A Strong Jobs Report, Charted

From Oct. 3  NYT “TheUpshot” Blog by Neil Irwin:

Remember a month ago, when a crummy August jobs report raised some questions about just how robust the labor market recovery truly was? Never mind.

The September numbers are in, the last to be reported before midterm elections, and they show a job market that is recovering steadily but surely, with the unemployment rate falling below 6 percent for the first time since July 2008. And a solid 248,000 net new jobs were created.

But what are the finer details of the report telling us about the state of the American labor market? While the overall thrust of the report is unquestionably positive, there are some signs of continued weakness buried in the Labor Department numbers that give some reason for pause.

But first, the good news. The 248,000 gain in September payroll employment is part of a bigger trend over the last year, in which payroll gains have taken a decisive shift upward. You can see the shift in the chart of year-over-year job gains.

Over the course of 2014, the trend has risen from around 2.1 million net new jobs a year to 2.6 million as of September, the strongest since April 2006. That may be the single most important number to know to understand what people are talking about when they discuss the acceleration of American job creation.

So what about that unemployment rate? Crossing below the 6 percent threshold to 5.9 percent is surely a talking point we will hear from Democratic candidates in the remaining weeks of this election cycle, and there is no question it is good news.

And many of the internal details that are part of that decline in the unemployment rate are good, too. In September, 232,000 more people reported being employed and 329,000 fewer people reported being unemployed.

But here’s the less rosy sign of the report. The improving job market does not seem to be pulling people who left the labor force over the last few years back into it. In fact the size of the labor force actually ticked down by 97,000 in September, which in and of itself is too small a number in too volatile a series to make much of, but is part of a longer trend of the size of the labor force holding steady rather than increasing.

Read the entire article and see the graphics here.

North Carolina’s Misunderstood Cut in Jobless Benefits

From today’s NYT blog “The Upshot” by Justin Wolfers:

Since North Carolina effectively eliminated unemployment benefits last year for people unemployed 20 weeks or more, the state has become a symbol in the partisan wars over economic policy. People on either side of those wars have argued that it proves the economic advantages — or damage — of providing the long-term jobless with cash payments.

But digging into the data suggests North Carolina should really be a case study in people seeing what they want to see. Over the last year, the state’s economy has performed remarkably like the economy in nearby states.

North Carolina is more than a case study, too. It is a laboratory for the rest of the country, given that at the start of this year, the federal government eliminated all benefits for the long-term unemployed. Both political sides have looked to North Carolina for evidence to bolster the positions they have taken in this debate.

Republicans, who voted against extending unemployment benefits, argue that ending benefits will spur the long-term jobless to look harder for work; with more eager workers, employment will rise, conservatives say. Democrats, many of whom voted to continue jobless benefits for the long-term unemployed, say that ending benefits will force the unemployed to cut their spending, which may have broader ripple effects that could slow the labor market recovery.

My reading of the North Carolina experiment is that it provides little support for either side.

The question of whether to provide those benefits is an important one. But perhaps the answers should depend more on social values than on macroeconomic implications. After all, the point of unemployment insurance isn’t to boost the economy as a whole, but rather to ensure that an unlucky few don’t shoulder an unbearable burden. Whether we’re doing that is a question more of values than of economic statistics.

Read the entire article here.

The Downward Ramp

From NYT’s “Opinion” by Thomas Edsall:

With the bursting of the tech bubble at the start of the 21st century, two decades of growth at the high end of the job market — once the province of college graduates with strong cognitive abilities — came to an abrupt halt, according to detailed studies of employment and investment patterns by three Canadian economists. We are still feeling the ramifications.

New evidence produced by Paul Beaudry and David A. Green of the University of British Columbia, and Ben Sand of York University, demonstrates that the collapse, between 1980 and 2000, of mid-level, mid-pay jobs — gutted by automation or foreign competition (and often both) — has now spread to the high-skill labor market.

The U-shaped pattern of job growth characteristic of recent decades – strong at the top and bottom, but weak throughout the middle — has now become “a bit more like a downward ramp,” according to David Autor, an economist at M.I.T. who documented the decline in mid-level jobs in the 1980s and 1990s.

Preliminary findings suggest that this trend is alarming in almost every respect. Just one example: the drying up of cognitively demanding jobs is having a cascade effect. College graduates are forced to take jobs beneath their level of educational training, moving into clerical and service positions instead of into finance and high tech.

This cascade eliminates opportunities for those without college degrees who would otherwise fill those service and clerical jobs. These displaced workers are then forced to take even less demanding, less well-paying jobs, in a process that pushes everyone down. At the bottom, the unskilled are pushed out of the job market altogether.

Read the entire article here.

Shutdown: Complacency on Wall Street Could Be Worse Than a Panic

From the New York Times “DealBook” Blog by Jason Eissenger:

Don’t look to a market panic to save us.

We are in upside-down world, where a freak-out now would help stave off financial devastation later. By staying cool, the markets are making a crisis more likely.

Sure, the stock market has ebbed lower, but it hasn’t plunged. Short-term bond markets have hiccupped. Spreads on United States credit default swaps have widened, indicating a slighter greater fear of default, but nothing drastic. The financial media keep grasping at any movement to demonstrate investors are worried. But market participants simply don’t think that the government will end up doing something so obviously reckless and harmful as refusing to pay its debts.

Wall Street’s lack of worry reflects cynicism about Washington (who doesn’t feel that?) but also a deep misreading of how significant the ideological fissures are in the capital. Wall Street is misunderstanding the extremism of the House Tea Party Republicans who precipitated the government shutdown and debt ceiling crisis.

READ THE COMPLETE ARTICLE HERE.

Despite improving jobs report, unemployment remains the same

The Labor Department is reporting that the economy added 200,000 jobs in June, beating the expectations of analysts by about 35,000 jobs. The effective rate of unemployment remained the same at 7.6 percent, indicating that the better-than-expected performance is still inadequate for improving the jobless economic recovery.

Although Wall Street was anticipating the labor report in the hopes that it would signal a healthier economy, the figures and forecasting remain mismatched. The American economy has struggled to improve employment for the millions of individuals who remain out of work. In addition, most workers finding new jobs are discovering that they are worth less now than they were before the Great Recession.

In the New York Times today one worker reported that the inflated expectations of economists did not match her own diminished expectations regarding employment and wages. Sharon MacGregor, 42, of Paterson NJ, like so millions of other Americans who are out of work, is willing to work for much less than she used to earn. With a BA in psychology and 20 years of experience as a graphic designer, she has discovered in this labor market that experience and wages no longer match up.

“Seven years ago, I was making $63,000 a year,” MacGregor said. “If I asked for that now, forget it. I don’t want to work for so much less but I would, just to get back on the market and not to have a gap in my résumé,” she said.

The news from the labor department also prompted investors worrying about the Fed’s recent news that it would begin scaling back the stimulus money it has been pumping into the economy. Fed Chair Ben Bernanke last week said it would quit buying bonds when the unemployment rate hit 7 percent. However, an analysis of unemployment figures over the last year show that the unemployment rate has only dropped .06 of a percent since June 2012. At that rate, it will take another year for the struggling economy to reach a point where the Fed bond-buying program will end.

This is bad news for workers and investors alike. Workers are finding less employment opportunities and less well-paying jobs than before the financial collapse. Investors are finding less opportunities for profits that include job creation, which means most the profit now being generated by companies is dependent on doing more-with-less and shifting the financial burden onto workers desperate for jobs even if they pay less than their experience and skill set demanded several years ago.

Despite the glad-handing talk of economists and politicians alike that the American economy is vital and remains sound, the fact is that overall growth in economic output has been terrible. In the first quarter of this year, for example, the economy grew at an annual rate of 1.8 percent, well short of what is needed to create jobs, bring down the unemployment level significantly, and ensure what jobs are being added are good paying ones that will stimulate growth by encouraging consumers to spend.

July jobs report confirms weak pace of jobless economic “recovery”

The Labor Department released July’s employment figures today and once again there is little good news. According to the report the economy added 163,000 jobs last month even though the unemployment rate ratcheted up slightly to 8.3 percent. The number of additional jobs is mediocre by any other name, but the figure is double the jobs added in June and exceeded Wall Street’s doom-and-gloom forecast. This tarnished silver-lining was enough to provide the Obama administration with some spin traction by claiming that the “pace” of job growth is picking up.

Alan B. Krueger, the chairman of President Obama’s Council of Economic Advisers, said that Obama’s jobs plan would help those economic sectors that are struggling the most during this jobless recession, namely, public sector employees and construction workers.

“If you look at today’s jobs report, where we saw declines were construction and government education jobs,” said Krueger. “The main components of the Jobs Act would target exactly those two areas, by investing more in infrastructure and helping local governments keep teachers and first responders on the payrolls. I think it’s the kind of medicine that’s well targeted to the continuing areas of weakness in the job market.”

The devil is in the details, of course, and today’s report also provided Republicans with ammunition for their nauseatingly familiar mantra:  less government, less regulation, and less taxes means more investment by the private sector. Mitt Romney, the Republican presidential nominee, rehearsed the same tired lyrics Republicans have been singing for decades, laying the blame for America’s economic woes at the feet of the man who inherited the mess three years ago.

“This is an extraordinary record of failure. The president’s policies have not worked because he thinks government makes America work. He’s wrong,” Romney bleated.

Never mind that Obama has spent his first term cleaning up the mess left in the wake of Republican economic policy during the two terms that they controlled both the White House and Congress. Never mind the surpluses left by Clinton that Bush squandered. Never mind that the largest expansion of government spending since the New Deal was brought on by two wars and an expansion of Medicare. Never mind that the Republicans irrational fear of taxes has a created a climate in which it is impossible to govern because revenues are hamstrung by unaffordable tax cuts they want to keep extending into infinity. No, never mind the facts.

Admittedly, Obama’s economic policy has been less than admirable. Under Treasury Secretary Tim Geithner, many of the same Wall Street-favoring features of the Bush years have continued:  bail outs for irresponsible (indeed, criminal) investment banks, failure to regulate volatile markets like derivatives where trading smoke-and-mirrors continues with no accountability, failure to regulate investment bank shenanigans, and an ineffective response to Republican rhetorical nonsense on taxes.

Nevertheless, it is doubtful that an economy as large and complex (and corrupt!) as America’s can be turned around on a dime, let alone a single term, so Romney’s exhortations ring as hollow as the Republican economic fantasy that markets can do everything if we just leave powerful private actors to do as they please.

DOL reports jobless claims down, as workers give up looking for work

The Department of Labor announced that jobless claims were down from 9 to 8.04 percent in November, the single largest decline since March 2009. The fraction translates into roughly 120,000 new jobs created by private employers. However, the report grimly noted that the decline in jobless claims was also partly due to workers giving up looking for jobs in the grim labor market, particularly women.

The report also revised higher the average number of jobs created each month to 143,00 over the three-month period going back to September, an average that is higher than the historic low from May to August, in which anemic job growth signaled the unwillingness of investors and firms to take on new workers at the height of the European debt crisis and the earthquake in Japan that disrupted shipping and supply chains globally.

This November job “rally” can be traced in large part to retailers who added temp workers during the holiday season, so it is unclear whether there is cause for celebration as the transient nature of these 50,000 jobs may become all too apparent in January when retailers let go of their seasonal workers. (Can we expect a rise in jobless claims after the holidays?) In addition, this year’s record-breaking figures by retailers for Black Friday also improved prospects that consumers are more willing to spend in the hopes of a brighter economic future.

However, while economists are claiming that the labor report shows the economy is “improving at a faster clip,” the real news on the ground is that anemic job growth is hampering the economic recovery as workers without jobs spend less on goods and services and firms continue to find ways of cutting workers in order to bolster their bottom lines. The seasonal affective disorder known as “holiday shopping” is only a temporary respite from the really bad news, which is that the real wages of Americans are down and their credit card debt is on the rise again.

These are “not” the signs of a healthily recovering economy, but given the dismal performance and prospects of economic growth in the near future, economists, politicians and investors alike are holding onto this bare bit of news that jobless claims are down, literally, by .06 percent. This is an embarrassing piece of evidence that sound economic policy, which must include job creation (thank you very much, Republicans, for voting against jobs for Americans), has been substituted for the rather conventional approach of grasping at straws in a rising flood.