CCAP: 48% of workers over-educated for their jobs

The center on College Affordability and Productivity release a report in January 2013 detailing that the workforce may be over educated compared to actual job requirements. The paper, called "Why are recent college graduates underemployed." is here. 

There are several highlights in the report.

We maybe over investing in college education. While the pay premium due to a college education is large, not every will find a good paying job.

College education may not be the answer to rising unemployment or increasing earnings.

One is that 48% of recent college graduates are in jobs that require less than a college education.  Eleven percent require less than a college education and 37% require only high school level knowledge or less.

ILO: Global Unemployment is Rising

The International Labor Organization release a report called "Global Employment Trends 2013". The report notes a second dip in employment due to the global recession of 2007.

Here are some hightlights

Half of the new unemployed (28 million) in 2012 were in advanced countries.

There are an estimated 197 million people unemployed globally.

BBC: Grace Amey-Obeng's beauty company in Ghana

The BBC story of the Ghanaian Beauty Company FC Group is here.  The owner trained in "beauty therapy"  in the UK then returned to Ghana.  She started giving advice on skin cremes and then created a product for the lower priced market.

The stories comes from the BBC series African Dream which shows how one successful business person developed their business in Africa.

JEEP (Jamaica Emergency Employment Program

We are reading about JEEP (Jamaica Emergency Employment Program) which is a job creation program.  The program will provide employment to 5000 Jamaicans at a cost of US$45 million dollars. The program was pushed for by Portia Simpson-Miller's People's National Party.  The PNP is the party of the left and the Jamaica Labor Party is the right of center party.  Under the JLP, Jamaica sponsored a similar porgram called JDIP(Jamaica Development Infrastructure Program) which cost US$400 million.

Jamaica has one of the highest debt to GDP ratios in the world (125%) and faces problem with crime and unemployment. Jamaica has approximately US $13 billion in debt or about $8000 per person.  In 2009 debt service consumed 65% of revenues.

The IMF restructured Jamaica debt in 2004 but has been unwilling, despite record low rates, to renegotiate again.

In 2010, the IMF agreed to a the Jamaican Debt Exchange(JDX) which exchanged high interest short term borrowings for lower interest, long-term debt.

Jamaica economy is small, service based economy based on tourism, remittances and buaxite exports.

Many believe the banks and IMF are making an example of Jamaica by not forgiving or restructuring it's debt.

Jamaica is a middle income developing country which has seen either zero or miniscule GDP growth for the past 20 years.

The UK guardian has a story on Jamaican Debt Crisis here.

The 2012-2013 national budget of Jamaica is here from the Gleaner.

Jamaica Debt Exchange press release from UNDP.



Sources:

CIA worldfact book
IMF
World Bank

ShoreBank

This is an old story I just discovered.  ShoreBank, the nations largest community development bank(community development financial institution[CDFI]), was declared insolvent by the FDIC on August 20, 2010.  The bank was well known for making loans on south side of Chicago.

The bank had a dual mission to serve the community as well as make a profit.

To quote the FDIC press release: "Shorebank experienced asset quality problems that centered on residential rehabilitation loans (single and multi-family) and condominium conversion loans.  Loan and operational losses depleted capital to the point where the bank was no longer viable."

Here is the FDIC press release.

The FDIC Information is here.

Crain's Chicago Business is here. Crain's story is about $100 million loss in 2010 and 2011 after $100 million dollar loss in 2009. Crain's also had a link to and FDIC audit in 2007 warning the bank about deteriorating loans. Here.

ShoreBank was acquired by Urban Partnership Bank.

And if you are really losing sleep, here is the purchase and asset assumption document, "the deal", between the FDIC and Urban Partnership Bank.  Basically, the FDIC take 80% of the loss on the bad loans.  The agreement is here.

Cuddly or Cut-Thoroat Capitalism

In the US, you would never know it, but there are different kinds of capitalism. In the US we have more conservative, individualistic, winner-take-all type with limited government. Some call this "Cut-Throat" capitalism. Other countries operate by the same market principles but provide a stronger social safety net and more government activism in the marketplace. Their version of capitalism has come to be called "Cuddly Capitalism". Most of the "cuddly" countries are in Europe especially Scandanavia. Many promoniant economists are debating which type of capitalism is more innovative. And also which one provides more growth. The VOX website has two articles: Cuddly vs. Cut-Throat Capitalism featuring the work of prominant economist Daron Acemoglu. A second debate centers on growth and innovation. Are nordic countries less innovative ?

Economist: Kibera (Kenya) slum is economic hotspot

The economist has a nice and positive story about economic activities in the Kibera slum in Nirobi, Kenya. The story called "Boomtown Slum" is here. The story details much of the daily life and economic activities in Kibera. Is skips over the ethnic clash, gangs, and missing government services.

Improving US manufacturing: Jan 2013

The Joint Economic Committee of the US Congress released a report on US Manufacutring Policy. The report lists some non-controversial ways the government can support manufacturing in the US. The report: Manufacturing in America was released in January 2013. The proposal are: 1) Improve education and training in Science, Technology and Math 2) Expand transportation infrastructure 3) Provide tax incentives such as r&D tax credit or acceralted depreciation. It also mention a credit for US based manufacturing. 4) Enforce intellectual property rights 5) Encourage China to stop undervaluing it's currency

Obscure Reference of the Day: PENBOTEC 400 -- Fruit preservative

Ever wonder why food and fruit don't spoil any more ? Because they are made with or covered with preservatives like Penbotec 400 from Janssen Pharmaceutical, Belgium. Penbotec 400 is a spray on fruit preservative with pyrimethanil which is a broad spectrum fungicide. We won't comment one whether it's good or bad. However, we will tell you to: Always wash your food !!! Including meat, vegetables, and fruits. We were looking at Penbotec 400 because it appears in a bill to temporarily waive the import tariff. The house routinely waves tariffs on imported chemicals as a favor to importing companies in their home states. The companies lobbyist then make a campaign contribution to the candidate. The house bill is here. Tax payers for Common Sense has an excellent database of all the tariff waivers proposed for 2012. TCS database of tariff waivers is here.

Government Job Creations Works but is Difficult

The Evil Black Economist Team has long been in favor of government creating jobs for the unemployed. Job holders learn, skills, pay taxes, are happier, have better self esteem and use less government support. The government should be the "employer of last resort". In the US the federal government created jobs during the depression. All jobs have some make work component. Restocking a return, fixing an error and preventing a mistake. However, some jobs have a much larger make work component, Lots of municipal jobs can be classified as make work jobs. Jobs such as police, fire, security guard, homeland security, armed forces and litter collection add little to no true value to the economy. Other jobs like social worker have a medium sized make work component. A good test is when the job is complete at the end of the day: was anything created. Was anything lasting built. If the answer is nothing is built, nothing was created, no one was educated nor road constructed then it is a make work job. Our definition of a make work is a job with no tangible output. Or a job that prevents harm to people and property. Having said all that, we are in favor of make work jobs. Make work jobs are the most efficient use of resources by society while yielding the greatest overall happiness. Once society agrees to pay unemployment insurance to the unemployed and income support to least fortunate in society, one must ask what is the best way to spend the money. giving the money as a gift or letting people earn it. Clearly, helping people earn the money is a better choice. Developing such a program is incredibly difficult, complex and expensive. The benefits (higher taxes, skills, crime reduction) do not accrue to entity paying the bills. It also requires a level of long term thinking that many government entities cannot handle. It sustained political support. The Labour Party of the United Kingdom came to a similar conclusion when it created the future jobs fund October 2009. The fund, which subsidized jobs for young people was a response to a very high youth unemployment rate in Britain. The program was cancelled by the Conservative government recently because of austerity. Here is a recent report analyzing the cost-benefit of the program. Impacts, Costs and Benefits of the Future Jobs Fund. The Guardian has a story summarizing the report which says the fund generated a positive return of 7750 British Pounds per worker in the program.

US Prison Statistics for 2011. 1% decrease.

The US Department of Justice released it's annual survey of the prison population. The number of prisoners at the federal and state level decreased from 1,613,803 to 1,598,780 a difference of about 15,000 or a less than 1% decrease. Prisoners in 2011

NELP: Mid-wage jobs have yet to recover

The National Employment Law Project confirms so sad news we have all suspected. Most of the jobs created since the recession have been low-wage jobs. About 60% of the jobs eliminated were mid-wage jobs yet only 22% of the new jobs were mid-wage. NELP report is here.

Ten States Increased their Minimum Wage on January 1st, 2013

The following states increased the minimum wage above the federal minimum wage (FMW = $7.25) on January 1st, 2013.  Only Vermont, Oregon, and Washington State offer minimum wages that are significantly  (20% or above) above the federal minimum wage.  The rest are withing 8% or less of the FMW.

You can only hope states are setting the stage for future increases. It is good to see some traditionally conservative states like Arizona, Florida and Montana raising the wage.


Vermont          $8.46 to $8.60
Rhode Island   $7.40 to $7.75
Arizona           $7.65 to $7.80
Colorado         $7.64 to $7.78
Ohio                $7.60 to $7.85
Oregon            $8.80 to $8.95
Washington      $9.04 to $9.19
Montana          $7.65 to $7.80
Florida             $7.67 to $7.79
Missouri           $7.25 to $7.35

The current federal minimum wage is $7.25.

Vermont's minimum wage is indexed to inflation and the cost of living.

Washington State has the highest minimum wage at $9.19 per hour. It is indexed to inflation.  It was created by a voter initiative 688 approved in 1988. 

Anti-Lobbying Site: American Anti-Corruption Act

Here is a site that wants to severely restrict lobbyist influence on politicians. It bill they propose would limit donations, expand the definition of a lobbyist, and impose more stringent rules on lobbying.

The American Anti-Corruption Act.

Everett and Jones Barbecue Restaurant in Oakland, CA

I saw Everett and Jones Barbecue on Nightly Business Report which had a nice puff piece.  I read some of the review on the internet and one dogged the place out.

Everett and Jones Barbecue

Cleveland Fed: College pays only a little more than high school in some fields.

There has been a recent slow down in wages for college graduates.  Many graduates are finding it hard to start their careers in their chosen fields.   Jonathan James studies the difference in wages based on college major.  Engineering comes out best.

The college wage premium by Jonathan James

Cleveland Fed: Labor's Declining Share of National Income

The Cleveland Fed has a piece on labor (vs. capital) receiving a declining share of national income.

Labor's Declining Share of Income and Rising Inequality by Jacobson and Occhino.

Traditionally labor income ad benefits have received about 2/3 of all national income and capital has received 1/3 of national income.  The article supports the idea that for the pass 30 years the returns to labor have been dropping. The result is flattening wages and increasing income inequality.