Audit Notes: The U-6ers, Jamie’s corporate welfare, The Guardian’s future

The NYT looks at those with not enough work

I like this Michael Cooper piece in The New York Times on the folks who don’t show up in the headline unemployment numbers (which are bad enough as it is).

These are basically U-6ers—workers who want full-time work but can’t find it or who are qualified for much higher-level jobs but can’t get them:

Ms. Woods’s current job has not been meeting her needs. When she began driving a passenger van last year, she earned $9 an hour and worked 40 hours a week. Then her wage was cut to $8 an hour, and her hours were drastically scaled back. Last month she earned just $233. So Ms. Woods, who said that she had been threatened with eviction for missing rent payments and had been postponing an appointment with the eye doctor because she lacks insurance, has been looking for another, better job. It has not been easy…

Garland Miller, 28, who has degrees in finance and accounting from the University of Georgia and Kennesaw State University, had hoped to land a job at a big accounting firm, and to have been able to buy a home by now. Instead he finds himself working as the lead server at a steakhouse.

The U-6 number is still 14.8 percent, by the way.

— Bloomberg View points out how JPMorgan Chase benefits from corporate welfare in the form of too-big-to-fail subsidies from the U.S. government.

Bondholders lend to TBTF banks like JPMorgan at cheaper rates because they think or know that the U.S. will step in to bail them out if they get into trouble. That’s an indirect taxpayer subsidy:

With each new banking crisis, the value of the implicit subsidy grows. In a recent paper, two economists — Kenichi Ueda of the IMF and Beatrice Weder Di Mauro of the University of Mainz — estimated that as of 2009 the expectation of government support was shaving about 0.8 percentage point off large banks’ borrowing costs. That’s up from 0.6 percentage point in 2007, before the financial crisis prompted a global round of bank bailouts.

To estimate the dollar value of the subsidy in the U.S., we multiplied it by the debt and deposits of 18 of the country’s largest banks, including JPMorgan, Bank of America Corp. and Citigroup Inc. The result: about $76 billion a year. The number is roughly equivalent to the banks’ total profits over the past 12 months, or more than the federal government spends every year on education.

JPMorgan’s share of the subsidy is $14 billion a year, or about 77 percent of its net income for the past four quarters. In other words, U.S. taxpayers helped foot the bill for the multibillion-dollar trading loss that is the focus of today’s hearing. They’ve also provided more direct support: Dimon noted in a recent conference call that the Home Affordable Refinancing Program, which allows banks to generate income by modifying government-guaranteed mortgages, made a significant contribution to JPMorgan’s earnings in the first three months of 2012.

And that’s not all the corporate welfare Jamie Dimon & Co. get.

— Here’s another good whither The Guardian piece, this one at The Economist’s More Intelligent Life. Here’s one media expert with a good take (emphasis mine):

Juan Señor is a leading expert on newspapers, a Spanish television reporter turned visiting fellow in news media at Oxford University and partner at Innovation Media Consulting, a firm which advises struggling papers. The remedies he prescribes—more explanation, stronger graphics, bolder features, full integration between print and web teams—look much like the medicine the Guardian has taken of its own accord. But when he saw the Three Little Pigs ad, he was unimpressed. “Open journalism?” he wrote in a tweet. “How about Profitable Journalism first. The Guardian lost £33m last year and counting. Muddled rhetoric, poor model to emulate.”

“We are very concerned,” Señor tells me on the phone from Los Angeles, “that everybody looks at the Guardian’s success in terms of volume of traffic. That is not a measure of success, because you might as well get into pornography. They’ve played the volume game all along. Open does not need to mean free, but the Guardian associates both things and is almost dogmatic about it, saying that if you put up paywalls you are somehow betraying the spirit of the web. There are Talibans on each side and that’s what is hurting the industry. Both extremes are wrong because they do not make money - the Times with its paywall and the Guardian being free. The truth is somewhere in the middle.” He points to the New York Times, and to Aftonbladet, a Swedish paper that has been charging online since 2003 and, he says, has just reached the point where digital brings in more money than print. “While I love the Guardian’s journalism at times, I just don’t think it’s sustainable. They’re announcing even more lay-offs, it’s a tragedy. And then they spend the money on the Three Little Pigs.”

The caveat is that the paper charges for its mobile apps.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,