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:

Corporate Welfare and the Case for Taxes and Regulation

Most everyone knows the most common use of welfare as helping those in danger of being left behind by society. Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP although often still referred to as Food Stamps, and Medicaid are the most well known programs available to people. And no, Social Security and Medicare are not welfare programs.

But just as there are welfare programs for individuals and families, there are also welfare programs for corporations and the rich and powerful. These are just not given names to make them easily identifiable as welfare programs yet the end result is governments at all levels wind up subsidizing for profit industries at the expense of the taxpayer. Privatizing the profits, socializing the losses in other words.

Let me offer a few examples. WalMart is one of the easiest examples. They are a profitable business yet far too frequently, WalMart employees are forced to use public assistance, i.e., the pretty much textbook definition of the working poor (see here, here, here, here, here, and here). If you check der Google for "WalMart employees public assistance" there are over 900K hits in .34 seconds.

Privatizing the profits, socializing the losses.

Next up are oil and gas companies. Just for last year (2012) the Big Five oil companies (ExxonMobil, Shell, Chevron, BP, and ConocoPhillips) had combined profits of $117B (high of $45B for Exxon down to 'only' $8B for ConocoPhillips). These are just the biggest oil companies and does not cover the Koch Brothers Amerada Hess, T Boone Pickens, and many other "smaller" oil companies (smaller being a relative term). While the amount of subsidies varies depending on how they are defined, contrary to Forbes magazine's contention, they do exist. As even an earlier Forbes article concedes (although they paint it as "everybody loves them.") Christian Science Monitor places the subsidies at $41B a couple of years ago. The Atlantic in March discussed over $38B in Big Oil and gas subsidies identified by the Obama administration for deletion over the next 10 years. This chart shows the annual subsidies for Oil and gas at $10B to $52B per year. You will notice that all of these guesstimates on the amount of annual subsidies are well below the annual profits.

Just these past few weeks we have seen a few more examples of privatizing the profits and socializing the losses. Exxon's oil spill/pipeline break in Mayflower, AR. Due to a loophole in the law, Exxon will not have to pay into a federal cleanup fund after this disaster. The West, TX fertilizer plant explosion:

"This explosion, I think, surprised a lot of people," said Senator John Cornyn. "It is no surprise that ammonium nitrate is explosive under the right conditions."

No one could have anticipated - unless they did.

Tax breaks. Lack of regulations. No inspections. Ka-boom!

I wish I had the answers or the magic wand but I do not have the magic wand and elected officials at all levels do not have the will to find and implement the answers. It might hurt the (un)free market and cost a few cents of profit.

Privatize the profits. Socialize the losses. Avoid the taxes and regulations and let the tax payer pick up the pieces. John Galt would be so very proud.

And because I can:

Jobs, Unemployment, Firings

Yesterday, Digby hit on one of my favorite talking head idiocies about how folks collecting Unemployment Compensation are just lazy bums getting a free ride vacation. I like to call this the "Larry Kudlow School of Economics" since I've heard Kudlow spout this piece of uninformed gibberish multiple times over the years.

This post by Digby was brought about by Congress's dithering once again on passing a further extension of Unemployment Benefits, currently set to expire on June 2.

Yeah, these tens of millions of our fellow citizens are just a bunch of lazy asses who are living it up on 300 a week. There's plenty of jobs, these people just refuse to work because they like all this cushy free money.

I just don't know what to say about this. You have a 10% official unemployment rate which doesn't count all those who never qualified (small business owners, independent contractors etc.) and it doesn't count all those who have already fallen off the rolls. And yet politicians are buying this nonsense that there are plenty of jobs but people just won't work? That's completely ridiculous. These people should be ashamed of themselves.

This article is from 2/2009 and shows the maximum weekly Unemployment Benefit for each state. The payments range from $230 per week for Mississippi and $240 for Arizona (lowest two states) up to $628 for Massachusetts and $584 for New Jersey (the two highest). California pays a maximum of $450 and New York maxes at $405.

But it's not just the non-existent jobs. From yesterday's NY Times, we have the story on cutbacks to Child Care subsidies. More exercises in penny wise, pound foolish operations.

Despite a substantial increase in federal support for subsidized child care, which has enabled some states to stave off cuts, others have trimmed support, and most have failed to keep pace with rising demand, according to poverty experts and federal officials.

That has left swelling numbers of low-income families struggling to reconcile the demands of work and parenting, just as they confront one of the toughest job markets in decades.

This is the downside for most all of the various legislation passed by Congress that provides "subsidies" for poor individuals. We'll most likely see it with the subsidies from the Health Insurance Reform. In order to achieve some faux "bi-partisan" ideal against deficit spending, it is always the poor and least able who bear the brunt of these actions. Never shall it pass that taxes are raised for those who have the most of course. After all, only the poor people who actually need support are worthy of sacrificing.

We're not looking for hand outs. We're looking for the little bit of support to help us make it together as a society.

And because I can: