Labor Markets and Elections, Then and Now
by DHinMI
Fri Nov 28, 2003 at 04:13:54 PM PDT
Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources. The Beige Book summarizes this information by District and sector.
This is from the December 8, 1999 Beige Book, released after almost seven years of the Clinton presidency and 47 weeks before the 2000 election:
Tight labor markets were reported in all Districts. Workers that have been in especially high demand include high technology workers in Boston and Atlanta, carpenters in Cleveland, skilled workers in St. Louis, and entry level employees in a variety of industries in Kansas City. Stores in Boston, Philadelphia, Chicago, Minneapolis, and San Francisco said they were having difficulty finding temporary workers for the holiday shopping period.Wage increases were described as persistent in most Districts. Reserve Banks received reports of increases ranging from 3 to 10 percent on an annual basis. Although the rate of increase did not appear to be accelerating generally, there were some reports of higher recent salary increases in some industries and regions. Richmond District employers noted substantial wage increases recently. Atlanta noted significant increases in compensation for health-care workers. The use of signing bonuses has spread, according to reports from several Districts.
My, how times change. This if from the summary of the Beige Book released this week, three years into G.W. Bush's presidency and 48 weeks out from the 2004 election:
Labor markets across the nation generally improved or remained stable, with several districts noting a slowing in layoffs. Stronger demand for temporary workers was noted by Boston, Richmond and Minneapolis; Chicago added that the higher demand for temps was widespread. Several districts indicated that firms are waiting for sustained increases in orders before hiring permanent workers, although Boston reported some increases in permanent placements by temp agencies. Firms had difficulty finding some specialized workers in the Kansas City district, but labor markets remained slack there overall. Dallas and San Francisco also reported slack labor markets, although Dallas did note fewer layoffs. Minneapolis also reported increased hiring plans in some areas. Labor markets remained steady in the Cleveland and Atlanta districts as a whole, with few signs of impending increases in employment.Wage pressures were mostly subdued, although almost all districts reported concerns about escalating health and other insurance costs. Several districts noted that employers were shifting more health insurance costs onto employees, with Kansas City adding that some small firms are eliminating health insurance entirely. Dallas cited rising health insurance costs as a factor, making firms reluctant to add new employees. New York reported that bonuses in the securities industry are expected to be 20 percent higher than last year.
If you're trying to construct a winning electoral college map for George Bush, there are particularly worrisome data in two of the key Federal Reserve districts . Between them the Cleveland and St. Louis districts encompass much or all of several key states in which the election is likely to be decided, such as PA, OH, MO, AR and TN.
From Cleveland:
Contacts noted that it remains easy to find qualified job applicants...A variety of businesses also reported rising labor costs due to increases in health insurance premiums. Despite an apparent pick-up in economic activity, few contacts indicated any intention to increase staffing levels outside of seasonal additions...
Breaking with the recent pattern, growth in core deposits at District banks slowed. Some banks actually reported a slight decline in deposits in the last six weeks. Loan demand remained mixed in recent weeks. As many contacts reported an increase in their commercial lending levels as reported no increase. All but one contact reported that their consumer lending levels fell or were unchanged. Mortgage refinancing is down from recent record levels...
And from St. Louis:
Firms in the customer support systems, credit card systems, data management, savings and loans, and airline industries reported reduced business activity and plans for layoffs. Higher utility prices, fewer orders, weaker production, and increased health insurance costs are among the factors reported as hindering economic activity in the District.
Wage stagnation, slow job growth during an economic recovery, skyrocketing health care costs, loss of manufacturing jobs, and astronomical growth in the federal debt...it sounds like 1991 all over again. The Bush administration is partially trying to avoid an economic repeat of 1992 by devaluing the dollar, making our U.S.-made products more competitive domestically and in international markets.
But there are now approximately 3 million fewer jobs in the United States than there were in March of 2001. (See how that performance compares to 10 other recessions since 1945.) But what should really keep Rove awake at night is the state-level data: in February, 1991, 16 states had fewer jobs than they had when the recession had begun 31 months earlier. In 1988 George H.W. Bush had won 13 of these states, but four years later he lost all but one. This time there are 34 states that have fewer jobs than they had when the most recent recession began 31 months ago, including every state along the Ohio and Mississippi rivers, the likely ground zero of the 2004 election. 20 of these 34 states went Republican in 2000, and if all the Gore states stay with the Democrat in 2004, the Republicans will have to hold on to at least 18 of these 20 states that are among those suffering the most from Bush's job on the jobless recovery.
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