Diesel Civil Trust
We start 2010 with some early signs of stabilization in the housing market, with house prices and home sales likely nearing the bottom sometime in 2010. We expect that low mortgage rates, relatively high affordability and the homebuyer tax credit will help continue to fuel the recovery. Still, the housing recovery remains fragile, with significant downside risk posed by high unemployment and a potential large wave of foreclosures.
The government unemployment rate is deceptive on several levels. It doesn’t count people who are “involuntary part-time workers,” meaning workers who are working part-time but want to find full-time work. It also doesn’t count “discouraged workers,” meaning long-term unemployed people who lost hope and don’t consistently look for work. As time goes by, more and more people stop consistently looking for work and are discounted from the unemployment figure. For instance, in January, 1.1 million workers were eliminated from the unemployment total because they were “officially” labeled “discouraged workers.” So instead of the number rising, we will hear deceptive reports about unemployment leveling off.
On top of this, the Bureau of Labor Statistics recently discovered that 824,000 job losses were never accounted for due to a “modeling error” in their data. Even in their initial January data there appears to be a huge understating, with the newest report saying the economy lost 20,000 jobs. TrimTabs employment analysis, which has consistently provided more accurate data, “estimated that the U.S. economy shed 104,000 jobs in January.”
When you factor in all these uncounted workers — “involuntary part-time” and “discouraged workers” — the unemployment rate rises from 9.7% to over 20%. In total, we now have over 30 million US citizens who are unemployed or underemployed. The rarely cited “employment-participation” rate, which reveals the percentage of the population that is currently in the workforce, has now fallen to 64%.
Even based on the “official” unemployment rate, just to get back to the unemployment level of 4.6% that we had in 2007, we need to create over 10 million new jobs, and most every serious economist will tell you that these jobs are not coming back. In fact, we are still consistently shedding jobs, on just one day, January 27th, several companies announced new cuts of more than 60,000 jobs.
via The Economic Elite vs. the People of the United States of America: Part I (via savagemike)
Some labor experts say the basic functioning of the American economy has changed in ways that make jobs scarce — particularly for older, less-educated people like Ms. Eisen, who has only a high school diploma.
Large companies are increasingly owned by institutional investors who crave swift profits, a feat often achieved by cutting payroll. The declining influence of unions has made it easier for employers to shift work to part-time and temporary employees. Factory work and even white-collar jobs have moved in recent years to low-cost countries in Asia and Latin America. Automation has helped manufacturing cut 5.6 million jobs since 2000 — the sort of jobs that once provided lower-skilled workers with middle-class paychecks.
“American business is about maximizing shareholder value,” said Allen Sinai, chief global economist at the research firm Decision Economics. “You basically don’t want workers. You hire less, and you try to find capital equipment to replace them.”
During periods of American economic expansion in the 1950s, ’60s and ’70s, the number of private-sector jobs increased about 3.5 percent a year, according to an analysis of Labor Department data by Lakshman Achuthan, managing director of the Economic Cycle Research Institute, a research firm. During expansions in the 1980s and ’90s, jobs grew just 2.4 percent annually. And during the last decade, job growth fell to 0.9 percent annually.
“The pace of job growth has been getting weaker in each expansion,” Mr. Achuthan said. “There is no indication that this pattern is about to change.”
nbr:
“A Decade of Unemployment,” graphic showing unemployment figures by state, 2000-2009, from VisualEconomics.com (Feb. 12, 2010).
Unemployment in the 16 countries that use the euro hit 10% in December for the first time since the single currency was introduced in 1999.
Aughts were a lost decade for U.S. economy, workers - washingtonpost.com
I seem to remember during the “boom” portion of the Bush years if you were to suggest that economic growth wasn’t good enough, conservatives like George Will would laugh you out of the room with low unemployment numbers and inflation kept very low. Luckily no one really take that seriously unless you already wear a bow tie.
Increasing numbers of jobless workers struggling to find employment will lose a key benefit this month: Subsidies to continue their health coverage. The American Recovery and Reinvestment Act of 2009 (ARRA) helped laid-off workers retain their job-based health coverage through COBRA by picking up 65 percent of premium costs for nine months. Typically, employees who lose their jobs would be required to pay the entire premium.
But ARRA dollars were meant to be temporary, and for those who elected to take this benefit when it first became available, that time has just expired. Individuals’ monthly premiums will increase from an average of about $140 to $409, as reflected in the 2008 California Employer Health Benefits Survey. A family will see its monthly premium jump from about $390 to $1,119. Furthermore, for those who lose their jobs after December 31, this subsidy will not be available at all.
![redorangeorangeonred:
i saw this and decided to do it. . i assumed that “the people like me” would be the lowest. .. turns out the other gender is lower. .. but i am not really surprised [click thru to do it yourself]](http://28.media.tumblr.com/tumblr_ksx2vlBzmw1qz96a4o1_400.jpg)
i saw this and decided to do it. . i assumed that “the people like me” would be the lowest. .. turns out the other gender is lower. .. but i am not really surprised [click thru to do it yourself]
Unemployment at 10.2% is only those who actively seek work. The actual rate of those who are unemployed is likely closer to 20%. 1 in every 5 working-age Americans is out of a job.
muppetpants: (via notthatkindagay) Remember when Obama said that we could stop unemployment from reaching double digits by spending $1 trillion? Could you imagine going to a cobbler, having him tell you he could fix your shoes for $1000, and having the soles fall off shortly thereafter?
Unemployment Claims Steady
This week’s Unemployment Insurance Weekly Claims Report has been released. Initial claims dropped to 530,000. This is at the high end of the Bloomberg consensus range of 520k to 530k. For the first time in a long while, last week’s data was not revised upwards. From the report:
In the week ending Oct. 24, the advance figure for seasonally adjusted initial claims was 530,000, a decrease of 1,000 from the previous week’s unrevised figure of 531,000. The 4-week moving average was 526,250, a decrease of 6,000 from the previous week’s unrevised average of 532,250.
The advance seasonally adjusted insured unemployment rate was 4.4 percent for the week ending Oct. 17, a decrease of 0.1 percentage point from the prior week’s unrevised rate of 4.5 percent.
The advance number for seasonally adjusted insured unemployment during the week ending Oct. 17 was 5,797,000, a decrease of 148,000 from the preceding week’s revised level of 5,945,000. The 4-week moving average was 5,960,750, a decrease of 78,750 from the preceding week’s revised average of 6,039,500.
This is mildly good news. On the plus side, any drop in new claims is a step in the right direction. In the minus side, the typical revision number is larger than this change. This isn’t as good as the data from two weeks ago and the trend that was emerging. Any number over 500k is bad. Most important, however, is that the news seems a bit hollow because the unadjusted numbers moved in the wrong direction:
The advance number of actual initial claims under state programs, unadjusted, totaled 492,456 in the week ending Oct. 24, an increase of 32,026 from the previous week. There were 449,389 initial claims in the comparable week in 2008.
The advance unadjusted insured unemployment rate was 3.8 percent during the week ending Oct. 17, an increase of 0.1 percentage point from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 4,968,019, an increase of 51,445 from the preceding week. A year earlier, the rate was 2.4 percent and the volume was 3,233,118.
We are still close to where we were last year in terms of new claims. Unfortunately, in the absence of an engine for jobs growth, a year of steady new claims numbers at this level would mean increased unemployment. This is a serious problem. Rhetoric has moved from calling for a “jobless recovery” to a “job-loss recovery.” There’s a lot of discussion of establishing a “new normal” with higher unemployment. In other words, there will be no recovery for most Americans.
There is no good or bad news on the unemployment benefits extension. It is in the exact state of limbo as last week. No recovery indeed.
The good / bad lists tell a story. Interpreting the story is an exercise for the reader. It’s pretty easy (easier if you are outside California).
The good list (-1000 or more): WI, NY, PA, IL, OR, AR, NJ, KY, TX, GA, IN, MD, OH, MO, FL, NC, WA, KS, MI
The bad list (+1000 or more): CA
CA (the worst) was +5,774 vs WI (the best) at -5,681. Improvements to the trade and service industries took the top spots in the comments column for the good list.
This report was not bad, but it was not the reversion to the previous trend that I had hoped for. A drop of 1,000 new claims is not a significant change to the seasonally adjusted numbers. Short term outlook is still dominated by the unemployment benefits extension bill. Long term outlook is still dominated by the lack of an engine for jobs growth.
The recession of the ’80s transformed the working class into the working poor, as manufacturing jobs fled to the third world, forcing American workers into the low-paying service and retail sector. The current recession is knocking the working poor down another notch - from low-wage employment and inadequate housing toward erratic employment and no housing at all. Comfortable people have long imagined that American poverty is far more luxurious than the third world variety, but the difference is rapidly narrowing.”
“Maybe “the economy,” as depicted on CNBC, will revive again, restoring the kinds of jobs that sustained the working poor, however inadequately, before the recession. Chances are, though, that they still won’t pay enough to live on, at least not at any level of safety and dignity. In fact, hourly wage growth, which had been running at about 4 percent a year, has undergone what the Economic Policy Institute calls a “dramatic collapse” in the last six months alone. In good times and grim ones, the misery at the bottom just keeps piling up, like a bad debt that will eventually come due.
Barbara Ehrenreich (via retropolitics) (via anitaprentice)
We review the burgeoning literature on the employment effects of minimum wages - in the United States and other countries - that was spurred by the new minimum wage research beginning in the early 1990s. Our review indicates that there is a wide range of existing estimates and, accordingly, a lack of consensus about the overall effects on low-wage employment of an increase in the minimum wage. However, the oft-stated assertion that recent research fails to support the traditional view that the minimum wage reduces the employment of low-wage workers is clearly incorrect. A sizable majority of the studies surveyed in this monograph give a relatively consistent (although not always statistically significant) indication of negative employment effects of minimum wages. In addition, among the papers we view as providing the most credible evidence, almost all point to negative employment effects, both for the United States as well as for many other countries. Two other important conclusions emerge from our review. First, we see very few - if any - studies that provide convincing evidence of positive employment effects of minimum wages, especially from those studies that focus on the broader groups (rather than a narrow industry) for which the competitive model predicts disemployment effects. Second, the studies that focus on the least-skilled groups provide relatively overwhelming evidence of stronger disemployment effects for these groups.
Minimum Wages and Employment by David Neumark, William Wascher I provide this as a contrast to the EPI quote that has been circulating. Unlike the EPI, which is an organization with the stated goal of providing evidence for increased minimum wages, NBER and PPIC are a little more unbiased on the issue (PPIC even has a paper justifying higher wages in California—though the PPIC is strongly pro-California for obvious reasons). The “rather than a narrow industry” parenthetical is a specific jab at the research by Card and Krueger. Their study, cited by the EPI in the claim that “There is no evidence of job loss from previous minimum wage increases,” was restricted to minimum wage earners at fast food restaurants in a few select states. A subsequent narrow study found that the same industry had decreased advancement opportunities and employee training. As a consequence, though minimum wage went up, the total amount paid to employees didn’t change much in the long run (a greater proportion of fast food employees were making minimum wage). It’s interesting, because I doubt anyone would try to promote fast food industry labor practices as a model for emulation. There have been empirical studies on minimum wage impacts on employment for decades. The majority of them have shown that minimum wage increases have negative employment effects. This is unsurprising, as supply and demand for pricing is a fairly basic theory derived from empirical observations. The EPI does not do anything to promote discourse on this topic, ignoring any and all research that contradicts their findings. Squashed has certainly done more to contribute to a meaningful argument on minimum wage increases. His argument is, in fact, generally even stronger than that in More Than Subsistence: Minimum Wages for the Working Poor, which was quite controversial. Still, I’ll link to it because it has had notable impacts on public policy (also, I have a copy, and it is a fairly easy read). (via crazynutjob)
Unemployment Statistics Begin Return to Normal
I can’t commit to a good / bad news headline this week. The Unemployment Insurance Weekly Claims Report has been released. Unfortunately, due to the auto industry revisions from the last two reports, it is difficult to decide whether the report represents good news or not. New claims came in at 554,000, which was a bit below the Bloomberg consensus of 560,000 (well within the consensus range of 535K to 590K). From the report:
In the week ending July 18, the advance figure for seasonally adjusted initial claims was 554,000, an increase of 30,000 from the previous week’s revised figure of 524,000. The 4-week moving average was 566,000, a decrease of 19,000 from the previous week’s revised average of 585,000.
The advance seasonally adjusted insured unemployment rate was 4.7 percent for the week ending July 11, unchanged from the prior week’s unrevised rate of 4.7 percent.
The advance number for seasonally adjusted insured unemployment during the week ending July 11 was 6,225,000, a decrease of 88,000 from the preceding week’s revised level of 6,313,000. The 4-week moving average was 6,541,500, a decrease of 132,500 from the preceding week’s revised average of 6,674,000.
It is still difficult to draw any conclusions from the seasonally adjusted data. A huge revision that simply wasn’t relevant this year just expired, so an increase was expected even if there was an improvement in the underlying trend. It will be a couple weeks before any underlying trend becomes apparent in the adjusted statistics again. Instead, we can turn to the unadjusted numbers. Back to the report:
The advance number of actual initial claims under state programs, unadjusted, totaled 580,944 in the week ending July 18, a decrease of 90,298 from the previous week. There were 411,408 initial claims in the comparable week in 2008.
The advance unadjusted insured unemployment rate was 4.7 percent during the week ending July 11, an increase of 0.1 percentage point from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 6,231,108, an increase of 57,168 from the preceding week. A year earlier, the rate was 2.4 percent and the volume was 3,164,970.
A decrease of 90,000 initial claims might be worth celebrating. An increase in the insured unemployment rate is not. That leaves this report a little mixed, but we should put a little more emphasis on the decrease in new claims, if only for the reason that the other statistic lags by one week.
Let’s look at the good / bad lists:
The good list (-1000 or more): MI, MA, NJ, IN, CA, IA
The bad list (+1000 or more): WV, ND, NV, LA, MD, TX, CO, OR, VA, AZ, WA, KS, AL, PA, AR, IL, SC, GA, TN, MO, FL, NC, NY
NY (the worst) was +12,504 vs MI (the best) at -6,648.
Ouch! The good/bad lists lag the new claims data by one week, and this list clearly shows that the only thing that shouldn’t have been in the seasonal adjustment last week was the auto industry. Michigan had a particularly good week while almost half of the US landed on the bad list. It looks like the construction and service industries are responsible for most of the bad list. Incidentally, “Return to a five day workweek” is listed in the comment section for Nevada, Colorado, and Virginia.
The decrease in the unadjusted numbers is too large to be ignored. Keep in mind that the good news is tempered by still being extremely poor on a year over year (or any historical) measure, and we don’t really know what the underlying trend is due to awkward statistics revisions from the last two week.
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