Unequality Peter Rupert Professor of Economics Chairman, - PowerPoint PPT Presentation

Unequality Peter Rupert Professor of Economics Chairman, Department of Economics, UCSB Director, UCSB Economic Forecast Project Associate Director, LAEF Economic Summit Cinco de Mayo, 2016

unequality | un · equal · i · ty | \ @ -ni-’kwä-l @ -t ¯ e \ noun 1 : the quality of being unequal or uneven 2 : the condition of being variable 3 : things that get affected differently by things

big picture

Real GDP Logged Billions of 2009$, Seasonally Adjusted 10.0 9.5 9.0 8.5 8.0 7.5 7.0 Linear Trend 1929 1940 1950 1960 1970 1980 1990 2000 2010

FOMC, April 27 statement removed global and financial concerns consumption spending has moderated painted a slightly weaker picture

FOMC, April 27 statement removed global and financial concerns consumption spending has moderated painted a slightly weaker picture result: no change in the federal funds rate

Effective Federal Funds Rate Percent 15 10 5 0 1954 1965 1975 1985 1995 2005 2015 Source: FRB St. Louis

Effective Federal Funds Rate Percent 5 4 3 2 1 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: FRB St. Louis

Real GDP Index, 2010=1, Quarterly, SA 1.15 1.10 1.05 1.00 0.95 0.90 US UK Germany France Japan 0.85 Ireland Spain Italy Portugal 0.80 Greece 2004 2005 2007 2008 2010 2011 2013 2014

Real GDP Index, 2010=1, Quarterly, SA 1.15 1.10 1.05 1.00 0.95 0.90 0.85 0.80 US 2004 2005 2007 2008 2010 2011 2013 2014

data since the April 27 FOMC meeting GDP: weak, 0.5% non-residential fixed investment: weak, -5.9% residential fixed investment: strong, 14.8% real personal income: strong-ish, 3.8%

Real GDP 5 2.9 0 Percent −5 quarterly change at an annual rate year−over−year change 2016 Q3 annualized growth rate −10 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Fixed investment Percent change at annual rate 20 10 0 −10 −20 Non−residential −30 Residential 1999 2002 2005 2008 2011 2014

Real Personal Income Percent change from a year ago 6 4 2 0 −2 −4 2004 2005 2007 2008 2010 2011 2013 2014 2016

Real Average Hourly Earnings Percent change from a year ago, production and nonsupervisory workers 4 2 0 −2 −4 Real AHE using CPI −6 Real AHE using PCE 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016

Inflation and Average Hourly Earnings Percent change from a year ago, all private workers CPI AHE 4 2 0 −2 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Unemployment Rate, Seasonally Adjusted Percent (%) Santa Barbara County [ 4.92% ] 12 California [ 5.43% ] United States [ 4.93% ] 10 8 6 4 2000 2002 2004 2006 2008 2010 2012 2014 2016

unequality

breaking down national averages unemployment earnings housing

Gini Coefficient Real per capita personal income across counties 0.18 US California 0.16 0.14 0.12 0.10 0.08 1969 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012

Estimated Gini Coefficient, 2015 0.26–0.28 Redding 0.28–0.29 0.29–0.30 0.30–0.32 0.32–0.35 Occupational Employment Statistics (OES) Sacramento California Regions Santa Rosa Oakland San Francisco San Jose Fresno Bakersfield Santa Barbara Los Angeles Long Beach San Diego

Real Hourly Mean Wages, by Area Annual Growth Rate (%) Santa Barbara County 3 California United States 2 1 0 −1 −2 2003 2005 2007 2009 2011 2013 2015

Cumulative percent change in real hourly wages United States 8 90th Percentile 75th Percentile 50th Percentile 6 25th Percentile 10th Percentile 4 2 0 −2 −4 −6 2003 2005 2007 2009 2011 2013 2015

Cumulative percent change in real hourly wages California 90th Percentile 75th Percentile 50th Percentile 10 25th Percentile 10th Percentile 5 0 −5 2003 2005 2007 2009 2011 2013 2015

Cumulative percent change in real hourly wages Santa Barbara County 8 90th Percentile 75th Percentile 50th Percentile 6 25th Percentile 10th Percentile 4 2 0 −2 −4 2003 2005 2007 2009 2011 2013 2015

minimum wages

a looming labor market issue current minimum wage $10 $15 minimum wage by 2022 let’s start by examining the data

Nominal Minimum Wage 15 California Federal 10 5 0 1947 1960 1970 1980 1990 2000 2010 2020

Real Minimum Wage (2009 dollars) 12 California Federal 10 8 6 4 1947 1960 1970 1980 1990 2000 2010 2020

Percent of Workers at Minimum Wage 12 Wage & Salary @ Fed Min 10 8 6 4 2 1980 1984 1988 1992 1996 2000 2004 2008 2012

Percent of Workers at Minimum Wage 12 Wage & Salary @ Fed Min Wage @ Fed Min 10 8 6 4 2 1980 1984 1988 1992 1996 2000 2004 2008 2012

Percent of Workers at Minimum Wage 12 Wage & Salary @ Fed Min Wage @ Fed Min Wage & Salary @ Binding Min 10 8 6 4 2 1980 1984 1988 1992 1996 2000 2004 2008 2012

Percent of Workers at Minimum Wage 12 Wage & Salary @ Fed Min Wage @ Binding Min 10 8 6 4 2 1980 1984 1988 1992 1996 2000 2004 2008 2012

Percent of Workers at Minimum Wage 12 US: Wage @ Binding Min CA: Wage @ Binding Min 10 8 6 4 2 1980 1984 1988 1992 1996 2000 2004 2008 2012

Estimated Share of Employment at or Below $10.50 per hour, 2015 6.74%–15% Redding 15%–20% 20%–25% 25%–30% 30%–39.80% Occupational Employment Statistical Regions Sacramento Santa Rosa Oakland San Francisco San Jose Fresno Bakersfield Santa Barbara Los Angeles Long Beach San Diego

Percent Making Minimum Wage by Occupation United States, 2015 65 % 4.9 % 9.1 % 3.2 % Management/Professional Service Occupations Sales 17.8 % Natural Resources/Construction/Maintenance Transportation Source: BLS

Employment by Industry Santa Barbara County 15 Trans., Ware. & Util.* 2014−2015 Growth Rate (%) 10 5 Goods Producing Leisure & Hospitality Wholesale Trade Government Other Services Educ. & Health Services Retail Trade Information 16.9 13.6 13 11.4 11.2 10.7 9.9 3.3 2.5 2.2 0 3 2.3 Financial Activites Prof. & Bus. Services Total Farm −5 0 25 50 75 100 Percent of Total Employment, 2015

housing

Zillow Home Value Index Index (100 = Pre−Recession Maximum Value) 100 90 80 70 60 50 Santa Barbara, CA [ $ 554,100 ] California [ $ 462,100 ] 40 United States [ $ 186,200 ] 2000 2002 2004 2006 2008 2010 2012 2014 2016

Zillow Home Value Index YoY Growth Rate (%) 20 10 0 −10 Santa Barbara, CA [ 3.86 % ] −20 California [ 6.3 % ] United States [ 4.84 % ] 2000 2002 2004 2006 2008 2010 2012 2014 2016

For−Sale Inventories, Seasonally Adjusted Index (Jan 2010 = 100) 120 Santa Barbara [ 874 ] California [ 70,713 ] United States [ 1,436,856 ] 100 80 60 2010 2011 2012 2013 2014 2015 2015

Zillow Home Value Index, by MSA Index (100 = Pre−Recession Max Value) San Francisco, CA[ $806,600 ] Los Angeles, CA[ $565,400 ] San Diego, CA[ $506,100 ] Santa Barbara, CA[ $554,100 ] Sacramento, CA[ $339,700 ] 100 Riverside, CA[ $304,200 ] California [ $462,100 ] 80 60 40 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Zillow Home Value Index Index (100 = Pre−Recession Max Value) 100 80 60 40 Santa Barbara[ $1,076,600] Carpinteria[ $839,000] Montecito[ $3,131,500] Goleta[ $768,800] Buellton[ $510,800] Santa Maria[ $334,300] 20 Lompoc[ $287,100] Guadalupe[ $238,700] 2000 2001 2003 2005 2007 2009 2011 2013 2015 2016

Zillow Home Value Index: Downtown Index (100 = Pre−Recession Max Value) 100 90 80 70 60 50 Santa Barbara City [ $1,076,600 ] Oak Park[ $785,000 ] Westside[ $752,100 ] 40 Eastside[ $895,400 ] Laguna[ $989,900 ] Upper East[ $1,449,300 ] 2000 2001 2003 2005 2007 2009 2011 2013 2015 2016

Zillow Home Value Index: Coastal Index (100 = Pre−Recession Max Value) 120 100 80 60 Santa Barbara City [ $1,076,600 ] Alta Mesa[ $1,162,800 ] East Mesa[ $1,413,200 ] West Mesa[ $1,214,600 ] Hope[ $926,900 ] 40 2000 2001 2003 2005 2007 2009 2011 2013 2015 2016

Zillow Home Value Index: Other Index (100 = Pre−Recession Max Value) 100 90 80 70 60 50 Santa Barbara City [ $1,076,600 ] Samarkand[ $970,000 ] Bel Air[ $1,211,800 ] Hitchcock[ $837,400 ] 40 Hidden Valley[ $882,700 ] 2000 2001 2003 2005 2007 2009 2011 2013 2015 2016

Zillow Home Value Index: Riviera Index (100 = Pre−Recession Max Value) 110 100 90 80 70 60 Santa Barbara City [ $1,076,600 ] Cielito[ $1,906,900 ] 50 Eucalyptus Hill[ $1,784,600 ] Riviera[ $2,061,800 ] Lower Riviera[ $1,387,300 ] San Roque[ $1,119,400 ] 40 East San Roque[ $952,900 ] 2000 2001 2003 2005 2007 2009 2011 2013 2015 2016