March Monthly Unemployment Review: A disappointing 88,000 new jobs in March

BLS Unemployment Report Review for March

The BLS reported that only 88,000 net new jobs were created in March. which is well below the expected 150,000 average.  The national unemployment rate did not move from 7.6%. The black rate was 13.3%.  Most of the job growth was in temporary help, healthcare and leisure and hospitality. Retail sales employment was down by 25K jobs.

Overall unemployment report summary and reaction

The big story is the 663,000 people who dropped out of the labor force as reported in the household survey.   The drop outs were spread across all demographics categories. The stock market shrugged of the small job increase number and rose slightly.  The chart below shows the slow decline in the national unemployment rate.

Almost every other unemployment statistics were unchanged.

The national unemployment rate dropped 0.1% to 7.6% consistent with the slow growing economy. The Employment to Population ratio dropped to 58.5% and the participation rate was rate 63.3%. Both dropped during the month to record lows.  The low values point to a huge number of people who have dropped out of the labor force.

Household Survey Results for February

The household data survey reported that the total labor force decreased by -496,000 and the number employed dropped by -206,000.  All demographic categories, white, blacks and Hispanic, saw large number of people who self-classified as not in the labor force. 

The black unemployment rate moved down to 13.3%.  The reported black labor force decreased by -115,000 people however 9,000 more black people said they were working.  About 148,000 additional black people said they were not in the labor force. Changes in labor force statistics do not always match.

Total black employment was estimated at 16,068,000 workers.  Black teenage unemployment was 34% versus 23% for whites and 28% for Hispanics. Unemployment rate for Hispanics/Latinos was 9.2% while the rate for whites was 6.7%.

The black unemployment rate has reached a plateau while the national rate continues to decline.

The real black unemployment rate (Black U-6) is stuck around 20% even as US national rate slowly declines.

The long-term unemployed (27 weeks or more) was 4.6 million people which represents 40% of the unemployed.  The median duration of unemployment was 18.1  weeks  while the average duration was 37.1 weeks.  People are taking longer to find jobs.

The “work part-time, wants full-time,” number decrease by about 350,000 people to 7.6 million.  These people are considered under employed and would like additional work.  About 2.3 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 803K discouraged workers (part of marginally attached) who are not looking because they believe there are no jobs for them.

Establishment Survey Results for March

Non-Farm Payrolls rose by only 88,000 jobs in March. The growth came in construction, healthcare, hospitality and temporary help. Retail trade lost 25,000 spots.  Construction was a strong area of the job growth adding 18,000 people to the workforce. The number would have been higher except for a 9000 job reduction in civil engineering category.  Government shrank again losing -7,000 jobs. 

Here is a chart of the changes in Non Farm Payrolls since the start of the recession in 2007.

The following charts show the small change in Non Farm Payrolls in March.

The following chart show tepid growth in all categories. Business Services was pumped up by temporary help increases of 20,000 jobs. One would suspect the some of those works are not real temps but permatemps who have been outsourced.

Non-Farm Payroll Revision

Non-farm payrolls were revised in January upward to +148K from +119K and for February 2013 from +236K to +268K.  The average work week was at 34.6 hours and wages added 1 cent in March.

ADP national employment report

ADP reported an increase in private payrolls of 158,000 positions for March.  Small business (1-49 headcount) added 74,000 jobs; medium size (50-499) added 37,000 and large companies (500+) increased workers by 47,000. The breakdown is important because large businesses tend to pay employee more. 

The Entrepreneurship Industry: Another annoying down side of US capitalism

There has been an explosion of entrepreneurship programs in the US.  It looks like everyone has some sort of "start-up" program, incubator or resource web-site. It's like everyone is trying to hit the lotto and a who industry has developed to sell people tickets and in some cases even "lucky" numbers.

Here are some examples:

Google has site focused on Entrepreneurship called Google Entrepreneur.
So does the City College of New York but on Facebook. Here is the link. 
There are also website that let you create business model like LeanLaunchLab.Com.

But you have to ask how much real, new value add are they creating and how much are they just stealing from one another. All this talk about entrepreneurship is great but it seems like a lot of "fake" PR with lots of smiling young people talking about "doing" good or "risking it all."

The truth is most businesses fail.

Another difficult truth is that the US economy is really a zero-sum game.  In order for you to get rich, someone else has be lose money or income. Despite what people are sold, money does not come from thin air.  It comes out of other peoples pockets.

And large businesses, especially retail, incredibly efficent at removing that money from other peoples pockets. Big box retailing has grown faster than the GDP for the past 30 years.  They have put department stores and mom and pop retailers out of business.  The competition is strong and vigorous   While average customer incomes are flat for the past 30 years.

So, lets be honest, in order for some business to succeed others must fail.

The real key in any business including small start-ups is a defensible niche; a natural or created monopoly that allows the owner to enjoy surplus profits. That can be the corner delicatessen  the local auto-repair business, a mid level medical instrument manufacturer or Amazon.com. (Ed. Note: It was really hard coming up with a mid-level factory example, they all have been pretty much wiped out)

What to do about black unemployment

I would say the real black employment rate on average is about 22%. If you take U-6 and add the difference between the white and black U-3 rate you get 22%. The difference can mostly be traced to educational differences, immigration competition among the poor, geographical differences, different career choices (fewer entrepreneurs) and reduced government employment. The residual is discrimination.

Because of the huge legacy of racial oppression and discrimination, you cannot a conversation about black unemployment. Even the most liberal whites have come to associate blacks with being undeserving. In fact, the defenses go up so fast, that I have stopped writing or discussing "black unemployment" directly. I also use code.   I now always use "hard working poor people" or "former military servicemen" both groups contain large number of poor and minorities.

The problem is that society undervalues a job by social justice standards   Many people equate a job with their wage or the valued added returned to the employer. But a job is much more than that. In our society. A job is freedom, dignity, and respect.  It is a chance to participate in society, to earn a wage, to make friends and socialize with people from different backgrounds. It is also a chance to learn and develop. It is a chance to have pride. Without out a job you are worse than unemployed: you are a loser.

Now what to do ? Three things to start: we need to tilt the economy back to rewarding labor, set a realistic limit on immigration, and have the government (state and local) become the employer of last resort. The way to increase returns to labor are all pretty well known: limit corporate size and market control, encourage unions, increase the minimum wage, and teach and encourage entrepreneurship. Immigration should be a function of the unemployment rate.  And finally, the government should be the employer of last resort. It would be cheaper than the current social safety net.

Delaware = Cayman Islands North

If you every wonder about the power companies to "rig" the system in their favor, take a look a Delaware.  The state is know as Cayman Islands North. Delaware is a state that benefits from helping companies and individuals avoid state taxes. It also promotes business friendly, "light" regulation.  The state has been used by money-launders and arms smugglers.

Almost all of the financial activities in the state are linked to corporate tax reduction or tax avoidance. There was some back office check processing going on during the 90's and 00's but that has greatly diminished. About 50% of the fortune 500 are incorporated in Delaware. There is little real economic activity going on in Delaware outside of Dupont and Perdue Chickens. Delaware is little natural resources and remained a slave state until emancipation.

Instead what Delaware has done is exploit a loophole in the tax system allowing companies to "shop" for a state jurisdiction for tax purposes. For state tax purposes, companies recognize some their US profits in 0% tax Delaware regardless of where they are earned rather than in high tax NY state. Corporation use this tactic to reduce taxes on royalties and other payment that can be recognized in any jurisdiction.

Though it is small potatoes  Delaware has also benefited greatly from individuals avoiding local sales taxes.  People from Maryland, Pennsylvania and New Jersey drive to Delaware for consumer products like liquor, appliances, flat screen TVs and cars.  This damages state tax coffers resulting in higher taxes for everyone.

To it's credit, Delaware has set-up specialized courts, like the court of chancellory, to hear business cases.

The sad part is that Delaware is really usurped federal power.  And not in a good way like the Pennsylvania Department of Agriculture or California EPA's Air Resources Board. Delaware let corporations avoid taxes and robs other states revenues.

You can read more details in the NYT piece: "How Delaware thrives as a corporate tax haven."

Economic Reasons are five of the top ten reasons for joining the military

We, at the Evil Black Economis,t have been thinking about guaranteed jobs program with the government as the employer of last resort. So we are looking at the government programs that most closely resemble a jobs programs: the military, homeland security and civilian criminal justice (police, fire, and corrections).  Each of these job classes produces little to no value added in society or contributes to GDP other than through salaries.

We believe these areas, which are really cost avoiders, are perfect examples of government jobs programs.

Here are the top ten reasons to enlist in the armed forces.  This list was taken from a military recruiter on the military.com website. So it boils down to one expert opinion.

Here is the list.  Reason which are economic in nature tagged with an "E".

Education ([E]conomic)
Money (E)
Medical Coverage (E)
Career (E)
Travel and Adventure
Camaraderie
Sense of Direction
Real World Skill (E)
Honor
Other but Military Related - Like the idea, weapons and technology, a challenge, friend or family member is in the service, etc.

Affirmative Action is Everywhere

Affirmative action is everywhere these days and no one has a problem with it when the beneficiaries are US military personnel.  Veterans affirmative action even has quotas. And the public is completely accepting of this type of affirmative action.

 The Whitehouse web site has some new details on the affirmative action program for military personnel and their spouses. The program is called "Joining Forces Employment" is a program to get large corporations to hire veterans. The program includes specific commitments (quotas). Michelle Obama recently announced new hiring commitments from companies at  the Whitehouse.

One bit of good news is that poor people and blacks are over represented in the military.

The Whitehouse story is here.

The Joining Forces website is here.

Here is a great report from the Army called "Blacks in the US Army" that has statistics on black participation in the armed forces.

Military.com reports that 5 of the top 10 reasons for joining the military are economic.

February unemployment review: NFP jumps to 236,000 new jobs but all other stats are the same

BLS Unemployment Report Review for February

Ok, so here is a really good lesson in statistics.  The February unemployment report, which was released on  8, 2013, shows a jump of 236,000 jobs.  A huge jump over the from February  increase (119K).  So, we always have to remember the number can fluctuate by 100K up or down and that the number is constantly revised.

So what looks like a great number is in fact a random jump with no supporting indicators. Naturally, you  would expect to see the figure revised downward.  Instead, the figure was revised upward in April to 268,000 new jobs. And January was revised up to 148K. What the heck?

Long story short the unemployment rate (7.7%) and the non farm payroll number (236K), are the headline numbers, but they can randomly bounce around a very large amount.  You really have to look at the other numbers to get a complete picture.

Unemployment report summary and reaction

 Non Farm Payroll jumped by 236,000; a figure that is way above average.  There was strong growth in all employment categories except education and state government. The unemployment rate dropped 0.1% to a calculated 7.7%.  

The chart below shows the slow decline in the national unemployment rate.

The  large increase in payrolls came as unexpected news. The stock market surged on the news.   All other unemployment statistics were unchanged.

The national unemployment rate has reached a plateau around 7.8% with little sign of reduction in a slow moving economy.  The Employment to Population ratio was measured at 58.6%, the lowest since October 1983. The participation rate was rate 63.5% the lowest since June 1979. Both have barely moved in the past year.  The low values point to a huge number of people who have dropped out of the labor force.

Household Survey Results for February

The household data survey reported that the total labor force expanded by 165,000 while the number employed expanded by 170,000.  

The black unemployment rate stayed at 13.8%.  The reported black labor force decreased by 2000 people and -14,000 less black people said they were working.  Black employment was 16,059,000 workers.  Black teenage unemployment was 43% versus 22% for whites and 27% for Hispanics. Unemployment rate for Hispanics/Latinos was 9.6% while the rate for whites was 6.8%.

The black unemployment rate has reached a plateau while the national rate continues to decline.

The chart below shows the real black unemployment rate (Black U-6) stuck around 20% even as US national rate slowly declines.

The long-term unemployed (27 weeks or more) was 4.8 million people which represents 40% of the unemployed.  The median duration of unemployment was 17.8  weeks  while the average duration was 36.9 weeks.  People are finding jobs slightly faster.

The “work part-time, wants full-time,” number was 8.0 million.  These people are considered under employed and would like additional work.  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 885K discouraged workers (part of marginally attached) who are not looking because they believe there are no jobs for them.

Establishment Survey Results for February

Non-Farm Payrolls rose by 236,000 positions in February.  The growth coming in construction, retail trade, business services, and healthcare. Construction was a very strong area of the job growth.  Construction added 48,000 jobs while retail trade added +24,000. Government lost -10,000 jobs. 

The following chart show the huge jump in private jobs which added 246,000 jobs in February

You can see the wide spread growth across all job categories except for education and state government.

Non-Farm Payroll Revision

Non-farm payrolls were revised in December upward to 219K from 196K and for January 2013 from 157K to 119K. The January revision was the first time we have had a negative revision in 6 months which may indicate a slowing economy.  

The average work week was at 34.5 hours and wages added 4 cent in February.

ADP

 ADP reported an increase in private payrolls of 198,000 positions for February.  Small business (1-49 headcount) added 77,000 jobs; medium size (50-499) added 65,000 and large companies (500+) increased workers by 57,000. The breakdown is important because large businesses tend to pay employee more. 

White Networks block Blacks from Jobs

Nancy DiTomaso knows how white "networks" keep blacks from job opportunities.  Her book: "The American Non-Dilemma: Racial Inequality without Racism" delves into how whites retain their privileges while behaving in a self-described non-racist manner.

There is a story from Huffington Post here: "Black Unemployment Driven by White's favors for friends."

Nancy DiTomaso has been researching the topic for years.  Here is a great piece from a PBS program called "Race - The power of illusion" produced by California Newsreel in 2003. DiTomaso discusses racial inequality and hiring discrimination.

Race at Work: The realities of Race and Criminal Record in NYC Job Market

Here some old news but I don't want to lose track of it, so I am saving it in a blog post.

Devah Pager and Bruce Western did some great work in 2003 using job testers in NYC.  They used identical testers who were different only by race: black, white and Hispanic.   They then added the variable of a criminal record with a felony conviction.

The testers were choosen for similar background, appearance, and verbal skills.  The were all college graduates but representing themselves as high school diploma holders with solid work experience in the field. The testers were also coached to use similar self presentation styles.  They went to 1470 interviews.

The results were indicative of significant racial discrimination in hiring.

23% of whites were offered a job or a call back
19% of Hispanics a similar positive response
and 13% of black got a good response

A summary report from the NYC commission on human rights is here.

The detailed study by Devah Pager is here.

And here is Devah Pager dissertation which has the original research here.

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Rage against the "Job-Killing" machine

We are feeling the pain of automation

One of the most important and under reported stories of our time has finally hit the big time.  Technology and automation are destroying jobs AND we are feeling it. For the past 100 years, technology has helped developed countries grow and raise their standard of living. It has created a high standard of living where everyone in society has all of life's basic necessities.  Technology has killed jobs but added many more until recently.

Technology did cause people to lose jobs but in a growth else where quickly absorbed the surplus. Most jobs required low-skill levels and hard work, so workers were quickly recycled in to other areas of the economy.

When the industrial revolution first started in Britain, the new machines were feared by the populous who thought they would put people out of work.  Instead, growing wages fueled demand for new material goods, the country grew, and the displaced workers moved on to other, newer industries.  Britain's internal growth and lack of global competition allowed the country to shift workers to more productive jobs.  Britain's financial system was designed to supported industry. Labor captured most of the increase in wealth and funneled it back into the economy as demand. The results was a prosperous cycle of demand and growth.

What has happened during the late 20th century is that the 100 year cycle of growing wages, growing demand and national income growth has been broken.  No one is complete sure why the link between growth and wage is broken.  Many economists suspect globalization / outsourcing (global labor competition, financial engineering, regulatory manipulation by large companies, and technology change).  We are going to look at technological change.

As we mentioned earlier, technology killing jobs has been in the news because of a great, new book called  "Race Against the Machine" by Erik Brynjolfsson and Andrew McAfee. Their basic theory is that smarter machines are reducing the demand for white collar labor, however the change can be absorbed as long as wages are sufficient to generate demand for technology.  In addition, two other factors have conspired to reduce employment: 1) developed countries are net importers of goods and 2) process (versus product) technologies have become incredibly efficient by historical standards.

There is no shortage of new machines and innovation, but the country cannot afford to buy them because wages have stagnated.  In addition, developed countries are net importers further reducing growth and wages.

We want to offer some further background reading on the problem:

Race against the machine
Economist: Has the idea machine broken down ?
60 Minutes

The dilemma  was summarized by Walter Reuther, the leader of the United Auto Workers union, in a famous anecdote he would tell.

'After touring a factory filled with lots of automated car making equipment, a manager asked Reuther how he was going to collect union dues from all the machines making cars."  Reuther replied "How are you going to sell cars to these machines ?" '

Here is some background on the quote.

Finally, just to keep the problem real, here are some video's of Robots in Action

Packaging robots from ABB on Youtube.
ABB dual arm concept robot is here. 

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