity gains -- greater efficiency, or more output per worker. The NBER has not yet declared an end to the last recession, though the economy began expanding in the summer of 2009.)

Aside from executives' stock options, Gordon cites weaker unions and more competition from both imports and immigrants as subverting workers' bargaining power. History also mattered. The harsh 1981-82 recession threatened the survival of many firms. The near-death experience made managers more open to bigger layoffs. What started as last-resorts slowly became routine. There was a generational change, too. Depression-era CEOs, highly sensitive to job insecurity, retired. Younger executives worried more about competitive challenges and corporate takeovers.

In hindsight, the massive job cuts of 2008 and 2009 should not have been surprising. "With the collapse of the financial system," says economist Lynn Reaser of Point Loma Nazarene University in San Diego, "companies had to conserve cash desperately, (because) they couldn't rely on outside financing." So they savagely axed jobs, inventories and new investment projects (computers, machinery, factories). In the fourth quarter of 2008 and the first and second quarters of 2009, business investment dropped at annual rates of 24 percent, 50 percent and 24 percent. Nothing like this had occurred since at least the 1940s, Gordon notes.

"Businesses can't cost cut their way to consistent profit growth," argues Zandi. "Eventually, they need to generate revenue growth that requires investment and hiring." There are some favorable signs. Companies seem to have stepped up replacement of aging computers; this could create new jobs. General Electric says its 2009 research and development budget of $3.3 billion was up 18 percent since 2006 and is supporting new products, from batteries to solar films.

But it's unclear whether corporate elites were so traumatized by the crisis that they've adopted a bunker mentality. That, as much as uncertainty over Obama Administration policies, could be fearsome. What might appeal to individual firms -- paring expenses to maximize profits, hoarding cash to protect against a future financial crisis, waiting to hire until sales improve -- could, if adopted by most companies, sabotage a stronger recovery. If labor is cowed and capital is overcautious, the economy must suffer.


The rebound in profits ought to be a good omen. It frees companies to be more aggressive. They're sitting on huge cash reserves: a record of $838 billion for industrial companies in the Standard & Poor's 500 index (companies like Apple, Boeing and Caterpillar) at the end of March, up 26 percent from a year earlier. "They have the wherewithal to do whatever they want -- hire; make new investments; raise dividends; do mergers and acquisitions," says S&P's Howard Silverblatt. Historically, higher profits lead to higher employment, says Mark Zandi of Moody's Economy.com. Except for startups, loss-making companies don't generate many new jobs.