Improved U.S. job outlook for many, but not all

The U.S. economy buffeted by yesterday’s storms seem to have made it safely, if not completely, free from the damages of The Great Recession. The recent meeting of the Federal Open Markets Committee also gave credence not only to the dovish approach of Fed Chair Janet Yellen, but also the quiet confidence in a moderate growth for the job market. She noted that “economic activity has been rising moderately so far this year. Job gains have been solid, on average, since the beginning of the year, and the unemployment rate has declined.”

There were 222,000 jobs added in June, supporting Yellen’s cautious optimism.

This of course, is welcome news and is supported by the June 4.4 unemployment rate despite the overall weak labor force participation rate of 62.8 percent, that was little changed from the previous month, as was the involuntary part-time workers -- those working part-time but would prefer full-time, as was discouraged workers at 514,000.

What did change? The gap between black and white workers, for the first time since April 2000 came in at 7.1 percent, and 1.5 percent points down from a year ago, the smallest gap, on record, between black and white Americans.

"This trend is exactly what we want to see" as the economy gets closer to full employment, said Elise Gould, a senior economist at the Economic Policy Institute. The rebound in available jobs after the recession has attracted millions of Americans back into the labor force. With the unemployment rate back at a post-recession low, the economy is nearer to the theoretical level of full employment, at which everyone who wants a job and can work is employed,” reported Business Insider.

Despite the good news, the historical lag between the two groups is still present. And according to the Bureau of Labor and Statistics is 7.2 percent, with whites at 4.0.

It’s been well established that income inequality has never been greater than it is, and the figures for black unemployment are part of that conversation.  In December of last year, it was noted by many that Illinois -- the Land of Lincoln - held the nation’s highest black unemployment, in the nation, at 15 percent, according to the Economic Policy Institute, which, a year ago showed that “Nationally, African Americans had the highest unemployment rate in June, at 8.6 percent, followed by Latinos (5.8 percent), whites (4.4 percent), and Asians (3.5 percent).”

For 2016, there were some surprises, and for the “second quarter of 2016, the African American unemployment rate was lowest in Texas (6.1 percent) . . . since the fourth quarter of 2015, the black unemployment rate in Illinois has risen 1.9 percentage points as unemployment has increased 0.7 percentage points statewide.”

“Seventeen states had African American unemployment rates below 10 percent in the second quarter of 2016—in 13 of these states, the rate was equal to or lower than the second quarter national average for African Americans (8.5 percent),” noted the EPI.

Reason, like analysis also comes into play when looking behind the figures, and the right-leaning, Illinois Policy Institute,  took a stance from their governor, Bruce Rauner, and remarked, “This has resulted from policymakers’ yearslong neglect of Illinois’ economy. Illinois’ political leadership has ignored opportunities to encourage economic growth while enacting taxes and regulations that have stunted job creation. These anti-job policy decisions have helped create a situation where Illinois’ most economically vulnerable residents are the least well-off of any state considered by EPI’s study, which focuses on the half of U.S. states with larger black populations.”

It should also be noted that IPI received a sizeable donation from Rauner, before his election, which throws their reasoning into question.

The dwindling manufacturing and industrial base, long the bulwark of unskilled labor for African-American men, plays a role, as does racial segregation in the state’s schools, and the ever growing politicization in Chicago Public Schools that has seen an unequal funding formula that is based on real estate values, and a recalcitrant Rauner, who sees current efforts at balancing the education budget, at helping their unfunded pension, which is at $130 billion, and growing.

“Illinois has the nation’s largest funding gap between high-poverty and low-poverty districts, with the highest poverty districts in the state receiving nearly 20 percent less funding than districts with the lowest poverty levels.”

With a student population that has a majority that is nearly evenly divided between black and brown students, political will comes into play, and in turn, lack of that will reduces social capital for Illinois blacks, and helps maintain that high unemployment figure.

“A study by the University of Illinois at Chicago’s Great Cities Institute in January found that joblessness among young black men in the city of Chicago was alarmingly high—with unemployment among black 20- to 24-year-olds at 60.2 percent in 2015. That report found that the decline in available jobs was directly tied to the decline of manufacturing in Chicago and “the emptying out of jobs from neighborhoods,” a contrast from the professional level services” downtown, said Chicagoist.com.

Overall for 2017, June figures showed the overall figure of  8,600 jobs added, in Illinois, with an addition of 900 manufacturing jobs added, with increases in professional and business services, and leisure and hospitality.

Local PBS Station WTTW earlier noted that “In Illinois, the white-black unemployment gap is especially wide. While nationally, African-Americans are unemployed at 2.1 times the rate of their white counterparts, blacks in Illinois are unemployed at a rate nearly three times higher than whites.”

“When unemployment decreases at a national level, we have to break it down by race,” said Janelle Jones, author of the report. “Saying simply that unemployment is down is really leaving behind entire communities who have barely recovered since the Great Recession.”

Some solutions for the corresponding rate of poverty are to increase the minimum wage -- also a national debate -  but one that is fraught with political assault and those who oppose it say, like Michael Lucci, vice president of IPI argues that the increase can only further damage prospects for African American employment

He said, “These laws effectively ban job opportunities that might otherwise employ young black men and women in the Chicago area,” and. “The first solution is to stop digging a deeper hole with minimum wage hikes and roll back the misguided minimum wage hikes in Chicago and Cook County.”

On the opposite side of the argument is Jones who says, “that African-American workers have been largely impacted by jobs in the manufacturing and construction sector which have failed to return to pre-recession levels. She also points to another EPI report that finds “no significant evidence that job losses in the post-2007 period were driven by federal minimum wage increases.” Institutions with better wages, and more worker protections and unions, Jones says, prove to be more stable for African-Americans.”

Paying lower wages to increase employment is an issue for Jones, who remarked, “If the only way we can employ African-Americans is through low-wage jobs, that is a problem,” she said. “We can either design an economy that only employs minorities at low wages, or we can design an economy that raises the floor and let’s everyone have some bargaining power and a living wage.”

After a two year absence, Illinois now has a budget

They said it could not happen, and it almost didn’t, despite a hazmat scare that closed the capital temporarily, Illinois now has a budget, after a two year absence. With the all clear, there was a vote of 71-42 by the House on the revenue bill, giving relief to fears that there might be a third year without one. Lurking behind that fear was also a desire to avoid the much dreaded junk bond status that Moody's Investment threatened to slap on the state, without it.

The override means that the state has a budget plan for the first time since the first of July 1, 2015.

Before the champagne corks are popped, the sobering news is that there is now going to be a substantial hike in the personal income tax rate, and that of corporations, both of which are unlikely to bring smiles to those who will pony up to pay it.

Adding to the drama was the temporary lockdown that “ended about 3:30 p.m. at the Illinois State Capitol. The hazardous materials situation apparently was sparked by someone throwing a substance at the governor’s office, and other areas of the Capitol,” reported the Chicago Sun-Times.

Upping the ante was the revelation by State Rep. Steve Andersson, among the 15 of the House Republicans who crossed over to vote in support of the measures, in an initial vote on Sunday, who “told lawmakers that he’s been receiving hate mail and death threats for his vote.” Game to the end he remarked, “If I have to take a couple of days of that I will be happy to do so,” to end the impasse, he said.

Other lawmakers, like Keith Wheeler, of Oswego, suggested that the votes were like putting lipstick on a pig, and exclaimed, “It’s time for us to get real,” Wheeler said. “It’s time for us to get to work and get reforms into actual statutes.”

The plan was that lawmakers were to “take up an override of three budgetary bills, including a revenue bill which will hike the income tax rate to 4.95 percent — a rate Rauner once supported — in order to help jump-start funds to the state.”

That portion increases the 3.75 percent personal income tax rate to 4.95 percent to generate about $4.3 billion. The corporate tax rate goes from 5.25 percent to 7 percent,and is expected to bring in about $460 million.

On Sunday, “the revenue bill passed with 72 votes . . .  including 15 House Republicans,” and the state Senate moved quickly to override Rauner’s vetoes on Independence Day, in a move that had Rauner erupting on Facebook that the move was a permanent tax hike, and that the school funding was a bailout for Chicago schools.

All things being not equal in this messy, and partisanship battle, “Moody’s Investor’s Services on Wednesday offered a stark reminder, placing the state’s current rating of Baa3 “on review for possible downgrade.”

In contrast two other agencies last week, S&P and Fitch praised the passage of the budget bills as progress. Still, says Moody’s, “despite the progress toward budget balance” in the legislative package, “… the plan appears to lack concrete measures that will materially improve Illinois’ long-term capacity to address its unfunded pension liabilities.”

Lacking funds, there was a backlog of unpaid bills totalling $14.5 billion dollars, and most of it owed to “social service agencies and public universities whose funds have dried up without a budget, there are some missing holes to fill, including funding for education. The $36.5 billion spending plan includes an additional $350 million to go toward a school funding formula,” noted the Times.

During the impasse, Illinois colleges, and universities, were substantially affected, especially Chicago based Northeastern Illinois University, which was forced to do layoffs to meet budgetary demands.

On Thursday NEIU released the following statement, from Interim President Richard Helldobler: ” With the passage of the Illinois budget, Northeastern Illinois University can finally after more than two years refocus its efforts from survival to building and enhancing an exceptional environment for its students. We have been tested by adversity, and we have affirmed the strength of Northeastern Illinois University during these extremely difficult times. Our University community, which includes more than 9,500 students, appreciates all those in Springfield who have worked in a bipartisan way and funded our future by supporting public higher education.”

Still on the plate is an evidence based school-funding formula, for elementary and high schools, promulgated by Democrats with a pending signature by the governor, which is unlikely to be had considering what is sure to be his wrath on the override, and the absence of his “turnaround agenda”, which called for among other things, substantial changes in collective bargaining, and also a property tax freeze that Democrats said would hurt schools in lower income neighborhoods.

The governor has said he’ll veto that bill, but the Dems “say they plan to send the bill to his desk soon and will try to override his veto. That means schools won’t get money from general state aid funds without a school formula bill either signed or overridden.”

It would also would mean another return to the capitol, this summer, and a second round of overrides; offering another protracted, and bitter, battle of the words between the governor and leaders such as Speaker of the House Michael Madigan.

The big hole is still the twinned horrors of the near $15 billion in unpaid bills, the state has accumulated, (that legislators say will be paid with loans and cash reserves), and the biggest elephant in the chamber, unpaid pensions since there’s is not enough money to fund the government employee pension system.

While there will be a sigh of relief, for some, it will most likely be mixed, the law of unintended consequences still bearing out with the weakened budget for schools, and the pension hole.

Add to those is the large tax increase, on an already burdened electorate, with much of the state paying higher than normal rates; and in Chicago, which has faced two intensive property taxes, and possibly a third, this may be a bitter pill to swallow.

Recently, there was a stay on the penny per ounce sugary soft drink tax, proposed by Cook County Board President Toni Preckwinkle, by a local judge, but many residents are now faced with the reality that Illinois is becoming more and more expensive to live in, especially for Chicagoans.