We are constantly researching how governments can help create jobs more effectively.
As part of that task, we are reading about JEEP (Jamaica Emergency Employment Program) which is a job creation program created by the government of Jamaica. The program will provide employment to 5000 Jamaicans at a cost of US$45 million dollars. The program was pushed for by Portia Simpson-Miller's People's National Party. The PNP is the party of the left and the Jamaica Labor Party is the right of center party.
Under the JLP, Jamaica sponsored a similar porgram called JDIP (Jamaica Development Infrastructure Program) which cost US$400 million. The focus of the JLP program was infrastrcuture improvement. The JLP program was plagued by cost overruns.
Jamaica has one of the highest debt to GDP ratios in the world (125%) and faces problem with crime and unemployment. Jamaica has approximately US $13 billion in debt or about $8000 per person. In 2009 debt service consumed 65% of revenues.
The IMF restructured Jamaica debt in 2004 but has been unwilling, despite record low rates, to renegotiate again. Instead, in late 2009, the IMF agreed to the Jamaican Debt Exchange (JDX) which exchanged high interest short term borrowings for lower interest, long-term debt. The outstanding loan principal remained the same.
Jamaica is a middle income developing country which has seen either zero or miniscule GDP growth for the past 20 years. The economy is a service based economy based on tourism, remittances and buaxite exports. The GDP is approximately US $15 billion. Many believe the banks and IMF are making an example of Jamaica by not forgiving or restructuring it's debt.
The UK guardian has a story on Jamaican Debt Crisis here.
The 2012-2013 national budget of Jamaica is here from the Gleaner.
Jamaica Debt Exchange press release from UNDP.
Sources:
CIA worldfact book
IMF
World Bank
Sunday, January 27, 2013
BBC's African Dreams
The BBC has been running a story each on a successful African Entrepreneur. The stories come from the BBC series African Dream which shows how one successful business person developed their business in Africa.
The two stories most interesting stories were about the Beauty Company in Ghana and the IT Training company in Gambia.
The BBC story of the Ghanaian Beauty Company FC Group is here. The owner trained in "beauty therapy" in the UK then returned to Ghana. She started giving advice on skin cremes and then created a product for the lower priced market. She then created a number of cosmetology schools. She has also criticized skin-lightening cremes. Here is the link to Forever Clair.
Editor's Note: We are incredibly impressed with FC product packaging. The look, printing, graphics and container quality rival any global brand. It is very difficult, but we will try to find out who their packaging and equipment suppliers are.
The BBC story of the IT training company is here. The company is called QuantumNet.
It is tempting to look for a pattern of business success in this unrepresentative sample.
The principle used by each African entrepreneur is import substitution. Replacing high cost, low fit (or quality) "foreign" products with local products. They found markets poorly served by outsiders of the community. They then brought their local knowledge, low-cost labor advantage and contacts to bare on the marketplace.
From what we can see, each entrepreneur found a niche in a service market with little foreign competition and a fragmented, disorganized local market.
They started with one key product which replaced a poor quality foreign product. In the beauty creme market, with was skin lightening cremes that damage your skin. The IT company found the market relied on European trainers.
Each found a sweet spot in the market that they understood well with little competition They created and then branded a unique product marketed to local tastes. And most products were services: security, salon, or IT training which are difficult for large or foreign companies to compete with.
v3
Saturday, January 19, 2013
December Unemployment Review
BLS December Unemployment Report Review
Non Farm Payroll increases by 155,000 and the unemployment rate was calculated at 7.8%. There was growth in construction, manufacturing, healthcare and bars and restaurants. The big news was a $0.07 cent monthly jump in average hourly wages or an annual rise of $0.84 cents !
In political unemployment news, everyone was distracted by “fiscal cliff” negotiations and ignored the unemployment report. Extended unemployment benefits were continued for 2013 for the more than 2 million long-term unemployed. As large numbers of the unemployed return to look for work, the employment rate seems to a have reached a trough around 7.8%. The number of new jobs is now closely matching the growth of the labor force. Both the Employment to Population ratio (58.6) and the participation rate 63.6% have barely moved in the past year.
Household Survey Results for December
The household data survey reported that the total labor force expanded by 58,000 while the number employed expanded by 159,000 found jobs. The black unemployment rate bounced up to 14% from 13.2% last month. The reported black labor increased by 29,000 but -125,000 less black people said they were working. Black employment was 15,827,000 workers. Black teenage unemployment was 40% versus 21% for whites and 27% (Non-SA) for Hispanics.
Unemployment dropped again for Hispanic/Latinos to 9.5%. The white rate remained fixed at 6.8%
The long-term unemployed (27 weeks or more) was 4.766 million people which represents 39% of the unemployed. The median duration of unemployment was 18 weeks(a drop of 1 week) while the average duration was 38.1 weeks(a drop of two weeks). So, some good progress for the hardcore unemployed.
The “work part-time, wants full-time,” number was 7.9 million. These people are considered under employed. About 2.6 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 1,068K discouraged workers (part of marginally attached) who are not looking because they believe there is no jobs for them.
Non-Farm Payrolls
Non-farm payrolls add a solid 155,000 jobs overall and the private sector added 168,000 jobs. The government lost -14,000 jobs at the local level. Job growth came from construction, manufacturing, healthcare and leisure and hospitality. The losers were information technology and local government.
Non-farm payrolls were revised in October upward to +138K from 137K and for November from 146K to 161K. A net increase of 16K jobs.
The average work week was at 34.5 hours and wages added 7 cent in December.
*** ADP reported an increase in private payrolls of 215,000 positions for December.
Non Farm Payroll increases by 155,000 and the unemployment rate was calculated at 7.8%. There was growth in construction, manufacturing, healthcare and bars and restaurants. The big news was a $0.07 cent monthly jump in average hourly wages or an annual rise of $0.84 cents !
In political unemployment news, everyone was distracted by “fiscal cliff” negotiations and ignored the unemployment report. Extended unemployment benefits were continued for 2013 for the more than 2 million long-term unemployed. As large numbers of the unemployed return to look for work, the employment rate seems to a have reached a trough around 7.8%. The number of new jobs is now closely matching the growth of the labor force. Both the Employment to Population ratio (58.6) and the participation rate 63.6% have barely moved in the past year.
Household Survey Results for December
The household data survey reported that the total labor force expanded by 58,000 while the number employed expanded by 159,000 found jobs. The black unemployment rate bounced up to 14% from 13.2% last month. The reported black labor increased by 29,000 but -125,000 less black people said they were working. Black employment was 15,827,000 workers. Black teenage unemployment was 40% versus 21% for whites and 27% (Non-SA) for Hispanics.
Unemployment dropped again for Hispanic/Latinos to 9.5%. The white rate remained fixed at 6.8%
The long-term unemployed (27 weeks or more) was 4.766 million people which represents 39% of the unemployed. The median duration of unemployment was 18 weeks(a drop of 1 week) while the average duration was 38.1 weeks(a drop of two weeks). So, some good progress for the hardcore unemployed.
The “work part-time, wants full-time,” number was 7.9 million. These people are considered under employed. About 2.6 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 1,068K discouraged workers (part of marginally attached) who are not looking because they believe there is no jobs for them.
Non-Farm Payrolls
Non-farm payrolls add a solid 155,000 jobs overall and the private sector added 168,000 jobs. The government lost -14,000 jobs at the local level. Job growth came from construction, manufacturing, healthcare and leisure and hospitality. The losers were information technology and local government.
Non-farm payrolls were revised in October upward to +138K from 137K and for November from 146K to 161K. A net increase of 16K jobs.
The average work week was at 34.5 hours and wages added 7 cent in December.
*** ADP reported an increase in private payrolls of 215,000 positions for December.
Sunday, January 13, 2013
What's work for ? Work value beyond a wage.
What is work for ?
Work empowers people and make them feel good about accomplishing something
Let people earn a living.
Pays a decent wage.
Creates or performs something other value
Creates self esteem and self worth.
Provides positive role model for family and children.
Feel useful.
Improves personal health
To make a profit to add value to society
Creates a positive image in the eyes of society
to add value/make a profit to/for employer
to make your boss look good
Learn skills.
Social skills, business skills, life skills.
Learn by doing.
Networking and contacts
Make friends
Meet new people
Pay taxes
Pay for healthcare
Pay for housing
Spend money at other businesses.
Multiplier effect of earnings..
Vote more often
Don't take benefits
Commit less crime
Reduce support and benefits from the government including welfare, unemployment, housing
We are building the case for government creating jobs as employer of last resort.
And what should people work on: infrastructure, environmental project, energy efficiency, research and education.
Work empowers people and make them feel good about accomplishing something
Let people earn a living.
Pays a decent wage.
Creates or performs something other value
Creates self esteem and self worth.
Provides positive role model for family and children.
Feel useful.
Improves personal health
To make a profit to add value to society
Creates a positive image in the eyes of society
to add value/make a profit to/for employer
to make your boss look good
Learn skills.
Social skills, business skills, life skills.
Learn by doing.
Networking and contacts
Make friends
Meet new people
Pay taxes
Pay for healthcare
Pay for housing
Spend money at other businesses.
Multiplier effect of earnings..
Vote more often
Don't take benefits
Commit less crime
Reduce support and benefits from the government including welfare, unemployment, housing
We are building the case for government creating jobs as employer of last resort.
And what should people work on: infrastructure, environmental project, energy efficiency, research and education.
Sunday, January 6, 2013
US Debt Basics
Ok, It's time for some big number math.
As of January 3rd, 2013, the total out standing US debt held by the public stood at $16.4 Trillion dollars. That's about $55,000 dollars for every person in the United States. The size of the annual US economy was approximately 15.8 Trillion dollars. About $52,000 per year per person. So, if (and it's a big if), we wanted to pay off the debt over the next 50 years it would cost everyone about a thousand dollars a year.
Below you can see a chart of the total outstanding amount of debt.
However, many economists don't believe the level of the debt is important. Instead what is important is the level of debt to GDP and whether that level is increasing or decreasing. Currently the level in the US was about 67% of GDP in 2011. However, there has been no run on US Treasury Bonds. Global investors still buy treasuries at record low rates. No one knows what level of debt is bad for a specific economy. The United Kingdom is about 85%. Spain is around 70% and Greece is around 170%. Most economist believe that if the debt is kept below 75% of GDP on average it has no impact on the economy, especially if the economy is growing. It is possible to "grow" you way out of debt by holding the debt fixed while the economy expands. In addition, the debt can fluctuate higher during a period of slack demand without causing problems such as inflation.
The red line shows the projection of the Obama administration. Every administration has a projection that shows the debt decreasing. The projection is the administration budget proposal.
While the president proposes, it is congress that spends the money and is ultimately responsible for the debt.
One topic people like to argue over is which presidential administration increased the debt the most: Democrats or Republicans. The answer is: It's a tie. Since President Ronald Reagan in 1981 the democrats have increased the debt about 7.7 trillion dollars and the Republicans about 7.5 trillion.
The biggest reasons for the current debt increase were: 2 wars and a large tax cut under Bush-43 and the recession under Obama-44.
However, many economists don't believe the level of the debt is important. Instead what is important is the level of debt to GDP and whether that level is increasing or decreasing. Currently the level in the US was about 67% of GDP in 2011. However, there has been no run on US Treasury Bonds. Global investors still buy treasuries at record low rates. No one knows what level of debt is bad for a specific economy. The United Kingdom is about 85%. Spain is around 70% and Greece is around 170%. Most economist believe that if the debt is kept below 75% of GDP on average it has no impact on the economy, especially if the economy is growing. It is possible to "grow" you way out of debt by holding the debt fixed while the economy expands. In addition, the debt can fluctuate higher during a period of slack demand without causing problems such as inflation.
Ten states increased minimum wage above $7.25 but only three matter.
The following states increased the minimum wage above the federal minimum wage (FMW = $7.25) on January 1st, 2013. Only Vermont, Oregon, and Washington State offer minimum wages that are significantly (20% or above) above the federal minimum wage. The rest are withing 8% or less of the federal minimum wage.
You can only hope states are setting the stage for future increases. It is good to see some traditionally conservative states like Arizona, Florida and Montana raising the wage. Not sure what Missouri was thinking. Must have been a compromise.
| State | Old Wage | New Wage | Increase | % diff FMW |
| Missouri | $ 7.25 | $ 7.35 | $ 0.10 | 1% |
| Florida | $ 7.67 | $ 7.79 | $ 0.12 | 7% |
| Montana | $ 7.65 | $ 7.80 | $ 0.15 | 8% |
| Washington | $ 9.04 | $ 9.19 | $ 0.15 | 27% |
| Oregon | $ 8.80 | $ 8.95 | $ 0.15 | 23% |
| Ohio | $ 7.60 | $ 7.85 | $ 0.25 | 8% |
| Colorado | $ 7.64 | $ 7.78 | $ 0.14 | 7% |
| Arizona | $ 7.65 | $ 7.80 | $ 0.15 | 8% |
| Rhode Island | $ 7.40 | $ 7.75 | $ 0.35 | 7% |
| Vermont | $ 8.46 | $ 8.60 | $ 0.14 | 19% |
The current federal minimum wage is $7.25.
Vermont's minimum wage is indexed to inflation and the cost of living.
Washington State has the highest minimum wage at $9.19 per hour. It is indexed to inflation. It was created by a voter initiative 688 approved in 1988.
Tuesday, January 1, 2013
Interesting story links on our sister blog: Black Economic and Business News
The Evil Black Economist Blog has several sister blogs including Black Economic and Business News. We offer links to stories on:
Everett and Jones, a black owned barbecue restaurant in business since 1973 in Oakland, CA.
Two links from the Cleveland Fed: One on rising income equality and the other on returns to investments in college education.
Everett and Jones, a black owned barbecue restaurant in business since 1973 in Oakland, CA.
Two links from the Cleveland Fed: One on rising income equality and the other on returns to investments in college education.
Clearing my backlog this Holiday: BLS October Unemployment Report Review
Obama get's a great unemployment report. Labor market improves and additional workers return while non farm payroll increases by 171,000 and the unemployment
rate stays at 7.9%.
The big story was the positive sign that people are coming
back to the labor force as shown by the increase in non-farm payrolls (171,000)
while the unemployment rate also rose slightly (7.8% to 7.9%). The household data survey reported that the
labor force expanded by 578,000 and 410,000 found jobs.
Also the 171K figure was double the 81,000 NFP jobs added
since the end of the recession. The
figure can vary by 100,000 jobs in either direction. Economists were predicting 150K new jobs at
the end of the recession but now forecast about 100K new jobs each month.
Mitt Romney said, “Today’s increase in the unemployment rate
is a sad reminder that the economy is at a virtual standstill.” Obama praised
the number but said there was more work to do. Romney had little to complain about in a broadly positive report.
The black unemployment rate jumped to 14.3%. The 1% increase was not an issue since 387,000
black people returned to the labor market.
Black teenage unemployment was 40%.
Unemployment rose slightly for Hispanic/Latinos to
10.0%. The white rate remained fixed at 7.0%
The long-term unemployed (27 weeks or more) was 5.002 million
people which represents 40% of the
unemployed. The median duration of unemployment was 20 weeks while the average duration was 40
weeks. So, the hardcore unemployed
stayed unemployed much longer than average.
The “work part-time,
wants full-time” (WPWF) number was 8.3 million.
These people are considered under employed. About 2,433 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 813K discouraged workers (part of marginally attached) who are not
looking because they believe there is no jobs for them.
All three numbers: WPWF, marginally attached and discouraged
workers, have been slowly dropping for the last three months as the labor
market improves.
Non-Farm Payrolls
As we mention in the summary, non-farm payrolls add 171,000
jobs. Private sector hiring added
184,000 jobs (vs. 128,000 last month) and government employment lost -13,000 jobs.
Job growth was broadly spread accross all areas but retail trade, business services, leisure services and healthcare had large increases. Other key sectors had increases including construction (17K) and manufacturing(13K). Information technology (1K) and finance(4K) were flat.
The federal government lost -6,000 positions, state governments lost -7,000 positions and local government added 3,000 position for a net loss of -10K jobs.
Non-farm payrolls were revised for August upward by 50,000
(from 142K to 192K) and upwards for September by plus 24,000 from (114K to 148K).
That’s an increase of 84,000 jobs!
Average work week was unchanged at 34.4 hours and wages dropped 0.01 cents in September. I can't believe wages are dropping. We have to look at this further.
.
ADP reported an increase in private payrolls of 158,000
positions for July.
US Monster Employment Index moved up to 156 in October from
153 in September. Hiring was up 3% compared to same month last year.
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