Friday, February 5, 2016

America Now 18.36 Million Jobs Short as AJSN Gains Almost 900,000 Seasonally – And On More People Marginally Attached

I didn’t know what to expect with this morning’s jobs numbers – and, looking over the press, most others didn’t either.  We’re creeping closer to recession both here and elsewhere in the world, yet is hasn’t happened yet.  On the other hand, December’s 262,000 net nonfarm private employment gain, though revised 30,000 downward, was way up there, so we had reason for it to fall.  Per Bill James’s Plexiglas Principle, something going up or down an unusual amount for random reasons is likely to go the other way next, so I was also anticipating a drop in the numbers of those in the major marginally attached categories, specifically those not searching for a year or more, which were up sharply in December. 

The first happened, but the second did not.  There were 151,000 net new nonfarm payroll jobs, seasonally adjusted as that broadcasted number always is, created in January.  Adjusted unemployment fell to 4.9% from 5.0%, and average private hourly earnings bounced back from their 1 cent per hour December loss to a 12-cent gain, finishing at $25.39.  This measure fluctuates a lot, and over the past year is at 2.5%, hardly huge but nothing shabby with inflation significantly lower. The count of those wanting to work but not having looked for it for a year or more, the group contributing the third largest latent demand for employment, shot up again and is now at 3.5 million, more than 400,000 beyond only two months ago.  The Other category rose a surprising 152,000, but the count of those discouraged was off 40,000.  Overall, the American Job Shortage Number, or AJSN, gained 874,000 as follows:


The two measures of how common it is for Americans to be working both improved last month, with the labor force participation rate up 0.1% to 62.7% and the employment-population ratio up the same to 59.6%.  The counts of those working part-time for economic reasons, or doing that while unsuccessfully seeking full-time opportunities, and those officially unemployed for 27 weeks or longer held at 6.0 million and 2.1 million respectively.  Unadjusted joblessness was up, essentially completely from moving from job-rich December to job-poor January, from 4.8% to 5.3%. 

Compared with a year before, the AJSN improved significantly once again.  In January 2015 it was 1,200,000 higher at 19.56 million, with 1.07 million of that difference from lower unemployment and the rest from the largest categories of marginal attachment, except for those claiming no interest in working.  The latter is about the surest bet you can find to increase over the course of a year, and over the past one rose about 1.7 million.

Where does last month’s jobs data fit in?  In most ways it was like treading water, but two numbers make the difference.  With labor force participation and employment to population both up, I tip the balance to positive.  The turtle has taken his first 2016 step forward.   

Monday, February 1, 2016

What’s Happening with European Employment?

We have heard quite a bit about that string of grapes across the Atlantic, and most has not been good.  The refugee situation has magnified their long-term individually debated and addressed issues of how to deal with their shrinking populations on one hand and the prospect of massive Muslim immigration, which would change their cultures but allow continuing funding of their lavish social programs, on the other.  What else is going on there, and how does and will it affect their joblessness and ours?

First, on jobs, the continent is in bad shape.  Average Eurozone unemployment reached 10.5% in November, and that was on the way down.  That conceals an atrociously high age 15 to 25 jobless rate of 20% overall, with individual countries, as of the fourth quarter of 2014, achieving rates such as 52% for Spain, 51% for Greece, and even 42% for Italy and 25% for France.  Their shares of long-term unemployed are much higher than in the United States, where 26% of jobless have been out for 27 weeks or longer; of the 27 European Union countries, only Denmark, Sweden, Finland, Austria, and Luxembourg have below 30% of their unemployed without work for a year or more.      

Second, the Schengen agreement, which allows Europeans to travel between countries without passports or border checks of any kind, is seriously endangered and is likely to be splintered if not obliterated.  I expect some subgroups of nations, such as Belgium, the Netherlands, and Luxembourg, to keep their mutual borders open, but it will prove unworkable to maintain it on its current scale.  With that, there will be conflict about whether to continue the Euro.  There could also be sets of two and three countries continuing to share a currency, but it has already proven tenuous to keep the likes of frugal Germany and profligate Greece under one central bank.  Either of these changes would hurt European prosperity and thereby cut jobs overall, but would, of course, create more in the fields of security, administration, and currency exchanging.

Third, along with the United States, Europe has been hit hard by China’s slowdown.  Sales of construction materials for their massive infrastructure work, and of consumer goods for their increasingly higher-paid workers, went nowhere but up for decades, but have now not only leveled off but actually decreased.  The worldwide oil glut has largely been caused by slowing Chinese demand.  Europeans are not finding it any easier to adjust to the dwindling of such a large customer than we have in America.

Fourth, despite all these problems the continent’s economy may be improving.  German unemployment was down to 6.1% in December, compared with 5.0% in the United States.  Ireland and Great Britain reached seven-year lows this fall, at 8.9% and 5.3%.  Eurozone economic growth reached an annual 1.6% in 2015’s third quarter, or about twice the previous 12-year average.  Its jobless rate is down from 2013’s 12.0%, and manufacturing and consumer confidence are both at two-year highs.    

So, are the problems above, as they have been manifested in the recent stock market fall an indicator of a coming world recession?  That is quite possible but far from certain.  Can the United States avoid it?  Probably not.  We are too entwined with Europe and China to avoid their worst problems.  Yet we may continue, as we have been, doing better.  What may become (and already is, if you are under 26 in the European Mediterranean) a depression and near-depression in these places may be held to an ordinary periodic recession here.  Just the same, it’s nothing for our next president to look forward to.  

Wednesday, January 20, 2016

Good Stuff in the Press: Four Old and New Workplace Ideas, All Positive

Over the last two months we’ve had a nice little flurry of worthwhile thoughts on employment.  Before that, though, let’s have a brief look through that same prism at President Barack Obama’s final State of the Union Address.

On jobs in America, there wasn’t a lot.  He had two correct general ideas, with “how do we give everyone a fair shot at opportunity and security in this new economy?,” followed, nine of the speech’s 72 (!) applause breaks later, by “today, technology doesn’t just replace jobs on the assembly line, but any job where work can be automated,” so “workers have less leverage for a raise.”  Around them, however, we heard the wrong suggestions – “equal pay for equal work, paid leave, raising the minimum wage,” and calls for more education, particularly “hands-on computer science and math classes.”  There is nothing off beam with either employers choosing to provide paid leave or the existing laws prohibiting sex discrimination, but further mandates would be misguided.  Training, especially with the irritating emphasis on that related to science as if to imply that that is where there are enough jobs for the students, still too often only shifts who gets scarce positions.  His free community college proposal is worthy of further study, but best was his plan for a redoubled cancer cure effort, which, if it materializes, could open a new vein of opportunities. 

Now to those four ideas.  The first was in a December 1st Wall Street Journal piece, “When a Job Offer Comes Without a Job.” Author Lindsay Gellman described how Facebook, Intuit, and other companies are grabbing the most promising recruits first and determining where to assign them second.  What she called “program hiring” is new only in name, as it is quite similar to what large organizations actually did from the 1940s into the 1980s, when promotion from within was routine and they started workers at levels lower than now existing to see if they would show up, behave themselves, and so on.  My father-in-law was to become an innovative Eli Lilly engineer, but his first work assignment there, despite his science degree, was sweeping out one of the labs.  Many others started as office boys and file clerks, and “from the mailroom to the boardroom” became a cliché.  This program hiring is exactly what many workers need, as the concept of a career, especially with one company, has taken a beating since the Great Recession.  Even though this job-assignment process is, unlike in the past, cooperative between employer and employee, apparently more of the latter are fussier than were those in previous generations about even temporary positions.  I recommend millennials adopt one of the best and most underrated qualities of the baby boom generation and put up with unfitting work to get positioned for better opportunities, now that these re-pioneering organizations are setting them up for just that.

The second was also in the Journal, and explained how an even older hiring methodology is being brought back.  Rachel Feintzeig’s January 5th “The Boss Doesn’t Want Your Résumé” discussed a few information-technology companies starting the staffing process by having applicants perform sample job tasks, such as project work, and by writing things to show what they know.  Since the candidates are unseen by hiring managers and they do not put their names in their work, race and sex discrimination, as well as halo effects from such usually job-irrelevant qualities of charming interview conversation and more well-known previous employers, are cut way back or eliminated completely.  The whole thing is much the same as blind auditions in music, in which judges do not see the candidates.  It is new to the white-collar and professional world, but was once common in physical jobs, particularly around the turn of the previous century, when prospective bricklayers might be asked to carry stacks of them to show they could do it.  Although what Feintzeig described does not replace organizations’ obtaining and using demographic and historical information, it does put job skills at the front of the process, a huge change. 

The third was what might be called a right-wing business finding, from of all places the Harvard Business Review.  Published on January 4th and from three authors, it had the stunning title “Diversity Policies Don’t Help Women or Minorities, and They Make White Men Feel Threatened.”  I am a Caucasian male with a 20-year corporate business career, and have made many related observations:  that the problem with “diversity” is that hiring, job assignment, and promotion opportunities are fixed in number making them zero-sum; that that word itself has been distorted to mean preferential treatment for those in certain groups, instead of its still-current dictionary sense of synonymous with “variety”; that it is also often a euphemism for arranging for women and minorities to have special chances for top positions, and has little to do with workplace behavior; that real human differences go way beyond genital type and skin pigmentation; and so on.  The article made many of these same points.  It also posited two more:  that such policies served mostly as legal defense structures, their existence being crucial as talking points to hold off losing lawsuits in cases of true discrimination; and that in some situations they actually held back black women (who have been running degree-earning rings around black men). 

In sharp contrast, we had a fine example of what could be done with such efforts at AT&T about twenty years ago – in a meeting we divided into groups (men/women, black/white/other, under and over age 40), and after internal discussion a spokesperson from each talked about what tied them together.  I learned some fascinating things that day.  Although I grew up in 30% black Hyde Park in Chicago, I did not know that, at least as of about 1995, African-Americans felt free to talk socially with anyone else of their race whether that person was a fashion plate or a street sweeper, that they “don’t go camping,” and tended heavily to spend vacations visiting relatives, or that they still, in something I have never heard a white person express, caught themselves, as most Americans did in centuries past, attributing higher status to blacks with lighter skin.  This experience was diversity as it should be practiced, and helped me understand many of my co-workers better.   

Fourth was something President Obama said four days after his address.  He said that each state should allow a minimum of 26 weeks of unemployment insurance, with suddenly higher state jobless rates triggering an automatic extension to 52.  That is the right thing to do.  We are 17.5 million jobs short, with 2.1 million not only officially unemployed but that way for 27 weeks or more, and six million not counting as jobless but working part-time in lieu of the full-time opportunity they haven’t found.  Unemployment benefits make up about the most reliably circulating money there is, so much of them return to the state governments in taxes.  The amounts vary drastically between even similar states – for only one example, Wisconsin has a maximum $370 weekly benefit with neighboring Minnesota at $629 – but cost of living differs more, and even Louisiana’s $221 is immensely valuable to anyone with neither work nor savings, making the length of such benefits, now 18 to 30 weeks (which probably should be 39) more important.  Obama will formally propose improvements to Congress in his February 9th budget proposal.  I wish him the best with it, as I do for the implementers of the other three ideas above.

Friday, January 15, 2016

Robots and Jobs – Where Are We Going?

Half a dozen New York Times, Washington Post, and Wall Street Journal articles on robots at work have appeared over the past two-plus months.  I’m glad to see this issue getting attention.  However, despite a general improvement in the facts and assumptions in such stories, there are still some misconceptions, which continue to be destructive.  For example, it has been a long time – over 70 years in fact – since manufacturing peaked as a share of American jobs, and so the issue now is not how we will deal with its decline, but how we will manage the slowdown of its successor, services.  I was glad to see, though, a refutation in two of those pieces of the obsolete idea that robotics is affecting only the most menial positions, and the articles had other valuable insights as well.  So what is happening, overall, in this area?

First, the key to understanding which jobs are vulnerable to takeover by robots or other automation technology is the presence or absence of underlying algorithms.  Any work function dependent on implementing a linear sequence is in eventual danger of being mechanized away.  If your job consists of following rules, it will someday not need to be done by a human.  The good news is that is robots, computers, other machines, and even artificial intelligence all require algorithms, which is why, for example, janitors are much more resistant to being replaced by technology than are insurance underwriters. 

Second, often robotics will not take over entire jobs, but will supplement existing ones, with workers then doing only some of their duties.  As Ana Swanson put it in her Washington Post article, “emergency room doctors might spend more time on the most serious or unusual cases, while robots do the triage and diagnose routine illnesses.”  However, in most of those circumstances, positions will still be lost, as, in many settings, with the time saved fewer human employees will be needed.

Third, in remarkable contrast to the past, robots are rapidly becoming more common and more sophisticated.  Per the International Federation of Robotics, shipments of industrial robots in the entire world added up to 55,000 in 1992, and it was not until 19 years later, in 2011, that that number more than doubled.  Since then it has climbed steadily, with about 185,000 in 2014 and a projected 260,000 in 2015.  Researchers have also redoubled their efforts to increase robots’ scopes, with, as one example, SoftWear Automation’s expectation that their mechanical devices will be able to sew complete garments, which since it involves soft cloth has been a classically hard type of task for them to complete, by the end of this year. 

Fourth, in what may well be the most common urban-ride system of the 2020s, General Motors is combining with amateur cab company Lyft to develop driverless taxis.  That could rescue both companies, if regulation catches up with the latter and, as some people think, the proliferation of self-driving cars slashes sales of privately owned ones.  It is a visionary step, well worth the $500 million GM is investing, as it shows that both organizations are placing themselves more centrally in the auto-transportation business.  They are avoiding a mistake that has happened to entire industries; if American railroad companies had not fallen into the trap of being committed to trains, we might be flying Southern Pacific and Milwaukee Road instead of United and Southwest. 

Fifth, even with robots aplenty, United States manufacturing will hardly disappear.  In 2013, the last year for which full statistics are available, only China added more value that way.  American labor being more costly is nothing new, but there remain many applications, such as aircraft, where technical knowledge is critical, and many others where the convenience of being close to the market outweighs foreigners working for less.  As more and more jobs get automated away, cheaper-labor countries lose much of their advantage, as robots cost much the same to operate anywhere.  Although there will never be anything like the armies of people going to factories we had in the past, there will still, indefinitely, be a lot of things made here.

Sixth, we have not resolved a concern I raised over four years ago.  The final Work’s New Age Principle states “Factory jobs replaced farm jobs.  Service jobs replaced factory jobs.  No paid work that we know of now will replace service jobs.”  This situation explains why we cannot count on new positions to replace ones we lose.  It is true that, as researcher Michael Chui said in the Washington Post piece above, “we have been automating work for hundreds of years, and we’ve always been able to create new jobs,” and that, although “a century ago, most of our ancestors were farmers,” “today, it’s not as if we have 80 percent unemployment.”  Likewise, Ji Shisan, writing in The New York Times, was correct to say that “we don’t blame the steam engine or tractors or sewing machines for unemployment now.”  Yet we know what replaced the numerically devastated extraction and manufacturing jobs of the past, and we still have nothing more to cover lost service ones than classic futurist Herman Kahn’s Quaternary phase, in which people do things for themselves or their communities without pay.  With robots here to stay, if we can’t get out of this bind, we may, someday, see that 80%.

Friday, January 8, 2016

A Fine Employment Numbers Month? AJSN Begs to Differ, as America is Now 17.5 Million Jobs Short

With the Chinese stock implosion and corresponding market nosedive here, we especially needed good Bureau of Labor Statistics employment data.  And we got it – on the surface.  Although official joblessness stayed at 5.0%, nearly all the major numbers in the Employment Situation Summary improved.  We gained 292,000 net new positions, way beyond the 200,000 for which analysts hoped.  The count of people working part-time for economic reasons, or wanting and not finding full-time opportunities, fell 100,000 to 6.0 million.  The two best measures of how common it actually is for Americans to work, the labor force participation rate and the employment-population ratio, got better and higher, up 0.1% to 62.6% and up a large 0.2% to 59.5% respectively. 

Two other front-line numbers did not improve.  The long-term unemployed, or those out 27 weeks or longer and still looking, are still at 2.1 million, and average private nonfarm pay not only did not get better but fell one cent an hour to $25.24.  Unadjusted joblessness also stayed the same, at 4.8%.

Where we got worse was, once again, found in the counts of those marginally attached to the labor force, or people neither working nor technically unemployed.  Those claiming interest in jobs but not looking for a year or more jumped up 228,000 to just over 3.3 million, meaning that this group all by itself could now absorb over 2.6 million new opportunities.  Those describing themselves as “discouraged,” with the same expectation of taking positions as those officially jobless, rose 67,000 to 663,000.  Those in school or training jumped 42,000.  Overall, the American Job Shortage Number, or AJSN, rose 255,000, as follows:

Compared with a year before, the AJSN has fallen 832,000, but that difference is smaller than it has been for years.  Almost all of that is from lower official joblessness, but counts in the marginally attached categories have dropped as well, with the exception, as usual, coming from those claiming no interest in working, who now number 1.7 million more than in December 2014. 

So what happened here?  We cannot blame any seasonal difference, as last year’s December AJSN was lower than November’s.  The problem is that we still have too many people sitting on the sidelines – in fact, there are now about 94.7 million not in the labor force.  Even though their latent demand shares are as low as 5%, those on the fringes now account for more than 61% of our job shortage, and that number is growing.  To name just two categories, the almost four million Americans either discouraged or not having looked for work for a year or more is a lot, and is now over half as many as the 7.5 million officially jobless.  As for compensation, this army of idled workers is the only explanation we need for wage growth being nonexistent yet again.    

Overall, December’s jobs numbers were good.  We needed that 292,000 gain.  Yet the core problem of people unsuccessfully wanting to work remains, and did not improve last month.  We need to pay attention not only to those who qualify as officially jobless, but to the others, who could quickly absorb a disturbing 10.7 million jobs.  The turtle did, indeed, take another step forward, but not nearly as large a one as many will think. 


Thursday, December 31, 2015

New Year’s Resolutions on Jobs and Beyond We’d Like to See

Our annual promises to ourselves have three requirements which are both necessary and sufficient.  First, they must be things we can personally control – no fair, for example, resolving to win the lottery.  Second, they must be beneficial to those doing them, which precludes such as starting smoking.  Third, and most importantly of all, they must be plans on which the person has no intention of following through. 

In that spirit, what would be suitable proposals from the major players, and groups of players, in American employment?  Here’s what Royal Flush Press suggests. 

President Barack Obama:  As long as my country could quickly fill more than 15 million additional work opportunities, as shown by the American Job Shortage Number (AJSN), I will push for increases in their quantity, and let their quality take care of itself.

Republican Presidential Candidates:  I will help keep America great by supporting a massive infrastructure repair and improvement project, which will create millions of jobs in the process.

Democratic Presidential Candidates:  I will fight for ALL United States citizens to have better opportunities to work and support themselves, even straight white Anglo men, and not just to improve life for existing employees.

Speaker of the House Paul Ryan:  I will coordinate the Republican representatives to do what is right for overall American prosperity, not just for people with the top 1% of income or net worth.

Columnist Paul Krugman:  I will use my Nobel Prize-caliber skills as an economist to encourage better jobs policy, even if it disagrees with liberal orthodoxy.

Columnist Charles Krauthammer:  I will make my criticism of Obama less incessant and move on to other topics, including jobs and the economy, at which I can be constructively influential.

Janet Yellen and the Federal Reserve:  Until the AJSN tells us we are fewer than 15 million jobs short, we will neither raise interest rates again nor threaten to do so.

New Hampshire and Iowa Republican Voters and Caucus Participants:  We will vote for a genuine, reasonably experienced candidate who understands that politics involves deal-making and compromises.

New York Times Editorial Board:  We will get educated about cost-of-living differences around our country before again proposing that all jobs everywhere must pay at least half-again as much as what countless unemployed and underemployed Americans in the hinterlands would be delighted to work for.

Employers:  We will stop crying about skills gaps and labor shortages, and train inexperienced workers, pay market rates for experienced ones, or both. 

Me, and everyone else:  As the Moody Blues put it 47 years ago:  Keep as cool as you can.  Face piles and piles of trials with smiles.  It riles them to believe that you perceive the web they weave.  And keep on thinking free (emphasis mine).

Happy New Year, everyone!

Wednesday, December 23, 2015

The Year in Jobs – Good, Bad, and Just Different

Historians, if they care, will say that 2015 was a slow year on the employment front.  It was more than that, though, and those of us who lived through it know what else was afoot. 

The best news came from the statistics.  In the latest available year-over-year comparison, November 2014 and 2015, official unemployment dropped over one million.  The number of discouraged workers fell 100,000, and those in other marginally attached categories were off as well, led by the count of people wanting work but not trying for it for a year or more down almost 400,000.  The long-term unemployed, or those out for 27 weeks or longer and still looking, were off 25 percent from 2.8 million to 2.1 million, and the number of people working part-time for economic reasons, or wanting a full-time opportunity but not finding one, improved from 6.9 million to 5.8 million.  The AJSN (American Job Shortage Number), showing latent employment demand, dropped more than 1.3 million to another post-recession low, but tells us our country could still fill more than 17.2 million additional positions.  Average private-sector pay improved modestly but more than inflation, up 2.1% from $24.66 per hour to $25.20.  On the other side, those saying they did not want a job kept rising and ended up more than 2.7 million to 89 million, and labor force participation was off from 62.8% to 62.4%.

A good year can mean few efforts to improve, and that is what happened otherwise.  On the jobs front, President Barack Obama’s administration did almost nothing.  Proposals from Democrats consistently missed the mark, with an overemphasis on different average pay between the sexes, a totally unrefined number reflecting literally dozens of factors other than discrimination, and higher minimum wages, which can only cut the amount of work.  When 2016 presidential candidate Hillary Clinton, as her competitor Bernie Sanders had done before, proposed the large infrastructure building plan our country badly needs, she hit a sour note by saying it should create vast numbers of middle-class jobs, which all but assures that even a moderately conservative legislature will reject it.  The Republicans offered a mixed bag on how to improve work and the economy, ranging from removing anti-employment regulations (great, but why are they there now?) and comprehensively maximizing both renewable and non-renewable energy resources (good), to cutting corporate taxes (companies are cash-rich as it is) and repealing Obamacare, maybe in their heart of hearts to replace it with nothing (as bad an idea for employment as it is for our country’s health).  The Federal Reserve acted as if there was a tidal pull to raise interest rates, and not only did that but discussed doing it again in a few months, which not only gratuitously endangered stock prices but showed they can’t stand prosperity. 

Some things this year simply changed.  While 3D printing went nowhere widespread, drones and self-driving cars roared to the front of technological progress news, and by this time two years from now are more or less certain to be replacing human workers.  The sharing economy, headed by gypsy cab networks Uber and Lyft and semi-legal hotel service Airbnb, continued to grow and grab headlines, but their peak may be in sight, with their managements now trying to fight off being forced to join the adult business world through unionization and required working condition improvements.  The acceptability of paying people to complete various chores, through the likes of TaskRabbit, seemed to spill over into normal jobs, with companies as large and established as Target and The Gap taking to telling their employees minutes in advance that they will neither be working nor earning money that day.  Unlike such now-implemented developments as robot sobriety-checking bartenders, the stories about what might be called Amazon’s office-job intensity made front pages, reminding us how simple supply and demand can make jobs ever more demanding.  A flock of articles on the best and worst cities for careers documented that internal United States differences are as large as ever, and showed us that the recent principle of the Sun Belt being optimal no longer holds, with former easy-job standbys Orlando and Las Vegas now well behind the likes of once rusty Pittsburgh.   

So what’s coming up in 2016?  I hope we can continue to avoid a recession, but we may not, as even if our public policy and private decisions prove well-tuned, both closely connected China and Europe are in trouble.  Education’s role in getting jobs will attract even more attention, with students and their parents increasingly incisive about the true values of the many choices.  With no trends or new tax laws to stop it or even slow it down, economic inequality, and with it the pooling up of money in corporations and the very wealthiest people, will get more extreme.  Because of that, the Fed will discover that no matter how much cash is in circulation, inflation will barely if at all challenge two percent, and months after they send interest rates up again they will bring them back down, when lower job creation numbers and increasing official unemployment scare them.  Somebody will get elected president and, according to the oddsmakers backing up their predictions with money, it will probably be Clinton.  That will mean either four or eight years of the same course we have been on, for better or worse, but with the jobs crisis not likely to stay muted.  As the numbers say, we have been lucky with American employment – may that continue for as long as it can.