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Thursday, July 20, 2006

Weak Job Growth & Rising Inequality

Job Growth Continues to Lag as Fed Chief Bernanke Blames 'Unskilled' Workers-

Only 121,000 new jobs were added to the economy last month, a rate that falls short of simply providing jobs for new workers just entering the workforce.

Alan Abelson, in his column "Up & Down Wall Street" - Barron's 7/10/06 notes:

'As Philippa Dunne and Doug Henwood, our favorite parsers of the monthly employment reports, put it: "This was a weak report, with few signs of strength under the surface." They note that the 121,000 slots added brought the average monthly gain in the second quarter to a meager 108,000, sharply below the first quarter's 176,000 and even more sharply below the long-term average of 236,000.'

'A full 25% of the gain was from government hiring, mostly local and state. A good chunk of the 75,000 new jobs from private services were from health care and the bar and restaurant sector. That prompts our jolly duo to speculate that "maybe our new economic model is one in which vigourous eating and drinking inspire a lot of doctor visits, which reinvigorate us for a fresh round of eating and drinking." We'll drink to that.'

Fed Chief Ben Bernake was questioned in Congress on Wednesday about the continued outsourcing of well paying jobs and the resultant rising inequality between rich and poor in this country. He continued to blame the 'lack of skills' of many workers and pointed to education and 'skills upgrading' as long-term solutions to this problem.

Several Democratic senators took issue with Bernanke's interpretation, pointing out that many highly skilled positions, such as computer programming, are being lost to countries like India and China.

The fact is that the U.S. is not competitive in many areas, its manufacturing industries are basket cases, and the mountain of debt is a gathering threat to the U.S. dollar.


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