News and Research on Cash transfers to the Poor and Welfare stigma

From the New York Times

The myth of welfare corrupting the poor

An Economic Model of Welfare Stigma

Debunking the Stereotype of Lazy Welfare Recipient 

Cash Transfers and Temptation Goods

Here is the web site for the poverty action lab at MIT.

Poverty Action Lab

And here is the story of Lille Harden who Bill Clinton exploited when we claimed to "End welfare as we know it"

Lille Harden

News: Russell SImmon's RushCard is in trouble

According to Think Progress the Consumer Financial Protection Bureau has stepped in after a payment outage.

http://thinkprogress.org/economy/2015/10/22/3715189/rushcard-cfpb/

Here is CFPB statement

http://www.consumerfinance.gov/newsroom/statement-by-cfpb-director-richard-cordray-on-rushcard-prepaid-card-incident/

News: Tyra Banks: Entrepreneur

A nice but short article on tech crunch about Tyra Banks' entrepreneurial efforts.


http://techcrunch.com/2015/10/20/tyra-banks-on-her-new-startup-and-why-every-woman-needs-f-you-money/

Pew Research releases comprehensive immigration report covering 1965 to 2015 with projections out to 2065

The Pew Reseach centerreleased a comprehensive study of US immigration since 1965.  The study also include projections for different immigrant groups out to 2065. The US immigration system underwent major reform in 1965. The report covers the period 1965 to 2015. 

Here are the highlights:

Immigrants and their descendants account for 72 million in population growth from 1965 to 2015. They are projected to increase the population by an additional 103 million through 2065.

In 2065, 80 million people or about 18% of population will be foreign born.

Also in 2065, an additional 18% of the population will be second generation foreign born

Asians will replace Hispanics as the largest immigrant group by 2055. 

Here is a link to the Pew Research Center web page with the story.

http://www.pewhispanic.org/2015/09/28/modern-immigration-wave-brings-59-million-to-u-s-driving-population-growth-and-change-through-2065/

and here is the full study

http://www.pewhispanic.org/files/2015/09/2015-09-28_modern-immigration-wave_REPORT.pdf

Poor September job report: Payrolls at 142,000 and US unemployment rate stays at 5.1%

The BLS released it's September 2015 employment report. Non Farm Payroll increased by only 142,000 jobs.  The U-3 Unemployment rate stayed at 5.1%.

May Unemployment report. Economy added 280,000 jobs as unemployment rate rises to 5.5%

An Analysis of the May 2015 Unemployment Report

The Bureau of Labor Statistics of the Labor Department  released the May Employment situation report on Friday, June 5th 2015.  The economic report also known as the "Unemployment Report". The report is the key measure of how well out the economy is benefiting working and poor people. The report includes a couple of key statistics that describe the real economy for the average American.

Summary

The US National unemployment rate(U-3) moved up slightly to 5.5%. The Black unemployment rate was 10.2%.  The broadest and most realistic measure of unemployment, U-6, stood at 10.8% and wages (average hourly earnings) rose 8 cents. The work week was unchanged at 34.5 hours.

The business employment report(Non Farm Payrolls) showed a gain of 280,000 positions. Jobs gains occurred in Trade and Transportation, Business Services, Leisure and Hospitality and Healthcare. The Government sector saw 18,000 new positions but 15,000 were local. Information Processing job shrank by 3K.

Figure 1. Non Farm Payroll Changes. June 2015. Source: BLS

The labor force participation rate was 62.9%. The rate has not changed in a year and been with 1% of 63% for the past 3 1/2 years. So the number people joining the labor force is almost exactly matching the number of new jobs. The situation is not good for wages, since there is no demand pressure driving wage higher.. An additional 397,000 people joined the labor force.


Figure 2. Unemployment Rate and Labor Force Participation Rate, June 2015. Source: BLS

The number of people unemployed increased by 125,000 to 8.67 million. Workers continued to rejoin the workforce and actively look for work, so they are now included in the unemployment counts.

The number of long term unemployed stayed at about 2.5 million.  The figure has dropped by 300,000 since Jan 2015.

The Big Story

The number of new payroll jobs came it at an above expected 280K after a slow growth spring. The GDP grew by 3.7% (annual rate) in the 2nd quarter after growing just 0.6% in the 1st quarter.

News of the Political Economy

No important news as government continues to shrink. The Dow Jones Industrial Average dropped below 18,000 index value as investor assume the fed will raise interest rates based on the strong jobs report.

Black Unemployment Situation

As stated earlier, the Black unemployment rate moved up to 10.2% because 120,000 newly unemployed people lost their jobs. The number of Black unemployed was nearly two million (1.988 million)



The Black labor participation rate was stable to 62%. The rate has been near 62% since January 2012.

Once again we compute the "real" Black unemployment rate: 15.5%. The real Black rate is the current Black unemployment rate plus the difference between the US national U-3 rate (5.5%) and the U-6 (10.8%). It is used to gauge how the economy affects real people.

Household Employment Details


Establishment (Business) Survey Results for February

Among the key industry sectors, Business Services added 63,000 jobs, total healthcare and social worked posted 58K new positions and  leisure and hospitality increased by 57, 000. 

Government increased by 18,000 jobs but 15,000 were at the local level. 

Non-Farm Payroll Revision

The March NFP number was revised upward by +34,000 from 85K to 119K while the April number was revised downward by 2k (+223K down to +221K)


ADP

ADP reported a non farm private employment increase of 201,000 jobs. Small business (1-49) employees accounted for 122,000 new jobs. Medium sized business(50-499) added 65,000. And large businesses(500 workers or more) added only 13,000 employees. ADP also reported that 

Larry Fink CEO of BlackRock on Corporate Under Investment

Today, we are looking at stagnant wage growth and corporate under investment. Basically, the rich (companies and people) are sitting on huge piles of cash. Here is an old but important story.

Anyone concerned about growing inequality in the Untied States knows that wages have not grown since the time of Ronald Reagan.  That's forty years ago! During that forty years, corporations and investors have "harvested" profit while reducing investments and wages.

Here is an open letter from Larry Fink, Chairman and Chief Executive of BlackRock, the nations largest asset management company encouraging companies to invest more in improving company operations rather than stock buybacks and dividends. The letter is from March 21, 2014.  He wants to steer corporations toward investments that will lead to long-term, sustainable growth.

The areas he suggest for investment are:

"innovation and product enhancements, capital and plant equipment, employee development, and internal controls and technology"

You can read the letter Larry Fink wrote on Long-Term Growth Strategies in the Wall Street Journal.

H-1B Debate February 2014

All, here is the latest news on the H-1B visa program in the United States. The H-1B visa program lets people from foreign countries work in the United States in professions where there is a identified "skills shortage."  The program is controversial because US born workers contend H-1B workers take their jobs and work for lower wages. Supports say the lack of employees is holding back growth as key positions go unfilled.

The goal of the original program was to provide temporary workers with critical skills to support growth in US industries.  These industries supply jobs to millions, so the thinking was, fill a key position and others will get jobs. A similar situation would be to provide a critical part to enable a machine to function.

However, large corporations and outsourcing companies have instead used the H-1B visa program to replace seasoned and high earning US IT workers with cheaper and younger foreign workers. 

The H-1B visa program has gained wider recognition in the news lately because Southern California Edison laid off 400 IT workers and replaced them with on-site H-1Bs.  The story was first reported in computerworld by Patrick Thibodeau.  Also, the comments on any H-1B story are enlightening. Some can be pretty nasty.

Note: I have been following the H-1B debate for years.  It has personally affected me twice.  

============================================================================================================

Here is a good explainer story in the Boston Globe

http://www.bostonglobe.com/opinion/2013/03/30/visa-program-has-been-hijacked-outsourcers/VAg6o9KgS2tuoZ3WbmaqeK/story.html

Here are the detailed computer world columns

http://www.computerworld.com/article/2879083/southern-california-edison-it-workers-beyond-furious-over-h-1b-replacements.html

http://www.computerworld.com/article/2886369/so-cal-edisons-it-layoffs-are-abuse-of-h-1b-program-says-us-lawmaker.html

The story is even more interesting since the re-organization that led to the outsourcing was prompted by a shooting by a Black Employee.

http://www.computerworld.com/article/2883897/so-cal-edisons-path-to-the-center-of-the-h-1b-debate.html

Here is an mediocre editorial in the LA times which captures the uninformed level of debate.  They don't even know the difference between UNISYS and InfoSys.

http://www.latimes.com/opinion/editorials/la-ed-visas-tech-workers-h1b-20150217-story.html

The best research based analysis is from the "The Economic Policy Institute"  They have a commentary 

http://www.epi.org/publication/open-letter-on-h1b-abuse/

and a research study

http://www.epi.org/blog/new-data-infosys-tata-abuse-h-1b-program/ which shows how few H-1Bs are sponsored for work permits.  The implication is that they are expendable workers who are being used to drive down US wages.

Ron Hira also wrote the famous "Bill Gates Tech Worker Fantasy " Editorial

http://www.usatoday.com/story/opinion/2014/07/27/bill-gates-tech-worker-wages-reforms-employment-column/13243305/

There is also a more corporate point of view with some facts about the program

http://blogs.wsj.com/indiarealtime/2015/01/25/will-obama-bring-more-h-1b-visas-for-indias-skilled-workers/

Dec 2014 Unemployment Summary: Rate drops to 5.6% with an increase of 252K jobs

An Analysis of the December 2014 Unemployment Report

The national unemployment rate fell 0.2% to 5.6% as the US created 252,000 Non-Farm Payroll jobs in December. Job growth occurred in construction, manufacturing, health care and food service. Construction added 48,000 jobs.  The temporary help category grew by 14,700 jobs and the governments added 12K jobs. The Black unemployment rate dropped 0.6% from 11% to 10.4% as an additional 93,000 people found work. 

The national unemployment rate declined from 5.8% to 5.6% as an additional 111,000 people reported employment based on the Current Population Survey. The labor force shrink by -273K people and the labor force participation rate also declined to 62.7%. The drop in the unemployment rate was due to a people leaving the labor force which is measured in the labor force participation rate. When the recession started most labor force drop outs were people who could not find jobs. Now, in 2014, the low participation rate is due to baby boom retirees.  

Figure 1. Unemployment Rate and Labor Force Participation Rate, Dec., 2014. Source: BLS CPS

There is some positive news: The employment to population ratio remained at 59.2, the best rate since August 2009. The EM ratio reached a modern high of 64.7% in May 2000 toward the end of the Clinton administration.

The private sector added 252,000 jobs while the government increased the job total by 12,000 jobs. The construction added 48,000 jobs during a winter month. There were also 17,000 new manufacturing jobs and 44,000 new healthcare jobs added in December 2014. Professional and business services has a jump of 52K while leisure and hospitality also added 36.000 workers. 

There were 2.8 million people classified as long-term unemployed (out of work for 26 weeks or longer),  About 6.8 million people who were underemployed (working part time but wanted full time work). A total of 15.5 million workers were unemployed or underemployed (9.9% of the workforce).

Figure 2. Non Farm Payroll Changes. December 2014. Source: BLS CES

The unemployment rate for women was calculated at 5.0% and men at 5.3%, while the rates for other groups remained largely unchanged: teenagers (16.8%), whites (4.8%), and Blacks (10.4%). The Hispanic rate dropped to 6.5%. A huge drop show the economy is recovering is paces that generate Hispanic employment.  Black teenage unemployment was 33.2%.

The Dow Jones Industrial Average rose again on the news to an index value of 17,200. 

There were positive revision for October employment numbers(+18,000 to 261K) and for November from 321K to 353K (+32,000 increase). 

News of the Political Economy

No real news.  President Obama and House Republicans released budgets. Sequestration continues to depress government spending. 

The Big Story

According to the Bureau of Economic Analysis, the economy grew by 4.6% annually in 2nd quarter and 5.0 in the 3rd quarter.  That is impressive growth for an "older" economy.  European growth has been flat or down except for Germany.  Wages were stagnant again.  Larry Wilmore got a regular show called "The Nightly Show".

Wall street is trying to figure out when the fed will rate interest rates. Many economists are trying to figure out how much slack there is in the economy.  People are no longer watching the unemployment rate and have switched to wathcing part-time workers who want full-time jobs and wage growth.

Black Unemployment

The national Black unemployment rate was pegged at 10.4% while the Black labor force participation rate was 61.3%.  The number of Black people holding jobs increased by +93,000 while the labor force was reduced by -19K causing a large 0.6% decrease in the unemployment rate. The 12 month average black unemployment rate has been 13.3%, so we are finally dropping below the 12 month trend.

Figure 3. Unemployment and LFP Rates for Blacks, December 2014. Source: BLS CPS

The "real" black unemployment rate dropped to 16% during December due to improvements in the national rate, the U-6 rate and the Black unenployment rate. The rate is calculated by adding the difference in national U-6 / U-3 to the national Black unemployment rate(Black U-3). 

Figure 4. The Real Black Unemployment Rate, December 2014

There was about 1.96 million Black workers looking for jobs and 93 thousand self reported they had found employment. Black labor force drop outs increased by 54,000. 

Below is draft form...

Household Survey Details for December

As previously mention, the economy grew by more than 4.0% in the 2nd and 3rd quarters, yet there has been only a small increase in hiring. Total job gains for the year are 2.95 million jobs of which 2.7 million are private sector jobs.

The long-term unemployed (27 weeks or more) was 4.1 million people which represents 37.3% of the unemployed.  The median duration of unemployment was 17.0  weeks  while the average duration was 37.2 weeks.  

The “work part-time, wants full-time,” fell to 7.7 million.  This is a measure of excess labor in the marketplace. About 2.1 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.    The report estimated that there were 762K discouraged workers (part of marginally attached) who are not looking because they believe there are no jobs for them.

All three categories dropped in November which is a postive sign of a tightening labor market. 

Establishment (Business) Survey Results for February

Non Farm Payroll increased by a reported 203,000 which is well above the 12 month average of 150K jobs created since Dec 2009 (+194K Average for past 12 months). Shockingly, even government payrolls expanded(+7,000). Growth was broad based, with gains in manufacutring and services. Transportation added 30,000 and retail trade added 22,000 postions while business services increased by 35,000. Healthcare added 29.6K and leisure services jobs increased by 17,000.

Key sectors of the economy fared well. Construction added 17,000 while Manufacturing jumped 27,000 spots.  Temp Help, a negative indictor, grew by 16,400 workers.

Below is a chart of the job gains in the non farm payroll categories.

Major gains occurred in high wage areas including manufacturing, construction and healthcare. Leisure and Hospitality also expanded. 

Non-Farm Payroll Revision

October was revised upwards from +243K to +261K and November was revised upward from +321K to +353K total additional increase of +50K jobs. 

ADP

ADP report a non farm payroll increase of 241,000 jobs. Small business (1-49) employees accounted for 106,000 new jobs. Medium sized business(50-499) added 70,000. And large businesses(500 workers or more) added 66,000 employees.

Drop in unemployment due in large part to workforce dropouts

Every is patting themselves on the back when it comes to the drop in unemployment. The media is crowing about the low unemployment level.  But, as always, things are more complex than they appear. A large amount of the improvement in the unemployment rate is due to workers dropping out of the labor market as measured by the Labor Force Participation (LFP) rate.  When the recession was at it's peak, people simply could not find work and stopped looking.  Now, just as some of those workers return to jobs, retirees are heading for the door.  All this means the LFP will continue to stay low.

During the "good times" from 1991 to 2003, the Labor Force Participation (LFP) rate averaged about 66.7%. That is about 67% of the population were considered part of the labor force. At the beginning of the Recession (December 2007), the LFP was 66% and as late as November 2009 the figure was 65%. Now, after the current recession, only 63% of the people in the US participate in the labor market. This means that over 9 million workers are "missing" from the pool of would be workers. 

Let's look at the current Labor Force Participation since the start of the recession in December 2007. 

The chart below adds the "missing" workers back to the the total number of unemployed. The workers are missing because of the low participation rate.  Using this new figure, the unemployment rate is still about 12%.  And the unemployment rate peaked at 13% during the recession.

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