Metrics

The Navigation problem

We’re sliding rapidly into a severe recession — we hope not into a full scale Depression. How do we measure the fall?

The US and many other governments and their central banks are pumping $ trillions into the economy expecting to slow decline and begin to rebuild. How will we know this massive Keynesian injection of money is working — or failing and that it is time to change strategies?

We need metrics — indicators that we non-economist people can understand.  We’ll assemble here some numbers and graphs.   What do you think we should be tracking? I’d value your ideas — and any charts you find.  Send me an e-mail at seaquist.larry@leg.wa.gov or add a comment below.

Until we come up with one or a handful of vital statistics that pretty much tell the whole economy’s story at a glance, let’s consider the metrics problem in terms of alternative dashboards — instrument panels that portray our economy through different lenses, through different windshields.  Here’s an evolving list:

The Employment Metric

President-elect Obama and his economic team seem to be focused especially on jobs — job losses and jobs to be regained with his immediate stimulus package.  Here is Washington’s current unemployment chart — about 3.3 million people working out of a labor force of 3.5 million for a November ‘08 unemployment rate of 6.4%.

From the chart we see that we need to generate about 75,000 jobs today.   Unfortunately, the problem is more complicated.  The US Bureau of Labor Statistics counts as ‘unemployed’ only those who have been out of work and looking for 6 months or less.  Go 6 months without finding a job and you fall off the edge of the data world.  Nor does the BLS count the underemployed — people who want to work full time but have to make do with part time work.  These two undercounts mean that real unemployment — people who would take a full time job if they could get it — is about double the official rate. And not to forget: our population is steadily growing — we need new jobs just to stay even.

So we need to generate well over 100,000 new jobs if we are really going to have Washington’s working families bringing home a full slab of bacon.  Can we do that?   How quickly?  Let’s check our stimulus package to see if it is coming close to what we’ll need to get employment back on track.

The Middle Class Metric

Len McComb, one of Olympia’s wiser, urges law- and budget-makers to keep the middle class in the center of the budget picture.  We know that America’s historic economic strength is a) its strong middle class and b) the ability of people who start on a lower rung to move up into that working middle class through education, hard work and the equal opportunity guaranteed by our Constitution.  Right at the beginning of our industrial revolution Henry Ford recognized that he needed to pay his workers well so they could buy the cars they were building; our labor unions have done a great deal to create America’s middle class — people who were well paid for satisfying, honorable work and who had the health benefits, working hours, and weekends that enabled them to be citizens, not just drudges.

Unfortunately, our middle class has been dwindling.  And not just recently.  Working folks have been feeling a recession for many years — incomes not keeping up with the cost of living, jobs constantly being downscaled as formerly well-paid technical people were replaced by technology or cheaper labor overseas.

So what’s the metric?  How do we measure our middle class?   I for one believe we will not emerge from this Great Recession until we have reversed the decline in the middle class.  Why?  Because these are the stalwarts that make an economy viable.  Let’s make sure that our Smart Recovery strategy is fueling a newly reinvigorated middle class of Washingtonians.  Agreed?

The single most revealing measure?

If you were allowed only one yardstick to measure our society-economy’s overall health what would you choose?  After years of working in a number of at-war and at-risk countries and cities around the world, I came to believe that the status of education for girls was the single most important telltale.  If the country is beginning to prosper, girls education will be on the rise.  But if girls education is headed down, so are the fortunes of the country.  Today’s case in point: Afghanistan, where after some early gains following the overthrow of the Taliban, rising “fundamentalist” lawlessness forces retreat on girls education.

How about here in WA?  My nomination is youth emotional/mental health.  Kids absorb and reflect the adult society.  As pediatrician friend points out (in considerable alarm) the mental health situation among our youth is terrible.  Where he used to see one kid with depression a month now he encounters several a day.  Kitsap County Public Health Director Scott Norquist echoes this concern.  “Youth mental health”, says he, “is our number one public health problem.”

So if the number goes down — the number of homeless kids, kids whose parents are worried about job and money to the point of family abuse, kids who are so distracted that they can’t perform in school — will that signal that our hoped-for economic recovery is gaining speed?

In theory, yes. But exactly how do we measure?  There is no way (at least for now) to take the emotional temper of our kids.  We’ll have to rely on personal anecdote and on the judgment of the professionals like Dr. Norquist and our pediatricians.  However we do it, here is one place I’m going to be looking for signs.