Free Markets, Free People

employment


Observations: The QandO Podcast for 27 Feb 11

In this podcast, Bruce, Michael, and Dale discuss the demonstrations by public employee unions in Wisconsin, and the state of the economy.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.


January 2011 Unemployment Situation (Updated)

Today’s unemployment situation data is…wierd.  Most noticeable is that the Civilian Non-Institutional Population declined by 185k people, from 238,889k to 238,704k.  Did a lot of people die last month? (Update: Ah. It was an annual population adjustment by the BLS. Carry on.) At the same time, we continue the trend of large increases in the population that dropped out of the labor force, with 319k dropping out last month. Since January, 2010, 2,039k people have left the labor force. On the plus side, 117k more people say they are employed this month than last month.

Still, that 9% unemployment rate is an artifact of 504k people disappearing from the population, not the creation of new jobs, something the anemic 36k new payroll jobs number makes clear. Also, the adjusted U6 unemployment rate surged From 16.6% to 17.3%. In fact, U-3, U-4, U-5, and U-6 all rose sharply.  U-3 (Total unemployed, as a percent of the civilian labor force) rose from 9.1% in December to 9.8% last month. So, we got that goin’ for us.

Getting to the numbers, for a more accurate view of unemployment:

Civilian non-institutional adult population: 238,704
Historical labor force participation rate:
66.2%
Proper labor force size:
158,022
Actually Employed:
139,323
Unemployment Rate:
11.8%

UPDATE: Well, this is embarrassing.  I’ve made a calculation error in the Excel spreadsheet, which provided an incorrect unemployment rate, above.  I reversed the division between the labor force and the number of employed persons.  I noticed that while writing the post above, on how I calculate the number.  I’ve corrected the Excel spreadsheet, to prevent the error from recurring in the future.


December Unemployment

The employment numbers from this morning are no cause for any sighs of relief, yet.  The number of persons employed increased faster than the increase in population–which seems to be unusually small compared to recent months.

In any event, according to my calculation method, this is where we stand (all numbers in thousands):

DECEMBER 2010
Civilian Non-Institutional Adult Population:
238,889
Average Labor Force Participation Rate: 66.2%
Proper Labor Force Size: 158,145
Actually employed: 139,206

UNEMPLOYMENT RATE: 13.6%

The labor force participation rate continues to decline, coming in at 64.3% this month, a 30-year low.  The actual size of the labor force was 153,690.  Using the historical average participation rate of 66.2%, that means the current labor force is running with about 4.45 million fewer workers than it should.

This month’s non-farm payroll increase of 103k new jobs is really just a drop in the bucket. We would need 11 million jobs created to get the unemployment rate back to 5%.  Even if there were no increase in population at all, we would need to create 300k new jobs per month for 37 months to get those 11 million jobs back. The only possible bright spot is that, this year, the first of the baby boomers hit 65 and begin retiring. So maybe the actual labor force participation rate is due to naturally drop, as is the size of the labor force.

All we have to do, then, is figure out how to pay social security to more retirees with a shrinking labor force.  That should be fun.


Observations: The QandO Podcast for 05 Dec 10

In this podcast, Bruce, Michael, and Dale discuss the Budget Comission, and Washington’s refusal to even consider making any of the hard choices it represents.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2009, they can be accessed through the RSS Archive Feed.


November Unemployment

Once again this month, the employment report, weak as it is, hides even worse weakness in the labor market. Despite the banner headline of 39,000 new jobs, the number of Americans actually employed declined from 139.061 million to 138.888 million, a decline in employment of 173,000. And, of course, 39,000 new jobs isn’t really helpful anyway, when you consider that last month, the labor force increased by 122,000. We need to be creating 122k+ jobs a month just to keep even with population growth.

The real unemployment rate continues to rise, according to my personally devised measure of employment (Population numbers are in thousands):

NOVEMBER 2010

Civilian Non-Institutional Adult Population: 238,715
Average Labor Force Participation Rate: 66.2%
Proper Labor Force Size: 158,029
Actually employed: 138,888

UNEMPLOYMENT RATE: 13.8%

Compare and contrast that with April of this year:

APRIL 2010

Civilian Non-Institutional Adult Population: 237,329
Average Labor Force Participation Rate: 66.2%
Proper Labor Force Size: 157,112
Actually employed: 139,455

UNEMPLOYMENT RATE: 12.7%

Since April, the number of Americans actually employed has declined from 139.455 million to 138.888 million, a drop of 567,000 employed.


Observations: The Qando Podcast for 21 Nov 10

In this podcast, Bruce and Dale discuss the Democrats’ response to their electoral drubbing, and the Federal Reserve’s Quantitative Easing policy.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2009, they can be accessed through the RSS Archive Feed.


So are Obama and the Democrats focused like a laser on jobs and the economy? Uh, no.

Here you have a lame duck Congress dominated by Democrats and a president who admits his party was “shellacked” in the midterm elections with a chance to partially redeem themselves and focus on the people’s priority – jobs and the economy – and what do they do?

Well they make the repeal of DADT and passage of the DREAM act – purely political priorities – the legislation of choice.

Or to put it another way, they’ve chosen to double down and push their political agenda vs. heeding the message sent by American voters on November 2nd and pushing that aside to give jobs and the economy the priority.

Pure arrogance.  But an indication of the fact that the administration has absolutely no real intention of “triangulating” anything or “pivoting” in any direction.  The supposed “pragmatic” president shows his true ideologue colors.

This should be something the GOP captures and preserves in amber for 2012.  This is precisely the worst thing Democrats could do, but apparently they simply can’t help themselves.  And that shouldn’t surprise anyone.  Harry Reid still presides over the Senate and what comes to the floor there and House Democrats just reelected the liberal leadership that cost them over 60 seats in the midterms.

But hey, it’s their party, their strategy and their arrogance.

The GOP’s job is to record and remind in 2012.

~McQ


Observations: The QandO Podcast for 07 Nov 10

In this podcast, Bruce and Dale discuss Tuesday’s midterm elections, and Friday’s unemployment report.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2009, they can be accessed through the RSS Archive Feed.


Wasserman Schultz – Obama creating more jobs than in entire Bush presidency (update)

Tis the season where absurd and wild claims are made (to be fair – by both sides) hoping they’ll hold up at least until the election has passed. Some, however, just are too off the wall and blow up immediately upon being uttered. An example is this claim by Democratic Congresswoman Debbie Wasserman Schultz:

“On the pace that we’re on with job creation in the last four months — if we continue on that pace — all the leading economists say it is likely that we will — we will have created more jobs in this year than in the entire Bush Presidency,” Wasserman Schultz, a Democrat from Weston, said on FOX News.

On its face, you immediately say –wait a minute, that can’t be true.  To make that claim, one has to ignore the jobs lost prior to the “last four months” and disregard the total jobs created during the Bush era.  Obviously the same process was going on during the Bush administration (job losses vs. job gains) which ended with a net positive.  Wasserman Schultz would like you to ignore the meaning of “net” and job loss numbers in favor of only focusing on the pace of job creation.  And I’m not sure she’s right about that.

As Veronique de Rugy points out over at NRO, while the jobs picture during the Bush administration was nothing to brag about, there’s no way that Wasserman Shultz’s claim has any credibility in the face of an economy that has shed almost 3 million jobs in the private sector during Obama’s presidency. 

In effect, it’s a shot at getting a meme started with low information voters hoping they’ll accept it at face value and it will influence their vote.  You have to love the “all the leading economists” appeal to authority she dropped in there.  But if you want hard numbers, well, forget it. 

They do exist however.  Instead of providing them (you can see them in de Rugy’s post at NRO), a graph will do a much better job of pointing out the absolute nonsense of the Wasserman Schultz claim.  While it is possible that more than 675,000 jobs created in the next 4 months somewhere, as we just saw with the latest numbers, the economy is still shedding jobs (95,000).  It is the net that counts – not just one side of the ledger. If you “create” 1,000,000 jobs but lose 2,000,000 during the same period, it’s a net loss.  And that’s what we continue to suffer right now.   So her’s is an empty and meaningless claim that is disingenuous because ignores the whole picture in a transparent attempt to drag the left’s favorite punching bag back into the argument.

 

image

While total employment rose slightly (675,000 net jobs) during the Bush presidency, most of it was government employment.  During the Obama presidency there’s been no overall growth of employment except slightly at the federal government level and no net increase.  What Wasserman Shultz wants you to ignore is the blue bar on the left and the negative net job numbers we continue to see.   If you do that, the claim sounds good.  If you don’t, then her claim is nonsense.  

Bottom line is Wasserman Schultz’s claim is selective statistical nonsense, but I expect to see it somewhere, sometime repeated as gospel. 

UPDATE: Dale sends along the Bureau of Labor Statistics spread sheet which shows:

  • From Jan 01 to Jan 09, a net of 1,080,000 jobs were created.
  • From Jan 09 to present, 3,348,000 jobs have been lost.
  • The low point in non-farm employment was Dec 09, when there were 129,588,000 payroll jobs
  • Since that low, 613,000 jobs have been created.
  • There are 580,000 fewer payroll jobs today than there were in January of 2000.

Make sure you understand that last line.  In a nation that has increased its population during the last 10 years, we have a net job loss of 580,000 jobs since 2000.

~McQ


What part of “production” don’t these people get?

In today’s NY Times, Robert Schiller laments the lack of jobs brought by the “stimulus”.  Essentially, he posits, government focus is on the wrong thing.  Instead of boosting the GDP, the “stimulus” should be focused on creating jobs.  And where should government be focusing that effort?

Why not use government policy to directly create jobs — labor-intensive service jobs in fields like education, public health and safety, urban infrastructure maintenance, youth programs, elder care, conservation, arts and letters, and scientific research?

Would this be an effective use of resources? From the standpoint of economic theory, government expenditures in such areas often provide benefits that are not being produced by the market economy. Take New York subway stations, for example. Cleaning and painting them in a period of severe austerity can easily be neglected. Yet the long-term benefit to businesses from an appealing mass transit system is enormous. (This is an example of an “externality,” which the market economy, left to its own devices, will neglect.)

The problem with this idea, of course, is nothing is really produced.  In fact, the focus on kicking up the GDP isn’t the wrong focus.  And trying to produce make-work jobs or “service” jobs don’t help with that.  They certainly would keep those who got the jobs busy, but a clean subway will not lead to more jobs elsewhere.

The tendency to think like this is apparent among a certain set who believe that spending money on jobs, whatever the sector and whatever the labor, make a difference.   A job is a job is a job.

But it isn’t.  Government jobs are not jobs that “produce wealth”.  They consume wealth.  And they don’t certainly don’t produce jobs that do produce wealth.

That comes in the private sector where people produce things – to include services – that other people want and that old “voluntary exchange of value between two people” takes place and produces wealth, which in turn kicks up the GDP.

It is wrong-headed to think the government can “stimulate” employment by employing people in non-productive, busy work jobs.

If government has a role in a recession or depression it should be to clear the way with less regulation and provide the incentives through tax breaks for businesses to hire and expand. 

What is hold all of this up at the moment is the unsettled tax picture and regulation regime as well as new legislation the business world is still trying to digest and pending legislation which would further complicate recovery.  It isn’t rocket science.  Until the marketplace is much more settled than it is now, no jobs are going to be created and now businesses are going to expand.

You can paint and clean all the subway systems in the US and it won’t make any difference.  The mid-term elections, however, may.  If the GOP takes the House and closes the gap in the Senate, you may start to see some hiring and some expansion, based on the belief that the worst is over  – governmentally that is – and perhaps it is now safe to begin the long, slow process of recovery.

~McQ

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