Posts Tagged ‘employment’

Factoids: The state of the economy …

September 21, 2012

The economic analyses done by Mort Zuckerman at US News are always laden with cold facts.

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Read the article for the prose. Here are the factoids:

  • Annual wage increases have dropped to an average of 1.6 percent, the lowest in the past 30 years.
  • A Census Bureau analysis  indicates that median income in 2011 had fallen to $50,054, the fourth straight year of decline.
  • Layoff announcements have risen from a year ago and hiring plans have dropped dramatically.
  • 5 million people have now been out of work for 27 weeks or more. That’s roughly 40 percent of the unemployed.
  • The average period of unemployment is close to 40 weeks.
  • Fewer Americans are at work today than in April 2000, even though the population has grown by 30 million people since then.
  • Older people are not leaving the workforce at the same rate as in the past … employment in the age group of 55 and older is up 3.9 million, even as total employment is down by five million.
  • The so-called quit rate has sagged to the lowest rate in years.
  • Young workers now face double-digit unemployment and job prospects for young workers aren’t very good.
  • As a result, the birth rate has just hit a 25-year low of 1.87 births per woman. And
  • Of jobs that have been added, more than 40 percent of new private sector jobs are in low-paying categories such as leisure and hospitality, bars, and restaurants
  • Millions of people who had good private sector jobs are now dependent on the government for life support.
  • Roughly 15 percent of the population, a record, representing over 46 million Americans, are in the food stamp program, compared to the 7.9 percent participation from 1970 to 2000.
  • A record 11 million-plus Americans are now collecting federal disability checks. Half of them have come on board since President Barack Obama took office.

Sure doesn’t look like we’ve turned the corner yet.

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Sorry to harp … but, the streak continues

September 7, 2012

Some loyal readers have suggested that I get off this case … That I’ve made my point.

I promise that I’ll stop writing about BLS reporting bias when the streak ends.

Now we’re up to 77 out of 78 weeks — and, at least 18 weeks in a row — that the BLS’s “headline number” has under-reported the number of initial unemployment claims … and cast the jobs situation as brighter than it really is.

Based on yesterday’s BLS report, the number for the week ending August 25 was revised upward from 374,000 to 377,000.

In itself, the 3,000 isn’t a big deal.

But, in context it is

Again, I ask: statistical bias or political bias?

If the former: fix it already, BLS.

Hint to BLS: just add 2k or 3k …  or .8% to your prelim forecast !

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About the 4.5 million jobs that Obama has (or has not) created …

September 6, 2012

The Dems are touting 4.5 million jobs created by President Obama.

CNN says that the number  is an accurate description of the growth of private-sector jobs since January 2010, when the long, steep slide in employment finally hit bottom.

But – and it’s a BIG but — while a total of 4.5 million jobs sounds great, it’s not the whole picture.

According to CNN:

Nonfarm private payrolls hit a post-recession low of 106.8 million January 2010 … The figure currently stands at 111.3 million as of July.

While that is indeed a gain of 4.5 million, it’s only a net gain of 300,000 over the course of the Obama administration to date since the private jobs figure stood at 111 million in January 2009, the month Obama took office.

And total nonfarm payrolls, including government workers, are down from 133.6 million workers at the beginning of 2009 to 133.2 million in July 2012. There’s been a net loss of nearly 1 million public-sector jobs since Obama took office, despite a surge in temporary hiring for the 2010 census.

Meanwhile, the jobs that have come back aren’t the same ones that were lost.

According to a study released last week by the liberal-leaning National Employment Law Project, low-wage fields such as retail sales and food service are adding jobs nearly three times as fast as higher-paid occupations.

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Millennials: More responsibility, more flexibility … and, oh yeah, more turnover.

August 30, 2012

Punch line: Many companies are beginning to make significant changes for Millennials in order to drive retention and lower turnover rates … uphill battle?.

* * * * *

Excerpted from WSJ, “More Firms Bow to Generation Y’s Demands”

They’re often criticized as spoiled, impatient, and most of all, entitled.

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But as millennials enter the workforce, more companies are jumping through hoops to accommodate their demands for faster promotions, greater responsibilities and more flexible work schedules—much to the annoyance of older co-workers who feel they have spent years paying their dues to rise through the ranks.

Employers, however, say concessions are necessary to retain the best of millennials, also known as Generation Y, which is broadly defined as those born in the 1980s and 1990s.

They bring fresh skills to the workplace: they’re tech-savvy, racially diverse, socially interconnected and collaborative.

Moreover, companies need to keep their employee pipelines full as baby boomers enter retirement. 

Gen Y will comprise more than 40% of the U.S. workforce by 2020 … far outnumbering any other generation.

Some critics contend that Gen Y is no different from previous generations. 

However, a 2010 Pew Research study found that while baby boomers — generally born between 1946 and 1964 — cited work ethic, respectfulness, and morals as their defining qualities, millennials chose technology, music and pop culture, and liberal leanings — followed by superior intelligence and clothing as their defining qualities.

Millennials are also likely to prioritize lifestyle over salary, and to foresee changing careers.

They want the opportunity to stand out without dealing with routine or hierarchy.

Even if they get what they want, they’re likely to move on.

“I mean, what kind of millennial would work for the same company their whole life?”

Edit by BJP

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Trick question: Did employment grow faster under Bush or Obama?

August 12, 2012

Team Obama says “Bush’s failed policies of tax cuts to the rich got us into this problem”.

Oh, really?

Team Romney says “The worst recovery ever”.

Oh really?

Let’s cut to the chase.

First, I assert that the housing crash was a bi-partisan effort brewed over several decades … hard to say that it was caused by Bush’s tax policies.

Second, I’ll give Obama that he inherited a mess … and, I’ll start counting from the trough.

Well, well, well.

Turns out that – with the above assumptions — the growth in employment under Bush and Obama (to date) is pretty much equal … at about a 1% compound annual rate.

Hmmm.

On one hand, Obama got handled a financial collapse … not just a garden variety business cycle recession.

On the other hand, Obama continued the Bush tax rates … and he (and the Fed) have expended trillions in fiscal and monetary stimulus.

But, Obama continues to run around saying that the Bush tax rates are the cause of all evil … and eliminating them for the wealthy will get us out of this mess.

Oh, really?

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The streak rolls on: BLS under-reports initial unemployment claims … again!

August 10, 2012

I can post this post on auto-generate, I guess …

Now we’re up to 73 out of 74 weeks — and, at least 14 weeks in a row — that the BLS’s “headline number” has under-reported the number of initial unemployment claims … and cast the jobs situation as brighter than it really is.

Based on Thursday’s BLS report, the number for the week ending July 28 was revised upward from 365,000 to 367,000.

In itself, the 2,000 isn’t a big deal.

But, in context it is

Again, I ask: statistical bias or political bias?

If the former: fix it already, BLS.

Hint to BLS: just add 2k or .8% to your prelim forecast !

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* * * * *

Almost forgot …

The 4-week moving average of initial unemployment claims bumped up 2,250 to 368,250 … suggesting that the corner hasn’t been turned yet.

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Were jobs added or lost in July?

August 6, 2012

Basic answer: it depends.

It depends on which BLS survey you look at.

The BLS’ “Establishment Survey” polls businesses and collects data on hiring and firing.

It says that 163,000 jobs were added in July … reversing a recent slide.

The BLS’ “Population Survey” polls people instead of businesses and collects data on whether they’re employed, unemployed, looking for work.

The Population Survey says that 195.000 jobs were lost in July … which is why the unemployment rate increased to 8.3%

Note:

  1. Both surveys are conducted by the BLS
  2. The Establishment Survey – which heavily guesstimates small biz hiring & firing —  is the headline jobs number.
  3. The Population Survey is the basis for the headline unemployment rate
  4. From the lips of the BLS: “Both the payroll and household surveys are needed for a complete picture of the labor market. The payroll survey provides a highly reliable gauge of monthly change in nonfarm payroll employment. The household survey provides a broader picture of employment including agriculture and the self-employed.

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Re: Unemployment … this chart says it all

August 2, 2012

There are a lot of of confusing – and sometimes misleading – numbers thrown around to characterize the state of the employment market.

As we’ve been harping the past several weeks, the BLS has been consistently underreporting the weekly unemployment claims numbers that get headlined on the news – only to revise them up quietly the following week.

Similarly, there are lots of questions about the BLS’ seasonal adjustment factors … which sometimes cause more variance than they explain.

Finally, there’s understandable confusion about the reported unemployment rate and the labor force participation rate.  Since the latter has been going down, the former benefits – i.e. there are fewer unemployed people because some (or many) have left the work force.

The St. Louis Fed published a chart that puts the factors into perspective.

The chart is brilliant in its simplicity.

It simply plots the percentage of the able-bodied population who are employed.  The difference to 100% is the percentage of able bodies that either choose not to work or can’t find jobs.

What it shows: prior to the financial crisis, about 63% of able bodies had jobs.

The rate fell quickly to about 58.5% and has – save for some statistical noise – hasn’t budged despite the trillions of  fiscal and monetary action.

In other words, about 1 in 20 (the difference between 63% and 58.5%) able bodied folks who used to work, aren’t employed now … and the trend isn’t good.

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How productivity creates jobs … and how gov’t stifles productivity.

July 17, 2012

Nice piece in today’s WSJ … here are snippets:

Punch line: Productivity — the ultimate engine of growth and better living standards — always  swims upstream against those that fight it. Unions, regulations and a bizarre tax code  lock in the status quo.

But, doesn’t productivity — getting more output with less inputs — destroy jobs?

Sure, but it creates way more than it destroys by creating technological avenues and lowering the cost of business

So how does productivity result in more employment?

Some new technology comes along that allows something never before possible. Cash from an ATM, stock trading from an airplane’s aisle seat, ads next to Google search results.

Cheaper technology becomes a platform for others to create or expand businesses that never before made economic sense. Think, eBay and Amazon.

Productivity  attracts capital to satisfy new consumer demands. In a competitive economy, productivity—doing more with less—always lowers the cost of products or services:

And, private investment does a better job of allocating capital than any elite economist or politician picking pork-barrel projects and relabeling them as “investments.”

Entire WSJ article is worth reading

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Book cookin’ alert …

June 1, 2012

The BLS reports May’s unemployment number at 8:30 this morning.

If the headline is “Unemployment rate clicks down to 8%” … I’ll scream.

You may remember that job growth was anemic last month (under 125,000), but the unemployment rate dipped to 8.1% as more than 350,000 quit looking for jobs.

In advance of today’s BLS report …

The Commerce Dept revised down its Q1 GDP estimate to 1.9% … … its original report a month ago was an increase of 2.2%.

ADP reported 133,000 new jobs … after revising its prior month estimate down by 6,000.

Gallup’s mid-May unemployment rate rate hovered around 8.2%.

And, unemployment claims for last week increased by 10,000 … after revising the prior week’s claims up (of course).

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My bet: miraculously, the unemployment rate will stay constant at 8.1% … though every other piece of data says it it should bump up.

We’ll see.

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What’s up with women leaving the labor force ?

May 14, 2012

Last week, we were fast out of the blocks posting about the drop in the labor force participation rate: How to make 11% unemployment look like 8.1% 

The essential points raised:

  • Since President Obama was inaugurated, the U.S. working age population has increased by roughly 8 million people.
  • During that same period the U.S. labor force – folks either holding or looking for jobs – stayed roughly constant at about 154 million.
  • So, it arithmetically follows that the labor force participation rate declined … from about 66% to 63.5%

Here’s the money chart from last week’s post:

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The long view

Some analysts have seized on the fact that  324,000 Women Dropped Out of Labor Force in Last Two Months.

Are women really leaving the labor force in droves? ?

Let’s start with the long view:

Back in 1960, women’s labor force participation rate was below 40%.

Over the next 40 years, it bumped up about a point a year, hitting 60% in 2000.

The demographics are well known.  More women chose to pursue careers and some families needed 2-wage earners in the family in order to make financial ends meet.

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The Shorter View

But, the long view masks what’s been happening the past couple of years.

Let’s shorten the time frame back to only 1990, and increase the granularity of the charting scale.

During the Clinton Era, women’s labor force participation rates continued to climb at the historical rate and reached a historical peak a bit above 60%

The participation rate fell back slightly during the eight Bush years … from 60% to about 59.5%

During the 3+ years since Obama’s inauguration, the women’s labor force participation rate dropped 2 points from 59.5 to 57.5%

Hmmm.

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So, what’s going on?

Pundits are serving up a few explanations:

1. The labor market has absorbed the historically pent up supply of women wanting to work and able to find jobs.

2. Some women have discovered what many me have know for centuries – work often isn’t as fulfilling and rewarding as it’s made out to be.

3. Some women have done the math and figured out that compensation levels are sometimes inadequate to fully cover the costs of work clothes, commuting, child care, etc.

4. As government benefits have increased, some women at the lower rungs of the economic ladder have concluded that they’re better off not employed than to take a low paying job. 

Regarding the last pint, according to the WSJ, in some high-benefit states women need to earn $30,000 or more to compensate for the benefits they lose if they get a job.

Considering that a full-time minimum wage job only pays about $20,000  [ 2,000 hours times $10} …  at least part of the explanation for declining labor force participation rates may be purely rational economics …

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Told you so: Companies emerge from recession more productive.

April 12, 2012

Way back in July 2009, we posted “Private sector jobs won’t be coming back any time soon”

Our logic was basic business:

First, you can’t let a good crisis go to waste, right?

Businesses always use tough economic times to clean house.

Fat builds in all organizations over time. In “normal” times, it’s difficult to get rid of dead wood. Employment laws – perhaps well-intended originally –- serve to protect slackers by making it cumbersome and difficult to fire anybody.

When the economic tide rolls out, companies have the air cover they need to resize and purge under-performers en masse.

The tendency is to cut deep. If some muscle gets pared too, so be it. It can be rehabilitated later.

In typical business cycles, employment is a so-called lagging indicator of an economic rebound. That is, when the economy starts to recover, jobs are usually added back very slowly.

Why?

Because businesses have a renewed zeal for productivity, they recommit to keeping the fat from building up again, and they want to be sure that the signs of better economic times aren’t false positives.

Fewer jobs will get added back than history would suggest, and those that get added back will materialize later than past patterns.

Businesses will add jobs as a last resort rather than trying to build capacity ahead of the economic growth curve.

Well, the WSJ has confirmed our prognosis in an article titled: Large Corporations Emerge from Recession Leaner, Stronger—and Hiring Overseas

Overall, the Journal found that S&P 500 companies have become more efficient — and more productive.

In 2007, the companies generated an average of $378,000 in revenue for every employee on their payrolls. Last year, that figure rose to $420,000

Such efficiency moves are essential for companies to be competitive.

But economists warn that improved efficiency and continued executive caution are slowing the recovery.

“What’s best for an individual firm may not be best for the overall economy,”

Yeah, but, you just can’t let a good crisis go to waste …

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‘Tis the season …

April 9, 2012

… or more precisely:  ‘tis the seasonality.

For a couple of months, we’ve been pointing out that something smelled fishy about the Fed’s employment reports.

Too much of the good news seemed to be directly tied to statistical tweaks of the the raw data called “seasonal adjustments”.

In fact, the Feds have been goosing the numbers up by more then they used to.

Well, now the Wash Post is even on the case.

The Post article — “Mild winter may have artificially inflated jobs data, economists fear“ —  suggests that we may have been underestimating the effect.

Economists are now saying that the mild winter has artificially inflated job growth.

Translation: The surge in hiring early in the year may not be as strong as it appeared.

The warm weather meant more jobs for construction workers and retail employees.

For economists, it means a statistical nightmare.

Typically, these bumps in demand are evened out through a process called seasonal adjustment.

That allows researchers to compare one month’s economic activity with the next for a more accurate picture of the nation’s health.

But this year’s weather was so abnormal that those models fell short, and economists are now scrambling to figure out how much of the growth over the past three months was simply due to a glitch in their systems.

“When the weather does not follow a normal seasonal pattern, then the seasonal adjustment cannot adjust for it.”

And that may help explain why recent data on jobs have looked rosier than actual economic growth would suggest.

Forecasts for the nation’s gross domestic product during the first quarter hover around 2 percent, a middling number at best.

Somewhere there is a disconnect, and Mother Nature is a valid scapegoat.

The labor market boost from the mild winter will eventually even itself out, though it may mean dips in job growth in coming months

Glad to see the mainstream media catching up with the Homa Files and its loyal readers …

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The unemployment rate went down … hmmm.

April 6, 2012

BLS Report says that 120,000 seasonally adjusted jobs were added in March … below February when 240,000 were added.

In February, the unemployment rate remained constant at 8.3% … it dropped in March to 8.2%.

How can that be?

Remember that the jobs growth comes from the “Institutions Survey” and the unemployment rate comes from the “Population Survey”.

From the “Population Survey”, seasonally adjusted employment actually declined by 31,000 – from 142.065 million to 142.034 million. (chart below)

So, how did the unemployment rate go down?

Simple.

The labor force participation rate continued to decline.

In February, 154.871 million were in the labor pool; in March there were 154.707 million … a drop of 164,000. (chart below)

Presto … the unemployment rate goes down.

If only more people were to get sufficiently discouraged that they’d stop looking for work, we’d have this unemployment problem nailed.

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Labor Force Statistics from the Current Population Survey

Civilian Employment Level

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Civilian Labor Force Level

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USA Today: “More CEOs plan to hire” … more than what?

April 4, 2012

Specifically, the headline said “More CEOs plan to hire as outlook brightens, survey says”

The article said:

A growing number of chief executives at large U.S. companies say they are more optimistic about the economy and plan to step up hiring. The brighter view from the boardroom comes after the best three months of job growth in two years.

The Business Roundtable said Wednesday that a survey of its CEO members found that 42% expect to hire over the next six months. That’s up from 35% three months ago.

Wow.  Pretty good, right?

Being a trust & verify guy, I went to the Business Roundtable site to check the nums.

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Sure enough, 42% of the 128 surveyed CEOs said they expect that employment will go up.

And, that is up from the 35% who thought so last quarter.

But, apparently the reporter didn’t notice that 52% of CEOs expected employment to go up last year at this time.

In other words, less than half of CEOs now  think that employment will go up in the next 6 months.

Over half thought it would last year.

Hmmm.

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So, is employment up or down since Obama took over?

March 21, 2012

Team Obama keeps crowing about the millions of jobs they’ve added with their trillions of dollars of fiscal and monetary stimulators.

Hmmm.

Here are the facts, direct from the BLS …

In February 2008 — right as the financial crisis was becoming evident — employment was 136.356 million.

Employment dropped by about 5 million between February 2008 and February 2009.

In February 2009 — when Obama took office — there were 131.314 million workers employed.   Real jobs, no seasonal adjustment.

Note: Obama’s Stimulus was passed January 28, 2009

The comparable number in February 2012 was 131,164 million.

By simple subtraction,  there are 150,000 fewer jobs now then there were in February 2009.

Note: During the same period, the labor force (i.e. those folks who are employed or looking for work) grew by about 300,000 … from 153.804 million in Feb 2009  to 154,114 million in Feb. 2012. 

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Let’s dig a little deeper with another view of the data:

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Cutting to the chase, “real” employment is back to where it was when Obama was inaugurated … but up substantially from the low point in Obama’s term.

The “issue” is who owns 2009 — Bush or Obama?

Obamites argue that the drop in 2009 is simply a reflection of the momentum coming out of the Bush years … slowed by effects of the Stimulus.

GOPers argue that — since Obama’s Trillion-dollar Stimulus was passed in January 2009 and since the administration made promises re: keeping unemployment in check — that Obama owns 2009.

The answer is probably somewherw in between.

You decide … 

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Cookin’ the books? … About those pesky seasonal adjustments to the Fed’s employment numbers …

February 9, 2012

Earlier this week, we blogged about the “interesting” difference between Team O’s job gain claim:

The Labor Department reported that the economy gained 243,000 jobs.

But, the BLS  also reported that the economy lost 2,689,000 jobs in the month

The difference in the two numbers is in seasonal adjustment.

Here’s an interesting tidbit that I haven’t seen reported: the January seasonal adjustment factor mysteriously crept up from the factor that was used in January 2011 … with the effect of increasing the number of seasonally adjusted jobs reported.

As Gomer Pyle would say: Surprise, surprise, surprise …

 

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Source: BLS

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A college degree is still worth it …

November 15, 2011

Interesting piece in Business Week …

Punch line: Sure, it costs more, and technology is threatening high-paying jobs. But the Great Recession shows postsecondary education is more valuable than ever

Supporting factoids:

The share of jobs in the U.S. economy requiring postsecondary education went up from 28 percent in 1973 to 59 percent in 2008… … and is projected to increase to 63 percent over the next decade.

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Median earnings in 2008 …

  • College graduate with a BA working full-time  … $55,700
  • Associates Degree (typically awarded by community and technical colleges)  … $42,000.
  • High school-only grads  … $33,800
  • Without a high school diploma ….$24,300

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Earnings Power

About 25 percent of those in the top 40% of wage earners have only a high school diploma.

About 20 percent of workers with a college degree are in the lowest 40% of wage earners.

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Unemployment rates:

  • 4.3% for college graduates and above who are 25 years and older.
  • 9.5% for high school graduates
  • 13.9% for those with less than a high school education

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