December, 2000, Vol. 123, No. 12
Précis
Where the jobs are now
A place in the sun for baby-boomers
Escaping unemployment
Density appears to be among the primary determinants of job clustering at the beginning of the 21st century, according to Gerald Carlino, in "From Centralization to Deconcentration: People and Jobs Spread Out" (Business Review, Federal Reserve Bank of Philadelphia, November/December 2000).
Three shifts, which have determined the distribution of jobs and people, have occurred since the end of World War II: 1) the shift from the frostbelt to the sunbelt; 2) the movement from central cities to suburbs; and 3) "the relatively faster growth of jobs and people in small and less dense metropolitan statistical areas (MSAs)." This last shift is what Carlino calls "deconcentration," and he has found that "jobs have grown less rapidly in MSAs where employment is dense…[and] employment has spread out faster than population during the postwar period, suggesting that the proportion of the population that is employed grew faster in small and less dense MSAs than in the big and more dense MSAs."
As the denser areas come close to the carrying capacity of local resources, "adding jobs and people burdens existing support systems, leading to increases in the cost of living," such as when rents and housing prices around a major metropolitan area rise out of proportion to their actual value. Jobs are growing faster in the less densely populated, outlying areas, because infrastructures either already exist or, with little ado, can be built to sustain the new growth. Carlino offers a suggestion to better manage the third-generational shift’s growth: "[L]ocal planners can enhance growth in dense MSAs is by adding public infrastructure to reduce congestion. Similarly, in the faster growing, less dense MSAs, local planners need to make sure that the area’s public infrastructure keeps in step with private growth." Without such planning efforts, the new "hot spots" may find themselves with the same growth problems as those experienced by the major metropolitan areas during the first- and second-generation shifts.
A place in the sun for baby-boomers
In Economic Commentary (Federal Reserve Bank of Cleveland, October 1, 2000), Jagadeesh Gokhale and Laurence J. Kotlikoff question whether the coming few decades will bring a substantial increase in inheritances and if today’s baby-boomer workers should depend upon inheritances to fund their retirement years.
They answer "no." While estimates have placed the projected sum of future inheritance receipts as high as $14 trillion by 2050 (in 1999 dollars), today’s elderly generations are wealthier because of such elements as growth in Social Security and medicare benefits during the past several decades, causing a transfer of wealth from younger toward older generations.
The post-World War II generation produced more offspring than their parents, resulting in the current and pending situation of many boomers having to split inheritance pies. "Another factor limiting the flow of bequests across generations is the remarkable postwar increase in the degree to which the resources of the elderly are annuitized," that is, composed of income that will cease to flow once the recipient dies. People are living longer and spending more years in retirement, thus depleting "the assets they would otherwise have bequeathed to their children." Gokhale and Kotlikoff conclude that although boomers stand to inherit more in the aggregate than previous generations have, it is their children, the grandchildren of today’s older Americans, who will be the ultimate beneficiaries of the economic "boom times" of today.
How well does unemployment, the economists’ traditional yardstick, measure labor market tightness, given today’s combination of historically low unemployment rates and somewhat limited wage and salary pressures? In her article "Discouraged and Other Marginally Attached Workers: Evidence on Their Role in the Labor Market," (New England Economic Review, May/June 2000), Yolanda Kodrzkycki concludes that it measures reasonably well, and that the effect of these other categories of worker on our understanding of the cyclical condition of the labor market is negligible.
Three points support her findings: 1) even when these individuals are included in an expanded measure of unemployment, the jobless rate thus measured remains the lowest in thirty years; 2) as a group, marginally attached workers are less likely to become employed or remain employed, because they are more concentrated than the unemployed in demographic groups whose employment-population ratios are low; and 3) unemployed workers have been highly successful in finding jobs in the last several years, resulting in a sharp reduction in the number of marginally attached workers.
The last point—seemingly contradictory—is a reflection of the simple fact that fewer people are entering this category. Kodrzkycki notes that "a greater share of the marginally attached in 1997–2000 reported finding a job the following month than was the case during 1994–96. The monthly job-finding rate for discouraged workers increased from 10 percent to about 14 percent, and that for other marginally attached workers increased from almost 11 percent to almost 16 percent." Even so, the discouraged and the marginally attached workers found employment at a rate less than half that of the unemployed.
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