September Unemployment Report Review

Unemployment rate drops to 7.8%; Broad employment gains in most areas.

US national unemployment rate fell to 7.8% from an August rate of 8.1%. The BLS household survey reported an additional 873, 000 people found employment in September. The number is a crazy, high number and well above the yearly average of 150K.  You can bet it will be reduced in later reports. The establishment (non farm payroll) survey showed companies hired an additional 114000 more workers. The NFP number is from the BLS business survey and is considered more accurate than the household survey. All major employment rates declined from the previous month. The president reacted positively to the numbers. Mitt Romney said they were too low and the country could do better. The stock market was slightly down on the news.

Adding some comedy to the mix were the wacky comments of Jack Welsh (CEO of GE – 1981 to 2001). Jack said in a twitter message that the numbers were manipulated to benefit Obama. The funny part is that Neutron Jack’s public ignorance of unemployment statistics calls in to question his reputation and leadership at GE. Was firing 100,000 GE employees strategic or lucky ? Either way, Jack Welch, like Donald Trump, has moved from business leader to entertainer.

The black unemployment rate moved down to 13.4%. The historic average since 1972 is 12.3%. The size of the black labor force dropped by about -34K overall and was affected by 84K additional people who found jobs and 70K who dropped out of the labor market. Add in the fact that the black population grew by 37K and you get a declining black unemployment rate. The national labor force participation rate rose to 63.6%. Black labor force participation was 61.7 (67% for Black men, 62% for Black women and 29% for black teenagers) Unemployment by race dropped in all major groups. The black national rate shrank to 13.4%, the white rate dropped to 7.0% and the Hispanic rate also fell to 9.9%. The black teenage unemployment was reported at 37%.

The long-term unemployed (27 weeks or more) decreased to 4.84 million people which represents 40% of the unemployed. The “work part-time wants full-time” number was 8.6 million. These people are considered under employed. Two and a half million workers were marginally attached to the labor pool. They have looked for work in the last 12 months but not in the last four weeks. And there were 802K discouraged workers (part of marginally attached) who are not looking because they believe there is no jobs for them.

Non-Farm Payroll Increased by 114,000 jobs. It was the 24th straight month of job growth.

The economy has recovered more than half of the jobs lost during the recession.

A very rough estimate predicts all recession jobs will be recovered by about June 2014 regardless of who is president. Below is a crude regression line based on job gains in the household survey and the business survey which is used to predict the June 2014 date.

Non-Farm Payrolls

As we mention in the summary, non-farm payrolls added 114,000 jobs.  Private sector hiring added 104,000 jobs (vs. 142,000 last month) and government employment added 10K jobs. Job growth was concentrated in healthcare and transportation.   The losers were manufacturing(-16K), information technology and local government.

Manufacturing employment has continued to fall since president Obama mention a resurgence in US manufacturing.

Non-farm payrolls were revised in July upward by 40,000 (from 141K to 181K) and upwards for August by plus 46,000 from (96K to 142K). That’s an addition of 86,000 jobs additional jobs.

The chart below shows the job growth was broadly based with healthcare creating the highest number of jobs.

Average work week was unchanged at 34.5 hours and wages added 7 cent in September.

ADP reported an increase in private payrolls of 114,000 positions for September.

US Monster Employment Index moved down 2% to 153 from 56 in August. Hiring was down 2% compared to same month last year. 

Jack Welch is the next Donald Trump

When the September 2012 jobs report,  Jack Welsh (former CEO of GE – 1981 to 2001), sent a twitter message questioning the accuracy of the results. He even suggested the results were manipulated to benefit the Obama administration. The funny part is that Neutron Jack’s ignorant comments abouth unemployment statistics makes everyone questions his reputation and leadership at GE. Is Jack Welch really a have talent or is he just another lucky, rich guy.

You then have to ask was firing 100,000 US GE employees strategic or lucky ?  Was replacing them with 100,000 off shore employees strategic or lucky ? Were GE profits under Welch, pumped-up by financial risk taking by GE Capital taking ?

Either way Mr. Welch has moved in to the Donald Trump category of business leader: business leader as entertainer.

So how are the statistics collected ?. By a panel of experts who work for the Bureau of Labor Statistics. 

Three people got fired from my job on Friday

Getting fired sucks. I overheard three people getting fired on Friday.   I work in the computer field.  The company I work recently outsourced it's computer systems to a hosting facility last January.  Very few corporations actually own their own computer systems any more.  Instead the lease time and space on remote computers on a monthly or yearly basis at a managed hosting facility.

One of the network guys, Reggie, who I only talked to a little bit, left immediately.  I guess he knew what was up and had good skills.

But two other guys, Sam and Kevin, stayed.  Sam, had been with the company for 15 years and worked as a computer operator.  He was a local guy with a high school education.  When they outsourced the computer systems, they gave Sam a job on the helpdesk. But Sam had trouble keeping up and answering calls.

Kevin, the late shift operator, who used to cover 4pm to 12am really had no work at all.  I think he had a second job some place.  He was an immigrant from a west Asian country.  He was down to managing backup tapes.

That, along with a 3rd guy, in computer support, whom I did not know at all, were let go a 4:30 on Friday.  Bam !  Pack your stuff, give me you access card, get out.

So, I am trying to decide if the company did the right thing and if it even matters.  They did know the computers were gone and they had very little work.  The company did try to give one a job on the helpdesk.

But I also see, read and hear how tough it is in the labor market in the US.

Long story short, I gotta look for a job with more job-security like teaching or the government.

US investment in high speed rail non-existent

If you are lucky enough to travel, you find your self making frequent comparisons between home and the place you are visiting. This time we were fortunate enough to go to visit Italy.

Most people compare the people, the food, the weather and the general environment. We compare the economic and business climate, employment opportunities and infrastructure. Always a tall order in a country where you don't speak the language.

But some things do jump out immediately. One is how good the roads are. They all seem to be built in the last 20 years. The second is the number of people using public transit especially trains. The united states has virtual no passenger rail infrastructure, while Europe's is extensive.

The US has completely ignored passenger rail service and infrastructure for the past 40 years. All the big countries: Spain, Italy, Germany and France, have high speed rail.  The Italian high speed service travels from Milan to Rome (a little more than 320 Miles) in 3 hours.

What we also don't see is the extensive web of industries behind the scenes making this advanced equipment.

The global industry is huge.  Here are some publications that cover the industry.
Railway Gazette.
Railway Technology

In contrast, the US has focused on the Airline and Car industries.  We are still the leader in airline equipment and technology

We believe the reason the US has not developed a mid range transportation infrastructure is due to low energy prices. The US has very low gas prices and airline fuel prices compared to the rest of the world.  Right now fuel prices in Italy for Jet Fuel A-1 is around $4.00 dollars a gallon.  Car gasoline is about $7 dollars a gallon.

A second reason is the low density of the population in the US outside of the Boston to Washington corridor.

Third, Europe has many incentives to discourage driving: higher gas taxes, road tolls and vehicle taxes.