Local Unemployment Rate Back to 11%

The unemployment rate in San Diego County rose to 11% in March from 10.7% in February, although employment increased by 5,000 in the month. The comparable rate for California was 13% and the nation 10.2%. Local government jobs went up 1,400 from February to March. Retail trade jobs inched up 0.3% and amusement, gambling and recreation jobs rose 1.3%. Jobs in full service restaurants rose 1.4% in the month. These are possible signs of a lambent consumer recovery. Tourism (accommodation) jobs were flat -- an improvement over some previous months. Year over year, the county lost 35,100 jobs.

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Hey, didn't Big Ben Bernanke say the depression is OVER-he said it ended like 6 months ago????? This is has been the longest, and deepest, downturn of my/our lives.

BTW, the U-3 UE rate is 11%, the REAL UE rate-the U-6 rate - is at least double that.

This does kind of mute the talk of a comeback for the consumer, at least locally...

Response to post #1: Nationally and locally, underemployment is about 50% higher than reported unemployment. Best, Don Bauder

Response to post #2: We can always have luxury retail sales on the rise while unemployment remains high. In fact, one can argue cogently that the higher unemployment and underemployment are, the better the upper crust does. That's because the Fed will continue giving money away at near zero percent interest as long as unemployment remains high. Now, the big banks can borrow at zero and merely buy Treasury bonds that yield 3% or 4%. This is keeping the stock, bond and commodities markets riding high -- the old liquidity buoyancy. So the top 1% to 10%, the major owners of stocks by far, have more money to spend. We are seeing that now; the luxury retailers are doing better. Best, Don Bauder

Hip hip hooray! We're number one! We're number one!

We should do something to celebrate.

Maybe we could build another football stadium or expand the convention center to celebrate!

Response to post #5: That new football stadium should cost taxpayers $600 million or more. You can bet that those picking up the tab won't be the ones who own big slugs of stocks and are benefitting from Main Street's woes. The top 1%-10% have ways to avoid paying taxes. Best, Don Bauder

The top 1%-10% have ways to avoid paying taxes

Could you please define the top 0.1%, 1%, 5% and 10% both in terms of net worth and income. There is a world of difference between the top 0.1% and the top 10%, unless the person in the 10% segment is a trust funder or living entirely off investments. Households who have two very good salaries can do very little to avoid being robbed by the government, other than contributing the maximum to a 401-k or buying tax-efficient mutual funds/ETFs. Municipal bonds are also an alternative, but who trusts California munis?

Very wealthy hypocrites like Warren Buffet pontificate about how taxes should be higher, yet they do everything possible to avoid paying taxes. Mr. Buffet makes sure his compensation is classified as capital gains, which is taxed at a relatively low tax rate, and can create trust funds to avoid inheritance taxes. If they think the government does such a wonderful job with the money it collects, there is nothing to keep them from voluntarily paying higher taxes or paying the death tax.

The way hedge fund managers manipulate their earnings with the political class' blessing is criminal.

The upper-middle class, and to a lesser extent the middle class, are the ones who are soaked by taxes. I liked the Reagan tax rates of 15% and 28% with very few (none would be better) deductions and no difference between earned income and long-term capital gains to avoid gaming the tax code.

Response to post #7: I don't have updated figures in front of me, but in 2001 the top 1% in wealth had 40% of financial assets (stocks, bonds, etc.) The next 4% had 28%; the next 5% had 12%. So the top 10% had 80% of financial assets. The next 10% had 11% and the bottom 80% had 9% of financial wealth. Pretty disgraceful. Best, Don Bauder

I don't have updated figures in front of me, but in 2001 the top 1% in wealth had 40% of financial assets

Here is something that is very commonly tossed out in the rich are taxed too much- The top 1% pay 50% of the income taxes- which is true-and that sounds out of whack until you learn that the top 1% is account for 70% of the income-which obviously proves they are paying a lower nominal rate than everyone else.

Ronnie Rayguns tax cuts were NOT evenly distributed. Although all tax rates were cut-the bottom rates were cut minimally (as I recall 15%) while the top rate was cut dramatically ( as I recall 40%).

Read David Cay Johnston's books "Prefectly Legal" and "No Free Lunch".

He has it all laid out in black and white based on official IRS tax data. The rich have been getting richer and the poor have been getting poorer over the last 30 years. And if anyone thinks that is not true they must be koo koo.

Response to post #9: I think you will find the upper 1% has about 23% of the income but a much higher percent of the wealth. In any case, it's obscene. Yes, the Reagan tax cuts were overwhelmingly for the rich. Best, Don Bauder

Rather than focusing on the percentage reduction, a better way to look at it is whether we had economic growth and whether tax revenues increased. Reagan and the Democratic Congress cut marginal tax rates twice, the first time from ~70% to 50% and then in 1986 to 28%, with a 33% rate in a bracket above $100,000. At the same time most deductions were eliminated, including the mortgage reduction to $1 million from unlimited. All of a sudden investment decisions were based on the economic/wealth creation and not the tax shelter aspects, regardless of whether it had any economic value or not. Government revenues increased dramatically and the percentage of taxes paid by the higher income people increased.

You can feel good about having high marginal rates, but if you do not collect any revenue and you have no economic growth, as is happening in California, is anyone really better off? The class envy card can be played, but be very careful about which demagogue uses to accumulate political power and you become "them." Increasing the government's power only benefits the government and those who work for it. Individual freedom and liberty become its victim. The next few years are going to be very interesting, and I do not mean it in a good way.

As the old saying goes, be careful what you wish for, you might get it.

I think you will find the upper 1% has about 23% of the income but a much higher percent of the wealth. In any case, it's obscene.

Why is it obscene? If the wealth was ill-gotten, like in bootlegging during prohibition, then I completely agree with you. I also agree with you that executive pay, Wall Street, entertainers, etc. are overpaid. However, wealth accumulation can have far more to do about how one manages their money and lifestyle choices than anything else.

The reason I asked what the numbers are is because they are thrown around and it is important to know exactly what they are. I do not know what they are. I heard a couple of years ago that the median net worth is about $10,000. If that is indeed accurate, than I would say that many of the bottom 50% are responsible for their lack of wealth. My parents were immigrants who did not speak English and had low-paying jobs, yet in about 15 years they managed to save about $80,000. I made more money the first day out of college than their combined income. We drive an 8-year old car and an 18-year car. Many of those who have no wealth drive newer cars and are far more spendthrift.

You have the fabulously wealthy and they are in an entirely different world. However, many non-government people who retire with a net worth of $1-3 million were either small businessmen, who take many risks and create jobs, or well-paid ($80-$120,000) who lived well below their means. Creating resentment towards those who made different lifestyle choices does not help society in the long run.

There are many reasons for why income has stagnated in the middle and lower end of the scale. Illegal immigration destroys the economic power of the unskilled. Globalization hurts those who have to compete on a worldwide basis. The days of low-skill, high-pay jobs will be difficult to bring back. You have to remember that we impact this when we make purchasing decisions or support regulations to improve something 0.1% but costs 50% more. How many elitists constantly deride this country and the American worker. Go to a university staff parking lot, and how many American cars do you see there?

Back in November, Peggy Noonan wrote a piece called: "We're Governed by Callous Children. Americans feel increasingly disheartened, and our leaders don't even notice"

It ends "They don't feel anxious, because they never had anything to be anxious about. They grew up in an America surrounded by phrases—"strongest nation in the world," "indispensable nation," "unipolar power," "highest standard of living"—and are not bright enough, or serious enough, to imagine that they can damage that, hurt it, even fatally.

We are governed at all levels by America's luckiest children, sons and daughters of the abundance, and they call themselves optimists but they're not optimists—they're unimaginative. They don't have faith, they've just never been foreclosed on. They are stupid and they are callous, and they don't mind it when people become disheartened. They don't even notice."


I hope I did not come across as insensitive to the less fortunate. I know first hand what it is to be very poor and it is not the best place to be. The well off have a moral duty to assist those who are not well off. However, the less well off also have a responsibility to help themselves.

I feel very sorry for the unemployed or those who are now having trouble meeting their financial obligations. Life can change in an instant, and it is usually for the worse and not the better. Being "rich" is not as important to me as not being "poor."

====== Why is it obscene? If the wealth was ill-gotten, like in bootlegging during prohibition, then I completely agree with you ========== Come on, don't kid yourself-most the wealth is being created b/c the rich are getting all the breaks-breaks they bought and paid for through with campaign bribes to the Congress.

Just look at Wall Street-you think they have all that money b/c they EARNED it?? Or because they are smarter than everyone else?? No way. They scammed the system.

I have no problem with people who are self made-but that is certainly a minority.

Many of those who have no wealth drive newer cars and are far more spendthrift.

I don't know what you mean by "many", but you are making broad generalizations that are certainly not true of the vast majority of Americans who have no wealth.

Not everyone with a GED hits the employment lottery as a $200K comped muni fire fighter or cop.

Response to post #11: Just remember that in those years, the U.S. deficit soared out of sight. After the initial tax cuts, Reagan had to raise tax rates in ensuing years. Best, Don Bauder

Response to post #12: There are some reliable statistics at www.faireconomy.org and www.wealthforcommongood.org. The AFL-CIO has its executive paywatch. You can get information on how much CEOs of hundreds of public companies make. It's conservatively compiled. Best, Don Bauder

Response to post #13: Noonan is a good columnist. Best, Don Bauder

Response to post #13: I agree that the well off have a duty to help those who are not so well off. But are the well off fulfilling their duty? Goodness, no. Best, Don Bauder

Response to post #15: At least the bootleggers were providing a product the public wanted. Wall Street is providing products that people don't comprehend -- until they find out that their pocket has been picked clean. Best, Don Bader

Response to post #16: There is no question, however, that American consumers are far too deeply in debt. They have been buying products they don't need and thereby bolstering the Chinese economy. The U.S. government encourages them to do so. We got the savings rate up to a fairly decent level (around 6%) and now it has fallen back again. Best, Don Bauder

@ #22: Another issue: The U.S. dollar is being devalued. It is trading against the Mexican Peso at around 12-1 at the moment (not more than a year ago it was at 15-1), and that's just one example against many. However, I have read various articles in the last week that claim the Chinese are not gaining like they once were, that perhaps their trade surpluses have crested and are now declining. What gives?

You need to define "rich" first. Is it someone who makes $100k, $200k, $500k, $1M, $5M, etc. Or is it someone whose net worth is $500k, $1M, $10M, $50M, $1B, etc.. Without creating a baseline, we can be talking past each other or we may appear to be disagreeing when we are partially agreeing.

I completely agree that most of Wall Street is a con job on society with the full approval of the entire political class in DC. Just look at the revolving door between government and Wall Street--both the actual politician or bureaucrat and their spouse. It will be interesting to see what happens, if anything, with the fraud indictment of Goldman Sachs this week.

I know many people who make more than $100k and have a net worth >$1 million, with the wealthiest being a retired executive with a net worth of ~$20 million. All of these individuals have worked very hard to earn their money and have managed their finances prudently to accumulate their wealth. I also have a friend who lives in Section 8 housing and is less careful with her money than I am. I am not making a judgement, just an observation.

Although there is a strong correlation between income and wealth, that is not always true. A friend who is an accountant in an affluent area told me that she was amazed at how many people with high incomes (>$300k) did not have any investments, i.e. wealth. There was a study about a year ago that said that most millionaires lived unassuming lives. Those with the fancy house and cars were literally living paycheck to paycheck.

I am not trying to say that those with modest incomes have a harder time than those who make more money, because they obviously do. In a high-cost area like San Diego, it is even more difficult to make it because housing is very expensive. If I were just starting out, or was making $30k, I would probably move to a lower cost area. California used to be like heaven: great weather, friendly people and many good jobs. Unfortunately, the weather is the only one that has not deteriorated and the job situation has changed the most.

Just remember that in those years, the U.S. deficit soared out of sight. After the initial tax cuts, Reagan had to raise tax rates in ensuing years.

The deficit did increase because of the recession of 1981-2 that finally got inflation out of the economy, the defense build up, and the spending cuts were not followed through by Congress. Without a line-item veto power, any president has limited options to prevent spending other shutting the government down. I wish our current budget deficit were the $100-200 billion of the Reagan years instead of the $1-2 trillion today.

The federal budget is an accounting disaster. Somehow I think it is intentional to make it difficult to understand what is going on. The federal budget should have both an expense budget and a capital budget. It is perfectly legitimate to borrow money to pay for capital improvements that have a long economic life. It is beyond irresponsible to borrow money for current consumption or transfer payments.

I do not remember whether Reagan increased rates as you imply above. I do remember that when the 1986 tax agreement was passed, which is when the top marginal tax rate was lowered to 28% from 50%, the capital gains rate did increase from about 20% to 28%. It was part of the compromise to lower the marginal rate on earned income. You can consider this to be an increase, but taken together with the tax simplification, I consider it a very good compromise. The elimination of many tax breaks hurt people who were making investments solely for their tax shelter benefit and not for any economic benefit. If we had the same rates today, the hedge fund managers would at least be paying the same rate as everyone else.

I agree that the well off have a duty to help those who are not so well off. But are the well off fulfilling their duty? Goodness, no.

How do you determine what fulfilling their duty is and how do you know that people are not doing it in a quiet manner?

You either have the government intervene to force their perception of "fairness" on everyone, or people are free to privately do so. A study by a liberal professor in upstate NY (Albany or Rochester) published a book that said that those who regularly attend religious services give far more to charity than those who do not. Liberal church goers donated similarly to conservative church goers. Compassion is what you voluntarily do with your own money, it is not compassionate to have government confiscate other peoples money.

The U.S. dollar is being devalued. It is trading against the Mexican Peso at around 12-1 at the moment (not more than a year ago it was at 15-1)

Is Mexico suddenly improving, or is the US deteriorating? The exchange rate tells us that the relative position is changing in Mexico's favor. Unfortunately, I do not believe this is because Mexico is improving at a faster rate, this is because this country is on a debt binge that will destroy the dollar and our standard of living.

On #25 I should have said: I am not trying to say that those with modest incomes DO NOT have a harder time than those who make more money, because they obviously do.

Response to post #23: When currencies trade against each other, as they do now, there are changes that happen every day, every minute. The dollar was so weak for awhile. Now the euro is taking a hit. It goes on and on. As to China, the country just reported a big rise in GDP. The currency remains undervalued deliberately. Will anything happen? Can't say. Best, Don Bauder

johnsd, you make some excellent points in this series of comments. Those regarding high marginal tax rates are so true. Those are driving high income earners out of California--on paper at least, and depriving the state of any tax take from them.

Response to post #24: There are stats available on wealth and income levels -- what level of total wealth or financial wealth it takes to be in the top 1% or top 5%, etc. Those are the best guides. Few if any journalists have written as much as I have on the revolving door between the SEC and Wall Street law firms. Those firms control the SEC. (See upcoming column.) Best, Don Bauder

Response to post #25: Oh yes, some with high incomes abuse leverage and get themselves into trouble. Best, Don Bauder

Response to post #26: Presidents enter office saying they will lower the deficit by eliminating waste and fraud. Never happens. Won't. Popular entitlements such as Social Security and Medicare and ever-increasing defense spending eat up so much of the budget. In polls, people are asked what spending they could do without. It always winds up being foreign aid. But it is a tiny fraction of the budget. Best, Don Bauder

Response to post #27: One way of fulfilling their duty to the less well off would be to pay a fair share of taxes. Taxes are too regressive now on local, state and federal levels. Best, Don Bauder

Response to post #28: There are a plethora of variables too consider in trying to figure why one currency trades more strongly or weakly against another. Economic growth is just one of them. Best, Don Bauder

Response to post #29: Gotcha. Best, Don Bauder

Response to post #31: Yes, but look at the very low property taxes on homes benefitting from Prop. 13. Those are probably keeping a lot of people in California. Best, Don Bauder

Somewhat related, a fantastic article by Christopher Buckley regarding the upcoming attempt to "regulate" the financial sector:


For those not familiar with the Beltway-smart Buckley, he is the son of the late and great William F., and resigned his inherited editorship at National Review on account of voting for Obama rather than McCain. He's genuine, if not lethally clever. Don, you're going to have a lot to write about in the upcoming weeks.

Oh yes, some with high incomes abuse leverage and get themselves into trouble.

You do know tha Calpers is upping their investment portfolio in hedgefunds and private equity-using that leverage.

As you point out-leverage is a two edged sword. And Calpers found that out the hard way the past two years.

Calpers needs to be stripped of their power to invest their pension fund money in leveraged/speculative investments. It is not prident with pension money. T-bills all the way.

Response to post #39: Yes, Christopher Buckley has a good reputation. And good genes. Best, Don Bauder

Response to post #40: Pension funds including Calpers, SDCERS, and SDCERA have been taking irresponsible risks for years. Best, Don Bauder

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