May 2014 Jobs Reports: Good News, Bad News

According to this article this morning from CNNMoney, the official BLS Jobs Report for May, due this Friday morning, will show that the US economy will finally have recovered all the jobs lost in the Great Recession:

Set your sights on this number: 113,000.

That's how many jobs the U.S. economy needs to hit its break-even point, to finally recover all the jobs lost in the financial crisis.

Get ready, because we're about to get there this Friday.

That's when the U.S. Department of Labor will release its May jobs report, and the outlook is rosy. Economists surveyed by CNNMoney expect the U.S. economy added 200,000 jobs in May.

I guess that's the good news. But as the article also notes, it is a purely symbolic measure:

Breaking even is a key milestone, but was a long time coming. It took just two years to wipe out 8.7 million American jobs, but it took more than four years to recover them all, making this the longest jobs recovery on record since the Department of Labor started tracking the data in 1939.

Plus, the jobs that have returned are not necessarily the same ones we lost, nor are they in the same regions.

Here's the key - through all these four plus years of job growth to get back to where we were at the start of the Great Recession, we have been falling behind as it takes roughly 90,000 new jobs each month just to keep up with the new people entering the job market each month. If we take it back to the beginning of the Great Recession in December 2007, we are still in the hole on needed jobs by a bit over 7M (6.5 (years) x 12 (months per year) x 90K (jobs per month) = 7,020,000.)

The current month report from ADP continues the good news/bad news. The good news is 179K new jobs in the private sector (though fewer than "economists predicted.") The bad news (although painted as good news by Reuters):

U.S. companies hired far fewer workers than expected in May, but an acceleration in services sector growth supported views the economy was regaining strength after sagging early this year.

While other data on Wednesday showed the trade deficit hit its widest point in two years in April, a rise in imports to record highs underscored the economy's resilience.

Why is the increase in service sector jobs bad news? Because service sector jobs tend to be lower wage.

This blog post from the Washington Post's Wonkblog from 8/31/2012 covers this:

The United States lost about 8.1 million jobs after the recession began in late 2007. The economy has since recovered about 3.3 million of those jobs, starting in early 2010. That, in itself, should alarm policymakers. The labor market is still in a deep, deep hole.

But in some respects, the situation is even bleaker than that. The types of jobs that have come back so far don't seem to be paying as well as those that were lost.

A new report (pdf) from the National Employment Law Project finds that low-wage jobs, paying $13.83 per hour or less, have dominated the recovery to date. In many cases, they appear to be replacing higher-paying jobs that were lost in the first place.

That article was not the first time the Post had noticed the low wage aspect of the "recovery" as I noted in this blog post from April 2011.

The CNN article linked at the top of the page also showed a little "moving of the goalposts" in the world of economic and jobs reporting. Buried way down at the bottom of the page were these two paragraphs:

Back in 2006 and 2007, the unemployment rate hovered between 4% and 5%, but that work level was associated with an overheating housing market. Aiming for that rate may not be an achievable goal now, as baby boomers retire and some of the long-term unemployed may be permanently out of work.

Instead, economists surveyed by CNNMoney now define "full employment" in the economy as an unemployment rate at 5.5%. At that level, there's still normal turnover in the job market, which is considered healthy. The unemployment rate was 6.3% as of April, and economists expect it could take at least two years to get to 5.5%.

The official "unemployment rate" is already a fiction as it does not account for the long term underemployed, those who are "self-employed contractors" and the people who have given up looking for work. It does show how bad things are though that the economists feel the need to redefine "full employment" while recognizing that we are still a couple of years away from achieving even this revised figure.

As Bloomberg was reporting on the trade gap in April hitting the highest point in two years, Reuters was reporting that WalMart is once again trying to push "American Made." Not surprisingly, it is not going to happen easily:

When Walmart pledged last year to buy an extra $250 billion in U.S.-made goods over the next decade, it appeared to be just what was needed to help move America's putative manufacturing renaissance from rhetoric to reality.

But suppliers trying to reshore production as part of the initiative by the world's largest retailer are running into practical problems as they try to restart long-idled corners of U.S. manufacturing.

Companies that make the leap have to grapple with a host of challenges, including a shallow pool of component suppliers, an inexperienced workforce, and other shortcomings that developed during the country's long industrial decline.

It is not at all a surprise that there are these types of problems. As the article further notes:

Now, the retailer is asking companies to come back home - though they need little prompting. The forces pulling production back to the United States are powerful and real and include lower domestic energy prices, increasingly competitive wage rates, the benefits of greater automation, and a renewed appreciation for the value of being able to respond quickly to shifting U.S. customer demands.

My bold. "Increasingly competitive wage rates" = squeeze salaries down to as close to minimum wage as possible.

CNNMoney headline that 6 in 10 Say American Dream Is Unreachable is not a surprise at all.

And because I can:

Life in the Safety Net

If you have been reading my posts, you know I am among the long term un/underemployed. I was laid off from my then employer in April 2004. I know most economists place the official start of the Great Recession in December 2007 but given their continual "surprise" at how the economy does not conform to their expectations, the reality is a bit different. When I was laid off, I had spent the past seven to eight years working within IT on various State and Local Government social service projects. Unfortunately for me, many states had started cutting back in this area starting around 2001. Declining tax revenues led to cut-backs to contracts led to further declining revenues, etc.

Over the past nine years, I spent my unemployment benefits (I only received 6 months of unemployment benefits since my layoff preceded the official recession and advent of extended benefits.) I spent my savings. I cashed in my 401K and SEP/IRA (the best benefit there was even with paying the early cash-in penalties, I still got to spend more of the funds on myself instead of seeing the balances swirl down the toilet when the market crashed.) In 2007, I landed a part-time, online job that has been a god send.

I finally swallowed my pride in January of 2012 and applied for Supplemental Nutrition Assistance Program (SNAP) benefits (formerly known as Food Stamps). I was approved for benefits of $200 per month from Florida from February 2012 through June 2012 when I would have to be re-certified. I did not re-certify at that time as I was dealing with my late sister's estate by June and was able to pay myself a nominal salary. Since then, I have moved from Florida back to my home state of Kentucky. After I wrote this post in early July, documenting my soon to be homelessness, a friend from my hometown of Cynthiana, KY offered me a room in her home for Dan'l (my cat) and me. I am paying a nominal rent, my share of the utilities plus helping around the house. I have since applied for SNAP benefits here in Kentucky. I was initially denied due to lack of information, then approved for $159 per month then after a review after the state had received the remainder of my supporting information, the benefit amount was upgraded to $189 per month starting November 1. I do not know if the cuts to the over all SNAP program will affect my benefits but if there is a cut, so be it. I am fortunate enough to know how to cook and purchase food for myself so I can generally live within the benefit. I most likely would have to cut out the occasional treat of cookies or soda.

At this point, I am just trying to hang on until I reach age 62 next June and can apply for early Social Security. According to the SSA, my benefit for Social Security at age 62 is $1,371, a little above the current average overall benefit of $1,271 (as of September 2013.)

I do not have a car any longer. Maybe next year when I start the social security, between that and my small salary from my online job, I might be able to buy something (and pay the taxes and title and upkeep and maintenance and gas and insurance.) Once I am collecting social security, I will most likely no longer qualify for SNAP benefits and that's OK as I will have been able to use them to stay alive until I reached the "retirement" point.

Through all of this, I know I am still luckier than most. I have received help from family and friends that has kept a roof over my head. I am relatively healthy having had only a bad case of the flu back in early 2005 that I saw a doctor for, a cut on my hand in December 2005 that required an emergency room visit for four stitches (costing roughly $2,000 out-of-pocket as I am uninsured), and an infected tooth pulled at the dentist's in January 2013 for $175. The dentist gave me a 'scrip for free antibiotics to clear the infection before he pulled the tooth.

While I have been fortunate in many ways, I also know I am not alone. There are 900K veterans and 5K active military receiving SNAP benefits alone who will be impacted by the upcoming cut to the benefit level.

We hear all the stories about "fraud" in the SNAP program (and yes there is such a thing) but let me show a quick example. Let's pretend that one person has been receiving SNAP/Food Stamp benefits since age 18 at $150 per month and is now 70. Let's pretend this person has been committing fraud all along. If this person has received $150 a month for 12 months a year for 52 years, the total amount of fraud is $1,800 a year and $93.6K total. Compare that amount to the amount of farm subsidies that some members of Congress have been receiving. Which group is costing the tax payer more, my hypothetical SNAP fraudster or the recipients of hundreds of thousands of dollars annually in subsidies?

We have workers at McDonalds being directed on how to apply for SNAP benefits and Medicaid through the company's own Hot line. WalMart is the largest employer in the country yet is subsidized by the taxpayer nationwide paying for various welfare programs for the WalMart Working Poor.

It is not going to get any better anytime soon. The US economy needs roughly 90K each month just to keep pace with population growth. The ADP Jobs Report for October 2013 estimated a whopping 130K jobs for October while revising their September figures downward from 166K jobs to 145K. Add in the effects of the Government Shutdown and Sequester, I am willing to go out on a short limb and predict the official numbers from the BLS tomorrow (Friday, November 1) may well be down around 50K jobs for the month.

Some of the Beltway Village Idiots Politicians, Pundits, and Courtiers like to talk about how the numbers of people on Food Stamps and Medicaid are so high under President Obama while they avoid talking about people like Lloyd Blankfein quoted a couple of months ago at the Clinton Global Initiative:

In another remark likely to generate controversy, Blankfein praised the U.S. for having "accepted a higher unemployment rate" over the past few years, even as it bailed out the banks. Labor market flexibility—reflected in the ability of U.S. companies to fire workers—is one of the reasons the U.S. is doing so well despite many headwinds in the economy, he said.

Yep, there surely is no cause and effect between the rise in the folks using the Social Safety Net and the desire of people like Blankfein to keep unemployment higher so that wages and benefits can be kept lower.

And because I can:

Now isn't that con-vee-nient?

Oops.

So much for the monthly Jobs Report. One of the effects of the government shutdown (no Fox News, it is NOT a "slimdown") is no monthly Jobs Report from the Bureau of Labor Statistics. The BLS web site has a "Special Notice":

This website is currently not being updated due to the suspension of Federal government services. The last update to the site was Monday, September 30. During the shutdown period BLS will not collect data, issue reports, or respond to public inquiries. Updates to the site will start again when the Federal government resumes operations. Revised schedules will be issued as they become available.

Quite convenient for those members of Congress who deem most of us as not worthy of worrying about, yet manage to whine about how they need their pay check to get by - as if the 800K federal employees don't need theirs!

ADP did release their monthly report on private sector jobs on Wednesday, showing an increase of 166K in the private sector (and of course economists surprised as the number was lower than "expected"). The Wall St Journal looked at the numbers in a bit of detail (you can reach behind the WSJ Paywall by Googling the article title "U.S. Businesses Add 166,000 Jobs, ADP Report Shows"). The numbers that jumped out at me are:

Service-sector jobs increased by 147,000 last month, while the factory sector added a slim 1,000 new positions. Financial services cut 4,000 jobs.

Despite September's gain, job growth is weakening. Over the three months through September, the economy added an average of 162,000 private jobs per month, down from 220,000 at the start of the year, according to ADP.

Service sector jobs increase by 147K and manufacturing increases by 1K. It's a McJobs economy!

Business Insider offers us a listing of "what we know" even without the BLS figures. Of course, they base this to a large extent on "market economists' expectations" (see above link to previous blog post about "Economists surprised").

Bloomberg tells us that economists will just talk about football:

The absence of jobs data leaves economists and their investor clients without the month’s most important numbers on which to place bets, ranging from friendly office pools to million-dollar wagers on the health of the world’s largest economy.

Meanwhile, Reuters tells us Workers and employers face off at U.S. Supreme Court:

(Reuters) - Workplace disputes pepper the docket of cases the U.S. Supreme Court will take up during a nine-month term starting on Monday, with the justices having delivered a string of victories to businesses and employers in their last term.

Organized labor will feature in two of the cases. In one, an employee seeks to limit the power of public-sector unions to collect dues. In the other, an employee aims to limit the ability of private-sector unions to sign up members.

It would constitute a significant blow to the labor movement were the court, split 5-4 between Republican and Democratic presidential appointees, to rule against the unions in both cases, legal experts say.

Since the composition of the SCOTUS has not changed in the past few months, I am not going to hold my breath on workers getting any breaks from this court. In June, Businessweek declared the current court as Corporate America's Employees of the Month. It is not a stretch, it is not a difficult prediction to say more 5 - 4 decisions, more rulings in favor of our corporate overlords are coming in the next few months.

I bet Lloyd Blankfein will go to sleep at night dreaming of the wage slaves he can continue to abuse.

And because I can:

So what about the rest of your workforce?

These last few years, I have occasionally found myself watching the TV show Undercover Boss. From the wiki:

Undercover Boss is an Emmy Award-winning television franchise series created by Stephen Lambert and produced in many countries. It originated in 2009 on the British Channel 4.[1] The show’s format features the experiences of senior executives working undercover in their own companies to investigate how their firms really work and to identify how they can be improved, as well as to reward hard-working employees.

Each episode features a high-ranking executive or the owner of a corporation going undercover as an entry-level employee in his or her own company. The executives alter their appearance and assume an alias and fictional back-story. The fictitious explanation given for the accompanying camera crew is that the executives are being filmed as part of a documentary about entry-level workers in a particular industry, or a competition with another individual with the winner getting a job with the company. They spend approximately one to two weeks undercover (one week being the norm in some editions, such as the U.S. version, and two weeks in some other versions, such as the Australian edition), working in various areas of their company's operations, with a different job and in most cases a different location each day. They are exposed to a series of predicaments with amusing results, and invariably spend time getting to know the people who work in the company, learning about their professional and personal challenges.

My bold

Now, I have laughed at some of the "...series of predicaments with amusing results..." It can be very amusing to see someone who spends the bulk of their time behind a desk trying to wrestle a pallet loader or make a bed or wait on a customer. But there was always something that bothered me about the show and I eventually figured it out. It goes to the pieces of the wiki that I have bolded - "...rewarding hard-working employees" and "...learning about their professional and personal challenges." The wiki for the US version of the show has a bit that covers much of what bothers me about it, from a review in the Washington Post:

The Washington Post, in a negative review, said that Undercover Boss "is a hollow catharsis for a nation already strung out on the futility of resenting those who occupy CEO suites."

Further from the Washington Post review:

And in trickle-down style comes a show in which ordinary people get paid exactly nothing to experience the strangest sort of practical joke in their workplace, as if they're being "Punk'd" by a Successories poster: The head of the company wants to work alongside them, but -- get this -- they won't know it's him. And the sad part is, rather than tell a story about middle-class anger, "Undercover Boss" is drizzled with the feel-good syrup of corporate bunk.

Most of the shows I've seen have the "undercover" person meeting front line workers and being shown how the person does the job. As the worker and undercover boss do the task(s), they talk together and we hear the stories of the workers. It may be how the worker is a single mother worrying about how she will pay for her children's education. It may be the story of how the worker volunteers at a homeless shelter. Whatever the story the worker has to tell, it is usually some variation on heart warming to heart wrenching. At the end of the episode, the workers the "undercover boss" has met are brought to the headquarters where they then meet the boss in his/her real life. Sometimes they recognize the person they knew as a worker, sometimes they don't but they always seem to be shocked at the news they have been working with a big cheese. Almost invariably, the boss will reward the worker(s) - sometimes it might be a new car to replace the junker the worker has been using to transport food for the food pantry. It might be a scholarship fund or it might be a no interest loan for home repairs. Sometimes the boss creates a new position within the organization for the worker but no matter what special reward is provided, it is always a feel good moment.

But for all the feel good moments within the shows, what about all the other "Hard-working employees" who do not appear on camera dealing with the "undercover boss?" What will the organization do about the "professional and personal challenges" of the hundreds and thousands of other employees who are not privileged? Would it be possible for the businesses, producers, CBS, and other networks showing this TV series to maybe start doing little things like paying living wages, funding defined benefit retirement plans, providing full health care coverage to all employees? Maybe they could work to assure their companies aren't polluting the environment, maybe fewer feel good moments at the end of a television episode and more moments of businesses recognizing the values of all workers, not just the ones the show's producers decide can increase a couple of ratings points.

No, I am not going to hold my breath.

And because I can:

Jobs and Social Security

The January Jobs reports are out and for once, there is a modicum of (somewhat) good news. The Labor Department reported 157K new jobs for January 2013 and significantly revised both November and December 2012 numbers upwards:

Employers added 157,000 jobs in January, the Labor Department said, which was right in line with analyst expectations. The best news, though, was that revised estimates put job creation in November and December much higher than earlier estimated; the nation added a whopping 247,000 jobs in November and 196,000 in December, revisions that place those numbers a combined 127,000 jobs above earlier estimates.

The unemployment rate ticked up to 7.9 percent, from 7.8 percent, however, as both the number of people reporting having a job and the number looking for one edged up.

I'm sure we will hear a lot about how the January figures were "...right in line with analyst expectations" given how they are usually "surprised" that their predictions are wrong.

The .1% uptick in the unemployment rate (from 7.8% to 7.9% is not all that much of a surprise - or shouldn't be - if the economy truly is improving after all these years. The BLS U6 figure for the un/underemployed and marginally attached folks was unchanged at 14.4% (a figure that I believe is low but can't prove). Bloomberg reported the jobs news as:

Sustained hiring gains will give incomes a lift, buffering American workers from the sting of higher payroll taxes and helping them keep spending. At the same time, bigger employment advances are needed to drive down a jobless rate that Federal Reserve officials say is too high.

We can but hope Bloomberg is correct in this analysis that incomes will be lifted.

This past Wednesday, ADP reported 192K private sector jobs for January (versus 166K reported by BLS - see Bloomberg link).

One of the areas that seems to escape a lot of notice is how the jobs reports impacts the Social Security Trust Fund. Bloomberg touches on this with the mention of higher wages offsetting "...the sting of higher payroll taxes" but still seems to miss how higher employment will provide more funds to keep Social Security running without needing to be "fixed."

Of course, this in no way will stop people like Robert Samuelson of the Washington Post from offering up his fantasy of cutting Social Security as part of a "sequestration":

To be effective, a sequester has to hit millions of Americans so hard that, if it took effect, mobs of outraged voters would storm Capitol Hill.

Here’s my modest proposal to do that. Unless congressional negotiators agreed on at least $1 trillion in deficit cuts over a decade — personally, I’d go higher — then the desired amount would be raised in two ways: half from across-the-board income-tax increases and half from across-the-board Social Security cuts. People would see their take-home pay and retiree benefits reduced. There would be no mystery.

...snip...

It won’t happen. Truth in journalism: I have proposed this before. There were no takers. It would astonish me if there were any now. But the point is that there is a path to agreement. The fact that our so-called leaders don’t take it reflects their calculation that disagreeing is better politics.

Thankfully, he has had no takers so he has a sad.

Allison Linn at NBC News offers a counter to Samuelson and his gibberish with this report of a survey with results that fly in the face of so much Beltway Conventional Wisdom:

Most Americans think it’s important to preserve adequate Social Security benefits for younger generations — and they may even be willing to pay more taxes to get that assurance, a new survey finds.

The survey, released Thursday by the nonprofit National Academy of Social Insurance, found that about eight in 10 Americans think it is critical to support Social Security even if it means that working Americans have to pay more in taxes. A slightly higher percentage of the 2,000 people surveyed said they think it’s critical to save Social Security even if wealthy people have to pay more.

But here’s the thing: Many Americans also want something in return.

The study found broad-based support among both younger and older Americans for a plan that would gradually increase the amount of payroll taxes everyone pays and also eliminate the cap on the amount of income that can be taxed for Social Security. In return, that plan would call for raising minimum benefits and increasing cost-of-living-adjustments.

Raise minimum benefits, remove the cap on wages subject to Social Security, and increase cost-of-living-adjustments! Whocoodanode? Just the opposite of what Samuelson and the Washington Post (read: Pete Peterson) have pushed to get. It is only inside the beltway, with people who do not need Social Security, do we see the push to eviscerate it. Out in reality land, people understand the value of Social Security.

Now if we can just stop electing people who want to operate in Bizarro World.

And because I can:

Today's Anti-Social Security Propaganda

Well, it looks like there is a new push on in the long term destruction of Social Security today. Now, I usually write about the plight of the long term un and underemployed but I am getting close to Social Security eligibility so decided I would discuss the anti Social Security effort today.

I'll start with Fact Free Fred Hiatt's Concern Troll op-ed in today's (Monday, January 28) Washington Post. It seems Mr Hiatt wants to offer his advice to President Obama on "entitlement reform" using the guise of how Democrats and Republicans view the past four years:

To achieve a fiscal compromise, Obama agreed in 2011 negotiations with House Speaker John Boehner to changes in Social Security that would be anathema to liberals, but Boehner walked away from the talks.

...snip...

Both histories are factually correct. That coherent accounts can be written either way ought to suggest to partisans that neither version is quite the slam-dunk they imagine.

At a minimum, it ought to propel the White House to continue acting in the national interest, whichever party that seems to serve. And for a long time, Obama has said the national interest requires both revenue increases and reform of entitlement programs.

Once again, Mr Hiatt and the Post are pushing the myth that Social Security is a part of the overall Federal Budget and needs to be "controlled" to "fix the deficit" when in fact, Social Security loans to the Genera Fund have been propping up the Federal Budget for decades, allowing for the tax cuts over the years.

While I expect this type of nonsense from the Washington Post, today's Tampa Bay Times had a decidedly misleading headline ("US spends far more on seniors than on kids.") How is it misleading?

In 2008, all government (local state, and federal) spent $26,255 on average for each person 65 or older, most of which is Social Security and Medicare.

The blurb on children spending:

Conversely, the federal government spends relatively little on children and Medicaid is the largest single item. State and local governments spend much more n children because they pay for schools. But overall, governments spend far more than double on seniors than they do on children 18 and younger.

Finally, at the very bottom of this post, the Times offers a couple of caveats to offset the misleading nature of their headline and opening:

And boiling it down to a zero-sum game between young and old can make it seem as if those were the only choices. Indeed, other portions of the federal budget could be targeted instead, from defense spending to interest on the debt. Or people might be willing to pay higher taxes for government to do more.

Perhaps most crucially, if you spend dollars on the old, that can indirectly aid the young, and vice versa.

...snip...

Finally, some experts suggest that the issue isn't spending on the elderly versus spending on children. Rather, it's a question of what policies can promote high employment and growth versus policies that promote consumption today.

This brings us to Politico which offers this article titled "The quiet liberal plans for entitlement reform." Of course, the first "liberal" plan is the Chained CPI:

This new formula — a tweak to the consumer price index — would assume that people switch their buying habits when prices rise, rather than just buying the same things over and over. So, for example, if the price of ground beef goes up, someone might buy chicken or fish instead.

...snip...

But a lot of Democrats and liberals aren’t on board. They say seniors are already having a hard enough time with the current cost-of-living increases without dialing them back.

...snip...

That’s why liberals want any chained CPI agreement to be balanced out with measures to ease the burden on the seniors with the lowest incomes. For example, Paul Van de Water, a senior fellow at the liberal Center on Budget and Policy Priorities, suggests exempting people on Supplemental Security Income — which pays benefits to the lowest-income seniors — and making a special payment to seniors who have been on Social Security for 20 years because they get poorer as they get older.

Note to Politico and inside Beltway Villagers: if you have to make special provisions for the poorest and lowest income on the scale to avoid the bad impacts of a policy, that should by definition tell you the policy is bad for everyone.

For what it is worth, Politico does mention lifting the cap on Social Security earnings but limits this to:

Lift the cap so 90 percent of all Americans’ earnings are taxed — it’s only about 83 percent now — and a Social Security deal could raise about $550 billion in revenues over the next 10 years, according to estimates by Third Way, which has endorsed the approach. It would also wipe out Social Security’s deficit through 2020.

Of course, this is also misleading as "...wipe out the Social Security deficit through 2020..." discounts the loans Social Security has made to the general fund for 30 plus years and the surplus that was built up that was used to fund tax cuts.

There is a large amount of cluelessness across the board with the policies being discussed. A week and half ago, the "Business Roundtable" proposed raising the Social Security and Medicare eligibility ages to 70. Jon Walker at FDL Action made a rebuttal on this level of idiocy here. I would just like to ask these CEOs where the jobs are that allow folks to keep working until age 70? The BLS information for December 2012 shows the Unemployment Rate as 7.8 and the rate for the long term un and underemployed and those who have given up at 14.8% (a figure that I believe is much too low than actual). But of course, they don't actually have to do anything that might mitigate the problems they have helped to create.

And because I can:

This is the "new normal"

The ADP Report on private sector jobs came out today and showed an increase of 158K jobs. David Dayen at the FDL News Desk discusses this report and the Bureau of Labor Statistics report that will be issued tomorrow morning (Friday, November 2):

Plug this all in and what have you got? The consensus forecast calls for an increase in 125,000 jobs. That would be an increase from last month’s increase of 114,000, but below the increases in July and August (August and September will get revised in the report). This generally matches what we’re seeing in the ancillary reports, and shouldn’t be a number that would arouse joy or sadness in either Presidential campaign. However, with the volatility of last month’s topline unemployment rate, derived from the household survey, I wouldn’t be surprised if you saw it increase from the current level of 7.8%.

Either way, it’s a preliminary report, and we probably shouldn’t put as much weight on it as we will, especially with the political implications headed into the election.

While the Weekly report of initial unemployment claims was lower than expected (economists surprised!), even this moderately good news is not all that great.

The reality for many millions of us among the long term un and underemployed is the good jobs just are not there. At the end of August, Catherine Rampell of the NY Times had an article headlined "Majority of New Jobs Pay Low Wages, Study Finds." As I noted in this post, it was very similar to an earlier post from April '11 I had written that was based on a Washington Post article. Both the Times article and the Post article were based on reports from the National Employment Law Project.

Sunday in the NY Times, Steven Greenhouse had this article on how employers in retail and hospitality industries use (and abuse) part time workers:

But in two leading industries — retailing and hospitality — the number of part-timers who would prefer to work full-time has jumped to 3.1 million, or two-and-a-half times the 2006 level, according to the Bureau of Labor Statistics. In retailing alone, nearly 30 percent of part-timers want full-time jobs, up from 10.6 percent in 2006. The agency found that in the retail and wholesale sector, which includes hundreds of thousands of small stores that rely heavily on full-time workers, about 3 in 10 employees work part-time.

...snip...

A 2011 survey of 436 employees at retailers in New York City, as diverse as luxury establishments on Fifth Avenue and dollar stores in the Bronx, found that half of the city’s retail workers were part-time and only one in 10 part-time workers had a set schedule week to week. One-fifth said they always or often had to be available for call-in shifts, according to the survey, which was overseen by researchers at City University of New York.

...snip...

Mr. Flickinger, the retail consultant, said companies benefited from using many part-timers. “It’s almost like sharecropping — if you have a lot of farmers with small plots of land, they work very hard to produce in that limited amount of land,” he said. “Many part-time workers feel a real competition to work hard during their limited hours because they want to impress managers to give them more hours."

What? Could someone have actually spoken a truth here? The modern day wage slave, complete with sharecropping as the ideal.

While CNN has an article this morning attempting to paint the rosy glasses scenario on how the jobs are not all part time minimum wage, even they have to acknowledge the reality of the lower wage since 24% of the "new" jobs are in hospitality and retail:

It's true that the economy has added a lot of low-paying jobs over the last two years. Restaurants and bars, which pay a median wage of just $9 an hour, have accounted for 15% of all the jobs created in the recovery. Retailers, which pay a median $11 an hour, make up another 9%.

The Cincinnati Enquirer on Monday reported on the long term un and underemployed for Ohio:

According to the government, 780,000 Ohioans are underemployed or unemployed, a number that does not include persons working more than 35 hours. The report does not compile local underemployment numbers.

...snip...

More people are working multiple part-time jobs, a practice Pautke cites as the only means of increasing the person’s take-home pay.

And this point goes back to the job scheduling practices noted in the NY Times article above - it is rather difficult for a part time wage slave to work those two or more part time jobs if/when the employers want the "flexibility" to schedule the work shifts the day before.

This is the "new normal" for far too many workers. So somebody please explain to me where all those jobs are from the "job creators?" Businesses in multiple industries are posting record profits (here, here, here, here, here, here) yet there are still millions of people in long term un and underemployment, people wanting to work, people with skills asking only for an opportunity to earn a decent wage with fair benefits.

And because I can:

Final Pre-election Jobs Reports

This week has seen the final jobs reports that will be available to make a possibly measurable impact prior to November 6. Wednesday's report from ADP had 162K new private sector jobs. Yesterday's (Thursday, October 4) Jobless claims report had a slight increase to 367K new jobless claims and 4 week rolling average of 375K new claims. Finally, today's (Friday, October 5) Bureau of Labor Statistics report has an increase of 114,000 jobs for September and the jobless rate falling to 7.8%.

It seems the fall in the overall unemployment rate has some folks on the right, led by Neutron Jack Welch, claiming the numbers have been cooked. David Dayen at FDL News puts it this way:

Because data is just fungible to the political leanings of whoever confronts it, we predictably saw a number of conservatives question today’s jobs report, suggesting that the Bureau of Labor Statistics fudged the data to help the President’s re-election campaign. Leading this charge was former GE CEO Jack Welch on Twitter. I think the government should make a deal with Welch – they’ll admit to massaging the data if he cleans up all the PCBs in the Hudson River personally.

On a more serious note, this is really pretty outrageous, and Labor Secretary Hilda Solis, whose department includes the BLS, is right to be insulted. The BLS is a civil service agency that until recently was still run by a Bush appointee. It now has a career bureaucrat in charge. The political team plays no role whatsoever in the derivation of or announcement of the jobs data. And if, despite all this, BLS cooked the books, they’re terrible at it, because they shifted the data in the household survey without corresponding in the establishment survey.

My WAG on this is that the adjustment of the number of jobs for July and August probably had as much affect on the September jobless rate as the actual numbers for September. As far as I can see, this opinion piece from Jay Schalin at Fox News pretty much covers the basic point of the "unemployment" figures:

One thing the current economic slump has made painfully clear is that the unemployment rate is an imperfect tool for gauging the health of the economy. Washington should replace it with a more meaningful and useful benchmark: the labor-force participation rate.

The widely publicized unemployment rate, eagerly awaited each month by pundits and policy wonks, has become little more than a shell game in which officials keep the public guessing about the real state of the economy.

Please do go and read the entire piece, he makes some excellent points.

One item that I find still glaringly obvious is that for the most part, most of the people in charge or talking about jobs and the economy have no more clue about what is happening than they do about what the surface of the moon feels like. Just the past few days, I have seen these headlines as I have surfed the toobz (links embedded in headlines):

"Fiscal cliff" fears may impede faster job growth (Reuters October 2)

'Discouraged' workers face tough road back to employment (NBC News, October 4)

S&P 500 on verge of 5-year high day ahead of jobs data (Reuters October 4)

S&P 500 dips after four days of gains; earnings eyed (Reuters October 5)

I think the bottom line point here is any attempt to tie jobs reports, favorable or unfavorable, to the stock market is attempting so much witch craft. There IS no connection or the stock market would not be trading. As Reuters reported back in August, the market is up for the Obama administration by 74% since he took office January 2009:

At 1,400, the S&P 500 on Friday was closing in on a four-year high and was up 74 percent since January 20, 2009, the day Obama took office. Not since Dwight Eisenhower's first term has a president had such a strong run for their first term.

As most folks reading this know, I am and have been among the long term un/underemployed. The reality for me and many millions of others is, we want to work in decent paying jobs, preferably in our chosen career fields. The dithering in DeeCee from both sides of the aisle, the constant calls for cuts to the budget, "Grand Bargains" to "save" Social Security, Medicare, and Medicaid (especially the non-existent "Bowles-Simpson" plan since there was no formal report and plan adopted by their namesake committee) personally drives me nuckin' futz. As Mr Pierce often says, "Fck the deficit. People got no jobs. People got no money."

It really is a simple concept. People want to work. We want to work at decent paying jobs with half way decent benefits and contribute to the overall commonweal of the nation. Working two or three part time barely above minimum wage jobs does NOT fit this definition.

And because I can:

Labor Day Weekend, 2012 Economic Report

Well, here we are once again. Labor Day weekend has rolled around; the time when all the politicians extol the virtues of the working man and woman. But as I pointed out last year, once a year praise by Beltway Village Idiots Politicians and Pundits or the local equivalent of same, does not actually make someone a friend of workers.

Just last night, if you were so inclined, you may have listened to Mitt Rmoney talk about workers:

You deserved it because during these years, you worked harder than ever before. You deserved it because when it cost more to fill up your car, you cut out movie nights and put in longer hours. Or when you lost that job that paid $22.50 an hour with benefits, you took two jobs at 9 bucks an hour and fewer benefits. You did it because your family depended on you. You did it because you're an American and you don't quit. You did it because it was what you had to do.

Emptywheel does a wonderful job of parsing and eviscerating that paragraph of Rmoney's speech here:

The passage is fundamentally important to the logic of the speech–and indeed, Mitt’s entire campaign–both because it pretends Mitt understands the struggles of average people and because it suggests Obama failed to deliver on Hope and Change.

...snip...

The average self-reported hourly wage of a Staples EasyTech Associate is $8.89. The average self-reported hourly wage of a Staples Sales Associate is $8.54.

Those jobs Mitt talked about as a symbol of America’s failed promise, the ones that don’t pay a living wage? That’s what Mitt’s campaign boasted about last night as his idea of an “engine of prosperity.”

And it was an engine of prosperity, for Mitt, for Stemberg. Mitt’s worth at least $250 million. Stemberg is reportedly worth $202 million. And they got that money by running an engine of prosperity that relies on workers who are Mitt’s own example of the failure of the American dream. “This just wasn’t right,” Mitt said himself. (Not to mention that some of the steel jobs Mitt destroyed probably were $22.50 an hour jobs, with benefits.)

A bit over a year and a half ago, I wrote this post, Let's Play With Some Numbers, where I put together what a single person with a full time job making minimum wage would have to deal with. And of course, few jobs paying minimum wage are actually remotely close to being 'full-time.'

Today's (Friday, August 31, 2012) NY Times had this article headlined with opening paragraph:

Majority of New Jobs Pay Low Wages, Study Finds

While a majority of jobs lost during the downturn were in the middle range of wages, a majority of those added during the recovery have been low paying, according to a new report from the National Employment Law Project.

This particular theme seemed familiar to me, then I realized I had written a post back in April 2011 on the same basic topic, only with a Washington Post article as the starting point. It turns out, the WaPo0 piece was based on a report (pdf) from the National Employment Law Project (NELP) and the NYT article is based on an updated report (pdf) from NELP. David Dayen discusses today's NELP report here. Dayen also has this on Federal Reserve Chair Ben Bernanke's speech in Jackson Hole, WY earlier today. Dayen offers this analogy:

Water works well at fighting fires.
Everything is on fire.
We may hook up the hose at some point.
Not promising anything.

As I have written before (here and here though I have touched on it in many more posts), we keep hearing how the Fed is "poised" to act; they just never seem to be willing to take the step of actually doing something. I guess pretending is acting in a way though. Dean Baker talks about the NYT piece here while also touching on Benbernank's speech and the fed.

But hey! Did you see where Honey Boo Boo got higher ratings the other night than the Republican National Convention? We. Are. So. Fecked.

And Because I can:

And the Occasional Truth Gets Spoken

Every now and then, I seem to run across news articles and/or headlines that seems to be just a bit of an understatement even as they are quite factual. Usually it seems, we get things like this one from NBC News yesterday:

New jobless claims take surprise jump

New claims for unemployment benefits took an unexpected jump in the latest week, raising more concerns about the struggling job market and providing further incentive for the Federal Reserve to jump in and help the economy.

As I have written before, it surely does seem as if the economist are ALWAYS surprised. Which still makes me wonder how they manage to keep their jobs as in most career fields, if you are always surprised by what happens, pretty soon you're looking for a new career.

A couple of days ago, I saw this piece from Alison Linn at the Today show with the headline:

Many in middle class say they are doing worse financially

The Great Recession and weak recovery have left slightly fewer Americans feeling like they are part of the middle class, and many who do still identify themselves as such say they are now worse off.

A new and comprehensive survey on how the middle class feels, released Wednesday by Pew Research Center, finds 42 percent of people who identify themselves as middle class say they are in worse shape financially than before the recession began. About 32 percent are in better shape, and the rest either don’t know or see no difference.

I am part of that 42% though in fact, I have been forced to accept that by income, I am no longer remotely close to "middle class." I am poor.

NBC News had this piece last night that is very much a companion to the Linn piece:

Stronger economy delivers smaller paystubs for most of us

With recoveries like this one, who needs recessions?

The average household income has fallen steadily for nearly everyone since the start of the economic expansion in June 2009, with average income dropping 4.8 percent in the three years since the upturn began, according to a report released Thursday.

High unemployment, outsourcing of jobs and generally slow economic growth have restrained income for households during one of the weakest and most prolonged recoveries on record, according to the report from Sentier Research.

Last summer, I wrote this post about the interconnectedness of the global economy. Today, the NY Times has this article on how China is now having to deal with surplus inventory:

GUANGZHOU, China — After three decades of torrid growth, China is encountering an unfamiliar problem with its newly struggling economy: a huge buildup of unsold goods that is cluttering shop floors, clogging car dealerships and filling factory warehouses.

The glut of everything from steel and household appliances to cars and apartments is hampering China’s efforts to emerge from a sharp economic slowdown. It has also produced a series of price wars and has led manufacturers to redouble efforts to export what they cannot sell at home.

This actually does make me wonder how long this headline from CNN will be true:

Romney: ‘Big businesses are doing fine’

It is a global economy and eventually what happens to one piece of that global economy WILL trickle down to the rest of the globe. Meanwhile we get to see pics of Prince Harry acting like a single, 27 year-old man visiting Las Vegas.

And because I can:

Where has the Federal Reserve been?

As many folks know, I spend a bit of time each day perusing various news sites. My postings have been light the past few weeks and months as I've been working through issues after my sister's death. More recently in the last week I've gotten a small piece of good news in my personal life (and not saying anything further as I try to nurture this news and make it grow - but it's not a job) as well as further bad news for my extended family, so the roller coaster ride does continue.

But then I go and see a headline like this at NBCNews.com:

Fed ready to help economy 'fairly soon,' minutes show

Turns out, the article was from Reuters though their headline wasn't much better:

Fed looks set to ease fairly soon barring swift rebound

Earth to Fed! Earth to Fed! Where in the holy hell have you been for these past few years?

(Reuters) - The Federal Reserve is likely to deliver another round of monetary stimulus "fairly soon" unless the economy improves considerably, minutes released on Wednesday from the U.S. central bank's August meeting suggested.

While the meeting was held before a recent improvement in economic data, including a stronger-than-expected July reading for U.S. employment, policymakers were pretty categorical about their dissatisfaction with the current outlook.

...snip...

The Fed held policy steady at that gathering, but signaled a renewed readiness to act amid lingering softness in the economy. The minutes showed the central bank is actively considering a "flexible" bond-buying program, which could suggest that no upfront amount will be announced.

Let's see. The "official" time frame for the Great Recession had a start in December 2007 and ended officially in June 2009. Last June I wrote a blog post where I predicted a double-dip recession. Officially, I was mistaken as the economy has managed to maintain just enough headway to avoid the term "recession." But also last summer, I wrote a blog post asking Mr Bernanke just where the hell he has been these past few years. I and all the other people in long term un and underemployed situations have the same concerns. We want jobs. The Fed still has a "Mission Statement" that begins with direction for "...pursuit of maximum employment..." So we sit here with the official unemployment rate at 8.3% and the rate of un and underemployeds at 15%. These number still translate to nearly 13 million unemployed and another 10 to 15 million underemployed. And again, these numbers do NOT include new college grads trying to find their first full time jobs in their chosen fields. The numbers do NOT include all the millions who have been forced to become "self-employed, independent contractors. Add these groups into the official numbers and we are probably looking at (as a guesstimate) another 10 to 15 million people. Labor force participation was at 63.7%.

But have no fear! All is not lost. Why just today, one of Willard Mitt Romney's top economic advisers proclaimed that The Benbernank is doing a smash up job as Fed chair and deserves to remain in the position while the Republican Party has added a plank calling for an annual audit of the Fed. My guess is this is the sop to Ron Paul. And to be honest, I can see this is a good plank. Of course, we still have the Todd Akin Memorial Anti-Abortion Plank Human Life Amendment so some things never change. After all, one of the reasons the Republicans re-took the US House in 2010 was because of the lack of jobs. Yet from the very start, the House concentrated on anti-abortion legislation that included "re-defining rape."

Todd Akin isn't an aberration in today's Republican Party. He is the epitome of today's Republican Party and Paul Ryan is right there with him. Meanwhile, the denizens of the Beltway wonder what all the fuss is about with jobs and millions of un and underemployed people wonder how they will survive.

And because I can:

Recovery? What recovery?

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This morning (Sunday, April 8) I was at the laundromat here in beautiful downtown Ruskin, FL and picked up a copy of the local, Tampa area Jobs Finder free newspaper. I'm sure most all of you have seen these free papers for your local area.

As I skimmed this paper, it reinforced for me that there is no economic recovery, at least not in this part of Florida. When I picked the paper up, I noticed it was awfully skinny so I counted pages. Eight whole pages. With large ads covering each page so I counted up all the ads. Thirty-nine ads for 8 pages. Then I looked even closer. Two ads were for the paper itself. Another two ads were for "start your own cleaning company" services. Then I counted nineteen ads for various types of training programs. Not for jobs. For for-profit training programs that might, maybe, if you can afford it and complete it, maybe get you a minimum wage job if you can survive to complete the six month to a year plus training program being offered.

No ads for local delivery drivers. No handyman type ads. No manual labor/construction service ads. No help wanted for local businesses and restaurants. No ads for jobs for any of the thousands of job types one usually sees in these types of free newspapers.

Now granted, this is obviously anecdotal but I would wager that in a lot of parts of the country, this is the current norm. It isn't much better with the ads on Craigslist or Monster or other online job search services. One of the metrics I use to check for job market improvements is the number of job ads from body shop/consulting services/head hunter agencies versus the number of ads from employers directly. My WAG is that the former ads are running nearly 10 to 1 over the latter. Businesses that are hiring directly are still able to be extremely picky about who they interview and hire.

But I guess we are not to worry. Everything must be getting better since the Beltway Village Idiots Pundits and Politicians seem to be in full pearl clutching mode after DNC Chair Rep. Debbie Wasserman Schultz went on CNN this morning and accused the Republicans of rooting for the economy to fail. Oh the horror of it all. Too bad that it seems to be beneficial to both parties to have the economy in doldrums. They all seem to forget that the 25M to 30M long term un and underemployed are each and every one, living, breathing, feeling human beings and not just statistics on the page full of numbers

And because I can:

How does an interconnected global economy avoid a global recession?

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As I was surfing through various news sites this morning (April 2), I noticed a number of articles discussing problems with the European and US economies which lead directly to the question I have posed in the title of this post:

How does an interconnected global economy avoid a global recession?

Unfortunately, I do not know the answer but if I had to guess, it would be to say "It can't."

The first article I noticed was from tha AP via Yahoo titled, "Euro unemployment spikes to record 10.8 percent." Reuters reported it as "Euro zone unemployment reaches near 15 year high":

Unemployment in the euro zone reached its highest level in almost 15 years in February, with more than 17 million people out of work, and economists said they expected job office queues to grow even longer later this year.

Joblessness in the 17-nation currency zone rose to 10.8 percent - in line with a Reuters poll of economists - and 0.1 points worse than in January, Eurostat said on Monday.

Economists are divided over the wisdom of European governments' drive to bring down fiscal deficits so aggressively as economic troubles hit tax revenues, consumers' spending power and business confidence which collapsed late last year.

As a companion to these was this blog post from Reuters on youth unemployment across Europe:

In Spain the number of under 24-year-olds out of work is 50 percent, in Italy nearly a third of young people are without a job and in France the figure is a quarter.

However, in Germany youth unemployment is expected to sink to record lows over the coming months and is currently well below 8 percent.

...snip...

So what is Germany doing right and can Spain learn a few lessons? In an article written for the Centre for European Reform, John Springford lays the problem out clearly. In EU countries where rates of unemployment are high levels of participation in higher education and vocational studies is approximately 40 percent. In Germany, Norway, the Netherlands, Denmark and Finland, where youth unemployment is fairly low, rates are closer to 60 percent in some cases.

But it is not just high unemployment in general and among the young in particular that is problematic. Today's NY Times had this article on the swelling ranks of the working poor in Europe:

Europe’s long-running euro crisis may be cooling. But the economic distress it has left in its wake is pushing a rising tide of workers into precarious straits in France and across the European Union. Today, hundreds of thousands of people are living in campgrounds, vehicles and cheap hotel rooms. Millions more are sharing space with relatives, unable to afford the basic costs of living.

These people are the extreme edge of Europe’s working poor: a growing slice of the population that is slipping through Europe’s long-vaunted social safety net. Many, particularly the young, are trapped in low-paying or temporary jobs that are replacing permanent ones destroyed in Europe’s economic downturn.

Now, economists, European officials and social watchdog groups are warning that the situation is set to worsen. As European governments respond to the crisis by pushing for deep spending cuts to close budget gaps and greater flexibility in their work forces, “the population of working poor will explode,” said Jean-Paul Fitoussi, an economics professor at L’Institut d’Études Politiques in Paris.

Meanwhile in the US, there was this post from Yahoo:

In addition, while the economy has been expanding for nearly three years and hiring is picking up, Reich notes, "we also see some major declines in terms of median wage. And that's particularly true for the bottom 90 percent."

In the past, economists argued that wage growth lagged in part because employers were spending more on benefits like health care and pensions. But that hasn't been the case in the past few years. A recently released study from the National Institute for Health Care Reform shows that in 2010, the percentage of Americans with insurance who got insurance from employers fell to 53.5 percent, down sharply from 63.6 percent in 2007. "At the top of the talent chain, employers are providing very generous health insurance, deferred compensation, and everything you can imagine," notes Reich. "But as you go down the job ladder, particularly to people who are doing routine jobs, they're getting less and less. There has been a substantial erosion of health care benefits for the bottom 90 percent.

David Dayen at FDL News points out that "Austerity doesn't work." Austerity in Europe squeezes the 90%, throws more people into unemployment and creates more working poor. The same thing in the US. In an interconnected global economy, how can we not have a global recession when seemingly the entire industrial world is being squeezed.

And because I can:

I really do want to believe in the economy...

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In the coming up on two years that I have been writing about the economy, jobs, un and underemployment at this little corner of the Intertoobz, I've tried to admit when my predictions have been a bit off. Like here and here where last summer I predicted we would be in a double-dip recession by the end of 2011. While we didn't fall back into recession on the time frame I envisioned, I still see it as quite possible.

I do hope I get to admit being wrong on that. I so very much want to believe the economy is really improving and the jobs picture will brighten but I just can't shake the feeling that it is all smoke and mirrors.

Today, (Thursday, January 19), the report of Initial Jobless Claims for last week came out and once again, the economists are surprised. Via Bloomberg:

Claims plunged by 50,000 to 352,000 in the week ended Jan. 14, the lowest level since April 2008, Labor Department figures showed today in Washington. The median forecast of 41 economists in a Bloomberg News survey projected 384,000. A Labor Department spokesman said the decrease reflected volatility seen during this time of year. The four-week average, which smoothes out fluctuations, decreased to 379,000 last week from 382,500.

...snip...

Jobless claims were projected to decrease from 399,000 initially reported for the prior week, according to the Bloomberg survey. Estimates ranged from 363,000 to 405,000. The Labor Department revised the previous week’s figure up to 402,000.

I am not at all surprised that last week's figures were revised upwards as that is the pattern over hte last few months at least. I did not make an official prediction but will admit that I thought this week's number would be back well above 400K. Once again, I do prefer to be wrong on these.

But then I see articles across the Toobz like this from Tuesday from US News (via Yahoo) with the headline "Are We Entering a Jobless Recovery?" and I just want to weep at the incredible combination of stoopid and duplicity to that gives us such a headline. The Great Recession/Lesser Depression is supposed to have ended in June 2009 so we are 2 1/2 years into a "recovery" and US News is just now questioning that it may be jobless?

But there is a downside to the Fed's favorable report and the good news on Wall Street. While the economy is growing, few new jobs are being created. The unemployment rate fell from 9.4 percent in December 2010 to 8.5 percent in December 2011. But without more dramatic job growth, low-skilled workers and the long-term unemployed will continue to have a hard time finding a job.

Economists now fear that the United States is entering what is known as a "jobless recovery," an economic recovery in which few new jobs are created. If economic expansion continues without adding a significant number of jobs, many unemployed workers will simply be left behind with few job prospects.

Unfortunately, the article doesn't get much better as it goes on to lay out standard "Gee, all you need is new training and education for the miracle to occur" when in fact, one of the groups hardest hit has been new college graduates from '08 - '11. Of course, if all we needed were training and skills to take all these jobs that are available, sure seems as if salaries would be rising in those areas with the needed new skills but that has not been happening.

Also from Tuesday was this piece from Reuters:

More than four years after the United States fell into recession, many Americans have resorted to raiding their savings to get them through the stop-start economic recovery.

In an ominous sign for America's economic growth prospects, workers are paring back contributions to college funds and growing numbers are borrowing from their retirement accounts.

Some policymakers worry that a recent spike in credit card usage could mean that people, many of whom are struggling on incomes that have lagged inflation, are taking out new debt just to meet the costs of day-to-day living.

American households "have been spending recently in a way that did not seem in line with income growth. So somehow they've been doing that through perhaps additional credit card usage," Chicago Federal Reserve President Charles Evans said on Friday.

With all due respect to Reuters and the author(s) of this "Insight" piece, this should not be a surprise. We have record people on Unemployment for long term, unemployment that averages $330 per week across the country, people who have exhausted all levels of unemployment compensation yet still have rent or mortgages, utilities bills, and the need to keep themselves and their families alive. Do you have a better option?

Today, Alison Lin at MSNBC was a little closer to reality with this:

The sudden loss of a job has become, if not commonplace over the last years, at least not very surprising.

And yet, many Americans remain unprepared for not having an income. A new survey from Country Financial finds that one-third of Americans would immediately fall behind on their bills if they lost a job and were left with no income.

That’s virtually the same result that Country Financial got the last time they asked the same question, in July of 2009.

But the banksters are at least mostly hitting their Wall Street predictions so it is all good I guess.

Which group lives in the bigger bubble, Wall Street or Beltway Villagers?

And because I can:

Capitalists: Venture vs. Vulture

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So there I was, surfing around the intertoobz this morning when I came across this headline at CNN:

Stop vilifying venture capitalists

I have to admit, I was a bit taken aback at the headline as it surely did not reflect anything I had read.

In reading the piece, it starts off in a fairly standard fashion:

From 1984 to 1999, Mitt Romney was in charge at Bain Capital, an investment firm that sought out small and sometimes troubled companies that, with careful management and Bain-provided cash, offered the chance for big profits. Bain, like many venture capital firms, invested in startups with the hope that the profits they made on the successes would outweigh the losses they incurred on the failures.

Venture capital markets are simple things. Two groups of people who want to create new businesses come together. Venture capitalists have money but lack ideas. Entrepreneurs have ideas but lack money. When they get together, they trade and new businesses are born.

Then I realized that the author was not really saying much I could disagree with - other than his implication that Bain Co. was this benign entity only helping entrepreneurs to find the needed funding to bring their ideas to market as wiki defines it.

Today's Boston Globe addresses this in this article.

Mitt Romney has long called himself a venture capitalist, experience he says helps him understand the economy better than other candidates for president. But he spent much more of his career in leveraged buyouts than in the investments in start-up companies known as venture capital.

Romney’s one true venture deal was Staples Inc., the office supply superstore, two years after he started Bain Capital. He wasn’t the first to discover Staples; another Boston venture firm introduced him to Staples founder Tom Stemberg. But Romney did lead the deal in 1986 in classic fashion - at first investing $650,000 in the start-up, then becoming its chief cheerleader and assisting with strategy to expand the seller of paperclips and pens.

...snip...

With leveraged buyouts, the investment firm purchases a mature company, partially with its money and with debt it transfers to the company. The new owners then usually streamline the business and seek to resell it.

For example, in the same year that Romney invested in Staples, he led the firm in its $200 million acquisition of Accuride, a wheel rim maker that was part of Firestone. Bain put down only $5 million and borrowed the rest, using junk bonds from Drexel Burnham Lambert. Eighteen months later, Bain resold the company and reaped $121 million in its first taste of the big time in the go-go 1980s.

Soon after, Romney steered Bain Capital more toward debt-driven buyouts. There was more money at stake and less risk for Bain than betting on untested technology.

My bold. And there you have it. While maybe starting life as a "venture capital" firm, Bain Co under Romney quickly turned to being Vulture Capitalists using the leveraged buyout.

At this point, I guess I should queue cue the chorus of voices shouting "FREE MARKET! FREE MARKET!"

Point of fact - there is no such thing. The LBO gets to use the debt interest to write down their taxes. By "streamlining" the business, the methods have often included cutting wages and benefits, selling off assets, and dumping pensions onto the taxpayers through the Pension Benefit Guarantee Corp. Dean Baker explains it quite nicely here and here. From the first link:

If private equity firms were successful in making companies more efficient and lowering prices to consumers, then it could lead to more jobs in the economy, even if there were fewer workers directly employed in the firms under its control. (This does not really apply in the current economy, where inefficiency means more workers are employed. This is good in the context of a poorly managed macroeconomy with high unemployment.)

However private equity firms do not profit just by making firms more efficient. Private equity also profits by financial engineering. For example, it is standard practice for private equity firms to load their firms with debt. This means that interest payments, which are tax deductible, are substituted for dividend payments, which are not tax deductible.

Private equity companies also often force firms into bankruptcy to offload debt. This can often include pension obligations, which are then taken over by the Pension Benefit Guarantee Corporation. Insofar as private equity companies are drawing their profit from this sort of financial engineering, it is not providing a benefit to the economy. In fact, it is a direct drain on the productive economy.

So much for the nonexistent "free market." If a firm has to offload their debts and pensions on the taxpayers, there ain't a diddly damn thing free about it.

While I am still trying to figure out how it is possible for the LBO group to incur debt for an entity that they are acquiring (don't you have to actually own something before you can mortgage it?), I'll close this little rant with this article from today's Cincinnati Enquirer headlined "Tax breaks for jobs: Half fall short." A story for another day.

And because I can:

Improvement, yes, but not that much improvement

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OK, so you might have noticed a few headlines the last few days talking about how the economy is getting better, unemployment is dropping, and we're all going to win Powerball tonight and retire tomorrow with our sparkly ponies.

Yeah, I ain't holding my breath on any of those things either.

Yes, the economy is getting a little better. Slightly. But not to a level to make an appreciable difference to the millions of long term un and underemployed. As David Dayen noted at FDL News on Friday:

The reason that the unemployment rate was able to tick down, however, is that the labor force participation rate remained unchanged at 64.0%. This low participation rate means that, even with the economy growing and the job market improving, a fair number of able-bodied workers have not rejoined the labor force. When they do, and when the labor force participation rate increases, that will put upward pressure on that topline unemployment rate. And unless everyone came into found money, that’s fated to happen. The employment-population ratio also remained unchanged in December (58.5%), despite the job additions. The average workweek and average pay went up very slightly over the month.

Even if those folks who have given up and left the workforce were to stay away and not return, it will still take years for the current problems to right themselves.

Let's pretend that we stay on the current level of seeing the official unemployment rate drop .2% each month. At the end of 2012, the unemployment rate would be at 6.1%, a number that sounds much better than it has been. But that number would still not be addressing the millions of folks working part time (probably minimum wage) jobs who want full time employment. Nor does it account for all the folks forced into being "independent contractors" or all the college grads from 2008, 2009, 2010, and 2011 still trying to get their first position in their fields.

Just today (Wednesday, January 11), MSNBC had this post with the headline, "Four job seekers for every opening, report shows":

Though hiring picked up in November, job openings shrank by 63,000, to 3.2 million. October’s job openings were revised down by 43,000.

With 13.3 million people unemployed in November, there were about 4.2 job seekers for every job opening, down a notch from the revised October ratio of 4.3-to-1. That is roughly triple the ratio seen before the recession hit in December 2007 but down from a peak of 6.9-to-1 in the summer of 2009.

“As the job-seekers ratio shows, what’s happening is not that millions of workers have become lazy, unskilled, or unproductive; it is that there are not enough jobs available,” said Heidi Shierholz, an economist at the Economic Policy Institute.

The Wall Street Journal had this article on Monday on how "Unemployment Scars Likely to Last for Years" (you can use der Google on that title to get the full article but here's a snippet):

The U.S. job market is showing signs of a sustained recovery. But the country's prolonged struggle with unemployment will leave scars that are likely to remain for years, if not generations.

The latest labor-market snapshot, out Friday, gave cause for continued, if tepid, optimism. U.S. employers added 200,000 jobs in December, and the unemployment rate ticked down to 8.5%, its lowest level since early 2009.

But economists gathered here for the American Economic Association's annual convention took a longer and generally dimmer view. Even if recent progress continues, the recession already has had a lasting effect on a generation of workers. Worse, the crisis has laid bare problems in the U.S. labor market that won't quickly recover when the economy eventually rebounds. And the longer that unemployment remains high, the greater the risk that it will create structural problems that will endure.

But hey! Let's make sure we don't hurt the fee-fees of the Private Equity Vulture Capitalists (NY Times via MSNBC):

The titans of private equity have long feared this moment. As Mitt Romney has established himself as the front-runner for the Republican nomination, not only has his record at Bain Capital come under intense scrutiny and withering attacks — but so has the private equity industry.

Mr. Romney’s opponents are the loudest, accusing such firms of carving up companies and cutting jobs. Newt Gingrich said over the weekend that Bain looted companies and fired employees, and Rick Perry on Tuesday called private equity firms “vultures.” An anti-Romney documentary calls him a “predatory corporate raider.”

The attacks have unnerved many buyout executives — especially those who have long used their fortunes to support the Republican Party. As Mr. Romney’s rivals have sought to turn the primaries into a referendum on his business career, the private equity industry finds itself under fire from those it thought were friends.

Amazing how much whining these people do. Whether they want to emulate Blackbeard or just Gordon Gecko, they've made their choices and should be willing to live with them.

And because I can:

Wait! I thought the South was where all the jobs are!

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Jobs.

Although the official time frame for "The Great Recession" was December 2007 through June 2009, for the millions of long term un and underemployed, the daily reality is that not only has the recession never ended, it is more applicable to The Great Depression than it is to any of the various acknowledged recessions since the end of WWII. One of the articles of faith from the always surprised Economists is that job creation lags other indicators, yet here we are, over two years since the "end" of the last recession and the official unemployment rate is still at 9.1% with the underemployed figure at 16.2% for August 2011.

Each week on Thursday, there's a report of the Initial Jobless Claims for the week before. Like many of the earlier weeks, last week's report forced the headline writers to find the lone tidbit of almost good news to concentrate on in their ledes. From Reuters:

(Reuters) - Americans filed fewer new claims for jobless benefits last week but the decline was not enough to dispel worries the economy was dangerously close to falling into a new recession.

Applications for unemployment benefits dropped 9,000 to 423,000 in the week ended September17, the Labor Department said on Thursday. That was roughly in line with expectations.l

Of course, once again, the earlier report had been revised upwards (from 428K reported on September 15). It is not going too far out on a limb to predict that the 423K reported for September 22 will be revised upwards on September 29.

I did not go too far out on a limb back in June when I first predicted a "double-dip" and it still was a short limb when I reiterated the prediction in July. Nouriel Roubini has made the same prediction last Thursday documented from his tweets (via Business Insider). A few days earlier (September 19), Roubini had written this op-ed on how to keep the coming Recession from being a Depression.