Coming Soon: The Vanishing Work Force
By EDUARDO PORTER

PITTSBURGH

TO be perfectly blunt about it, Pittsburgh is getting old. Half the line workers who repair, maintain and upgrade the grid at Duquesne Light, its electric utility, will be eligible to retire by the end of the decade. Likewise, half the 6,500 nurses working at the University of Pittsburgh Medical Center hospitals will hit the typical retirement age of 55 in the next seven years. And just outside of town, at Westinghouse Electric, which designs and maintains nuclear power generators, the average age of engineers is the late 40′s.

The trend has some people worried. “A silent crisis threatens the prosperity of Pittsburgh and western Pennsylvania,” warned a report done two years ago by the Center for Competitive Workforce Development at Duquesne University. “A declining and aging population places at risk the stability of the region’s work force and opportunities for economic progress.”

In other words, there just may not be enough young workers to go around in the not-too-distant future. So the older ones may have to stick around a lot longer than they originally planned.

That may seem counterintuitive, given the hand-wringing across the country about the sluggish pace of job creation. Indeed, Pittsburgh is flush with surplus workers, judging from an unemployment rate that jumped to 5.7 percent in July from 4.2 percent three years ago. The city’s power industry, in particular, has shed about 40 percent of its jobs in the last 10 years.

Yet a peek through the demographic keyhole presents a startlingly different picture. More than 16 percent of Pittsburgh’s population is above the official retirement age of 65. By 2012, southwestern Pennsylvania could face a shortage of 125,000 workers – about a tenth the size of today’s labor force, according to the Duquesne University report.

I agree completely. This was Alan Greenspan the Republican partisan who effectively endorsed tax cuts at a time not long before the baby boom generation will begin to retire, and knowing full well the business cycles make long term budget projections iffy at best. The tax cuts were designed not to immediately stimulate the economy and then be phased out, but as long term cuts that set us towards a structural deficit that will worsen from here.

“The changes in the budget outlook over the past several years are truly remarkable,” the Fed chief told the House Budget Committee. With debt reduction in check, tax cuts appear possible because “the sequence of upward revisions to the budget surplus projections for several years now has reshaped the choices and opportunities before us.”
However, as he did before the Senate, Greenspan cautioned, “We need to resist those policies that could readily resurrect the deficits of the past and the fiscal imbalances that followed in their wake.”
Greenspan said tax cuts are desirable because, with growing surpluses, the government could start accumulating private assets, something he has warned would be harmful.
Greenspan’s endorsement of tax cuts has helped bolster President Bush’s argument for his $1.6 trillion tax relief proposal, although he has not commented specifically on Bush’s plan. However, many Congressional Democrats are angry that Greenspan appeared to be modifying his stance on tax cuts to accommodate the new GOP administration.” Money CNN march 2001
My emphasis.

Paul O’Neill wrote (well Suskind did but you know what I mean): Rubin (in the meeting of Greenspan with senators the day before the crucial hearing with the Senate Budget Committee on January 25 2001) ?said it was all about perceptions and that Greenspan might be seen as endorsing Bush?s tax cuts. ?I can?t be in charge of people?s perceptions? Greenspan said. ? don?t function that way. I can?t function that way?. ?

A very very strange remark from the FED?s chairman indeed. In my opinion that is 50% of his job and I think that his opinion too.
Hence my emphasis: in my view that sentence is rather ideological. To me it is yet another sign that Greenspan is less of the non-partisan expert than he is characterized sometimes.

Paul Krugman 6/6/04

That is a rather dramatic overstatement. A rather large percentage of Americans get health care linked as a job benefit. The company portion of the insurance payments are not counted as income on the survey. (And I don’t think the employee portion is counted as income either but I’m not sure.)

Economic Squeeze Plaguing Middle-Class Families
By TIMOTHY EGAN

NEWTON, Iowa – Sure, she is upset that she cannot afford health care, and it hurts that higher tuition costs at the community college where she carries a full load have put her deeper in debt. But at the end of this month, Molly Illingworth will suffer the worst blow yet: she is getting laid off by her mother.

“I hate to close the shop,” says Pam DeBruyn, Molly’s mother, who owns a small party and office supply store here, and also works full time as a graphic designer. She needs the designer job for the health insurance, so she will close the store, and with it will go her daughter’s employment.

In this Iowa family, one generation is trying to step through the gateway to the middle class; the other is struggling to stay in it. And it is the middle-class squeeze – rising college tuition and soaring health care premiums at a time when wages are stagnant and job creation is sluggish – that may be the sleeper economic issue of the presidential campaign.

“I feel the squeeze from both ends,” said Beth Steenhoek, a mother of two who owns a small insurance agency in Newton. Fewer people are buying insurance, she said, because of a hefty increase in premiums, and her own family insurance costs have gone up as well.

Ms. Steenhoek has refinanced her home mortgage loan, and remembers getting “about $400 a kid” in the Bush tax cut, but she said it still feels like the family budget is shrinking. And she has not even thought of taking a few days off.

“A vacation? No, I can’t leave the office.”

For Ms. Steenhoek, the economy is the No. 1 issue in the presidential campaign. She is that rare species this election year: the undecided voter. But even solid partisans are troubled by the tremors at the edge of middle-class life.

“I’m a pretty staunch Bush Republican and I have a great job at I.B.M.,” said Todd Canny, who was sharing ice cream with his three children and wife in a new mall. “But we’re paying a lot more for health care co-pays and premiums, which is through my wife’s job as a teacher. And trying to save for college for these three little ones has gotten a lot harder.”

Across Asia, Beijing’s Star Is in Ascendance
By JANE PERLEZ

NEWMAN, Australia – Chris Dunbar watched as a front-end loader carved into a 60-foot wall of iron ore glinting in the red dirt of a vast open mine in the big sky country of northwestern Australia. ‘This is as good as it gets,’ said a satisfied Mr. Dunbar, 47, a manager with more than 20 years of experience.

He was boasting about the richness of the blue-black ore at the Mount Whaleback mine, but he might as well have been bragging about the boom that has propelled economies across the Asia-Pacific region. These days, Australian engineers – like executives, merchants and manufacturers elsewhere in the region – cannot seem to work fast enough to satisfy the hunger of their biggest new customer: China.

Not long ago Australia and China regarded each other with suspicion. But through newfound diplomatic finesse and the seemingly irresistible lure of its long economic expansion, Beijing has skillfully turned around relations with Australia, America’s staunchest ally in the region.

The turnabout is just one sign of the broad new influence Beijing has accumulated across the Asian Pacific with American friends and foes alike. From the mines of Newman – an outpost of 3,000 in a corner of the outback – to theforests of Myanmar, the former Burma, China’s rapid growth is sucking up resources and pulling the region’s varied economies in its wake. The effect is unlike anything since the rise of Japanese economic power after World War II.

For now, China’s presence mostly translates into money, and the doors it opens. But more and more, China is leveraging its economic clout to support its political preferences.

Beijing is pushing for regional political and economic groupings it can dominate, like a proposed East Asia Community that would cut out the United States and create a global bloc to rival the European Union. It is dispersing aid and, in ways not seen before, pressing countries to fall in line on its top foreign policy priority: its claim over Taiwan.

….

American military supremacy remains unquestioned, regional officials say. But the United States appears to be on the losing side of trade patterns. China is now South Korea’s biggest trade partner, and two years ago Japan’s imports from China surpassed those from the United States. Current trends show China is likely to top American trade with Southeast Asia in just a few years.

China’s prime minister, Wen Jiabao, as much as threw down the gauntlet last year, saying he believed that China’s trade with Southeast Asia would reach $100 billion by 2005, just shy of the $120 billion in trade the United States does with the region.

Mr. Wen’s claim was no idle boast. Almost no country has escaped the pull of China’s enormous craving for trade and, above all, energy and other natural resources to fuel its still galloping expansion and growing consumer demand. Though the Chinese government’s growth target for 2004 is 7 percent, compared with 9.1 percent for 2003, few are worried about a slowdown soon.

Greenspan did much to make sure there would be a problem. Remember the surplus? Remember the tax cuts? Remember who supported the tax cuts because the surplus was too too large?