Friday, October 24, 2014

Republicans Ready for Senate Takeover With 46 Job-Related Bills: How Good Are They?


As of Thursday evening, sportsbook.com says the Republicans are 9 to 4 favorites to take over the United States Senate.  If and when that happens, the House, which has been Republican-dominated this term, will not see a need to work on any bills designed to improve United States employment.  It has already cleared 46 of them, which Speaker John A. Boehner has been pushing. 

What’s on the list, and how much would they help the American jobs situation?

  • Approve the Keystone XL pipeline.  Positive, as it would create jobs, and take America one step closer to, though still far away from, maximizing its energy resources and opportunities. 
  • Block federal regulation of fracking.  Slightly positive, for the same reasons.
  • Open national forests to timber companies.  Slightly positive, as jobs would be needed to cut it. 
  • Water projects in Oregon and California.  Positive, though may not be very labor-intensive.
  • Allowing business owners to record phone calls and meetings with federal government regulators.  Neutral – no real job loss or gain here. 
  • Repeal of the Affordable Care Act.  Negative.  Obamacare is adding jobs and will continue to do so.
  • The Ryan Plan, making changes to Medicare and Medicaid, cutting military and other spending, and reducing taxes.  Slightly negative. 
     
    How do these stack up, as a group, as jobs initiatives?  Puny.  And extremely partisan.
     
    The last three are not jobs bills at all.  The first and fourth are useful, though small and incremental.  There is no mention of the badly-needed infrastructure effort, or anything else nearly that broad-based and large.  Passing off these things as significant employment legislation shows Republican priorities are elsewhere.
     
    So, does that mean I’m happy with the Democrats instead?  No!  They are little better, with their emphasis on raising the minimum wage (negative) and climate change (slightly negative). 
     
    The 2014 midterms look bleak for jobs.  Maybe the unemployment drop is the reason, though both sides agree employment, and the rest of the economy, is the most important issue for voters – above Ebola, beyond the alleged evils of the National Football League, over the real or imagined need for more “diversity” in high-technology and other careers, even over guns. 
     
    So, vote for whom you will – but check their websites first.  Some have plenty to say, some have almost nothing.  We’ll get the leaders, and the jobs efforts, we deserve.  Yes, I’m grouchy this time – that will get better when both sides see the need to work together for the good of the country.  Such an epiphany may precede a severe and obvious need, but I’m not betting on it.    

Friday, October 17, 2014

The Midterm Election: Five Close Races, Viewed From a Jobs Perspective


Two weeks from Tuesday (yes, it’s that soon), Americans will go to the polls for the most important election in years.  The immediate impact of the choices people will make varies greatly from state to state, from quiet here in New York (no senatorial race, and the current governor very likely to continue), to many others with a close race for at least one major office. 

Below are five such contests, all described somewhere as “too close to call” or something similar.  How do the candidates in them see, and want to deal with, their state’s employment situations?  For this, I’ll forget their real or alleged general ideologies, and what others have said and assumed they would or would not try to do, and focus only on their own platforms, as described in their websites.  Who looks better in each?

First, we have the Georgia U.S. Senate contest.  Per Democrat Michelle Nunn, “job creation and economic growth is my top priority.” She mentions a need to “upgrade our aging roads, bridges, mass transit and rail, water and sewage lines, and port infrastructure,” reverse cuts in research and development spending, and “work to expand public-private partnerships to provide our young people with training, experiential learning and apprenticeships that better equip them to meet the needs of employers in Georgia.”  That last piece, tying schools and workers together, is a big improvement over the common and incorrect assertion that jobseekers’ education levels are to blame.  Republican David Perdue only mentions “revitalizing American manufacturing,” which in my view is somewhere between a distraction and a pipe dream, and he has very little to say about Georgia’s particular situation.  Big edge to Nunn.

Second, New Hampshire’s U.S. Senate race starts with Democratic incumbent Jeanne Shaheen.  She provides much about how to get more jobs there, from helping small businesses, which she calls “the engine of New Hampshire’s economy,” to “expanding the federal research and development tax credit and making it permanent” in support of science and technology jobs, which she claims “are projected to be the fastest growing occupations over the next decade.”  She also mentions energy and infrastructure.  Her opponent, Republican Scott Brown must be getting his support in other ways, since his website is a disaster – it doesn’t consistently work, has almost invisible print, and has links to information on some of his stands but not others.  He advocated “better jobs for all,” but offered nothing about how he could help with that.  Big edge to Shaheen.

Third, we have a gubernatorial contest in Kansas.  Incumbent Republican Sam Brownback has “growing the Kansas economy” at the top of his issues list, and sets a goal of 25,000 new jobs in the state for each of the next four years.  He lists no fewer than 21 explicit ways of achieving that objective, mostly by improving the general business climate, but also by supporting specific, named commercial initiatives.  His Democratic opponent Paul Davis, except for naming “creating good-paying jobs” as a priority, with no hint of how he would do that, has nothing at all on his website about helping Kansas employment.  Big edge to Brownback.    

Fourth, the next Illinois governor is on track to be either Democratic incumbent Pat Quinn or Republican challenger Bruce Rauner.  Quinn’s website jumps out with a request to “add your name if you agree it’s time to raise the minimum wage,” hardly the way to increase employment.  His page of issues has links to more on 11 of them, including “equality & inclusion” and “women & children,” and mentions his previous job creation in “Illinois’ Comeback,” but has no sections for employment or even for the economy in general.  Running on his record, the last-mentioned page has a detailed accounting of the positions added under his leadership, but “Blueprint for Illinois’ Future,” though showing him speaking above a sign touting jobs and opportunity, has nothing on either.  Rauner’s view makes us wonder if he and Quinn are in the same state; his website has “jobs” first in his list of issues, and starts by saying “We are in a jobs crisis.  Illinois has the worst unemployment rate in the Midwest and among the highest in the nation.  That’s unacceptable.”  However, he names only four ways to improve on that:  overhauling tax codes, creating right-to-work zones, reforming tort laws, and cutting workers’ compensation costs.  Those are not enough.  Quinn seems to have won in the past, but neither seems poised for the future’s employment, so I’ll call it a tie, and not a high-scoring one at that.

Last, the Wisconsin gubernatorial race pits Republican incumbent Scott Walker against Democrat Mary Burke.  Walker’s website has a whole large section on jobs, calling the economy “the top concern for families across Wisconsin,” and advocating “cutting taxes on small businesses, curbing frivolous lawsuits that drove costs up, eliminating the state tax on Health Savings Accounts, reforming the Department of Commerce into a true Economic Development Agency” and “immediately convening a Waste, Fraud and Abuse Commission that was intent on curtailing wasteful spending at all levels of state government.”  Burke, though also plagued with website readability problems, has “jobs” at the top of her issues list, and has a link to a 40-page (!) document with a long, specific, detailed jobs plan.  The course of action has proposals from both political sides, and shows outstanding effort and emphasis on what is hardly only a Wisconsin issue.  Edge to Burke.  

So what can we learn from these ten candidates?  There is great variation in how much they seem to care about American employment.  A good attitude on the jobs crisis can come from either Democrats or Republicans, and from incumbents or challengers.  Perhaps most of all, those doing the best with this issue are nearer the national political center than others, and, especially in the cases of Michelle Nunn and Mary Burke, show that they see merit in ideas more likely to be put forth by those in the other party.  Before voting, I recommend that you do the same with your state’s candidates for senator, governor, or U.S. representative – the results may be enlightening indeed.       

Friday, October 10, 2014

Ideas for Action From the G20 Labor and Employment Report – Good, but Not Enough


Two weeks ago I posted on an important report, issued by the International Labour Organization, the Organisation for Economic Co-operation and Development, and the World Bank Group, on jobs in the world’s 20 largest economies.  As well as a fine dose of straight information, explaining how the document terms the “jobs gap,” and what I have been calling the permanent jobs crisis, is unfolding in large countries from Germany to Indonesia, the report includes ideas for dealing with the problems we face.  What do these organizations recommend, and how good would those things be?

The first suggestion in the fourth section of the report, “Achieving strong, sustainable, and job-rich growth,” is increasing consumer demand, which, as correctly stated, is not only a result of poor employment but a cause of it.  Breaking out of this vicious circle is an advantage of federal stimuli, which, though sometimes necessary as at the beginning of the Great Recession, cannot go on indefinitely.  More government work in countries with the worst employment problems, also advocated in the document, is a better idea.  Overall, we have a conflict with tax revenues;  on one hand, we want to make them more progressive, as to impact fewer people and thus to hurt consumer demand the least, and on the other, the most regressive sources, such as VATs and sales taxes, are the most impervious to decreasing from a shrinking number of people working.  Resolving that will be our largest related challenge. 

The second area of recommendations is on improving employment.  The report mentions the destructive effect of long-term joblessness on the workers themselves, and correctly advocates strong social programs for the unemployed.  The United States, better off than many of the other G20 countries, has been remiss in not extending jobless benefits from its generally current 6 months, and we have simply had too much difficulty and controversy with food stamps.  European countries have done better here, but the poorer large countries, where such programs are needed more than anywhere else, have not.  When more acknowledge the jobs crisis as permanent, the need for such benefits will naturally be accepted by more and more conservatives, here and elsewhere.

Third, the report takes on increasing labor force participation, which it first correctly notes is not going anywhere in the more developed countries without more jobs, then likewise mentions it can be helped by incentives for companies to provide jobs, which is badly lacking now in the United States.  It also remarks on accommodations for older workers, which would indeed help more of them want work, if not to actually locate it more often.

Fourth, the document falls into a common trap – advocating much more jobseeker education and training.  As with efforts to give preferential treatment to women and minorities, more schooling does not help the population as a whole, but only raises competition for existing positions.  While some people do need something, greatly increased occupational training is no priority for either today’s or tomorrow’s total employment situation.

The last area the report addresses is economic inequality.  To its credit, its approach is to connect efforts to make income outcomes more equal with general employment growth, instead of trying to make the case that differences in financial results are inherently bad.  It mentions the need for higher-paying jobs, but does not recommend higher minimum wages for countries with already substantial ones.  The issue of workers shut out from even the lowest-paying positions is more of a problem in some developing G20 countries, where people have much less adequate anti-discrimination legal protection. 

In all, the ILO/OECD/WB report is thoughtful and moderate on recommended solutions, which should, as it implies in spots, vary vastly between countries.  What is missing is a look at more fundamental, instead of incremental, ways of dealing with this 200-year crisis, which would continue to transform lives even if all of the ideas listed here were successfully implemented for all 20 countries.  That is what we need the most.                

Friday, October 3, 2014

Stop Calling It a Recession: AJSN Hits 5-Year Low as US Jobs Shortage Drops to 18.45 Million


As did most analysts, I expected this morning’s federal employment data to be worse than it was.   I anticipated maybe 100,000 net new jobs to disappoint again, and the official unemployment rate to hold. 

It was better.  Not only did the Employment Situation Summary data far outperform these two estimates, with 248,000 and a drop from 6.1% to 5.9%, but the measures feeding into the American Job Shortage Number were almost all improved.  The result was the lowest AJSN since 2009, down almost 1.2 million as follows:

 

The number of unemployed fell over 800,000, some but not all due to more jobs generally available in September than in August.  There were 77,000 fewer discouraged workers, defined as those who thought no jobs were available to them, and over 400,000 – many – fewer reported wanting work but not looking for it for at least a year.  Once again with September more Americans stood up and were counted, as the non-civilian, institutionalized, off the grid, and otherwise unaccounted-for category decreased over one million.  The only significant exceptions were, as expected with the new academic year, the set of people wanting jobs but in school or training, up one-third, and the number that keeps going up, those claiming no interest in work whatever.  That last one is now over 86 million, and, even at its low and conservative estimate of 5% taking jobs if they were more available, it accounts for more latent demand than any category other than official unemployment. 

Compared with a year before, the AJSN was also greatly improved.  In September 2013, it was a hair short of 20 million, with the almost 2 million more officially jobless only partially offset by lower counts of those not having looked for work in the past year and those not wanting it at all.  Unadjusted unemployment was down also, all the way from 7.0% to 5.7%. 

The main four secondary statistics, though, were mixed.  While the count of those working part-time for economic reasons, or wanting full-time jobs but not finding them, edged 100,000 below the bottom of its 2014-long range at 7.1 million, the other three did not improve.  Long-term unemployed, or those looking for 27 weeks or longer, stayed at 3.0 million, and the employment to population ratio is still 59.0%.  The labor force participation rate dropped to 62.7%, a new post-1978 low. 

In the current scheme of things, September was a fine month.  Yet ever-lower labor force participation and ever-higher counts of people claiming no interest in jobs mean that America is not going back to work again.  That may never happen.  These are good times, however, and with the permanent employment crisis not being addressed are the best they will be.  Enjoy them while they’re here – if you have a job.

Thursday, September 25, 2014

G20 Labor and Employment Report – What Does it Say?


Earlier this month, the International Labour Organization, the Organisation for Economic Co-operation and Development, and the World Bank Group issued a 30-page document explaining the situation, as they and a wide range of statistics saw it, of the jobs situation in the world’s 20 largest economies, or G-20.  These countries come from six continents:  7 in Europe, 3 in North America, 6 from Asia, and 2 in South America, along with South Africa and Australia.  Their level of prosperity runs from as low as India and Indonesia to Japan, Germany, the United Kingdom, and of course the United States. 

The report includes a great deal in both hard information and opinions, and covers the issue of what it terms the “jobs gap,” or worldwide employment shortage, quite comprehensively in the space it takes up.  So what are the most noteworthy conclusions it reaches?

First, labor force participation rates seem low all over.  Even though the American rate, listed at 62.8%, is about the smallest it has been since the 1970s, it is still seventh highest in the G20.  In Italy, fewer than half of people aged 15 to 64 are working, and the entire European Union (its data often included in the report) is under 60%.  These numbers, though, conceal wide variations in the share of women with jobs, and the rate among American men is only tied for 13th.    

Second, United States unemployment among people 15 through 24, while high at 13.1%, ranks sixth best among the 20.  Spain and Italy are worst here, with staggering rates, respectively, of 53.1% and 42.6%.  Although Germany was third at 7.8%, the European Union overall is at a near-depression level of 22.1%.         

Third, the trend of net new jobs, which had climbed steadily since at least 1999, fell way off in 2008, starting two years during which the number of positions broke about even in the “emerging” G20 countries and lost about 10 million in the “advanced” ones.  Although the number of jobs in both groups has been consistently increasing since then, the trend line from 1999 through 2008, if it had continued, shows about 25 million more jobs in G20 advanced countries and 35 million more for the developing than there are.  That means the Great Recession, and slower growth since then, have cost 60 million positions.

Fourth, the 30% share of unemployed United States workers being jobless for one year or more is about average among the 16 G20 countries for which that data was available.   The places with the worst problem here are almost all in Europe, with 45% of unemployed people in the EU being out for a year or more.  On the other hand, South Korea and Mexico, with rates around 1%, must be doing something very right.

Fifth, as I documented for the United States in Work’s New Age, productivity and wages have long since parted company in advanced G20 countries as a group as well.  Since 1999, inflation-adjusted pay is up about 5%, but labor productivity, after dipping in 2008-2009, rose 17%.       

Sixth, the labor share, or the percent of total domestic economic output equaling what is paid for people’s work, has been dropping in 17 of the 18 G20 countries presented.  The trend of automation, a large input into changes in the labor share, seems therefore steepest in Spain, Italy, South Korea, and the United States in the advanced countries named, and in Saudi Arabia and Turkey among developing ones.   

Seventh, another trend from Work’s New Age is also solidly affecting the rest of the G20 – in all twenty, the share of people aged 55 to 64 with jobs is higher than the share of those 15 to 24, which would not have been the case a generation ago.       

What actions does the ILO/OECD/WB report recommend, and how good would they be?  That will be the subject of the October 10th post.  In the meantime, you can view the entire report at http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/---publ/documents/publication/wcms_305421.pdf.

 

Friday, September 19, 2014

Reuters on Yesterday’s Employment-Related Data: Too Rosy


Yesterday, a report with commentary on jobless claims and residential building was published in The New York Times and elsewhere.  Titled “Housing Data Is Mixed, but Job Figures Show Strength,” with a byline only of Reuters, it showed how such data can be misunderstood.  What do I mean?   Going through the article…

“The number of Americans filing new claims for unemployment benefits fell more than expected last week, suggesting that a sharp slowdown in job growth last month was probably an aberration.”

We can’t reasonably assess the robustness of new job growth through how many people are officially dismissed from old ones, have reasonable grounds to get unemployment compensation, and are not retiring or leaving by their own choice.  Reuters is hardly the only source to do that, but it still just doesn’t make sense. 

“While other data on Thursday showed that housing starts declined in August, upward revisions for groundbreaking in July offered hope that the housing market was continuing to improve.  “We have broad-based growth in the economy, including the housing market,” said Gus Faucher, senior economist at PNC Financial Services Group.”

Fine, but a country of 318 million people and rising, when demonstrably not in a recession, had darn well better have “broad-based growth.”  The issue is whether the level of said growth is a sign of strength, or whether it is just at a neutral point. 

“Initial claims for state unemployment benefits dropped 36,000 to a seasonally adjusted 280,000 for the week ended Sept. 13, the lowest level since July, the Labor Department said Thursday.”

The lowest level since July?  That’s two months!  So what?

“Economists polled by Reuters had forecast claims falling to only 305,000 last week. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, slipped 4,750, to 299,500.”

That’s not much of a difference – less than 2%. 

““This is consistent with that the Federal Reserve is expecting to see,” Mr. Faucher said of the data.”

So it seems Mr. Faucher wasn’t impressed at all, in effect giving this data a grade of C.  The tone of the article is more positive than that.    

“The data came a day after the Federal Reserve renewed a pledge to keep interest rates near zero for a “considerable time,” while hinting at a faster pace of rate increases than the central bank was signaling a few months ago.”

Keep them low they should and keep them low they will.  Janet Yellen clearly seems to realize, correctly, that the unemployment rate is not the only story.  If she is not aware of the American Job Shortage Number (AJSN) showing the country could quickly absorb almost 20 million more positions, she seems to act as if she is.   

“In a separate report, the Commerce Department said housing starts fell 14.4 percent to a seasonally adjusted annual pace of 956,000 units.  July’s starts were revised to show a 1.12-million unit rate, the highest level since November 2007, instead of the previously reported 1.09-million unit rate.”

A tad better, but that’s all.  Most of that is due to pent-up demand, as housing starts have been poor for years. 

“That helped take some of the sting out of the report, which also showed that permits fell 5.6 percent, to a 998,000-unit pace in August.  Single-family starts in the South, where about half of the single-family construction takes place, increased last month to an eight-month high.  Permits in the South hit their highest level since April 2008.”

Some better, some worse.  The only other major reason for any improvement in housing may be more subprime loans, as the Times also reported this past week. 

“Housing is clawing back after a setback caused by a rise in mortgage rates last year.  However, it remains constrained by a relatively high unemployment rate and stringent lending practices by financial institutions.”

And fundamentally greater job insecurity, with the permanent crisis as the root cause. 

“With the labor market gaining traction, though, economists expect housing activity to accelerate next year.  “The underlying momentum in the housing sector remains quite favorable and we expect building activity to rebound next month,” said Millan Mulraine, deputy chief economist at TD Securities in New York.”

Rebound to what?  Accelerate how much?  There is no substantial good news, other than the prospect of continuing to inch forward, on the American employment front now. 

“Last week’s jobless claims data covered the period during which employers were surveyed for September’s nonfarm payrolls.  Claims fell 19,000 between the August and September survey periods.  The drop suggested that payroll growth rebounded from August’s eight-month low, which most economists dismissed as a fluke, noting that payroll gains tended to be smaller in August because of problems adjusting the data for seasonal hiring.”

As this data is already seasonally adjusted, that looks like bending the map to me.  And it doesn’t matter much anyway – whether 140,000 net new jobs gained or 240,000, it still projects to close to a decade to get to what anyone could reasonably call full employment. 

“Employers added only 142,000 jobs to their payrolls in August, snapping six consecutive months of job increases above 200,000.  The jobless claims report showed that the number of people still receiving benefits after an initial week of aid fell 63,000, to 2.43 million, in the week to Sept. 6.”

Actually, the number of people using up their unemployment benefits but not working would be a good indicator, with higher numbers being bad.  That points to August being not a good month, and once more the jobs crisis going nowhere.  And nothing – nothing at all – in this report contradicts that at all.   So being positive about this incremental and mixed data is a disservice.  That’s just the opposite of what we need now.

Friday, September 12, 2014

Guaranteed Government Jobs: A Fourth Possible Jobs Crisis Solution?


An article came out in Salon last week advocating a new, rather large social program.  Its author Bryan Williams showed some advantages of the United States federal government providing jobs, with pay about $30,000 per year, for everyone officially unemployed. 

Such an effort would be expensive.  Williams multiplied $30,000 by 9.8 million unemployed to get $294 billion annually, but when the cost of benefits, and expenses putting these people into work settings of some sort, are added, it would be more like $500 billion.  Some of that, immediately, would be saved from other programs – the author estimated $28 billion less in unemployment benefits, $49 billion less in Medicaid, and “billions” from food stamps.  As well, $25 billion per year would be collected from the workers in payroll taxes.  By comparison, the remaining amount, about $390 billion, is well under 2013’s $585 billion Medicare cost. 

Clearly, with the jobs crisis permanent, such a program is worthy of consideration.  What are its other good and bad points?

Another advantage would be the stimulus effect of putting more money in the hands of people who may not have much.  It’s almost impossible to quantify how much that would be, but, clearly, when formerly unemployed people buy things they wouldn’t have bought before, those who sell them gain income as well, meaning even more spending and even more taxes collected.  In poorer areas in particular, not only current businesses would be helped but new ones would appear to deal with the increased demand.  We do not need to debate exact or even approximate amounts, only to realize they would be real and substantial.

A second good thing about an automatic employment program is that it would get necessary tasks  done, in particular infrastructure work.  A recent estimate claimed the country now needs $3.6 trillion of that by 2020 alone, and no other program to greatly step up its activity has even been seriously proposed.  The effort could potentially cover almost all of the infrastructure labor needed, with room left over to do many other constructive things. 

How about the downside?  Three problems come to mind.

First, assured government jobs would damage incentive for people to work at other positions much more than either a guaranteed income or the current safety net.  Giving people, say, $10,000 per year just for being American citizens would take some off the working rolls, but the bulk would still want to have cars, meals out, good private houses, and other things such a stipend would not cover.  If people knew they would always be employed, though, they would often care less about keeping their existing jobs, and quality and quantity of work would suffer across the country.  The same problem would happen with the government positions themselves.  As well, if everyone unemployed were assured of working for $30,000 per year, many would find ways of losing their lower-paying positions.  Both practices would be seriously destructive.     

Second, such a program would overemphasize official unemployment.  The latest American Job Shortage Number (AJSN) shows a national deficit of 19.6 million jobs, of which only an estimated 8.8 million would be filled by the country’s technically jobless.  The proposed effort would provide nothing for people in other categories who would work if the opportunities were truly there:  700,000 of the 775,000 discouraged; 2.9 million of the 3.6 million who did not look in the previous year; 1.1 million or one-tenth of those institutionalized, in the military, and off the grid; and even 4.2 million representing only 5% of those claiming no interest whatever in jobs.  Those people, more willing to work than many think, arguably need such a program more than many whose skills are fresher and contacts more current.

Third, a guaranteed jobs effort would be very hard to manage.  Dealing with the highly variable numbers of people needing it, assigning them to workplaces, anticipating how many could be used where, and handling those suddenly leaving would mean a lot of inefficiency, and a lot of $600 weeks for no work at all.  Especially given that it would take years to develop and implement the logistics of assigning people, there would be chaos for quite a while.  

So how much promise does assured federal jobs have?  It could be an improvement over long-term falling employment, but would need changes to be truly good, which could make it even more gigantic and unwieldy.  The stimulus effect, as well, could be offset by what could become an effective $15 per hour minimum wage, as most jobs paying less would be quickly vacated in favor of government opportunities.  There would also be temptations to go further with the program, as those on the left would not only lose little time in labeling jobs there as holding a stigma, but would push to make them pay closer to what they considered a living wage. 

Therefore, while the idea of guaranteed government jobs has some appeal, it would not be the right way to go.  Full marks to Bryan Williams, though, for presenting it – with a crisis this profound, we need more people doing just what he did.  His idea, as flawed as it is, gets a place with three other possibilities:  guaranteed income, shorter work hours, and payments for online contributions.  We need more.