Results of Middle Class Destruction

I would like to start today by pointing out an error I made yesterday. I assumed that since March was not finished with us, that the ADP jobs report for March would not be issued until next Wednesday. I guess ADP figures the last few days of the month don't matter so long as they get a report out two days prior to the BLS report for the overall economy issued on the first Friday of the new month.

From Reuters on today's (Wednesday, March 30) ADP report:

(Reuters) - Private employers added 201,000 jobs in March, while February's figure was revised down slightly, a report by a payrolls processor showed on Wednesday.

The data was largely in line with expectations. Economists surveyed by Reuters had forecast the ADP Employer Services report would show a gain of 203,000 jobs. The report is jointly developed with Macroeconomic Advisers LLC.

February's figure was revised down to 208,000 from 217,000.

"Basically the number was very much in line with expectations and shows that the labor recovery continues at a reasonable pace," said David Katz, chief investment officer at Matrix Asset Advisors in New York.

Of course, Mr Katz is not accounting for the loss of jobs in the public sector. And there have been job losses in the public sector this past month.

But there have been a few articles I've seen during my daily surfing of the toobz, from today and earlier, that tell us a bit more about the state of the economy than the ADP report and the words of Mr Katz can tell us.

First up is this article from today's Hartford Courant on New London, CT schools that are now providing free suppers (to go with free breakfasts and lunches) for students from low income families. From the article:

While many schools across Connecticut provide free or reduced lunch and breakfast to students from low-income homes, New London was the first to provide supper, too. Bridgeport recently launched a similar program, and Norwich is considering it.

In New London, where 85 percent of students live in poverty and 60 percent come from homes with single parents — some working multiple jobs — the free supper has already proven popular. Since it started a month ago, the number of diners has doubled to as many as 120 on some days.

...snip...

Besides Connecticut, the federally funded program is offered in 11 other states and Washington, D.C. It is aimed at schools where at last 50 percent of students qualify for free or reduced lunch programs. In Connecticut, 33 school districts have schools fitting that description.

My bold. Note that these are children where parents are working - and still not making enough to be considered above the poverty line. From the 2011 HHS guidelines, for poverty, a family of three (a single mother and two children), the poverty line is $18.5k per annum. This works out to $8.90 per hour for a 40 hour week, 52 week year. The current federal minimum wage is $7.25 per hour (Connecticut's minimum wage is $8.25) for the math challenged. Since New London, CT is also the home of the Naval Submarine Base New London, I wonder if there are any active duty families affected here?

Trying to Avoid Incoherent Rage

As I read news sites across the toobz and see the occasional cable talking heads populated by the Beltway Village Idiots Pundits, it is often difficult to keep myself from dissolving into a mass of protoplasm due to simple rage.

First up today is this article from Reuters on Sunday, March 27:

(Reuters) - The U.S. labor market is finally improving, just when many of the other economic indicators are wavering.

Jobs are considered a lagging indicator. They typically recover many months after the economy comes out of a recession, and this cycle was no exception. So will troubles in Japan, Libya and elsewhere push up U.S. unemployment later this year?

...snip...

Friday brings the March employment report, and economists polled by Reuters are looking for growth of about 188,000 jobs, with the unemployment rate holding steady at 8.9 percent.

Any bets on how the headlines Friday will include some variant of "economists surprised"? I'm betting right now that the 188K figure will be way high for the entire economy. Of course, since the BLS jobs numbers will be first out this month ahead of the ADP Jobs reports on private sector jobs created for the previous month which appears the first Wednesday of each month, my bet will also be that the ADP report will be more positive than the BLS report so that will get all the good publicity next week and folks will forget the reality of the BLS report.

Why Create Jobs When You Hate Labor?

As always, we have some "interesting" jobs related news in the past week, though also as always, few members of the TradMed will actually pull all the pieces of news together. I'll start today with the weekly Initial Unemployment Claims report (via Reuters):

A second report from the Labor Department showed initial claims for state unemployment benefits slipped 5,000 to a seasonally adjusted 382,000, a touch below economists' expectations for a fall to 383,000.

The four-week moving average of unemployment claims -- a better measure of underlying trends - dropped 1,500 to 385,250, the lowest since mid-July 2008 and holding below the 400,000 level for a fourth straight week.

A reading below 400,000 is generally associated with steady job growth, which until recently had eluded the economic recovery. Employers created 192,000 jobs in February, the most in nine months, after adding a paltry 63,000 new workers in January.

The first report the Reuters article is talking about is the fall of of durable goods orders:

The Commerce Department said durable goods orders fell 0.9 percent after a 3.6 percent increase in January. Economists polled by Reuters had expected a 1.1 percent increase. Excluding transportation, orders fell 0.6 percent after dropping 3.0 percent in January.

So what is happening in the economy? No where near as much as most people need, that is certain. Today's (Thursday, March 24) Hartford Courant had this article on unemployed recent college grads:

How Many Suicides Will There Be?

While I was surfing through the various news sites this morning (Friday, March 18), I came across this story from the Los Angeles Times about the apparent suicide of a maintenance worker for Costa Mesa, CA. It seems that Costa Mesa is laying off nearly half of its employees and intending to outsource the work. Of course, the layoff notices have gone out, even though the city is still trying to figure out exactly what they are doing.

Costa Mesa has sent layoff notices to nearly half of its employees in a dramatic austerity program being closely watched by other cities struggling with ballooning pension obligations.

The move was sharply criticized by union leaders, and it stunned city employees, one of whom apparently committed suicide by jumping off Costa Mesa City Hall hours after layoff notices went out Thursday.

City officials said the cuts were the first step in a plan to outsource many services to the private sector and significantly reduce the number of workers at City Hall.

...snip...

The man reported to have committed suicide, a 29-year-old maintenance worker, was expecting to receive a layoff notice, authorities said. His identity has not been released pending notification of relatives.

Employees were shell-shocked upon receiving the notices Thursday, even before news of the suicide spread.

This article is on the heels of this one from Wednesday's NY Times on the unemployment rate in El Centro, CA:

The Rush to Declare "Recovery" and Move On

There are times that I begin to despair a bit about all the crap going on all over. I can't do anything about earthquakes, tsunamis, and nuclear disasters (all in one) but I can address some of the reporting I've seen in the TradMed the last couple of days.

Apparently the Beltway Village Idiots Pundits are anxious to stop writing all those bummer articles about the un and underemployed and the destruction of the global economy. I guess it's just too Debbie Downer for them. So they've started the "Everything's Getting Better" articles. The NY Times and Floyd Norris started with this headline:

Crisis Is Over, but Where’s the Fix?

Of course, without anything being fixed, it's rather difficult for the "crisis" to be over. And to be fair, Norris does address some of this in the article:

When the financial system began to crumble more than three years ago, the world rushed to rescue it. Country after country went deeply into debt to keep banks afloat and prevent a deep recession from turning into something worse.

...snip...

But the world has changed since then. The economic recovery in most developed countries is stuttering at best, and governments are struggling with their own finances. It is time for remorse and second-guessing.

A surprising citadel of that second-guessing is at the International Monetary Fund, where researchers this week concluded that the rescues “only treated the symptoms of the global financial meltdown.”

The researchers, Stijn Claessens and Ceyla Pazarbasioglu, warned that “a rare opportunity is being thrown away to tackle the underlying causes. Without restructuring financial institutions’ balance sheets and their operations, as well as their assets — loans to over-indebted households and enterprises — the economic recovery will suffer, and the seeds will be sown for the next crisis.”

...snip...

In retrospect, it is clear that the bailouts came with too little pain for those responsible. Bondholders who financed banks that failed largely escaped pain. That was true even in Ireland, where the bailout would have led to a default of government debt had Europe not stepped in. It is still not clear how Ireland will pay its national debt, but the bank bondholders did fine.

Norris goes on to point out that one of the problems is the lack of accountability. Imagine that?

Tax Cuts and Gutting of Environmental Regulations Create Jobs?

Well, well. According to today's (Thursday, March 10) NY Times, Republicans are becoming a bit sensitive at charges that they really have done virtually nothing to improve the employment situation in the US; especially after having run as jobs creators. Matthew Desmond at addictinginfo.org offers a pretty good list of what the US House has been doing instead of working on jobs for the un and underemployed but as I noted previously, a lot of their efforts have been primarily directed at destroying jobs related to government service. So what are they going to do? From the Times article:

Mr. Camp said Republicans were strongly encouraging the Obama administration to move forward with free trade pacts that could lead to 250,000 new hires. He noted that half of the eight hearings held by his panel this year were devoted to simplifying and overhauling the tax code to stimulate economic growth. He said he had been in touch with Senator Max Baucus, the Montana Democrat who is chairman of the Senate Finance Committee, about moving forward with tax law changes.

“Fundamental tax reform is key,” Mr. Camp said. “It is a critical issue for us to work on.”

Mr. Upton said the chief job-creating focus of his panel had been to identify and move to block regulatory efforts by the Obama administration, and specifically the Environmental Protection Agency, that he said would strangle the economy.

Free trade agreements. Tax cuts. Blocking the EPA from protecting people and the earth. Yet there are people who will believe it against all the evidence otherwise. Just last week, Princeton Economics professor Uwe Reinhardt, used a post on the NY Times Economix blog to try to justify Free Trade as overall good for the world without addressing all the ways it is bad for the US. This post was in response to one he had written in February extolling global free trade.

Good News and Bad News on the Economy and Other Things

Let's see how broadly I can stretch the definition of "Good News" today. The weekly report of Initial Unemployment Claims was the lowest it has been since May of 2008:

There were 368,000 initial jobless claims filed in the week ended Feb. 26, the Labor Department said Thursday. That was down 20,000 from the week before, and the lowest since May 2008.

Economists surveyed by Briefing.com had expected initial claims to rise to 400,000 in the latest report.

The 4-week moving average of initial claims, which aims to smooth out volatility, also improved, falling to 388,500 from the previous week's revised average of 401,250. That's the lowest since July 2008.

Of course, this is before any of the threatened lay-offs due to federal and state budget cuts and the overall official unemployment rate is still stuck at 9% or higher so there are still roughly 15 million unemployed and 25 to 30 million un and underemployed.

Another bit of information in today's news that can be considered "good" news is from today's (Thursday March 3) NY Times is how the Federal Trade Commission (FTC), Justice Department, Postal Inspectors, and 11 state Attorneys General had investigated, fined, and seized assets of firms preying on the unemployed:

The investigation focused on businesses that lured financially unsophisticated retirees and the unemployed with opportunities to start businesses or gain access to job listings, often with little personal effort but hefty upfront fees, the authorities said.

...snip...

The commission announced more than 90 civil actions, including three lawsuits against companies the agency said defrauded consumers of more than $49.5 million. The F.T.C. said it had obtained judgments and levied fines totaling $14.6 million in six other cases.

The Justice Department said it had taken 48 criminal actions, most in conjunction with the Postal Inspection Service. In 36 criminal cases presented Wednesday, officials said there were 16 guilty pleas, three convictions and seven cease-and-desist orders. Nineteen sentences handed down to defendants total more than 56 years.

Now for the bad news.

February Jobs Reports Coming Out

Since today (Wednesday March 2) is the first Wednesday of the new month, Automatic Data Processing (ADP) has released their monthly report estimating the new jobs for February for the private sector. As always, the economists were surprised. From Reuters:

(Reuters) - Private sector employers added more jobs than expected last month in a sign of steady improvement in the labor market, ahead of the closely watched non-farm payrolls report from the Labor Department on Friday.

Employers added 217,000 jobs in February, the ADP Employer Services report showed on Wednesday, above expectations for a rise of 175,000. January's figure was revised higher by 2,000 to 189,000.

Economists said the private-sector hiring indicates improvement in the labor market, though they noted the month-to-month changes in ADP's report are not always good predictors of Friday's larger jobs numbers.

There is a quite simple explanation for why the month-to-month changes in the ADP report do not predict the larger report from the DoL Bureau of Labor Statistics. The BLS reporting includes jobs from all levels including the public sector which has been laying people off even as the pace of hiring has picked up a bit in the private sector.

Of course, even as there was some new hiring in February, layoffs also continued with Reuters also reporting this morning on a report from consultants Challenger Gray & Christmas on an increase in February of the numbers of planned layoffs:

(Reuters) - The number of planned layoffs at U.S. firms rose in February to its highest level in 11 months as government and non-profit employers let workers go, a report showed on Wednesday.

Employers announced 50,702 planned job cuts last month, the highest level since March 2010 and a jump of 32 percent from January's 38,519, according to the report from consultants Challenger, Gray & Christmas, Inc. Layoffs were 20 percent higher than the 42,090 announced in February of last year, marking the first year-over-year increase since May 2009.