Free Markets, Free People

unemployment

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Observations: The QandO Podcast for 24 Nov 13

This week, Bruce McQuain makes his triumphant–albeit mean-spirited and cruel–return, to talk with Michael and Dale about Iran, The Census Bureau. and the Senate’s filibuster rules.

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.


Observations: The QandO Podcast for 10 Nov 13

This week, Bruce, Michael and Dale discuss Obamacare and the end of antibiotics.

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.


Stagnant wages, among other things, a result of the economic doldrums

That’s certainly one of the factors keeping GDP growth low.

Four years into the economic recovery, U.S. workers’ pay still isn’t even keeping up with inflation. The average hourly pay for a nongovernment, non-supervisory worker, adjusted for price increases, declined to $8.77 last month from $8.85 at the end of the recession in June 2009, Labor Department data show.

Stagnant wages erode the spending power of consumers. That means it is harder for them to make purchases ranging from refrigerators to restaurant meals that account for most of the nation’s economic growth.

Not only that, but unemployment remains historically high years after the “recovery”. The question, however, is why wages are remaining stagnant. The WSJ cites three factors:

Economic growth remains sluggish, advancing at a seasonally adjusted annual pace of less than 2% for three straight quarters—below the prerecession average of 3.5%. That effectively has put a lid on inflation, which has been near or below the 2% level the Federal Reserve considers healthy for the economy. With demand for labor low, prices not rising fast and 11.5 million unemployed searching for work, employers aren’t under pressure to raise wages to retain or attract workers.

Emphasis mine. The Fed is happy with the inflation rate. And the administration, despite numerous claims to be focused like a laser beam on “j-0-b-s” has done little if anything to address unemployment or economic growth. Finally, given the uncertainty that regulation and new laws (such as ObamaCare) bring to the table, employers are even less likely to hire until the regulatory and legal dust settles and they have a much better idea of how both effect their business and industry.  It’s not about “pressure”.  It’s about a lack of incentive.

Secondly:

Businesses are changing how they manage payrolls. Economists at the Federal Reserve Bank of San Francisco in a recent paper said that, in the past, companies cut wages when the economy struggled and raised them amid expansions. But in the past three recessions since 1986—and especially the 2007-2009 downturn—companies minimized wage cuts and instead let workers go to keep remaining workers happy. As a result, to compensate for the wage cuts that never were made, businesses now may be capping wage growth. “As the economy recovers, pent-up wage cuts will probably continue to slow wage growth long after the unemployment rate has returned to more normal levels,” the researchers said.

Another point to make, again considering the unemployment rate, is that those working are glad to still have a job. And with the economy still struggling it is unlikely that many feel the time right to push for higher wages. In fact, it is a “buyers market” right now when it comes to labor. And it will remain one until we get into much higher growth percentages and the demand for labor begins to outstrip the supply. We’re not even close to that at this point.

Finally:

Globalization continues to pressure wages. Thanks to new technologies, Americans are increasingly competing with workers world-wide. “We are on a long-term adjustment, as China, in particular, but all developing countries, get their wages closer to ours,” said Richard Freeman, an economist at Harvard University. According to Boston Consulting Group, there will be only a roughly 10% cost difference between the U.S. and China in making products such as machinery, furniture and plastics by 2015.

Technology is also replacing workers in many industries. Automation is especially tough on low skilled workers. But again, given laws like ObamaCare, the incentive at work is to have fewer employees, not more. Businesses will automate where it makes sense and helps make a profit. It is also a means of closing that wage gap mentioned above, so it isn’t a trend that is likely to end anytime soon.

All of those factors and what I’ve mentioned in addition to them combine to make unemployment and wage growth both remain static. There simply aren’t any incentives at the moment to hire more people. Certainly not in GDP growth. Certainly not with the plethora of new regulations and laws.

In fact, as is mentioned in the article, at the moment there are only two paths to higher wages:

The only path to wage gains is through a stronger economy or an increase in demand for specialized skills.

The economy is moribund and has been for quite some time with GDP growth under 2% for the last three quarters.

That narrows the path to wage gains to a single one – developing specialized skills. It isn’t a path open to everyone, unfortunately, for a number of reasons.

So how could government help change all of that? Quite simply by getting out of the way – something it seems completely unable to comprehend or do.

And because of that, it continues to contribute negatively to the economic situation we endure.

~McQ


Don’t drink “the employment picture is much better” Kool-aid

Why?  Because it isn’t really better.  Oh, it may be marginally better than it was a year ago but that’s not saying much at all.  In terms of real progress?  Yeah, not so much.  The National Journal says:

The U.S. jobs picture is bleaker than the most recent jobs reports may make you think. The economy added 175,000 jobs last month, but at the rate things are going, it would take almost a decade to get back to prerecession employment levels. A Job Openings and Labor Turnover Survey report released Tuesday by the Bureau of Labor Statistics digs in on the bad news: The number of job openings in the U.S. actually fell by 118,000 in April to 3.8 million.

How bad can 3.8 million job openings be? The Economic Policy Institute looks at the number and sees that “the main problem in the labor market is a broad-based lack of demand for workers—and not, as is often claimed, available workers lacking the skills needed for the sectors with job openings.”

Here’s a chart they put together to visually make the point:

An economy on the mend is generating jobs at such a pace that it is competing for workers.  As is obvious, that’s not the case in this economy, nor has it been the case for quite some time.

In a word, the employment picture sucks.  Anyone pretending otherwise is doing exactly that – pretending.  And they can toss around all the numbers they like, the bar charts above tell the real picture – business is not hiring and the reasons are multiple, most having to do with government intrusion (see ObamaCare for one example).

~McQ


Observations: The QandO Podcast for 07 Apr 13

This week, Bruce, Michael and Dale discuss the events of the week.

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.


Jobless numbers “unexpectedly” rise to 4 month high

Because, you know, we’re in a (perpetual) recovery and stuff like this isn’t supposed to happen:

The number of Americans filing new claims for unemployment benefits hit a four-month high last week, the latest suggestion the labor market recovery lost some momentum in March.

Initial claims for state unemployment benefits increased 28,000 to a seasonally adjusted 385,000, the highest level since November, the Labor Department said on Thursday.

Economists, who had expected claims to drop to 350,000, said while part of the rise reflected difficulties adjusting the data during the Easter and spring breaks, there was no doubt the pace of job growth had eased.

“What we do know is that the growth momentum has slowed, employment has slowed. The question is how much?” said Millan Mulraine, a senior economist at TD Securities in New York.

How much?  Well let’s consider something shall we?  What has recently and finally gone into full effect to the point that employers can now finally make some plans with reference to it as to how many they plan to employ (or continue to employ)?

Oh, yeah, ObamaCare.  The taxes and penalties kick in this year and – not saying this is the only reason – companies and corporations are finally put in the position of executing their plan to avoid the prohibitive costs and penalties imposed.

That’s right – “avoid”. Again, as is usually the case, the left has ignored Human Nature 101 as they usually do. You have to remember, the purpose of their utopia is to change human nature once and for all from a self-interested and independent being to a hive worker enslaved to the state, er, an enlightened being who thinks of others first … yeah, that’s the ticket.

And when their utopian plans meet human nature, well they call the result “unintended consequences”. We who study human nature call them “entirely predictable outcomes”. They seem surprised by these “unexpected” developments. We simply shake our head at their studied stupidity.

The problem, of course, is they presently have the power of the state in their hands. What that means is they will continue to try to drive the square peg of their utopia into the round hole of human nature and use the power of government to do so.

What that means is at some point, when they’re finally out of power, we’re going to have to pick up their pieces of what they’ve destroyed and try to piece it together in some form or fashion, if that’s possible.

And all the while that’s being attempted, we’ll have to listen to them whining and complaining that what is being done isn’t “fair” or “equitable”.

Well, what you’re suffering now is a result of “fair and equitable” nonsense that ignored Human Nature 101. Maybe it’s time to figure that out if you’re on the left.

~McQ


Unemployment rate at 7.8%? If you believe that, you probably believe the presidential polls …

Here are a few fast facts (from BankruptingAmerica.org)  to put today’s absurd announcement into persepctive:

  • The real unemployment rate stayed at 14.7%. This includes the underemployed and those who have given up looking for work.
  • 23 million Americans are still looking for work. In January 2009, that figure was 22 million.
  • Of the 12.1 million Americans unemployed, more than one third (4.8 million) have been looking for work for over six months.
  • Two out of every five Americans looking for work have been out of work for more than six months.
  • 3.4 million Americans have been out of work for a year and are still looking for work.
  • 802,000 Americans have stopped looking for work
  • In January 2009, the average amount of time spent unemployed was 19.8 weeks. Today, the amount of time has doubled, rising to 39.8 weeks.
  • Manufacturing employment edged down in September by -16,000 jobs.

If you’re wondering why the drop, it simply means another massive group of Americans have come to the end of their extended unemployment benefits and are no longer counted.

In reality, the only numbers that count are listed above.  The labor participation rate essentially remains unchanged.  Those who are celebrating 7.8% are only fooling themselves.  Those who are unemployed certainly know who they are and when it comes time to enter the voting booth and pull the lever aren’t going to be thinking about this “improved number”.  They’re going to be dealing with the fact they don’t have a job.

Wonder who they’ll blame?

~McQ
Twitter: @McQandO
Facebook: QandO


Since when do Americans reward incompetence?

Jonah Goldberg provides a little history lesson that helps one understand why it is that politicians are now credited with the country’s economic progress or lack thereof:

The idea that presidents “run” the economy is both ludicrous and fairly novel. Before the New Deal (which in my opinion prolonged the Great Depression), the notion that presidents should or could grow the economy was outlandish. But, as the historian H. W. Brands has argued, it was JFK who really cemented the idea that the president is the project manager for a team of technicians who create economic prosperity. “Most of the problems . . . that we now face, are technical problems, are administrative problems,” he explained, and should be kept as far away from partisan politics as possible.

It may have been JFK who “cemented” the idea, but it was FDR who first sold it and the myth that grew up around him that claimed he had saved us from the Great Depression. Subsequent study of the era has yielded pretty solid evidence that, in fact, his policies failed and it was a world war that dragged us out of the Depression.

That said, it really doesn’t matter – the perception and belief has been established that the President does indeed have an effect on the economy – right or wrong. That’s just the reality of the matter. Additionally, politicians haven’t been shy about cultivating that perception. It is another means of padding the resume (if the results during their term have been good) or attacking the incumbent (if the results haven’t been very good).

The truth is politicians do have an effect – usually when they chose to intervene, the economy does worse and when they get out of the way, it does better. For the most part, they have yet to realize that, however.

But that’s not really the point I’m interested in making. All of that said, what this race boils down too is a President, who has had poor results, claiming he should be given another 4 years to do better.

The problem with that? He’s already proven he doesn’t know what he’s talking about:

President Obama, a hybrid reincarnation of Kennedy and Roosevelt according to his fans, came into office with similar misconceptions. Controlling the White House, the House, and the Senate, his team of propeller-heads insisted that if we passed exactly the stimulus they wanted, the unemployment rate would top out at 8 percent and would be well below that by now.

They waved around charts and graphs “proving” they were right, like self-declared messiahs insisting they are to be followed because the prophecies they wrote themselves say so.They got their stimulus. They were wrong.

They were dead wrong.

So the question then, given their “know-it-all” claim and their assertions that their plan would work if we’d only give them the money, why should we trust them to do better the second time around, given the fact that we’re actually worse off now than when we were in the actual recession?

As Goldberg points out, their claim is the downturn was “so much worse than anyone realized” isn’t a good excuse given the assurance with which they made their previous claim.

Why didn’t they realize it? That’s a fair question.

A more important question though is why in the world would you give another chance to someone who didn’t drive the vehicle of the economy out of the ditch as promised, but instead put it into a telephone pole?

It makes absolutely no sense.

And Obama’s plan for his coming 4 years? As best as I can discern, pretty much maintain course and tax the rich. That’s it. We’re banging along the economic bottom, unemployment is trending worse, and Obama wants to raise taxes on a single group that would pay for a total of 11 hours of government spending.

Brilliant.

You’re asked to buy into that nonsense as solid economic policy – i.e. giving him more time.

Really?

Are you actually going to do that?

If so, and if you give this incompetent president and his clueless advisers another 4 years, you deserve everything that comes with that choice – to include a hearty “I told you so” from me if I’m still around in 2016.

~McQ

Twitter: McQandO

Facebook: QandO


August employment report in one word? Awful (UPDATE)

Of course the spin will be that the unemployment rate has dropped to 8.1%.

Unstated is the fact that the reason the unemployment rate dropped is because 368,000 more Americans left the labor force.

In fact, the labor participation rate in the US is at its lowest level since September of 1981. Had we not seen 350,000 dropped from the labor force last month, the unemployment rate would be 8.4%. And if the labor participation rate was the same as the day Obama took office, unemployment would be at 11.2%.

96,000 jobs, while better than nothing, isn’t even close to what is necessary to get this economy going again. And don’t forget, the average monthly gain in 2011 was 153,000 a month. In fact, the U-6, which includes part-time workers looking for full time work, is at 14.7%.

I keep telling you that when you talk about jobs or lack thereof and what that means to individual Americans, it’s personal. While they may care or not care particularly who has the best record in foreign policy or whether or not abortion is something they believe in, being jobless, struggling, and/or knowing someone in the family who is, has much more of a direct effect on a potential voter than the other issues.

14.7% fall into that category with probably twice to three times that many effected by what those 14.7% are struggling with. Believe what you will about the polls right now, but if history is any indicator, Obama isn’t going to get a round 2.

Oh, and just as a reminder of the depth of the failure:
RomerBernsteinAugust-600x352.jpeg
UPDATE: Meanwhile at the Ministry of Truth the “Spin-o-matic” is in overdrive:

While there is more work that remains to be done, today’s employment report provides further evidence that the U.S. economy is continuing to recover from the worst downturn since the Great Depression.

It does?  Wow … who knew?  Certainly not the 350,000 who dropped out of the labor force this month.  But hey, be happy, don’t worry … and ignore the chart.

~McQ

Twitter: McQandO

Facebook: QandO


Indicators: Enthusiasm among critical voters down for Obama

So the question of the week is can the DNC via Obama reignite the “magic” of 2008 in dispirited voters?

Charlie Cook, the dean of Democratic strategists, takes a look at three demographic groups critical to Obama’s 7 point margin of victory in in 2008. While he finds one of the groups, African-Americans, still with Obama in numbers similar to 2008, two other groups are not at all showing the same enthusiasm they had then. They are voters 18-29 and Latinos. Obama leads comfortably in both demographics. However, the question is, will they vote in the numbers necessary to push Obama over the edge.

Cook says it doesn’t appear so.

In each case, the percentage who say they will definitely vote is significantly lower than it is among other demographic groups who view Obama less charitably.

Groups among those who see Obama “less charitably”, as Cook puts it, includes seniors (65 and older):

Voters ages 65 and older favor Romney by a 15-point margin, 54 percent to 39 percent, and 86 percent of those in that oldest cohort say they definitely plan to vote, compared with just 61 percent of those ages 18-29. Romney has a statistically insignificant 1-point edge (46 percent to 45 percent) among those 30 to 49 years of age, but 80 percent of them say they will definitely vote. Among the 50-to-64 age group, Romney leads by 3 points, 48 percent to 45 percent, with 86 percent of that cohort saying they will definitely vote.

Cook believes it is a matter of enthusiasm, or lack thereof:

But the study also found “consistent evidence that President Obama’s 2008 first-time voters are less supportive than other Obama voters, reflecting a decline in enthusiasm among a key voting bloc in the 2012 elections.”

Note, both polls are those of “registered voters”, however, the point is clear – enthusiasm for Obama isn’t at all near the fever pitch it was in 2008 and experts like Cook know that. As he says, there’s “consistent” evidence Obama’s support among those groups has eroded when it comes to enthusiasm. Cook also knows what has to happen for Obama to again grab the edge and win. How critical is the Democratic convention to that?

Very. It is there the spark needs to be lit again, where a message that resonates and energizes the same demographic groups that put him over the line last time.

Will it happen? Well that’s the “big question”.

And behind all these problems isn’t the “war on women”, “race” or “inequality”. It’s the economy. If, in fact, the Democrats concentrate on the diversion of the first three, the likelihood of them reenergizing their voters isn’t high. It may, however, even further energize the other side.

So you may see them tip-toe around mentions of the economy and attempt to push it off on Bush again. They’re already trying out “the Bush recession”, “the Bush economy”, etc. That’s unlikely to impress many (most polls have indicated that voters think, after 3 years, Obama owns the economy now), but it’s about all they have in that arena.

Of the two conventions, the DNC is likely to be the more interesting of the two by a long shot.

~McQ
Twitter: McQandO
Facebook: QandO

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