1990s Economic Boom Presentation

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					      The 1990s Economic Boom:
Another Period of Missed Opportunities?

               William M. Rodgers III
           Professor and Chief Economist
 John J. Heldrich Center for Workforce Development
Rutgers University, The State University of New Jersey
                    April 29, 2004

                                                    1
                  Introduction
• Highlights of the 1990s economic boom
   – March 1991 to March 2001
   – U.S. unemployment rate hit 30 year low in April 2000
      • Below 5.0% for 46 consecutive months
      • Below 4.5% for 28 consecutive months
   – N.J. unemployment rate hit series low of 3.4% in
     February 2001
      • Below 5.0% for 44 consecutive months
      • Below 4.5% for 18 consecutive months
• Tight labor markets had the following benefits
   – Created skills shortages
   – Increased inflation-adjusted wages
   – Breadth and depth of boom had disproportionate
                                                            2
     impacts
   The Boom Ended the Stagnation of Men’s Income
(Inflation-Adjusted Male Median Income: 1947 to 2001)
               35,000

               30,000

               25,000
2001 Dollars




               20,000

               15,000

               10,000

                5,000

                   0
                        1948 1951 1954 1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2001

                                                 White        Black       Asian       Hispanic

Source: Current Population Survey, Annual Demographic Supplements                                                   3
  The Boom Accelerated the Growth of Women’s Income
(Inflation-Adjusted Female Median Income: 1947 to 2001)
                 35,000

                 30,000

                 25,000
  2001 Dollars




                 20,000

                 15,000

                 10,000

                  5,000

                     0
                          1948 1951 1954 1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2001

                                                   White        Black       Asian       Hispanic

  Source: Current Population Survey, Annual Demographic Supplements                                                   4
Are We on the Verge of Missing the Opportunity
    to Build on the Successes of the 1990s?

• Our macroeconomic foundation is in jeopardy
  due to the following:
   – Recession and “Job Loss” Recovery
   – Federal and State Fiscal Policy Responses


• Is the short and long-term health of Americans,
  particularly minorities at risk?

• Is the short and long-term health of NJ residents,
  particularly minorities at risk?
                                                       5
                  Goals of Talk
• Share lessons I have learned and challenges that I have
  experienced while working to improve the economic status
  of Americans

• Describe some of the implications of the current
  economy’s health on the material well-being of
  Americans, particularly minorities

• Provide a sketch of policies and approaches that can help
  to raise the standard of living of all Americans, but would
  have a disparate positive impact on minorities

                                                                6
            Lessons Learned
• This long period of prosperity helped to generate
  job and earnings growth at levels not seen for
  decades

• By the expansion’s end, the African American
  unemployment rate had fallen below 10.0 percent

• Least skilled minorities benefited the greatest, but
  the benefits were lumpy and some places were not
  touched
                                                      7
Unemployment rates by county,
    1991 annual averages
      (U.S. rate = 6.8 percent)




                                                                           10.0% or over
                                                                            7.0% to 9.9%
                                                                            6.0% to 6.9%
                                                                            5.0% to 5.9%
                                                                            4.0% to 4.9%
                                                                            3.0% to 3.9%
                SO UR CE :   Bu re au of La bor S ta tist ic s

                             Local A rea Un em ploym en t S ta tis t ics
                                                                            2.0% to 2.9%
                             Febru ary 200 4                                1.9% or below
                                                                                   8
Unemployment rates by county,
    2000 annual averages
      (U.S. rate = 4.0 percent)




                                                                           10.0% or over
                                                                            7.0% to 9.9%
                                                                            6.0% to 6.9%
                                                                            5.0% to 5.9%
                                                                            4.0% to 4.9%
                                                                            3.0% to 3.9%
                SO UR CE :   Bu re au of La bor S ta tist ic s

                             Local A rea Un em ploym en t S ta tis t ics
                                                                            2.0% to 2.9%
                             Ju ly 2 003                                    1.9% or below
                                                                                   9
 Challenges to Extending the 1990s Boom

• Helping Employers Find Skilled Workers
  – Congressional debate on funding education and
    job training
• Inflationary Fears
  – Federal Reserve and market concerned about
    wage induced inflation
• Fighting Structural Drags in the Economy
  – Tougher enforcement of child support orders
  – Effects of incarceration
                                                  10
       Strategies for Extending Boom
(Satisfying Employers’ Thirst for Workers)
•   Investing in education and training
•   Skills shortages grants
•   Youth agenda
•   Economic arguments
    – Productivity growth vs. wage growth
    – Untapped pools of labor
       • Unemployed
       • Out of Labor Force, but want a job
       • Part-time for economic reasons

                                              11
                        The Current Recovery Compares
                        Favorably to the 1990s Recovery
 (Real GDP Growth During the Current and Most Recent Recovery)
                   10
                                                                                         8.2
                   8
  Percent Change




                   6             4.7                                                       4.5
                                                                4.2       3.9      4.0           4.1
                   4                                 3.4                        3.1
                                      2.6
                        2.0                 1.91.9     1.9              2.0
                   2                                         1.3
                                                                                                   0.5
                   0
                   -2     1        2          3        4       5          6       7        8       9
                          -2.0
                   -4
                                                     Quarter of Recovery

                                                       Nov-01         Mar-91

Source: Bureau of Economic Analysis                                                                      12
                               Jobless Versus Job Loss Recovery
                              (Cumulative Employment Growth During the Current
                                          and Most Recent Recovery)

                          3,000
                          2,500
   Number(in Thousands)




                          2,000
                          1,500
                          1,000
                            500
                              0
                           -500    1   3   5    7        9      11       13         15    17   19   21   23   25   27   29
                          -1,000
                          -1,500
                                                             Months Since Start of Recovery

                                                                      Mar-91             Nov-01

Source: Establishment data. U.S. Department of Labor, Bureau of Labor Statistics.                                       13
Lessons from the Recession and “Job Loss” Recovery

• Even in the “New Economy”, minorities are
  bearing larger burden of job loss recovery

• Education is only partially insulating
  African Americans from job loss

• Fragility of 1990s Gains

                                              14
      Decline in Inflation-Adjusted Median Household
            Income from 2000/2001 to 2001/2002
                                     0.0%
       Change in Percentage Points




                                     -1.0%
                                                     -0.8%
                                     -2.0%
                                                                                                               -2.2%
                                     -3.0%
                                                                     -3.2%
                                     -4.0%

                                     -5.0%
                                                                                          -5.0%
                                     -6.0%
                                             White   African American                   Asian          Hispanic of any race
Source: Author's calculations. Department of the Census, Median Income of Households by Race and Hispanic Origin Using 2-Year-Averages:
2000-2002. Figures are for White and African-American alone.
                                                                                                                                          15
               Unemployment Rates for College Graduates
                       by Race and Ethnicity
               5.0%                                                                                     4.5% 4.4%
               4.5%                                                                                                      4.1%
               4.0%
               3.5%
                                                                                             2.8%
     Percent




               3.0%                        2.5%
               2.5%                                              2.2%
               2.0%             1.6%
               1.5%
               1.0%
               0.5%
               0.0%
                                                 2000                                                         2003
                                                    White            Black           Asian            Hispanic
Notes: Bureau of Labor Statistics, Current Population Survey. Figures are annual averages. The Asian unemployment rate
was not available in 2000..                                                                                                     16
Unemployment rates by county,
    2002 annual averages
      (U.S. rate = 5.8 percent)




                                                                                        10.0% or over
                                                                                         7.0% to 9.9%
                                                                                         6.0% to 6.9%
                                                                                         5.0% to 5.9%
                S O U RC E : B ur e a u o f L ab o r S ta tis tics                       4.0% to 4.9%
                             Lo c a l A r e a U n e m p lo ym e n t S ta tisti cs
                             A ug u s t 2 00 3                                           3.0% to 3.9%
                    NO T E : Da ta a n d bo u n d a ri e s i n C o lo r a d o fro m      2.0% to 2.9%
                             20 0 2 fo r wa r d re fl ec t th e de s ig n a tio n o f
                             B ro o m fie l d as a co u n ty.                            1.9% or below
                                                                                               17
     U.S. Employment Rates in the “Tightest” US Labor Markets
                    (Unemployment Rate below 4% in all years from 1992 to 2000)
                    90%
                                 80%                                                               79%
                    80%       73% 72%                           76%
                    70%                                      66% 66%
                                                                                                          59%
                    60%                                                                     51%
          Percent




                    50%                                                                                                           44%
                    40%                                                                                                                  32%
                                                                                                                           28%
                    30%
                    20%
                    10%
                     0%
                                      Men                        Women                       Black Men                   Black Women
                                                                       1992          2000          2002
Notes: Estimates are for 16 and over men and women with no more than a high school diploma and nonenrolled youth that are 16 to 24 years of age with
no more than a high school diploma.                                                                                                                  18
                       US Employment-Population Ratios
                       by Educational Attainment and Age
                90%
                                        77%      76%
                80%            74%
                                                                                 70%       69%
                                                                        66%                                 67%
                70%                                                                                               64%
                                                                                                      61%
                60%
      Percent




                50%
                40%
                30%
                20%
                10%
                0%
                                 All Adults                     Less Educated Adults Less Educated Youth
                                                                   1992          2000          2003
Source: Author’s tabulations from the Outgoing Rotation Groups of the Current Population Survey.
                                                                                                                        19
                       NJ Employment-Population Ratios
                       by Educational Attainment and Age
                90%
                                        77%      76%
                80%            75%
                                                                                 70%       69%              67%
                70%                                                     66%
                                                                                                      62%         65%

                60%
      Percent




                50%
                40%
                30%
                20%
                10%
                0%
                                 All Adults                     Less Educated Adults Less Educated Youth
                                                                   1992          2000          2003
Source: Author’s tabulations from the Outgoing Rotation Groups of the Current Population Survey.
                                                                                                                        20
  US Employment Population Ratios of Less Educated Youth
                 by Race and Ethnicity

                90%
                80%                72%
                            67%           68%
                70%                                                                                62% 60%
                                                                                                                   65% 63%
                                                                                                             57%
                60%                                               51%
                                                                                          54%
      Percent




                                                                         47%
                50%                                        41%
                40%
                30%
                20%
                10%
                 0%
                                White                       African                           Asian          Hispanic
                                                           American
                                                                   1992          2000           2003
Source: Author’s tabulations from the Outgoing Rotation Groups of the Current Population Survey.
                                                                                                                             21
NJ Employment Population Ratios of Less Educated Youth
               by Race and Ethnicity

                 90%
                 80%         72% 71% 74%                                                            74%
                                                                                                                      69%
                 70%                                                                                      62%
                                                                                                                58%         56%
                 60%                                               53% 55%
       Percent




                 50%                                        43%
                                                                                           38%
                 40%
                 30%
                 20%
                 10%
                  0%
                                 White                       African                           Asian            Hispanic
                                                            American
                                                                    1992          2000           2003
 Source: Author’s tabulations from the Outgoing Rotation Groups of the Current Population Survey.
                                                                                                                                  22
         Framing the Future
• Americans have serious concerns about the
  management of the U.S. economy

• Because of choices we are making now, 1990s
  boom has potential to become a period of missed
  opportunities

• Fundamental Question for all Americans: For our
  next period of growth in prosperity, do we want a
  period of prosperity that looks like the 1980s or
  the 1990s?
                                                      23
Workers Rate the Congress on Handling of the Economy
                      by Race
                  60%
                  50%
                                                                                                            42%
                                                                                  39% 39%                         38%
                  40%                                                                       36%
        Percent




                                                                                                      30%
                  30%
                                                            23%
                  20%
                                                                   13% 13%
                  10%                        5%
                               1% 0%
                  0%
                                Excellent                        Good                Fair               Poor

                                                       White             African American     Other
  Source: Figure 4.3. Heldrich Work Trends Survey, v.6.2: summer 2003.
                                                                                                                        24
Workers Rate the President on Handling of the Economy
                       by Race
                  60%
                                                                                                               51%
                  50%
                                                                                                                     39%
                  40%                                                             33%
                                                                                               36%
        Percent




                                                            29%
                  30%                                                                   26%              24%

                  20%                                              15% 15%
                              10%           10%
                  10%
                                      0%
                  0%
                                Excellent                        Good                   Fair               Poor

                                                       White             African American        Other
  Source: Figure 4.3. Heldrich Work Trends Survey, v.6.2: summer 2003.
                                                                                                                           25
              White Households Percent Change in Mean Income Received
                          by Each Fifth and Top 5 Percent

              8.0%                                                                             7.1%
              7.0%
              6.0%                                                                           5.7%
              5.0%                                                                  4.5%
    Percent




              4.0%                                                               3.7%
              3.0%                                             2.4%       2.6%
                          1.9%               2.2%                      1.9%
              2.0%     1.4%               1.6%              1.7%
              1.0%
              0.0%
                        Lowest             Second             Third    Fourth      Highest    Top 5
                                                          1992-2000    1983-1989
Notes: Author’s calculations from published U.S. Census Bureau data.
                                                                                                      26
              Black Households Percent Change in Mean Income Received
                          by Each Fifth and Top 5 Percent

              8.0%
              7.0%
              6.0%                        5.5%                                                 5.5%
              5.0%
    Percent




                       4.0%                                 3.9%                    4.2% 3.9%
              4.0%                                             3.4%       3.4%   3.3%
                                               2.7%                    3.0%
              3.0%
              2.0%
                            1.0%
              1.0%
              0.0%
                        Lowest             Second             Third    Fourth      Highest   Top 5%
                                                          1992-2000    1983-1989
Notes: Author’s calculations from published U.S. Census Bureau data.
                                                                                                      27
 Have We Missed an Opportunity to Build
   on the Successes of the 1990s Boom?
• Recession and “job loss” recovery appear to not
  have eroded too much of the progress of the 1990s

• Simply put:
   – It will depend on the upcoming Presidential election

   – Both candidates have very different visions for the U.S.
      • Civil rights
      • Education/training
      • Labor market and macroeconomic policy

                                                            28

				
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