Well, some times you go looking for a good story but you are glad you did not find one. I recently speculated that the huge incarceration rate in the US would affect the Black unemployment rate.
Well it does affect the rate but only in a small way. We can estimate that the rate would be only about 1.5% higher due to the incarceration rate. In other words the rate would move from 15.2% to 16.7% due to people in jail.
Wednesday, December 29, 2010
Sunday, December 26, 2010
What is a human life worth ?
The debate over the cost of healthcare and security revolve around an very important concept. What is a single human life worth ? The answer has implications in economics, insurance, law-enforcement, safety, and environmental regulations.
We all know human life is precious. We are all taught you cannot put a price on a life. However, to have a rational and coherent debate about many areas where money is spent you must make an estimate. You can never put an exact price on a life, you can put and approximate value. The value helps us make good, fair economic decisions for society.
While we may be unconfortable with the concept, businesses and government routinely make the calculation for US. Life and health insurance conpanies have sophisticaed acturial models. The government uses the value in calculations of pensions and social security. State and local governments calculate survivor benefits. So does the military.
Another, related concept is whether one specific person's life is worth more than another. And, if so, is the concept important ? Should it be used to make decisions in society ??
The answer seems to depend on the event causing the loss of life. Individual events would require individual estimates.
Juries and judges currently pay amounts based on a persons projected life earnings. Payout from the government were based on life earnings.
However, the special master of the 9/11 victims compensation fund has said that the system rewards bond-traders and Enron lawyers as much as fire and policemen. It may be time to consider a fixed, equal payout in certain circumstances.
According to Time Magazine.
1) National Healthcare systems including Canada, United Kingdom and Netherlands value each additional year at $50,000
2) Research on kidney failure patients states each individual year may be worth as much as $129,000
We all know human life is precious. We are all taught you cannot put a price on a life. However, to have a rational and coherent debate about many areas where money is spent you must make an estimate. You can never put an exact price on a life, you can put and approximate value. The value helps us make good, fair economic decisions for society.
While we may be unconfortable with the concept, businesses and government routinely make the calculation for US. Life and health insurance conpanies have sophisticaed acturial models. The government uses the value in calculations of pensions and social security. State and local governments calculate survivor benefits. So does the military.
Another, related concept is whether one specific person's life is worth more than another. And, if so, is the concept important ? Should it be used to make decisions in society ??
The answer seems to depend on the event causing the loss of life. Individual events would require individual estimates.
Juries and judges currently pay amounts based on a persons projected life earnings. Payout from the government were based on life earnings.
However, the special master of the 9/11 victims compensation fund has said that the system rewards bond-traders and Enron lawyers as much as fire and policemen. It may be time to consider a fixed, equal payout in certain circumstances.
According to Time Magazine.
1) National Healthcare systems including Canada, United Kingdom and Netherlands value each additional year at $50,000
2) Research on kidney failure patients states each individual year may be worth as much as $129,000
US Grows at 2.5% in BEA 3Q GDP Final Release
The use Economy grew by 2.5% in the 3rd quarter after a 1.7% in 2Q. The rates was boosted by growth in private inventories and reduced imports.
Saturday, December 25, 2010
Revised 2Q Gross Domestic Product
The Gross Domestic Product was revised in September downward to 1.7% annual rate in the second quarter from 2.4%. This revision reduced GDP by almost 7/10th of a percentage point signaling a very slow economic growth rate.
Based on this revision, it looks like policy makers were right to fear a double dip recesson. Bernake and the federal reserve were also justified in using a second round of quantative easing(QE2)to increase the money supply. There is no inflation or inflationary expectation in the short or medium term.
Monday, December 13, 2010
Construction companies commit fraud to avoid hiring Minorities
This is the number one, underreported, Black economic new story.
If you have ever driven by a construction site, even in a Black neighborhood, and wonder why only white, men were working, now you know why.....
Two giant construction companies are being investigated for fraudulently creating "fake" Minority shell companies. The companies were used to get around requirements to employ Women, Minority and Disadvantaged businesses as subcontractors.
The companies would hire a "Minority" company as a pass though company or have the company run the "payroll" while they continue to collect the money and employ the workers.
The Schiavone Construction Company admitted it had evaded requirements for 5-years and agreed to pay back $20 million dollars.
"Such schemes are wide spread in public works projects" the newspaper quoted law enforcement officials.
Well there you have it plain, old corruption in the construction industry.
If you have ever driven by a construction site, even in a Black neighborhood, and wonder why only white, men were working, now you know why.....
Two giant construction companies are being investigated for fraudulently creating "fake" Minority shell companies. The companies were used to get around requirements to employ Women, Minority and Disadvantaged businesses as subcontractors.
The companies would hire a "Minority" company as a pass though company or have the company run the "payroll" while they continue to collect the money and employ the workers.
The Schiavone Construction Company admitted it had evaded requirements for 5-years and agreed to pay back $20 million dollars.
"Such schemes are wide spread in public works projects" the newspaper quoted law enforcement officials.
Well there you have it plain, old corruption in the construction industry.
Sunday, December 12, 2010
What is structural unemployment ?
What is structural unemployment ??
Structural unemployment is unemployment due to the mismatch of skills and geographic location between the labor force and the jobs market. Structural Unemployment includes workers who do not have the skills to fill open positions or workers who do not want to move to fill an open position.
For example, even during the recession the US has a shortage of engineers and computer technicians. Another example, is technology and globalization have reduced the need for manufacturing technicians leading to a a surplus of manufacturing workers. An example of geographic unemployment is fishermen and oil workers from the Gulf Coast who did not want to move to Alaska after hurricane Katrina. Workers may not want to move because of family, community, or investment decision (a house they cannot sell).
Some economist add discrimination, monopoly power, and government policies as factors that contribute to structural unemployment. There is also speculation that worker attitudes and perceptions may play a part. For example,"I am not working at Wal-Mart or MacDonalds my friends will make fun of me."
In the perfect world, employees would have exact skills in the right place to satisfy labor demand perfectly. However, in the real world
Economists define several different types of unemployment
Wage unemployment. Wages are set higher then what the market demands resulting in an over supply of labor for the number of positions. An example is minimum wage laws which may cause business to hire less employees than they would otherwise.
Structural unemployment. A mis-match between labor skills, labor geography and jobs demand.
Cyclical unemployment. Unemployment due to economic fluctuations and shocks like the collaspe of the housing bubble and the effect on residential construction unemployment. This type is caused by lack of demand.
And search unemployment. The time a workers spends looking for the best possible job. There is never a perfect match between worker and job; both must compromise. This is the time workers spend between jobs before accepting an offer.
During a recession, economists argue over how much of the unemployment rate is structural versus cyclical. Structure unemployment can only be reduced by long-term changes such as training, relocation, new industries opening or government policies. Cyclical unemployment can be reduced by stimulating demand either through government spending or reduced taxes.
Finally, another important concept is natural rate of employment or NAIRU - the non accelerating inflation rate of unemployment. This is the rate of unemployment below which inflation is created in a economy.
Structural unemployment is unemployment due to the mismatch of skills and geographic location between the labor force and the jobs market. Structural Unemployment includes workers who do not have the skills to fill open positions or workers who do not want to move to fill an open position.
For example, even during the recession the US has a shortage of engineers and computer technicians. Another example, is technology and globalization have reduced the need for manufacturing technicians leading to a a surplus of manufacturing workers. An example of geographic unemployment is fishermen and oil workers from the Gulf Coast who did not want to move to Alaska after hurricane Katrina. Workers may not want to move because of family, community, or investment decision (a house they cannot sell).
Some economist add discrimination, monopoly power, and government policies as factors that contribute to structural unemployment. There is also speculation that worker attitudes and perceptions may play a part. For example,"I am not working at Wal-Mart or MacDonalds my friends will make fun of me."
In the perfect world, employees would have exact skills in the right place to satisfy labor demand perfectly. However, in the real world
Economists define several different types of unemployment
Wage unemployment. Wages are set higher then what the market demands resulting in an over supply of labor for the number of positions. An example is minimum wage laws which may cause business to hire less employees than they would otherwise.
Structural unemployment. A mis-match between labor skills, labor geography and jobs demand.
Cyclical unemployment. Unemployment due to economic fluctuations and shocks like the collaspe of the housing bubble and the effect on residential construction unemployment. This type is caused by lack of demand.
And search unemployment. The time a workers spends looking for the best possible job. There is never a perfect match between worker and job; both must compromise. This is the time workers spend between jobs before accepting an offer.
During a recession, economists argue over how much of the unemployment rate is structural versus cyclical. Structure unemployment can only be reduced by long-term changes such as training, relocation, new industries opening or government policies. Cyclical unemployment can be reduced by stimulating demand either through government spending or reduced taxes.
Finally, another important concept is natural rate of employment or NAIRU - the non accelerating inflation rate of unemployment. This is the rate of unemployment below which inflation is created in a economy.
Sunday, December 5, 2010
A bad jobs report for November; unemployment rate is 9.8%
On Friday, December 3rd, 2010, the Bureau of Labor Statistics reported that the rate of unemployment was 9.8% of the total labor pool. There were bad unemployment signs across the board.
Non-farm payrolls were almost unchanged adding only 39,000. Unemployment rates for many major population groups increased for adult men, adult women, whites and Hispanics. The Black unemployment rate was 16.0%.
The number of long-term unemployed (6 months or longer) was 6.3 million. The number of marginally attached workers (people who looked for a job in the last 12 months but are not currently working) was reported at 2.5 million up from 2.3 million a year ago.
U-3 Unemployment Rate
U-6 People who want full-time work plus people working part time who want full-time.
In the establishment data categories, non farm payrolls increased by 39,000. Private firms added 50,000 jobs while government cut 11,000. Temporary help and healthcare added jobs while retail shed 28,000 positions. Manufacturing dropped 13,000 jobs. The average work week remained unchanged. Average earning increased by 1 cent.
The only positive item was the upward revision of the September and October Non-farm payroll numbers.
The misery rate, or the percent of the labor force who want work and cannot find it, grew to 17.0 . This is about 1/6 of the people in the labor force.
The jobs "deficit" is an incredible 8 million jobs lost since the start of the recession. Worse, job growth is flat for the past 5 months, with the growth rebound stopping in May.
Job growth has been flat on average since May 2010.
The Black unemployment rate was 16.0%.
This chart is always incredibly sad. This chart is the "real" black underemployment reate. If you take the trend for people who want work and cannot get it plus the black unemployment rate you get "real" underemployment rate: about 25%.
Another view of same data.
In related (unrelated ?) news, based on the unemployment report, the Dow-Jones index moved up 20 points, the NASDAQ closed higher by 12 points, and the S&P moved 3 points higher. The rise of the indexes shows the increasing separation of the jobs and unemployment issue from world of investments and corporations.
Finally, the consensus forecast from economists predicted a rise of 130,000 jobs for the month. Not even close to the actual rate of 39,000.
Non-farm payrolls were almost unchanged adding only 39,000. Unemployment rates for many major population groups increased for adult men, adult women, whites and Hispanics. The Black unemployment rate was 16.0%.
The number of long-term unemployed (6 months or longer) was 6.3 million. The number of marginally attached workers (people who looked for a job in the last 12 months but are not currently working) was reported at 2.5 million up from 2.3 million a year ago.
U-3 Unemployment Rate
U-6 People who want full-time work plus people working part time who want full-time.
In the establishment data categories, non farm payrolls increased by 39,000. Private firms added 50,000 jobs while government cut 11,000. Temporary help and healthcare added jobs while retail shed 28,000 positions. Manufacturing dropped 13,000 jobs. The average work week remained unchanged. Average earning increased by 1 cent.
The only positive item was the upward revision of the September and October Non-farm payroll numbers.
The misery rate, or the percent of the labor force who want work and cannot find it, grew to 17.0 . This is about 1/6 of the people in the labor force.
The jobs "deficit" is an incredible 8 million jobs lost since the start of the recession. Worse, job growth is flat for the past 5 months, with the growth rebound stopping in May.
Job growth has been flat on average since May 2010.
The Black unemployment rate was 16.0%.
This chart is always incredibly sad. This chart is the "real" black underemployment reate. If you take the trend for people who want work and cannot get it plus the black unemployment rate you get "real" underemployment rate: about 25%.
Another view of same data.
In related (unrelated ?) news, based on the unemployment report, the Dow-Jones index moved up 20 points, the NASDAQ closed higher by 12 points, and the S&P moved 3 points higher. The rise of the indexes shows the increasing separation of the jobs and unemployment issue from world of investments and corporations.
Finally, the consensus forecast from economists predicted a rise of 130,000 jobs for the month. Not even close to the actual rate of 39,000.
Sunday, November 28, 2010
Wal-Mart is good for the Black Community
Everyone likes to pick on a winner, but when you add it up, Wal-Mart is good for the Black Community. Not great, but pretty good. Wal-Mart is a plus for the economic health of the Black Community because of it's low prices and job creation.
Disclaimer: I do shop at Wal-Mart for commodities like detergent, meat, and basic clothing.
1) The lower prices on basic goods really do help consumers. Wal-Mart prices really are about 20-33% cheap on the same item at a local suburban supermarket and up to 50%-75% cheaper than supermarkets in low-income areas.
2) The quality is also better. Wal-Mart requires maximum dating, rotates stock and does not sell expired product. Products are delivered frequently since they do not want to keep inventory.
3) The selection is better. Wal-Mart typically offers two brand names and one store brand for all major product categories. Many competitor carry one national brand and one store brand.
4) Wal-Mart employs large numbers of low-income people and minorities who could not find employment elsewhere. Wal-Mart gives jobs to many people that could not work else where due to geography, discrimination and skill issues. Wal-Mart offers a chance to get on the first rung of the employment ladder. Many Mom-and-Pop business in poor neighborhoods would never hire the people that work in Wal-Mart. Now they can work where they shop.
5) Destination Economics. A Wal-Mart has a significant leakage effect. Wal-Mart always brings in a string of related businesses that capitalize on the traffic. Fast-food places, banks, cleaners, and gas-stations. Usually other big box retailers like Lowes, Home Depot, Staples, 99 cents store and Pet store join the neighborhood.
6) Finally, there are also subtle ways in which Wal Mart is good. As a large public, corporation Wal-Mart worries about it's public image. Wal-Mart can be pressured. When the news media has found Wal-Mart misdeeds, Wal-Mart has corrected them.
Wal-Mart also has some negative attributes / strikes against it.
1) Low wages. Walmart typically pays the minimum legally required where it operates. It gives employees few or minimum holidays. It also forces employees to work maximum part-time hours to keep benefits down. Wal-Mart also offers low-quality benefit plans.
2) Hard work. Wal-Mart has many incentives (both postive and negative) to keep employees working hard. Cashiers are measured on scans per hour, stock clerks on stock levels, receiving clearks on accuracy and put-aways. All the store data are instantly available to the store manager and their management team as well as regional and division managers.
3) Leading the outsourcing of manufacturing from the US. Wal-Mart is a leader in non-US manufacturing of clothes, toys, sports equipment, jewelry and fashions. Just about anything with a significant amount of labor has been "sourced" by Wal-Mart from China.
4) Drive local businesses out of business. Yes, Wal-Mart does drive local shopkeepers out of business. Retailers who are in the same business and cannot offer anything better (faster service, unique items, cheaper products) usually are put our of business by Wal-Mart. However some businesses survive.
5) Wal-Mart contributes to a unhealthy life style of shopping as an activity, over spending and over consumption. Wal-Mart encourages over consummerism and impluse buying. Wal-Mart stores are destinations for a "full-day" of activity: Shopping. Cheaper items lead to buying more products that contribute to poor health and an sedentary lifestyle. Do we really need a five pound bag of chips ?? or two pounds of cookies ??
When you weigh up the pluses and minusus of Wal-Mart, the low-prices and jobs tip the balance in favor of Wal-Mart being a postive economic influence on the Black Community.
Disclaimer: I do shop at Wal-Mart for commodities like detergent, meat, and basic clothing.
1) The lower prices on basic goods really do help consumers. Wal-Mart prices really are about 20-33% cheap on the same item at a local suburban supermarket and up to 50%-75% cheaper than supermarkets in low-income areas.
2) The quality is also better. Wal-Mart requires maximum dating, rotates stock and does not sell expired product. Products are delivered frequently since they do not want to keep inventory.
3) The selection is better. Wal-Mart typically offers two brand names and one store brand for all major product categories. Many competitor carry one national brand and one store brand.
4) Wal-Mart employs large numbers of low-income people and minorities who could not find employment elsewhere. Wal-Mart gives jobs to many people that could not work else where due to geography, discrimination and skill issues. Wal-Mart offers a chance to get on the first rung of the employment ladder. Many Mom-and-Pop business in poor neighborhoods would never hire the people that work in Wal-Mart. Now they can work where they shop.
5) Destination Economics. A Wal-Mart has a significant leakage effect. Wal-Mart always brings in a string of related businesses that capitalize on the traffic. Fast-food places, banks, cleaners, and gas-stations. Usually other big box retailers like Lowes, Home Depot, Staples, 99 cents store and Pet store join the neighborhood.
6) Finally, there are also subtle ways in which Wal Mart is good. As a large public, corporation Wal-Mart worries about it's public image. Wal-Mart can be pressured. When the news media has found Wal-Mart misdeeds, Wal-Mart has corrected them.
Wal-Mart also has some negative attributes / strikes against it.
1) Low wages. Walmart typically pays the minimum legally required where it operates. It gives employees few or minimum holidays. It also forces employees to work maximum part-time hours to keep benefits down. Wal-Mart also offers low-quality benefit plans.
2) Hard work. Wal-Mart has many incentives (both postive and negative) to keep employees working hard. Cashiers are measured on scans per hour, stock clerks on stock levels, receiving clearks on accuracy and put-aways. All the store data are instantly available to the store manager and their management team as well as regional and division managers.
3) Leading the outsourcing of manufacturing from the US. Wal-Mart is a leader in non-US manufacturing of clothes, toys, sports equipment, jewelry and fashions. Just about anything with a significant amount of labor has been "sourced" by Wal-Mart from China.
4) Drive local businesses out of business. Yes, Wal-Mart does drive local shopkeepers out of business. Retailers who are in the same business and cannot offer anything better (faster service, unique items, cheaper products) usually are put our of business by Wal-Mart. However some businesses survive.
5) Wal-Mart contributes to a unhealthy life style of shopping as an activity, over spending and over consumption. Wal-Mart encourages over consummerism and impluse buying. Wal-Mart stores are destinations for a "full-day" of activity: Shopping. Cheaper items lead to buying more products that contribute to poor health and an sedentary lifestyle. Do we really need a five pound bag of chips ?? or two pounds of cookies ??
When you weigh up the pluses and minusus of Wal-Mart, the low-prices and jobs tip the balance in favor of Wal-Mart being a postive economic influence on the Black Community.
Let the bush tax cuts expire. Extend unemployment benefits
It is time to let the Bush era tax cuts expire. Simple as that. No middle class tax cut, no tax cut for anyone. Going in, it would have been nice to see a middle class tax cut for those families making $100,000 or less. But the "starve-the-government" republicans are against any revenue raising possibility. The existing tax cuts are so skewed to the rich that they are not good for anyone but the rich. They also increase income inequality in the US.
Continuing the cuts would waste money on people who do not need the money. The rich would invest the money further lower interest rates and not spend it. More investment is not need in a 0% interest rate climate. Or worse, if they do spend it, it would be on imported, luxury goods. What is currently needed: investment opportunities from increased consumption and demand in the short run.
Meanwhile, the same money could be used to support additional unemployment benefits. Or educational grants. Job training.
The best position is to veto any extension of the tax cut bill. A good compromise is to offset the tax cuts by closing some tax loopholes on corporate off shore revenues, farm subsidies and the military.
Continuing the cuts would waste money on people who do not need the money. The rich would invest the money further lower interest rates and not spend it. More investment is not need in a 0% interest rate climate. Or worse, if they do spend it, it would be on imported, luxury goods. What is currently needed: investment opportunities from increased consumption and demand in the short run.
Meanwhile, the same money could be used to support additional unemployment benefits. Or educational grants. Job training.
The best position is to veto any extension of the tax cut bill. A good compromise is to offset the tax cuts by closing some tax loopholes on corporate off shore revenues, farm subsidies and the military.
Friday, November 12, 2010
Hanging out with the about to be unemployed
Hey, I am on the floor of a building where everyone is losing their jobs next Tuesday. Well, almost everyone. It is pretty sad state. People are close to tears. One lady was telling the woman who is replacing her that she did not know how to do her job and to "stop calling IM" all the time. Another came in, read some e-mail and left with a box. Everyone else comes in around 10am and leaves around noon. The last day is next Tuesday, November 15th, 2010. A lot of people are already gone, having exchanged phone numbers, e-mails, gifts and recipes last week.
"Leadership - Until you spreads you wings, you have no idea how far you will fly" (with a picture of an Eagle with wings spread). The department had those corny "Motivators" posters by Successories all over the walls. In the good times, they were ignored as another harmless idea from the boss. Now the posters mock the losers as they head out the door.
The company had a medium sized manufacturing plant in New Jersey but things haven't been good for years. Then they got bought by another company. The plant was running about 20% capacity. People would leave and not be replaced or replaced by temps. The last few days are a lot of heartache for the people working here. Almost everyone has more than 10 years experience. It is, sorry WAS, a big corporation accounting and finance operation, so you know the staff was 80% female. Only the bosses and the IT staff are men.
"Belief - The future belongs to those who believe in the beauty of their dreams" Lighthouse with a light in the dark on a hill. Say what, Can't figure this one out.
I stumbled across a cube, while looking for the printer. The cube has all the name plates that have been taken down as people left. Lisa, Pilar, Rose Marie, Ken, Patricia and Deborah. A pretty mixed group judging from the last names: some Spanish, Indian, Italian, Black and Polish. They were lucky to work here.
It is a little creepy to see order breakdown. I can almost hear the conversations: ”I never liked you. I saw you and Mike at the Christmas party. You can’t dress worth a damn. You need help and soap. I’ll miss you.”
Now it is Friday afternoon and the place is deserted; close to spooky. The cubes are stacked with boxes and junk. The filing boxes are in the hall way waiting for the mover to come get them. Some are going to storage because they cannot be legally destroyed. Others are going to the recycle bin. Just massive amounts of waste paper.
Excel - "All glory comes from daring to begin". (Waterfall). Who writes this stuff? It is just bad sloganeering that won't help anyone get a job.
I am sure they all got good severance packages. Company's usually give 1-2 weeks of pay per year of service as long as the employee's agree not to sue. But a lot of them were making good money for a pretty easy job. They worked 8 hours days, 1 hour for lunch, flexible hours, worked from home, vacation days and unlimited sick days. On the other hand almost none of them will find the same type of job and pay. Most were around 50, which is too early to retire but at least they got the kids out of the house (knock wood). Now what?
The security guard walks by, once in the morning, once at noon and one in the evenings. Looks in the conference room, decides I am safe. Some young kid. I guess they are looking for obvious trouble. Like some one going postal. I have never seen security in an office building unless there is trouble.
"Attitude - "Blah, Blah, Blah, it is all in your attitude, blah, blah, blah" (Ski-jumper going off a cliff)
Well almost time to go. I guess the posters didn't help much. But they had a nice little run so things can't be too bad. Some of the people had 25 years of experience and made it to retirement. It just looks bad right now.
Writing from the front lines of the recession...
"Leadership - Until you spreads you wings, you have no idea how far you will fly" (with a picture of an Eagle with wings spread). The department had those corny "Motivators" posters by Successories all over the walls. In the good times, they were ignored as another harmless idea from the boss. Now the posters mock the losers as they head out the door.
The company had a medium sized manufacturing plant in New Jersey but things haven't been good for years. Then they got bought by another company. The plant was running about 20% capacity. People would leave and not be replaced or replaced by temps. The last few days are a lot of heartache for the people working here. Almost everyone has more than 10 years experience. It is, sorry WAS, a big corporation accounting and finance operation, so you know the staff was 80% female. Only the bosses and the IT staff are men.
"Belief - The future belongs to those who believe in the beauty of their dreams" Lighthouse with a light in the dark on a hill. Say what, Can't figure this one out.
I stumbled across a cube, while looking for the printer. The cube has all the name plates that have been taken down as people left. Lisa, Pilar, Rose Marie, Ken, Patricia and Deborah. A pretty mixed group judging from the last names: some Spanish, Indian, Italian, Black and Polish. They were lucky to work here.
It is a little creepy to see order breakdown. I can almost hear the conversations: ”I never liked you. I saw you and Mike at the Christmas party. You can’t dress worth a damn. You need help and soap. I’ll miss you.”
Now it is Friday afternoon and the place is deserted; close to spooky. The cubes are stacked with boxes and junk. The filing boxes are in the hall way waiting for the mover to come get them. Some are going to storage because they cannot be legally destroyed. Others are going to the recycle bin. Just massive amounts of waste paper.
Excel - "All glory comes from daring to begin". (Waterfall). Who writes this stuff? It is just bad sloganeering that won't help anyone get a job.
I am sure they all got good severance packages. Company's usually give 1-2 weeks of pay per year of service as long as the employee's agree not to sue. But a lot of them were making good money for a pretty easy job. They worked 8 hours days, 1 hour for lunch, flexible hours, worked from home, vacation days and unlimited sick days. On the other hand almost none of them will find the same type of job and pay. Most were around 50, which is too early to retire but at least they got the kids out of the house (knock wood). Now what?
The security guard walks by, once in the morning, once at noon and one in the evenings. Looks in the conference room, decides I am safe. Some young kid. I guess they are looking for obvious trouble. Like some one going postal. I have never seen security in an office building unless there is trouble.
"Attitude - "Blah, Blah, Blah, it is all in your attitude, blah, blah, blah" (Ski-jumper going off a cliff)
Well almost time to go. I guess the posters didn't help much. But they had a nice little run so things can't be too bad. Some of the people had 25 years of experience and made it to retirement. It just looks bad right now.
Writing from the front lines of the recession...
Tuesday, November 9, 2010
October jobs report is slightly positive
The Bureau of Labor Statistics released the October unemployment report on November 5th, 2010. The report said the United States unemployment rate stayed at 9.6%. Non farm payroll increase by a total of 151,000 jobs.
The unemployment rate for all groups stood at 9.6%. For Blacks it was 15.7%, Hispanics had a rate of 12.6% and the White rate was 8.8%. The average unemployment duration increased from 33.3 weeks to 33.9 weeks. The number of people who were jobless for 27 weeks or more was 6.2 million. The number people working part time involuntarily was 9.2 million. This group would work full time if they could.
The October jobs report shows almost no change in all major categories. The small positive note was the increase in non farm payrolls of 151,000 jobs. Private service jobs increased by 154,000. Retail was up by 28K, Business Services increase 46K, 35,000 of which were temp help. Health was up 34K and education was up 19K. Government drop 8K (local government -7,000).
In other notable categories construction added on 5,000 jobs, Manufacturing dropped 7K jobs, and computer systems design added 7,500.
The unemployment rate for all groups stood at 9.6%. For Blacks it was 15.7%, Hispanics had a rate of 12.6% and the White rate was 8.8%. The average unemployment duration increased from 33.3 weeks to 33.9 weeks. The number of people who were jobless for 27 weeks or more was 6.2 million. The number people working part time involuntarily was 9.2 million. This group would work full time if they could.
The October jobs report shows almost no change in all major categories. The small positive note was the increase in non farm payrolls of 151,000 jobs. Private service jobs increased by 154,000. Retail was up by 28K, Business Services increase 46K, 35,000 of which were temp help. Health was up 34K and education was up 19K. Government drop 8K (local government -7,000).
In other notable categories construction added on 5,000 jobs, Manufacturing dropped 7K jobs, and computer systems design added 7,500.
Sunday, October 31, 2010
$80 Billion on Intelligence and $43 on homeland security
The Washington post reported that the government spent $80 billion on intelligence activities in fiscal 2010 which ended in September 2010. The amount consisted of $53 billion for the CIA and other intelligences agencies that report to the director of national intelligence and $27 Billion for military intelligence. An additional $43 billion was spent on Homeland security and $49 million was spent on state department operations.
Last years budget was $75 Billion and national intelligence was $49.5 million. The amount was double what was spent in 2001. In 2001 the amount was approximately $40 billion.
In the important Washington Post series, "Top Secret America", Robert M. Gates, Secretary of defense, said that a review of intelligence spending is necessary.
The Evil Black Economist want to make several points.
1) First, I am glad, under the leadership of President Obama, the military and CIA are releasing their spending figures. Now we can have an honest discussion of what we are spending the money on and what is the right level of spending for whatever we are buying.
2) The amount of spending is way out of proportion to the amount of safety and counter terrorism we are buying. And some of the counter terrorism money is mis-directed. Terrorism is a long term human development problem best countered with jobs and education not necessarily with counter terrorism spending.
3) The Intelligence - Security complex is one of the few area's were very little is actually produced. The program is a huge middle and upper middle class jobs program. It is time to monitor, measure and streamline the intelligence community.
4) It is also sad how small the minority participation in the intelligence spending establishment. Blacks and Hispanics are few and far between at major firms or as contractors. The IS community is a "good-old boys" network loaded with republican donors and hand shakers.
It is time to open up intelligence spending for the larger benefit of all.
PS. One department doing quite well in minority hiring is the TSA, which employs large numbers of minorities and women. It is also the lowest paying branch of Home land security.
Last years budget was $75 Billion and national intelligence was $49.5 million. The amount was double what was spent in 2001. In 2001 the amount was approximately $40 billion.
In the important Washington Post series, "Top Secret America", Robert M. Gates, Secretary of defense, said that a review of intelligence spending is necessary.
The Evil Black Economist want to make several points.
1) First, I am glad, under the leadership of President Obama, the military and CIA are releasing their spending figures. Now we can have an honest discussion of what we are spending the money on and what is the right level of spending for whatever we are buying.
2) The amount of spending is way out of proportion to the amount of safety and counter terrorism we are buying. And some of the counter terrorism money is mis-directed. Terrorism is a long term human development problem best countered with jobs and education not necessarily with counter terrorism spending.
3) The Intelligence - Security complex is one of the few area's were very little is actually produced. The program is a huge middle and upper middle class jobs program. It is time to monitor, measure and streamline the intelligence community.
4) It is also sad how small the minority participation in the intelligence spending establishment. Blacks and Hispanics are few and far between at major firms or as contractors. The IS community is a "good-old boys" network loaded with republican donors and hand shakers.
It is time to open up intelligence spending for the larger benefit of all.
PS. One department doing quite well in minority hiring is the TSA, which employs large numbers of minorities and women. It is also the lowest paying branch of Home land security.
Wednesday, October 27, 2010
Industry Salaries
I am not sure what is going on but industry salaries are still way to high. I work in computers and I am listening to a cubicle conversation. There is one lady here who has no secrets. She blabs everything. I am bad but this lady has diareaha of the mouth. Anyway, I am not sure of her positon, but she has not reports and appears to be a team member of an IT team. Yet, she has stock options, owns horses, a $600K house and drink fine wine. Wine that is way north of $50 dollars a bottle. What the heck ??
Sunday, October 24, 2010
Dangerous times in the United Kingdom
I think the NY Times spurs one to write. Today's editorial on the insane government fiscal policy in the UK requires discussion. Britain is playing with one of the economic stabilizers that automatically bring countries out of recessions. England is planning to cut up to 20% from certain departments over a 5 years. They will lay off close to 400,000 government workers.
The plan is close to reckless in a recession. Any reduction in spending during a recession is dangerous enough, but a 20% decrease is insane. The government also believes the private sector will pick up the differences in job losses from government cuts. This radical switch in policy counts on consumer demand and increased private investment. However, job and unemployment insurance cuts scare consumers. And corporations have shown a reluctance to invest. Big companies pay can borrow at a near zero interest rate. They also are sitting on record profits, yet they do not invest in creating jobs.
What should Britain do ? Apply a little of the usual common sense. (0) Flatten government growth. (1) Gradually cut spend and the deficit at a rate that roughly matches the countries growth rate. A cut little above the rate for the conservatives. (2) Increase the efficiency of government. (3) Better match long term job openings with worker skills.
The plan is close to reckless in a recession. Any reduction in spending during a recession is dangerous enough, but a 20% decrease is insane. The government also believes the private sector will pick up the differences in job losses from government cuts. This radical switch in policy counts on consumer demand and increased private investment. However, job and unemployment insurance cuts scare consumers. And corporations have shown a reluctance to invest. Big companies pay can borrow at a near zero interest rate. They also are sitting on record profits, yet they do not invest in creating jobs.
What should Britain do ? Apply a little of the usual common sense. (0) Flatten government growth. (1) Gradually cut spend and the deficit at a rate that roughly matches the countries growth rate. A cut little above the rate for the conservatives. (2) Increase the efficiency of government. (3) Better match long term job openings with worker skills.
Tuesday, October 19, 2010
Unemployment Rate Stays High and Static
October 8th, 2010. The Bureau of Labor Statistics reported the unemployment stayed the same: 9.6% of the civilian labor force is unemployed. The unemployment rage for all major sub-groups was also static: adult men (9.8), adult women (8.0), teenagers (26.0), whites (8.7), Blacks (16.1)and Hispanics showed little or no change.
The report was completely flat in almost every category for both household and establishment data. Absolutely no short-term news here.
The long term unemployed stood at 6.1 million (those who are looking more than 26 weeks). Forty-two percent of all unemployed were part of the long term unemployed.
The civilian labor participation rate was 64.7% and the employment to population ratio remained at 58.5
In more troubling news, people working part-time for involuntary reasons jump 600K to 9.5 million. These are people who want to work full time but cannot find a full-time gig.
Marginally attached workers climbed to 2.5 million from 2.2 million a year earlier. And discouraged workers jump to 1.2 MM from 0.5 mm a year ago.
Non-farm payroll moved up 64,000 positions but was erased by a 76,000 decrease in local government jobs. Employment in manufacturing was flat and construction dropped 21K.
The average work week stayed at 34.2 hours and wages increased 1 cent to $22.67.
Both July and August Non-farm payroll number were revised downward.
The report was completely flat in almost every category for both household and establishment data. Absolutely no short-term news here.
The long term unemployed stood at 6.1 million (those who are looking more than 26 weeks). Forty-two percent of all unemployed were part of the long term unemployed.
The civilian labor participation rate was 64.7% and the employment to population ratio remained at 58.5
In more troubling news, people working part-time for involuntary reasons jump 600K to 9.5 million. These are people who want to work full time but cannot find a full-time gig.
Marginally attached workers climbed to 2.5 million from 2.2 million a year earlier. And discouraged workers jump to 1.2 MM from 0.5 mm a year ago.
Non-farm payroll moved up 64,000 positions but was erased by a 76,000 decrease in local government jobs. Employment in manufacturing was flat and construction dropped 21K.
The average work week stayed at 34.2 hours and wages increased 1 cent to $22.67.
Both July and August Non-farm payroll number were revised downward.
Sunday, October 10, 2010
Soft hards and Easy jobs
Someone told me I have "soft hands" and that I have not done a hard days worth of work in my life. Well I do work hard, just not with my hands. Everyone wants a nice, cushy job sitting in a cool/warn office and typing on a computer. It looks like an easy job. And it is an easy job compared to how jobs used to be.
We cannot imaging what is was like to pick cotton or oranges by the pound, work on an assembly or in mine digging coal or on the railroad tracks as a "gandy dancer" (maintenance worker). Old jobs were hard, dirty, sweaty and paid crap.
It turns out that almost all jobs are easy now. Government regualtions, power equipment, and cheap motive power have turned may hard jobs into easy ones. Tell me how skinny people you see at a construction site these days. Even day laborers have add some pounds from when the arrived in the US.
Today, every job is an easy job compared to how things used to be. Every job has safety regulations, breaks, decent pay and very little heavy lifting. Jobs where you directly handle the product are rare. Jobs where you really work hard are even rarer.
Look at the size and shape of the avverage construction work, wherehouse employee or maintenance work. Not to many skinny people are there ?? If fact I think the best all around job from a fitness point of view is postal worker or UPS delivery truck drive, but that is for another post.
Yet, we as Black people, have been condition to look down on contstruction, building trades, engineering, maintenance work and delivery person. There are all good paying jobs which are now "easy" jobs. It is all in how define what an easy job is. There are lot's of other easy jobs as well where you still work with your hands and make good money.
We cannot imaging what is was like to pick cotton or oranges by the pound, work on an assembly or in mine digging coal or on the railroad tracks as a "gandy dancer" (maintenance worker). Old jobs were hard, dirty, sweaty and paid crap.
It turns out that almost all jobs are easy now. Government regualtions, power equipment, and cheap motive power have turned may hard jobs into easy ones. Tell me how skinny people you see at a construction site these days. Even day laborers have add some pounds from when the arrived in the US.
Today, every job is an easy job compared to how things used to be. Every job has safety regulations, breaks, decent pay and very little heavy lifting. Jobs where you directly handle the product are rare. Jobs where you really work hard are even rarer.
Look at the size and shape of the avverage construction work, wherehouse employee or maintenance work. Not to many skinny people are there ?? If fact I think the best all around job from a fitness point of view is postal worker or UPS delivery truck drive, but that is for another post.
Yet, we as Black people, have been condition to look down on contstruction, building trades, engineering, maintenance work and delivery person. There are all good paying jobs which are now "easy" jobs. It is all in how define what an easy job is. There are lot's of other easy jobs as well where you still work with your hands and make good money.
Sunday, September 26, 2010
Number of people obese or overweight could reach 75% by 2020
Draft v2
What seems like a ordinary but scary headline, "Overweight and obese could be 70% of population by 2020," actually contains a lot of interesting economic issues.
Do markets always yield the best results ?? Will people make good, long-term choices ?? How far should regulations go (the government) in mandating behaviors ??
Few people dispute how efficiently Markets allocate resources. Nor how well they reward marketplace winners and losers. But what happens when produce undesirable results like pollution, toxic chemicals, or overweight/obese people. All of which contribute to economic activity and GDP. And then the cleanup also contributes to GDP.
It is interesting to note that two countries who have the highest rates of obesity and overweightness also have no national healthcare system.
What seems like a ordinary but scary headline, "Overweight and obese could be 70% of population by 2020," actually contains a lot of interesting economic issues.
Do markets always yield the best results ?? Will people make good, long-term choices ?? How far should regulations go (the government) in mandating behaviors ??
Few people dispute how efficiently Markets allocate resources. Nor how well they reward marketplace winners and losers. But what happens when produce undesirable results like pollution, toxic chemicals, or overweight/obese people. All of which contribute to economic activity and GDP. And then the cleanup also contributes to GDP.
It is interesting to note that two countries who have the highest rates of obesity and overweightness also have no national healthcare system.
Sunday, September 19, 2010
The Business of America is Labor
"The business of America is Business" -- Calvin Coolidge, US president
While Coolidge do not actual say those words, he certainly meant them. He also meant the business is a means to other ends. Now one of those other ends in is conflict with business. Labor rights, wages and quality of work life are in direct and constant competition with corporations. The corporations are winning in the short-term.
However, the cyclical and dynamic nature of the economy means a short term gain can be a long-term loss. For example, retailer sales have slumped as the number of unemployed has grown.
We are going to have to find a new balance between the "surplus" given to labor and corporate profits. Corporations are just another wealth transferring institution in society like government or schools that takes money from someone and gives to someone else. They can be very efficient generators of utility. The are not, as Coolidge said, a means unto themselves. Nor our reason for being.
Instead, it Labor that is the reason we work and allows business. We work to provide the most happiness to the greatest number of people.
While Coolidge do not actual say those words, he certainly meant them. He also meant the business is a means to other ends. Now one of those other ends in is conflict with business. Labor rights, wages and quality of work life are in direct and constant competition with corporations. The corporations are winning in the short-term.
However, the cyclical and dynamic nature of the economy means a short term gain can be a long-term loss. For example, retailer sales have slumped as the number of unemployed has grown.
We are going to have to find a new balance between the "surplus" given to labor and corporate profits. Corporations are just another wealth transferring institution in society like government or schools that takes money from someone and gives to someone else. They can be very efficient generators of utility. The are not, as Coolidge said, a means unto themselves. Nor our reason for being.
Instead, it Labor that is the reason we work and allows business. We work to provide the most happiness to the greatest number of people.
Sunday, September 12, 2010
We know what works; We just don't like it: It's hard work
I had quick chat with my local bartender who's from Ireland and we disagree about many subjects. But we agree on what works: education, innovation, and entrepreneurship. And by education, we mean the traditional liberal arts education that helps you think through and solve problems.
We agree that new jobs are very personal, one-on-one, jobs and high touch, value added jobs that cannot be shipped overseas. We agree the free trade pacts are good in principle but devastating in reality. We also agree that basic jobs require a living wage. That's simple. Corporations must share the wealth and profits to labor and pay a living wage. It turns out that labor not corporation are the "business" of
It will be tough on new entrants to the job market so acquaintanceships and skills bridging opportunities are required. But jobs are now becoming a valuable commodity and must be treated the same way. The demand for "good" jobs has never been higher, we must manager this valuable resource for the benefit of all.
We agree that new jobs are very personal, one-on-one, jobs and high touch, value added jobs that cannot be shipped overseas. We agree the free trade pacts are good in principle but devastating in reality. We also agree that basic jobs require a living wage. That's simple. Corporations must share the wealth and profits to labor and pay a living wage. It turns out that labor not corporation are the "business" of
It will be tough on new entrants to the job market so acquaintanceships and skills bridging opportunities are required. But jobs are now becoming a valuable commodity and must be treated the same way. The demand for "good" jobs has never been higher, we must manager this valuable resource for the benefit of all.
Saturday, September 11, 2010
August unemployment rate flat
The US national unemployment rate was unchanged to 9.6% in August due to a small increase in private sector jobs and a drop in government census employment. Total non farm payrolls drop by -54,000 jobs. Government employment dropped by -114,000 due to census bureau layoffs and private sector employment added 67,000 jobs.
Here are the key stats from the household data report:
The basic unemployment rate was flat at 9.6%.
The black unemployment rate jumped to 16.3% from 15.6% in July. The Black teenage unemployment rate was an astounding 45% versus 24% for whites.
U-6, the true underemployment and unemployment rate also moved up from 16.5% to 16.7%.
In the company and government side of the employment report (establishment data), manufacturing dropped -27,000 jobs, construction added 19,000 and healthcare added 40,000.
Here are the key stats from the household data report:
The basic unemployment rate was flat at 9.6%.
The black unemployment rate jumped to 16.3% from 15.6% in July. The Black teenage unemployment rate was an astounding 45% versus 24% for whites.
U-6, the true underemployment and unemployment rate also moved up from 16.5% to 16.7%.
In the company and government side of the employment report (establishment data), manufacturing dropped -27,000 jobs, construction added 19,000 and healthcare added 40,000.
Monday, September 6, 2010
Modern Times by Charles Chaplin
Any good economist has to love "Modern Times" by Charlie Chaplin. It looks like a decent, good paying job that doesn't make you crazy is impossible.
Sunday, August 22, 2010
US Navy is just another expensive jobs program in disguise
US Navy is just another expensive jobs program in disguise
On paper the budget for the Navy is $149.3 billion dollars. A heck of a lot of money, but not historically over the top. However, the real War money comes from continuting operations which are not subject to budget constraints.
If you look at the Navy budget: $42 Billion on Personnel, $42 Million on operations and Maintenance, $41 million on purchases, $5 billion on facilities and $20B on R&D, nothing but the size jumps out at you. The budget supports 325,000 Sailors and 194K Marines.
In FY10, the budget is projected at $156 Billion dollars.
On paper the budget for the Navy is $149.3 billion dollars. A heck of a lot of money, but not historically over the top. However, the real War money comes from continuting operations which are not subject to budget constraints.
If you look at the Navy budget: $42 Billion on Personnel, $42 Million on operations and Maintenance, $41 million on purchases, $5 billion on facilities and $20B on R&D, nothing but the size jumps out at you. The budget supports 325,000 Sailors and 194K Marines.
In FY10, the budget is projected at $156 Billion dollars.
Paul Ryan's Roadmap for America's Future
Rep. Paul Ryans's Roadmap for America's Future
This is an evolving article as we dig deeper into the details. Paul Ryan appears to be the architect of the republican economic strategy.
The "roadmap" has three sections
Debt and Debt reduction strategies
Reducing health and retirement benefits and as a afterthought "Jobs and Competitiveness"
Part I
Every now and then you see an idea that sounds pretty good. And when it pops out from the Republicans, it can be surprising. Congress Paul Ryan, R-Wisconsin-1, has several good ideas for controlling spending. He wants to cap Medicare spending and entitlements for the middle and upper class: those making more than $149,000. He says the government cannot afford the current policies. Makes sense right.
Well he is right economically. Politically, the key to Medicare and social security is broad based, public support. As long as everyone get something, we can support the program. But heaven forbid that someone gets a handout, that I am not getting. That is waste, welfare and breeds a culture of dependency.
But I do admire Mr. Ryan for trying. Considering his party is bankrupt of any new economic ideas, he does twist some old ones.
v2
This is an evolving article as we dig deeper into the details. Paul Ryan appears to be the architect of the republican economic strategy.
The "roadmap" has three sections
Debt and Debt reduction strategies
Reducing health and retirement benefits and as a afterthought "Jobs and Competitiveness"
Part I
Every now and then you see an idea that sounds pretty good. And when it pops out from the Republicans, it can be surprising. Congress Paul Ryan, R-Wisconsin-1, has several good ideas for controlling spending. He wants to cap Medicare spending and entitlements for the middle and upper class: those making more than $149,000. He says the government cannot afford the current policies. Makes sense right.
Well he is right economically. Politically, the key to Medicare and social security is broad based, public support. As long as everyone get something, we can support the program. But heaven forbid that someone gets a handout, that I am not getting. That is waste, welfare and breeds a culture of dependency.
But I do admire Mr. Ryan for trying. Considering his party is bankrupt of any new economic ideas, he does twist some old ones.
v2
Saturday, August 21, 2010
Trade deficit expands by 19% to 50 Billion dollars in June
The US Census Bureau and the US Bureau of Economic Analysis reported on August 11th, that the trade deficit widen by 19% to $49.9 Billion dollars from $42 Billion dollars in May 2010. The jump was unexpected, since the economy is in recession, and was blamed on retailers stocking up for the fall and winter buying season. The willingness to add the stocks was taken as a positive economic sign.
Some of the other highlights in the report were a $5.4 Billion dollar jump in imported goods and a $2.3 Billion drop in exports creating a $7.7 net goods deficit. "May to June" increase in imports includes $3.1 Billion increase in consumer goods, $1.3 increase in Autos and parts and a $0.5 billion dollar increase in capital goods.
You can see the increase in imports and drop in exports during June.
This second chart shows the increase in the trade deficit (a negative number) to about $50 Billion dollars.
Some of the other highlights in the report were a $5.4 Billion dollar jump in imported goods and a $2.3 Billion drop in exports creating a $7.7 net goods deficit. "May to June" increase in imports includes $3.1 Billion increase in consumer goods, $1.3 increase in Autos and parts and a $0.5 billion dollar increase in capital goods.
You can see the increase in imports and drop in exports during June.
This second chart shows the increase in the trade deficit (a negative number) to about $50 Billion dollars.
Sunday, August 15, 2010
Job creation slow in July BLS Labor report
Household data report
In the July labor report, the Bureau of Labor Statistics said the unemployment rate was unchanged at 9.5% nationally and 15.6% for Blacks in the US. non-farm payrolls dropped by 131,000 jobs. Federal government employement decreased by 143,000 mostly due to the end of the census. Hispanic unemployment was 12.1%.
The long term unemployed (27 weeks or longer)remained at 6.6 Million. The labor force participation rate 64.6% was also unchanged but is up %0.6 since April. The declining participation rate explains the why the unemployment rate remained at 9.5%. The actual labor force is shrinking as people give up looking for work.
The BLS also reported there were 2.6 million marginally attached workers(MAW). MAW's want to work and have looked for a job in the last 12 months but have not looked in the last four weeks.
In one of the worst signs in the report, discouraged workers increase to 1.2 million from only 389K a year earlier. Discouraged workers are not looking for work because they believe there are no jobs available for them.
Business Establishment data
Total private employment increased by 71,000. A small number by historical recovery standards but probably as good as could be hoped in the current economic situation. Manufacturing added 36,000 jobs, health care added 27,000 and the average work week moved up 0.1 hour. Average hourly earnings increased by 4 cents or %0.2 percent.
In summary the economy is growing slowly as american adjust to the "new" normal.
In the July labor report, the Bureau of Labor Statistics said the unemployment rate was unchanged at 9.5% nationally and 15.6% for Blacks in the US. non-farm payrolls dropped by 131,000 jobs. Federal government employement decreased by 143,000 mostly due to the end of the census. Hispanic unemployment was 12.1%.
The long term unemployed (27 weeks or longer)remained at 6.6 Million. The labor force participation rate 64.6% was also unchanged but is up %0.6 since April. The declining participation rate explains the why the unemployment rate remained at 9.5%. The actual labor force is shrinking as people give up looking for work.
The BLS also reported there were 2.6 million marginally attached workers(MAW). MAW's want to work and have looked for a job in the last 12 months but have not looked in the last four weeks.
In one of the worst signs in the report, discouraged workers increase to 1.2 million from only 389K a year earlier. Discouraged workers are not looking for work because they believe there are no jobs available for them.
Business Establishment data
Total private employment increased by 71,000. A small number by historical recovery standards but probably as good as could be hoped in the current economic situation. Manufacturing added 36,000 jobs, health care added 27,000 and the average work week moved up 0.1 hour. Average hourly earnings increased by 4 cents or %0.2 percent.
In summary the economy is growing slowly as american adjust to the "new" normal.
Where will the jobs come from ?? Is the unemployment change structural ?
The recession of 2008 may be the biggest economic event of our lifetimes. Let me explain. While there is lots of business and economic information(not news), very little actual affects the everyday, average person. We still hear about this company (Walmart, GE) or that business person(Bernake or Bezos), but it is really just background noise. We all have gone on with our lives and shopping hoping it will continue forever. Now the recession has awakened everyone to the key economic question of our time: Where will the jobs come from ?? And by extension, what kind of lives will we and our children have ??
The latest unemployment numbers have been released. There is great worry that only 115,000 private section jobs were created. There was also a reduction in government employment.
Each recession, is a chance for the economy to re-balance itself. We are clearing the real estate, finance and consumer credit bubbles. We are also staring to think about what type of economy and society we want to live in. When most of us were happy and fat, we did not have to think too much, but now that the real world is intruding, we are thinking a little more about economic markets. Are markets always the best way to achieve societies aims ?? Are they the best way to allocate resources ?? What is the best way to design and regulate for the benefit of society ??
And where will the jobs come from ??
v1
The latest unemployment numbers have been released. There is great worry that only 115,000 private section jobs were created. There was also a reduction in government employment.
Each recession, is a chance for the economy to re-balance itself. We are clearing the real estate, finance and consumer credit bubbles. We are also staring to think about what type of economy and society we want to live in. When most of us were happy and fat, we did not have to think too much, but now that the real world is intruding, we are thinking a little more about economic markets. Are markets always the best way to achieve societies aims ?? Are they the best way to allocate resources ?? What is the best way to design and regulate for the benefit of society ??
And where will the jobs come from ??
v1
Sunday, August 8, 2010
GDP grows by only 2.4 percent
The US gross domestic product grew by 2.4% in the second quarter of 2010 as reported by the commerce department's Bureau of Economic Analysis. The 2.4% is the quarterly difference between the seasonally adjusted 1st quarter and 2nd quarter output of goods and services scaled to an annual rate (ie, the quarter change was really 0.59% times 4 = 2.36%). The estimate is an advanced estimate which is subject to revision as more data comes in.
There was broad increase in many of the components of GDP that contributed positively to growth. Exports, fixed investment, personal consumption expenditures, inventories, federal government spending, and residential fixed investment. Imports increased by 35% depressing GDP by nearly 4%. The slow down in GDP was due to slower inventory build-up and increased imports.
When you look at the individual components of GDP you can see the huge effect of imports on GDP. However, across the board the growth in investments, consumption spending and inventories boosted GDP. The addiction to imports is holding back the economy.
There was broad increase in many of the components of GDP that contributed positively to growth. Exports, fixed investment, personal consumption expenditures, inventories, federal government spending, and residential fixed investment. Imports increased by 35% depressing GDP by nearly 4%. The slow down in GDP was due to slower inventory build-up and increased imports.
When you look at the individual components of GDP you can see the huge effect of imports on GDP. However, across the board the growth in investments, consumption spending and inventories boosted GDP. The addiction to imports is holding back the economy.
Monday, July 26, 2010
Credit card rewards cost the poor
The NYT has a story about retailers raising prices for everyone to pay for rich peoples credit card rewards.
New York Times
New York Times
Saturday, July 24, 2010
Government Employment has Grown by 39% since 1981
Government employment has grown by 39%. Almost all the growth has been at the local level.
I was reading the current series in the Washington Post called "Top Secret America" and wondering about the intelligence and counter terrorism jobs created since September 11, 2001. The figures for the intelligence community are not broken out in government employment reports. However, we can look at trends in overall government employment.
Before we start, we must look at some general employment trends in the US.
Government employment has remained about 15-18% of the total non farm payrolls since 1981. The number of workers has grown in step with the overall employment situation in the US. Since January 1981, government employment has grown by 39%. During the same period non farm employment grew by 43%. Service sector employment expanded by 68%, while goods producing jobs fell by 25%.
The total number of government employees expanded from 16,360,000 in Jan 1981 to 22,770,000 in Jun 2010. Almost all of the growth occurred at the local level. There has been little hiring at the Federal level. Federal employment rolls have barely expanded compared to the amount of hiring done by local governments. The number of Federal employees has grown by 8%. The number of state workers by 42% and the number of municipal employees has expanded by 48%.
Here are the charts that illustrate the data. The first chart shows the over all increase in government employment from 16.3 million to 22.7 million.
The second chart show the share of government employment. Local percentage has increased from about 60% to about 64%.
You can see that the US has a much smaller central (federal government) than many other countries. Power has been devolved to states and the localities. However, this "sharing" comes at the price of duplication and inefficiencies. And higher taxes. Luckily, some of the "waste" is in the form of employment. Good thing for COPS, teachers and firemen.
Is is interesting to note that when people talk about government waste, they are usually talking either about the federal government or a different jurisdiction. They never talk about their own, local government.
Here in NJ, we have over 600 local municipalities each with it's own Department of Public Works, police and fire, parks, administration and purchasing departments and local government. Yet no one wants to consolidate jurisdictions out of fear of losing something. So as much as they complain, people don't seem to mind the high taxes. They are just accept it, but people like to complain. Politicians and administrators have a vested interest, so they have little interest in consolidation.
Another note: It is very difficult to find the number of private employees performing work for the government as contractors. I would consider them government employees since they perform government functions, however they are reported as private service employees. "Top Secret America" showed how difficult it is to find information in this area.
I was reading the current series in the Washington Post called "Top Secret America" and wondering about the intelligence and counter terrorism jobs created since September 11, 2001. The figures for the intelligence community are not broken out in government employment reports. However, we can look at trends in overall government employment.
Before we start, we must look at some general employment trends in the US.
Government employment has remained about 15-18% of the total non farm payrolls since 1981. The number of workers has grown in step with the overall employment situation in the US. Since January 1981, government employment has grown by 39%. During the same period non farm employment grew by 43%. Service sector employment expanded by 68%, while goods producing jobs fell by 25%.
The total number of government employees expanded from 16,360,000 in Jan 1981 to 22,770,000 in Jun 2010. Almost all of the growth occurred at the local level. There has been little hiring at the Federal level. Federal employment rolls have barely expanded compared to the amount of hiring done by local governments. The number of Federal employees has grown by 8%. The number of state workers by 42% and the number of municipal employees has expanded by 48%.
Here are the charts that illustrate the data. The first chart shows the over all increase in government employment from 16.3 million to 22.7 million.
The second chart show the share of government employment. Local percentage has increased from about 60% to about 64%.
You can see that the US has a much smaller central (federal government) than many other countries. Power has been devolved to states and the localities. However, this "sharing" comes at the price of duplication and inefficiencies. And higher taxes. Luckily, some of the "waste" is in the form of employment. Good thing for COPS, teachers and firemen.
Is is interesting to note that when people talk about government waste, they are usually talking either about the federal government or a different jurisdiction. They never talk about their own, local government.
Here in NJ, we have over 600 local municipalities each with it's own Department of Public Works, police and fire, parks, administration and purchasing departments and local government. Yet no one wants to consolidate jurisdictions out of fear of losing something. So as much as they complain, people don't seem to mind the high taxes. They are just accept it, but people like to complain. Politicians and administrators have a vested interest, so they have little interest in consolidation.
Another note: It is very difficult to find the number of private employees performing work for the government as contractors. I would consider them government employees since they perform government functions, however they are reported as private service employees. "Top Secret America" showed how difficult it is to find information in this area.
I started to new area under the Blog called mistakes
Just a quick, public place to complain about stupid mistakes I made as I write for the Blog.
This time I was trying to compare employment for government: Federal, State and Local. I wanted to check out the size of the government at the different levels.
Conservatives always complain about the government size but they usually mean the federal government, rarely the state and never the local government. But the local government is 4 times as large. Cops, teachers and firemen plus good pensions and benefits.
Anyway, I picked the wrong data set. A set which was NOT seasonally adjusted and here is my chart. See that annoying saw-tooth pattern in data. That is seasonality, which just confuses the whole picture. Oops.
This time I was trying to compare employment for government: Federal, State and Local. I wanted to check out the size of the government at the different levels.
Conservatives always complain about the government size but they usually mean the federal government, rarely the state and never the local government. But the local government is 4 times as large. Cops, teachers and firemen plus good pensions and benefits.
Anyway, I picked the wrong data set. A set which was NOT seasonally adjusted and here is my chart. See that annoying saw-tooth pattern in data. That is seasonality, which just confuses the whole picture. Oops.
Tuesday, July 20, 2010
Top Secret America: Another secret jobs program
Well, I have complained in the past about the large number of police and firemen in our town which basically has no crime or fires. Now comes word from the Washington Post about contractors and companies getting rich from 9-11. Companies have exploited fear of an attack by terrorist to fund a massive increase in Counter Terrorism and Intelligence services. And private companies have grown rich in the process.
Washington Post's Top Secret America
Washington Post's Top Secret America
What happened to those missing manufacturing jobs
When we look at the manufacturing sector we can see where the job losses came from. We can project job growth as some function of the rate of GDP growth over time. We can then calculate a manufacturing job deficit.
But why did those jobs disappear. Well the obvious answer is because they could. Underneath our economy is a political system that believes in free-trade and free-markets. The US has one of the most open markets in the world. The government plays a very small part in the markets and provides only the regulation to support functioning markets. Import tariffs are low. There are few cultural and non-business barriers. Few limits on foreign ownership.
The assumption is that higher competition gives the consumer a better value at a lower price. Free trade will also generate more jobs and higher incomes as countries specialize in different areas.
The second answer is global competition and productivity
The US lost to both China (items with a high labor content) at the low end and Korea, Germany and Japan at the high end (automobiles).
The third answer is productivity
The other sectors such as food, energy, construction materials which are not as import sensitive appear untouched but have trended downward because of productivity gains.
Services are relatively insensitive to productivity improvement, so the labor component has remained high.
But why did those jobs disappear. Well the obvious answer is because they could. Underneath our economy is a political system that believes in free-trade and free-markets. The US has one of the most open markets in the world. The government plays a very small part in the markets and provides only the regulation to support functioning markets. Import tariffs are low. There are few cultural and non-business barriers. Few limits on foreign ownership.
The assumption is that higher competition gives the consumer a better value at a lower price. Free trade will also generate more jobs and higher incomes as countries specialize in different areas.
The second answer is global competition and productivity
The US lost to both China (items with a high labor content) at the low end and Korea, Germany and Japan at the high end (automobiles).
The third answer is productivity
The other sectors such as food, energy, construction materials which are not as import sensitive appear untouched but have trended downward because of productivity gains.
Services are relatively insensitive to productivity improvement, so the labor component has remained high.
Where to look for jobs?? Look where H1-B visa holders work
Good paying jobs can be found in industries that employ H1-B workers.
The US issues visa to certain classes of foreign nationals to come for work. The visas are call H1-B visa and they are used to import workers in fields where the US has a shortage. The visa is for three years but is typically extended to six years. There are 65,000 H1-B visas issue each year. The visa is filled by highly educated foreign who have skills in areas where the US believes it has a shortage of workers. Skills like Math, Science and Information Technology.
The reasoning is that the imported workers provide missing skills to help the economy grow which benefits everyone. For example, one programmer may be the missing person on a large team launching a new website to sell sneakers. Ten other people at the company's jobs in marketing, manufacturing and finance may depending on the programmer who may not otherwise be available.
Also the programmer may buy a car, visit a doctor, rent and apartment and visit the local grocery store and pay taxes, all of which contribute to the economy. If the programmer, did not exist, there would be no secondary economic activity.
The imported workers can help an economy during periods of low unemployment. Corporation may also pay lower wage rates for H1-B workers thus helping increase there profits.
The number of imported foreign workers is small compared to the total US work force. Workers here as H1-B visa employees number less than 100,000. The total US work force is about 130 million. But the jobs pay well above the average wage.
In the US, we can also practice import subsitituion in the jobs market. The US currently imports a large number of workers in many high-tech fields such as engineering, math, sciences, nursing, biology, and medicine. The holders also include teachers and academics and Department of Defense contractors.
However, during high unemployment, the government reduces the number of imported foreign workers opening up jobs for US citizens in these same areas. So, if you are looking for a job consider one of the H1-B areas for employment.
The H1-B visa debate is a hot one. Here are some links to read about it.
Here is the site for US Citizenship and Immigration Services
v2
The US issues visa to certain classes of foreign nationals to come for work. The visas are call H1-B visa and they are used to import workers in fields where the US has a shortage. The visa is for three years but is typically extended to six years. There are 65,000 H1-B visas issue each year. The visa is filled by highly educated foreign who have skills in areas where the US believes it has a shortage of workers. Skills like Math, Science and Information Technology.
The reasoning is that the imported workers provide missing skills to help the economy grow which benefits everyone. For example, one programmer may be the missing person on a large team launching a new website to sell sneakers. Ten other people at the company's jobs in marketing, manufacturing and finance may depending on the programmer who may not otherwise be available.
Also the programmer may buy a car, visit a doctor, rent and apartment and visit the local grocery store and pay taxes, all of which contribute to the economy. If the programmer, did not exist, there would be no secondary economic activity.
The imported workers can help an economy during periods of low unemployment. Corporation may also pay lower wage rates for H1-B workers thus helping increase there profits.
The number of imported foreign workers is small compared to the total US work force. Workers here as H1-B visa employees number less than 100,000. The total US work force is about 130 million. But the jobs pay well above the average wage.
In the US, we can also practice import subsitituion in the jobs market. The US currently imports a large number of workers in many high-tech fields such as engineering, math, sciences, nursing, biology, and medicine. The holders also include teachers and academics and Department of Defense contractors.
However, during high unemployment, the government reduces the number of imported foreign workers opening up jobs for US citizens in these same areas. So, if you are looking for a job consider one of the H1-B areas for employment.
The H1-B visa debate is a hot one. Here are some links to read about it.
Here is the site for US Citizenship and Immigration Services
v2
Monday, July 12, 2010
Private sector job growth lags
Well there is more trouble in the labor market as private sector job growth stays below 100K. On Friday, July 2nd, 2010, the Bureau of Labor Statistics report private hiring increased by only 83,000, which is well below the 125K-150K need to reduce the unemployment rate.
Non farm payrolls actual decreased 125,000 person as 225,000 temporary employee finished US census jobs.
In detailed job news, manufacturing added 9000 jobs and construction contracted by 22,000 jobs. Two other signals of a tough labor environment were also reported: The average work week declined 0.1 hours and average wages dropped $0.02.
Two pictures(below) tell the story of Non Farm Payrolls during the recession and in the longer term. Here is the recession graph. You can see, for the first time, private service employment contracted. Add in the huge loss in goods producing jobs and you get 10% unemployment
Here is a chart of non farm payroll from Jan 1981 to June 2010. You can see the manufacturing jobs have slowly decreased. But service employment doubled! The growth was completely due to private sector services. Government employment remained between 16% and 18% for the entire period. During the 40 year period the economy grew by more than 2% per year. Yet manufacturing employment decreased.
So, you really have to ask what happened to those manufacturing jobs during the past 40 years.
Non farm payrolls actual decreased 125,000 person as 225,000 temporary employee finished US census jobs.
In detailed job news, manufacturing added 9000 jobs and construction contracted by 22,000 jobs. Two other signals of a tough labor environment were also reported: The average work week declined 0.1 hours and average wages dropped $0.02.
Two pictures(below) tell the story of Non Farm Payrolls during the recession and in the longer term. Here is the recession graph. You can see, for the first time, private service employment contracted. Add in the huge loss in goods producing jobs and you get 10% unemployment
Here is a chart of non farm payroll from Jan 1981 to June 2010. You can see the manufacturing jobs have slowly decreased. But service employment doubled! The growth was completely due to private sector services. Government employment remained between 16% and 18% for the entire period. During the 40 year period the economy grew by more than 2% per year. Yet manufacturing employment decreased.
So, you really have to ask what happened to those manufacturing jobs during the past 40 years.
Thursday, July 8, 2010
Time for more stimulus money and long term austerity
Opinion
This blog writer is in favor of a second, moderate sized government stimulus
The US economy needs another federal spending stimulus boost to continue growing. The economy is sputtering along, trapped in cycle of high unemployment feeding low consumer confidence. We all know that consumption is 70% of the direct economic output in the US. Another fiscal cash injection is need in the short term.
I would recommend spending the money on extending unemployment benefits, aid to state and local governments(SLG), student loans and grants, low income tax relief and long term R&D projects (like oil pollution control). We may have to get used to high unemployment and long-term subsidies for the unemployed. However, the money cannot be given with some productivity benefits to "pay" for the extra money. State and Local Governments must hold the line on pay, retirement and healthcare costs.
The stimulus should be about $400-500 billion dollar area (about 1/3 less than the original 787 Billion investment). Enough to cement the continued growth of the US economy. We must try to get the unemployment rate down to the 7% range to make the recovery psychologically self sustaining.
Longer term, the US economy has some issue to face. We need to shift from a "bubble" economy to a more structurally sound economy, like Germany or Canada, and that won't be easy. We have had tech bubble, a tax cut bubble and now a real estate bubble. Americans need to stop looking for the easy way out. Right now there is no alternative but hard work.
There is some good news. Interest rates at an all time low. Inflation is effectively zero, but not deflationary. We have taken steps to fix healthcare and the banking system. The US still generates the highest per capita income for the most people on the plant.
But there is also bad news. A large number of Americans will be retiring and living longer. This puts tremendous pressure on social security, medicare, private retirement plants and health insurance. Income inequality is growing. Fifteen percent of the working population is unemployed or underemployed.
But luckily, we are in far better shape than other countries to handle the problems.
Our debt to GDP ratio is low compared to other countries. Out growth rate is usually above other western democracies.
It is time to make some painful choices around taxes. We may need to get rid of home mortgage deductions. Put a true price on gasoline and carbon. And learn to live with a lower level of material wealth. We must stop funding wars.
Bling-Bling is out-out. Helping your neighbor is in-in.
EBE
v2
This blog writer is in favor of a second, moderate sized government stimulus
The US economy needs another federal spending stimulus boost to continue growing. The economy is sputtering along, trapped in cycle of high unemployment feeding low consumer confidence. We all know that consumption is 70% of the direct economic output in the US. Another fiscal cash injection is need in the short term.
I would recommend spending the money on extending unemployment benefits, aid to state and local governments(SLG), student loans and grants, low income tax relief and long term R&D projects (like oil pollution control). We may have to get used to high unemployment and long-term subsidies for the unemployed. However, the money cannot be given with some productivity benefits to "pay" for the extra money. State and Local Governments must hold the line on pay, retirement and healthcare costs.
The stimulus should be about $400-500 billion dollar area (about 1/3 less than the original 787 Billion investment). Enough to cement the continued growth of the US economy. We must try to get the unemployment rate down to the 7% range to make the recovery psychologically self sustaining.
Longer term, the US economy has some issue to face. We need to shift from a "bubble" economy to a more structurally sound economy, like Germany or Canada, and that won't be easy. We have had tech bubble, a tax cut bubble and now a real estate bubble. Americans need to stop looking for the easy way out. Right now there is no alternative but hard work.
There is some good news. Interest rates at an all time low. Inflation is effectively zero, but not deflationary. We have taken steps to fix healthcare and the banking system. The US still generates the highest per capita income for the most people on the plant.
But there is also bad news. A large number of Americans will be retiring and living longer. This puts tremendous pressure on social security, medicare, private retirement plants and health insurance. Income inequality is growing. Fifteen percent of the working population is unemployed or underemployed.
But luckily, we are in far better shape than other countries to handle the problems.
Our debt to GDP ratio is low compared to other countries. Out growth rate is usually above other western democracies.
It is time to make some painful choices around taxes. We may need to get rid of home mortgage deductions. Put a true price on gasoline and carbon. And learn to live with a lower level of material wealth. We must stop funding wars.
Bling-Bling is out-out. Helping your neighbor is in-in.
EBE
v2
Easy money for Health Insurance Brokers
There is something strange about the health insurance brokers market. I just got seven phone calls from from health insurance brokers in less than two hours after looking for health insurance on-line.
I think I just stumbled across another easy money, no work scam. Health insurance brokers must be raking in easy money for little work, few qualifications and no value add. I guess I found out where all the "hot-money" mortgage brokers moved to. These guys also sound like the placement "brokers" who have presented job candidates to me in my former position. And currently "peddle" my resume to prospective employers.
So here is the story. A friend, who is currently, not working, as me to find some alternatives to the COBRA policy his old job offered. I went to http://www.ehealthinsurance.com/ which seems a little too snazzy. A good website does not self-promote (ie, run ads for itself) on it's own website. So, I was a little suspicious. I enter my basic info; birth date, tobacco use (yes, I Know, I am stupid) and wieght. It also asked me for my address and contact phone number which I entered without thinking.
The site gave me a couple of quotes in different price ranges. I review them briefly and then started watching the boondocks. Two minutes later, my phone started ringing of the hook. I got four calls in ten minutes asking me if I was looking for health insurance.
Someone had clearly thrown some meat in the shark tank. I declined the offers and explained I was just looking. One guy even called back to ask if I was sure I didn't need health insurance.
I hear the used car market is taking off in the recession. Maybe these guys can upgrade.
v1
I think I just stumbled across another easy money, no work scam. Health insurance brokers must be raking in easy money for little work, few qualifications and no value add. I guess I found out where all the "hot-money" mortgage brokers moved to. These guys also sound like the placement "brokers" who have presented job candidates to me in my former position. And currently "peddle" my resume to prospective employers.
So here is the story. A friend, who is currently, not working, as me to find some alternatives to the COBRA policy his old job offered. I went to http://www.ehealthinsurance.com/ which seems a little too snazzy. A good website does not self-promote (ie, run ads for itself) on it's own website. So, I was a little suspicious. I enter my basic info; birth date, tobacco use (yes, I Know, I am stupid) and wieght. It also asked me for my address and contact phone number which I entered without thinking.
The site gave me a couple of quotes in different price ranges. I review them briefly and then started watching the boondocks. Two minutes later, my phone started ringing of the hook. I got four calls in ten minutes asking me if I was looking for health insurance.
Someone had clearly thrown some meat in the shark tank. I declined the offers and explained I was just looking. One guy even called back to ask if I was sure I didn't need health insurance.
I hear the used car market is taking off in the recession. Maybe these guys can upgrade.
v1
Wednesday, July 7, 2010
Cost of Iraq and Afghanistan Wars
I am trying to get my hands around three big public policy issues and their related economic costs.
1) Cost of the wars in Iraq and Afghanistan. And related 9/11 security expenditures.
2) Jobs and income lost to outsourcing of manufacturing and services
3) I can't remember I am getting old.
1) Cost of the wars in Iraq and Afghanistan. And related 9/11 security expenditures.
2) Jobs and income lost to outsourcing of manufacturing and services
3) I can't remember I am getting old.
Tuesday, July 6, 2010
CBPP: Income gaps between very rich and everyone else tripled in last 30 Years
The Council on Budget and Policy Priorities has an interesting report on their web site stating that the income gap between the top 1% and the rest of the country tripled over the past 30 years.
Bush tax cuts also accelerated the gap during the 00's.
During the study period income for the top 1% increase by 280% while middle fifth increased by only 25% and the bottom fifth by 16%
http://www.cbpp.org/cms/index.cfm?fa=view&id=3220
Bush tax cuts also accelerated the gap during the 00's.
During the study period income for the top 1% increase by 280% while middle fifth increased by only 25% and the bottom fifth by 16%
http://www.cbpp.org/cms/index.cfm?fa=view&id=3220
Conference Board Employment Index
This is more of a note to my self. I was looking for a data series on consumer confidence but instead I found a conference board index for employment. However the trouble I have is that the of the eight indicators, only one is actual conference board original data, six come from the government and one a small business research foundation.
If all the variables are significant then a free, public index without the conference board data would be almost as good. One could guess the proper weights from regressing consumer spending on unemployment indicators. So, just where is the conference board value add. Shoot, I know jobs are hard to get. I don't need a survey.
The eight labor-market indicators aggregated into the Employment Trends Index include:
1) Percentage of Respondents Who Say They Find "Jobs Hard to Get" (The Conference Board Consumer Confidence Survey®)
2) Initial Claims for Unemployment Insurance (U.S. Department of Labor)
3) Percentage of Firms With Positions Not Able to Fill Right Now (© National Federation of Independent Business Research Foundation)
4) Number of Employees Hired by the Temporary-Help Industry (U.S. Bureau of Labor Statistics)
5) Part-Time Workers for Economic Reasons (BLS)
6) Job Openings (BLS)
7) Industrial Production (Federal Reserve Board)
8) Real Manufacturing and Trade Sales (U.S. Bureau of Economic Analysis)
If all the variables are significant then a free, public index without the conference board data would be almost as good. One could guess the proper weights from regressing consumer spending on unemployment indicators. So, just where is the conference board value add. Shoot, I know jobs are hard to get. I don't need a survey.
The eight labor-market indicators aggregated into the Employment Trends Index include:
1) Percentage of Respondents Who Say They Find "Jobs Hard to Get" (The Conference Board Consumer Confidence Survey®)
2) Initial Claims for Unemployment Insurance (U.S. Department of Labor)
3) Percentage of Firms With Positions Not Able to Fill Right Now (© National Federation of Independent Business Research Foundation)
4) Number of Employees Hired by the Temporary-Help Industry (U.S. Bureau of Labor Statistics)
5) Part-Time Workers for Economic Reasons (BLS)
6) Job Openings (BLS)
7) Industrial Production (Federal Reserve Board)
8) Real Manufacturing and Trade Sales (U.S. Bureau of Economic Analysis)
June unemployment report is a cause for concern
June unemployment report is a cause for concern
The report for June is bad news for US employment in several areas. We will cover the highlights.
Private employers added on 83,000 jobs. Total non farm payrolls drops by 125,000 workers as 225,000 census workers were let go. Also both manufacturing hour declined which signal slack demand and inventory fill-ups were completed.
Finally the average hourly wage dropped by 2 cents to $22.53.
The construction industry employment dropped by 22,000 jobs.
The general unemployment rate dropped to 9.5% because 652,000 people gave up looking for work and dropped out of the civilian labor force. The number of discouraged workers was 1.2 million up from 414,000 a year ago. Discouraged worked are persons who are not looking for work because they believe there are no jobs available for them.
The general unemployment rate (U-3) dropped to 9.5% because of a reduced labor force
The unemployment rate for Blacks stayed at 15.4% and 12.4% for Hispanics. The estimate U-6 for black hovered around 22% with drops in black unemployment and general jobs seekers.
On average 125,000 to 150,000 new jobs are needed to keep pace with population growth and maintain a stable unemployment rate.
The report for June is bad news for US employment in several areas. We will cover the highlights.
Private employers added on 83,000 jobs. Total non farm payrolls drops by 125,000 workers as 225,000 census workers were let go. Also both manufacturing hour declined which signal slack demand and inventory fill-ups were completed.
Finally the average hourly wage dropped by 2 cents to $22.53.
The construction industry employment dropped by 22,000 jobs.
The general unemployment rate dropped to 9.5% because 652,000 people gave up looking for work and dropped out of the civilian labor force. The number of discouraged workers was 1.2 million up from 414,000 a year ago. Discouraged worked are persons who are not looking for work because they believe there are no jobs available for them.
The general unemployment rate (U-3) dropped to 9.5% because of a reduced labor force
The unemployment rate for Blacks stayed at 15.4% and 12.4% for Hispanics. The estimate U-6 for black hovered around 22% with drops in black unemployment and general jobs seekers.
On average 125,000 to 150,000 new jobs are needed to keep pace with population growth and maintain a stable unemployment rate.
NYTimes: Memphis -- Black majority city slides down
All, here is a compelling story on Memphis and it's economic slide from the NY Times.
http://www.nytimes.com/2010/05/31/business/economy/31memphis.html
The story details how hard Memphis has been hit by the recession especially the Black middle class. The article also discusses some of the lending practices by banks that led to the real estate collapse.
http://www.nytimes.com/2010/05/31/business/economy/31memphis.html
The story details how hard Memphis has been hit by the recession especially the Black middle class. The article also discusses some of the lending practices by banks that led to the real estate collapse.
Tuesday, June 29, 2010
Not working again
So, I am not working again which leaves more time for Blog writing and research. It is tough without the discipline of a daily job to guide your routine. I enjoy working and get some intrinsic satisfaction from working and being measurably productive. So during this second bout of unemployment, I am going to be much more organized and productive.
EBE
EBE
The popsicle: Consumer Marketing Overload
Big company marketing folks are out of control
Where the heck is my popsicle ??
In the push to make more money, corporations over doing everything. They are trying to get consumers to spend more, consume more, up size more. This constant pressure to sell up; sell more; add more value to products is getting really annoying. It is ruining some basic products I use to like.
Here is what happened. I was at a park and I wanted a popsicle. A plain red Popsicle. or lemon. But the vendor did not have it. They had creamsicle cherry swirl, chocolate cover vanilla indulgance, super bubble gum candy sicle and klondike bars. No plain popsicle anything. He had nothing without milk or chocolate in it. Dag. Can't even get a plain Popsicle.
I see the same behavior at KFC: you want the value meal, right ?? Starbucks: "With this receipt, you can get $2 dollars off a tall beverage, the same day." And shoe retailers: "BOGO sale going on now !!!"
Everyone is trying to sell more even if it is not needed. Of course there is a lot going on with that missing popsicle. The vendors, distributors and manufacturers all make more profit from selling high end products. The vendor can only stock a certain amount of product. They have fixed costs to cover. Gas for the van and refrigeration for the popsicles, his labor all have to be covered. So why spend it on a low margin products. Distributor encourage volume buying. They try to squeeze out competitors products and provide incentives for their own higher margin products. Sames as manufacturers. They try to cover every niche and encourage distributors to carry the "full line" of products.
Of course, when I skipped the Popsicle I was not thinking all of that stuff. I got a Italian ice instead.
Corporate addiction to, rather US addiction to the quick fix like MBA marketing killed my popsicle. Hopefully flat and declining sales spur the vendors to offer a wider choice.
v2
Where the heck is my popsicle ??
In the push to make more money, corporations over doing everything. They are trying to get consumers to spend more, consume more, up size more. This constant pressure to sell up; sell more; add more value to products is getting really annoying. It is ruining some basic products I use to like.
Here is what happened. I was at a park and I wanted a popsicle. A plain red Popsicle. or lemon. But the vendor did not have it. They had creamsicle cherry swirl, chocolate cover vanilla indulgance, super bubble gum candy sicle and klondike bars. No plain popsicle anything. He had nothing without milk or chocolate in it. Dag. Can't even get a plain Popsicle.
I see the same behavior at KFC: you want the value meal, right ?? Starbucks: "With this receipt, you can get $2 dollars off a tall beverage, the same day." And shoe retailers: "BOGO sale going on now !!!"
Everyone is trying to sell more even if it is not needed. Of course there is a lot going on with that missing popsicle. The vendors, distributors and manufacturers all make more profit from selling high end products. The vendor can only stock a certain amount of product. They have fixed costs to cover. Gas for the van and refrigeration for the popsicles, his labor all have to be covered. So why spend it on a low margin products. Distributor encourage volume buying. They try to squeeze out competitors products and provide incentives for their own higher margin products. Sames as manufacturers. They try to cover every niche and encourage distributors to carry the "full line" of products.
Of course, when I skipped the Popsicle I was not thinking all of that stuff. I got a Italian ice instead.
Corporate addiction to, rather US addiction to the quick fix like MBA marketing killed my popsicle. Hopefully flat and declining sales spur the vendors to offer a wider choice.
v2
Saturday, June 19, 2010
Weekly Unemployment Claims: Downward trends stops cold
We could be cursed with high unemployment for years to come
Since December 1st, 2009, weekly unemployment claims have average about 460,000. A figure is is stubbornly high for a growing economy. You have to ask if we have reached a new bottom on unemployment and things won't get much better.
You can clearly see the flat trend from the past six months in this historical graph of claims since 1999
Since December 1st, 2009, weekly unemployment claims have average about 460,000. A figure is is stubbornly high for a growing economy. You have to ask if we have reached a new bottom on unemployment and things won't get much better.
You can clearly see the flat trend from the past six months in this historical graph of claims since 1999
Sunday, June 6, 2010
Dismal unemployment report; no new private sector jobs
The department of labor, bureau of labor statistics released the May unemployment situation report on Friday, June 4,2010. The report shows no significant change in private sector employment. The private sector added only 41,000. The non farm payrolls increased by 431,000 jobs but 411,000 were temporary census jobs.
There was a small increase in manufacturing jobs of 29,000 and temporary help (+31,000), but construction decline by 35,000.
Economists, policy makers and government officials are worried that the recovery related hiring is slowing down. Some have speculated that the reducing hiring is a structural change as employers fore go hiring and squeeze workers for additional hours and productivity.
The unemployment rate dropped to 9.7% nationally.
The unemployment rate for Blacks (Black U-3) dropped to 15.5%. But the under employment rate has been above 23% until recently. The teenage unemployment rate remain about 40 percent (38%).
There was a small increase in manufacturing jobs of 29,000 and temporary help (+31,000), but construction decline by 35,000.
Economists, policy makers and government officials are worried that the recovery related hiring is slowing down. Some have speculated that the reducing hiring is a structural change as employers fore go hiring and squeeze workers for additional hours and productivity.
The unemployment rate dropped to 9.7% nationally.
The unemployment rate for Blacks (Black U-3) dropped to 15.5%. But the under employment rate has been above 23% until recently. The teenage unemployment rate remain about 40 percent (38%).
Sunday, May 23, 2010
Weekly Unemployment Claims Rise
The number of workers filing unemployment insurance claims rose by 25,000 from 446,000 last week to 471,000 this week. The rise was unexpected. Economists and policy makers were concerned that the recovery may be slowing the creation of jobs. Jobs are part of the dynamic at the heart of the US economy. Slow job growth leads to slow consumer spending, and then slow economic growth which finally leads back to slow job growth.
The chart shows unemployment claims stuck in a flat trend at about 450K since the beginning of the year. Many people believe that UI claims must be below 400K to reduce the unemployment rate.
There was no clear reason for the change. The economy has been adding job's for the past four months. The change may be due to random fluctuation.
Continuing claims dropped by 40,000 to 4.6 million.
This second chart of the longer term trends show the baseline case of about 300K during periods of economic growth and 400K or below during recovery. Our current UI situation is about 450K.
The chart shows unemployment claims stuck in a flat trend at about 450K since the beginning of the year. Many people believe that UI claims must be below 400K to reduce the unemployment rate.
There was no clear reason for the change. The economy has been adding job's for the past four months. The change may be due to random fluctuation.
Continuing claims dropped by 40,000 to 4.6 million.
This second chart of the longer term trends show the baseline case of about 300K during periods of economic growth and 400K or below during recovery. Our current UI situation is about 450K.
How to write Blog Stuff
I think I have figured out how to do this blog. It took about three months, but writing is a really tough activity. It has to be done early in the morning before noon. And as old person, I completely lose the mental edge in the afternoon and become a useless ball of clay. So I just have to get up earlier and write.
End of story.
Chris
End of story.
Chris
Sunday, May 2, 2010
New Roc City in New Rochelle: An Update
Well, I finally got to New Roc City in downtown New Rochelle. New Roc City (NRC) was design as an entertainment mall, with movie theaters, ice rinks, go-kart racing, rides, bowling and amusements. New Roc City was opened in Oct. 1st, 1999 with a huge amount of press coverage. NRC is located in downtown New Rochelle, NY and was developed by Louis Cappelli, president of Cappelli Enterprises, the largest real estate developer in Westchester County, NY. New Roc City was supposed to spur the development of New Rochelle, one of the poorest communities in the richest county in New York State.
New Roc City was developed as an entertainment complex, but plans have also included switching to big box retailing. Target had planned to open on the second floor, replacing the skating rink in 2008. The new opening date has note been set.
New Roc City was developed as an entertainment complex. It has had several issues with public safety and earned a reputation as being unsafe. On April 8th, 2007, hundreds of youths from NYC and New Rochelle fought with police. Another incident happened in New Rochelle on October 16th, 2007. NRC failed to attract the suburban kids in large numbers or to extract sufficient extra income to stay profitable. Many amusement parks operate on razor thin margins or losses and earn profits from food, drinks and merchandise.
NRC, now, is interesting place. The movie theater, go-karts, Buffalo Wild Wings and Modell's sports store were open. The bowling alley was packed. But the ice rink was closed, the entire second floor was closed off, the fitness club has moved out, and the amusement floor had a power failure. Sections of the complex are closed, dark or roped off. You can peer into the empty ice rink from the second floor. It was a real mixed bag.
My gut feel was that the place had a coney island, run-down amusement park feel, like it was intended for higher end spenders but could not attract them, so it settled for what it got. It's like an amusement park that is past it's prime.
New Roc City is pretty beat up but they did the right thing trying to develop it. They built the Trump Plaza and Avalon condominiums and New Roc City itself. They built a new transit hub. They redeveloped a good section of New Rochelle. They also generated a lot of good jobs.
The lesson: Yeah we gotta have a lesson. New Roc City is a great learning lesson in development. There are a couple of specific lessons: Security, Size, Customer Knowledge
First, economic development requires planning and security. When you make a project on the scale of NRC you must be ready to handle large crowds of Black and Hispanic kids without violence. You need smarter and better security guards that will stop any incident from getting out of hand. It would be better to close the complex to new customers rather than damage the reputation.
Second, NRC was probably too big. Perhaps it should have started smaller with a movie theater, bowling and ice rink, then see which ones worked and which ones did not make money, then expand in that direction. It takes years, maybe a generation, to re-develop and area at the grass roots level.
Third, know your customer. A smaller New Roc City might have worked if it targeted suburban kids who want a real, New York city feel without the hassle of traveling to the east village. They should have promoted resturantes, live music, clubs, bars and perhaps even adults entertainment in a controlled and contained fashion (similar to Europe). Plus new and different retailed (non-mall) like consignment, design, retro, vintage or custom. You cannot beat the mall. On persons sleaze is another persons spice.
Economic, class and racial trends in the US make projects like New Roc City very difficult economically. The future of New Roc City is uncertain.
New Roc City was developed as an entertainment complex, but plans have also included switching to big box retailing. Target had planned to open on the second floor, replacing the skating rink in 2008. The new opening date has note been set.
New Roc City was developed as an entertainment complex. It has had several issues with public safety and earned a reputation as being unsafe. On April 8th, 2007, hundreds of youths from NYC and New Rochelle fought with police. Another incident happened in New Rochelle on October 16th, 2007. NRC failed to attract the suburban kids in large numbers or to extract sufficient extra income to stay profitable. Many amusement parks operate on razor thin margins or losses and earn profits from food, drinks and merchandise.
NRC, now, is interesting place. The movie theater, go-karts, Buffalo Wild Wings and Modell's sports store were open. The bowling alley was packed. But the ice rink was closed, the entire second floor was closed off, the fitness club has moved out, and the amusement floor had a power failure. Sections of the complex are closed, dark or roped off. You can peer into the empty ice rink from the second floor. It was a real mixed bag.
My gut feel was that the place had a coney island, run-down amusement park feel, like it was intended for higher end spenders but could not attract them, so it settled for what it got. It's like an amusement park that is past it's prime.
New Roc City is pretty beat up but they did the right thing trying to develop it. They built the Trump Plaza and Avalon condominiums and New Roc City itself. They built a new transit hub. They redeveloped a good section of New Rochelle. They also generated a lot of good jobs.
The lesson: Yeah we gotta have a lesson. New Roc City is a great learning lesson in development. There are a couple of specific lessons: Security, Size, Customer Knowledge
First, economic development requires planning and security. When you make a project on the scale of NRC you must be ready to handle large crowds of Black and Hispanic kids without violence. You need smarter and better security guards that will stop any incident from getting out of hand. It would be better to close the complex to new customers rather than damage the reputation.
Second, NRC was probably too big. Perhaps it should have started smaller with a movie theater, bowling and ice rink, then see which ones worked and which ones did not make money, then expand in that direction. It takes years, maybe a generation, to re-develop and area at the grass roots level.
Third, know your customer. A smaller New Roc City might have worked if it targeted suburban kids who want a real, New York city feel without the hassle of traveling to the east village. They should have promoted resturantes, live music, clubs, bars and perhaps even adults entertainment in a controlled and contained fashion (similar to Europe). Plus new and different retailed (non-mall) like consignment, design, retro, vintage or custom. You cannot beat the mall. On persons sleaze is another persons spice.
Economic, class and racial trends in the US make projects like New Roc City very difficult economically. The future of New Roc City is uncertain.
Saturday, April 17, 2010
J. Bruce Llewellyn Dies
I was pretty young when I was inspired by J. Bruce Llewellyn who ran the coke-cola bottling operation in Philadelphia.
J. Bruce Llewellyn Dies
J. Bruce Llewellyn Dies
Another neighbor lost his job
It is kind of funny when they talk about the recession. It is really a recession among the middle and even the upper middle class. This time the recession has reached a little higher.
My neighbor, the real estate lawyer, lost his job. He used to do locations for large big box retailers: sporting goods stores, toys, outlets, retailers, and new specialty retailers. Now he got cut. Another neighbor across the street used to marketing and advertising and now he drives a limo to the airport. Both are set since their wives work and the house is almost payed for but I can see loss of pride.
Both will be fine in the long run, but short term they have to cut back. The kids will get collage but not ivy league. No more eating out or movies. But I can see the psychological blow taking it toll. One guy has not hair and the other is prematurely grey. Well good luck to both.
V2
My neighbor, the real estate lawyer, lost his job. He used to do locations for large big box retailers: sporting goods stores, toys, outlets, retailers, and new specialty retailers. Now he got cut. Another neighbor across the street used to marketing and advertising and now he drives a limo to the airport. Both are set since their wives work and the house is almost payed for but I can see loss of pride.
Both will be fine in the long run, but short term they have to cut back. The kids will get collage but not ivy league. No more eating out or movies. But I can see the psychological blow taking it toll. One guy has not hair and the other is prematurely grey. Well good luck to both.
V2
Were back !!!
We Are Back
It has been a tough month and a half with the new job, travel, kids, volunteer job and other stuff going on. I have been working about 65 hours a week for three week. It has been crazy.
But we are back and dedicated to bring you the best blogging on Black Economics. Whether is Obama's latest, BLS new reports, key people, wealth management, consumer trends or other interesting topics we will be covering it. We will have more links, more analysis and more explaining what the heck is going on. The focus will be the same: bridging the gap between complicated real life economics, complex economic theory and every day life for Blacks in the US.
All the best
Chris
It has been a tough month and a half with the new job, travel, kids, volunteer job and other stuff going on. I have been working about 65 hours a week for three week. It has been crazy.
But we are back and dedicated to bring you the best blogging on Black Economics. Whether is Obama's latest, BLS new reports, key people, wealth management, consumer trends or other interesting topics we will be covering it. We will have more links, more analysis and more explaining what the heck is going on. The focus will be the same: bridging the gap between complicated real life economics, complex economic theory and every day life for Blacks in the US.
All the best
Chris
Tuesday, March 16, 2010
Less stimulus for minority firms
Quick repost of AP article referenced on "The Root".
STIMULUS WATCH: Less stimulus for minority firms
STIMULUS WATCH: Less stimulus for minority firms
Saturday, March 13, 2010
cryptological pioneers
Every now and then you find a Black site and you say what the heck; I didn't know they even had that. Here is one such site about the role of African American in the NSA.
http://www.nsa.gov/about/cryptologic_heritage/african_americans/index.shtml
http://www.nsa.gov/about/cryptologic_heritage/african_americans/index.shtml
I got a job
I now have a job so I guess I can remove the "unemployed" from the description of the blog. The job is with a computer consulting company doing support work for a large pharmaceutical company. One disappointing thing is that I am the only Black person and the only person on the team who did not grow up in India. There are no women on the team and few in the industry. The job pays a good amount of money, so I don't quite understand why the talent pool is so limited. I would think people would be busting down the door to do this kind of work.
I have a long commute so I get plenty of time to ponder the issues. Basically, I believe it boils down to backgound preparation and then job information and contacts. To do the job you need a computer background such as programming or business analysis. The Whites in the field typically have business knowledge and experience. They come from the business. While the Indians have studied computer since high school. There seems to be no capacity for business or education to develop people for these jobs in the US.
In terms of job information, I think the average person in the US is completely unaware of the computer systems that run large business and government institutions. Everything is invisible.
I have a long commute so I get plenty of time to ponder the issues. Basically, I believe it boils down to backgound preparation and then job information and contacts. To do the job you need a computer background such as programming or business analysis. The Whites in the field typically have business knowledge and experience. They come from the business. While the Indians have studied computer since high school. There seems to be no capacity for business or education to develop people for these jobs in the US.
In terms of job information, I think the average person in the US is completely unaware of the computer systems that run large business and government institutions. Everything is invisible.
Thursday, March 4, 2010
Job categories by race and gender
These graphs have some additional breakdowns of the categories. But the major trends are obvious. Educated professionals regardless of race, continue to do well. Asians have the highest percentage of professionals followed by Whites. Blacks and Hispanics, especially men, have a way below average number of professionals. The lack of professionals shows up in the high unemployment numbers during the current recession. Gender wise it also show the huge impact the recession is having on men.
The charts also show how Blacks and Hispanics are concentrated in service occupations which pay far less then professional occupations.
In the year-to-year delta graphs you can actually see the shrinking of manufacturing and constructions jobs.
Employment by Gender and Occupational Category
Here is a nice comparison of occupational where men work and women work. The following chart compares the occupations of men and women by race.
There are some notable features of the first chart. Women are almost nonexistent in the fields of farming, production and maintenance. Women dominate office support and sales occupations. Blacks are concentrated in transportation and material handling occupations while Hispanic men are prevalent in farming, construction and maintenance. Asian men are concentrated in the professional ranks. One can also see the large difference between Black and Hispanic men and White and Asian men in the management and professional category. Among women the differences are not so great.
The next chart shows differences by gender within th same race.
The chart show that the deficit of female workers in farming, production and maintenance is consistent across all races. Asians had the smallest difference between male and female occupations. Hispanics had the largest difference.
Managers and financial professionals still tend to be men but women are much more likely to be professionals and office workers. Men dominate construction, maintenance and repair and transportation and material handling occupations. Women have almost no presence in those categories.
There are some notable features of the first chart. Women are almost nonexistent in the fields of farming, production and maintenance. Women dominate office support and sales occupations. Blacks are concentrated in transportation and material handling occupations while Hispanic men are prevalent in farming, construction and maintenance. Asian men are concentrated in the professional ranks. One can also see the large difference between Black and Hispanic men and White and Asian men in the management and professional category. Among women the differences are not so great.
The next chart shows differences by gender within th same race.
The chart show that the deficit of female workers in farming, production and maintenance is consistent across all races. Asians had the smallest difference between male and female occupations. Hispanics had the largest difference.
Managers and financial professionals still tend to be men but women are much more likely to be professionals and office workers. Men dominate construction, maintenance and repair and transportation and material handling occupations. Women have almost no presence in those categories.
Tuesday, March 2, 2010
Weekly Unemployment Claims Rise Slightly to 496,000 (SA)
Weekly seasonally adjusted unemployment claims rose 22,000 to 496,000 from the prior weeks figure of 474,000. The weekly claims figure has come down from a peak of 674,000 in March of 2009. It is approximately 200,000 higher than before the recession started. Weekly unemployment is a good indicator of the overall labor market in the US.
The second chart show the longer term trend with unemployment claims hovering around 300,000 during periods of expansion as compared to 500,000 currently.
Saturday, February 27, 2010
"The Great Doubling:" New Global Labor Market v2
A huge increase workers is having a disastrous effect on US wages and jobs for low-skilled workers.
The University of Wisconsin-Madison's Institute for Research on Poverty had an interesting article about globalization's effect on US low wage workers. The article was written by Ricard B. Freeman. Freeman discusses' the global increase of workers from China, India and Russia. The number of workers available to global markets has increase from approximately 1.5 Billion to about 3 Billion. However, the capital available for production has stayed about the same. So the ratio of capital to labor per unit of output has fallen by 50%. This gives capital a tremendous advantage in the new global environment. Production can take place almost anywhere labor is cheap.
The entry of China and India into the global market place has also had a devastating impact on other low and medium wage countries. Countries that used to export to the US and EU are being replaced by China.
The author also defends Paul Samuelson's view that globalization may not always be good especially for low skilled workers. Mr. Samuelson had been attacked by some economists for "opposing" free trade. The author points out that China and India, besides just exporting low wage products, are also producing highly educated workforces to challenge high skilled products from the US and Europe. These new competitors are adding supply and competition, and reducing prices, profits and wages.
Mr. Freedman then highlight two scenarios the US could take given the effects of globalization.
One: China and India produce products at lower prices which increases global standards of living. The US retains some of it technological lead to continue to produce high valued products and services. A high world savings rate leads to an increase in the capital / labor ratio. The US puts some money into a stronger social safety net including healthcare to support high living standards for workers who's wages are limited by low-wage competition.
A second scenario is capital formation fails to match labor growth. The Chinese and Indian economies only benefit "elites" leading to instability. The US develops a backlash against globalization and limits free trade.
Professor Freeman proposes some solutions.
1) Continued investments in science, technology and education.
2) Continued immigration of scientists and engineers.
3) Government support for low wage workers such as:
Earned Income Tax Credit
Higher wages and higher minimum wage
Support for unions and collective bargining
Profit sharing with employees
4) Support for government programs such as healthcare which reduce the cost to hire new employees
==================================================================================
A huge increase workers is having a disastrous effect on US wages and jobs for low-skilled workers.
You can read the report here.
The University of Wisconsin-Madison's Institute for Research on Poverty had an interesting article about globalization's effect on US low wage workers. The article was written by Ricard B. Freeman. Freeman discusses' the global increase of workers from China, India and Russia. The number of workers available to global markets has increase from approximately 1.5 Billion to about 3 Billion. However, the capital available for production has stayed about the same. So the ratio of capital to labor per unit of output has fallen by 50%. This gives capital a tremendous advantage in the new global environment. Production can take place almost anywhere labor is cheap.
The entry of China and India into the global market place has also had a devastating impact on other low and medium wage countries. Countries that used to export to the US and EU are being replaced by China.
The author also defends Paul Samuelson's view that globalization may not always be good especially for low skilled workers. Mr. Samuelson had been attacked by some economists for "opposing" free trade. The author points out that China and India, besides just exporting low wage products, are also producing highly educated workforces to challenge high skilled products from the US and Europe. These new competitors are adding supply and competition, and reducing prices, profits and wages.
Mr. Freedman then highlight two scenarios the US could take given the effects of globalization.
One: China and India produce products at lower prices which increases global standards of living. The US retains some of it technological lead to continue to produce high valued products and services. A high world savings rate leads to an increase in the capital / labor ratio. The US puts some money into a stronger social safety net including healthcare to support high living standards for workers who's wages are limited by low-wage competition.
A second scenario is capital formation fails to match labor growth. The Chinese and Indian economies only benefit "elites" leading to instability. The US develops a backlash against globalization and limits free trade.
Professor Freeman proposes some solutions.
1) Continued investments in science, technology and education.
2) Continued immigration of scientists and engineers.
3) Government support for low wage workers such as:
Earned Income Tax Credit
Higher wages and higher minimum wage
Support for unions and collective bargining
Profit sharing with employees
4) Support for government programs such as healthcare which reduce the cost to hire new employees
==================================================================================
A huge increase workers is having a disastrous effect on US wages and jobs for low-skilled workers.
You can read the report here.
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