Monthly Archives: March 2015

Temp Workers aren’t Temporary, they’re the Norm

by Bud Meyers, published February 21, 2015

First, let’s look at the number of unemployed Americans during the Great Recession…

depression_unemployed

On December 7, 1941 the Japanese bombed Pearl Harbor — and the U.S. went to war — and it expanded it’s industrial might to put millions of Americans back to work. Then in the month of September 1945, the U.S. suddenly had a loss of 1,967,000 jobs — because World War II had ended.

Fast forward to Ronald Reagan: In the month of September 1983, the Bureau of Labor Statistics showed a gain of 1,115,000 jobs. But the recovery during Reagan’s presidency did not include any month in which one million jobs were actually created — but it did include one month in which almost 700,000 striking AT&T workers had returned to work.

Fast Forward to the Great Recession. From February 2008 to December 2009 (over a period of 23 continuous months), the Bureau of Labor Statistics shows consecutive monthly job losses totaling over 8 million, as shown in the chart below from the Bureau of Labor Statistics.

2-20-2015

Continue reading Temp Workers aren’t Temporary, they’re the Norm

There Are Nearly Six Unemployed Construction Workers for Every Construction Job Opening

by Elise Gould, Working Economics blog, Economic Policy Institute, published March 10, 2015

If today’s labor market woes were the result of skills shortages, this would not be the case.

One of the recurring myths following the Great Recession has been that recovery in the labor market has lagged because workers don’t have the right skills. The figure below, which shows the number of unemployed workers and the number of job openings in January by industry, is a useful way to examine this idea. If today’s labor market woes were the result of skills shortages or mismatches, we would expect to see some sectors where there are more unemployed workers than job openings, and others where there are more job openings than unemployed workers. What we find, however, is that there are more unemployed workers than jobs openings in almost every industry.

The notable exception is health care and social assistance, which has been consistently adding jobs throughout the business cycle, and there are signs that workers in that industry are facing a tighter labor market. However, we have yet to see any sign of decent wage gains yet, which would be the final indicator that the labor market, at least for those workers, was approaching reasonable health.

Continue reading There Are Nearly Six Unemployed Construction Workers for Every Construction Job Opening

Another Dubious Jobs Report

by Paul Craig Roberts, published March 6, 2015

According to the payroll jobs report today (March 6) the economy created 295,000 new jobs in February, dropping the rate of unemployment to 5.5%. However, the BLS also reported that the labor force participation rate fell and the number of people not in the labor force rose by 354,000.

In other words, the unemployment rate dropped because the labor force shrunk.

If the economy was in recovery, the labor force would be growing and the labor force participation rate would be rising.

The 295,000 claimed new jobs are highly suspect. For example, the report claims 32,000 new retail jobs, but the Census Bureau reports that retail sales declined in December and January. Why would retailers experiencing declining sales hire more employees?

Construction spending declined 1.1% in January, but the payroll jobs report says 29,000 construction jobs were added in February.

Continue reading Another Dubious Jobs Report

Obama Administration Makes Unverifiable Claim of 545,000 IT Job Openings; H-1B Visa Boosting Likely Culprit

by Yves Smith, published March 11, 2015

Although the plural of anecdote is not data, we’ve found Slashdot over the years to provide reliable early warnings of what were to become pervasive practices in the US employment market. For instance, for well over a decade, Slashdot has regularly featured reader-submitted articles along the lines of “I’m a new graduate in IT and can’t find an entry-level job.”

The oldsters would explain how yes, none of the large and hardly any mid-sized companies were willing to train people. They’d send the yeoman work that used to be how young professionals learned their trade offshore. Of course, that meant that the US was choosing to give up its leadership position in computer science by refusing to develop the next generation of professionals, but no one seemed to care much about that. The seasoned types would explain to the stranded aspirant how to cobble together assignments to try to develop a decent skill set.

That pattern has been replicated in other professions, in particular law and accounting. So how will we have a service industry in 15 years with no experienced service professionals? The only consolation is that some of those people over 65 who need for financial reasons to keep working may have higher odds than they ought to, if they are in one of these hollowed-out fields, of continuing to find work.

With this background, we have in the same day, hat tip bob, two stories on Slashdot that say a great deal about the reality of the labor market versus the official hype. It’s noteworthy that the comments, which are typically fractious at Slashdot, line up almost uniformly on the “employers are looking for insanely specific and often unrealistic experience.” And why might that be? In the case of tech in particular, to justify bringing in more H-1B visa candidates.

Continue reading Obama Administration Makes Unverifiable Claim of 545,000 IT Job Openings; H-1B Visa Boosting Likely Culprit

Red States Gutting Worker Comp Laws

by Bud Meyers, published March 7, 2015

In President Obama’s proposed budget for fiscal year 2016, OSHA would be funded at $592.1 million — which includes the following increases: $4 million for State Plan states; $18 million for federal enforcement; and $5 million for whistleblower protections. But as Safety and Health Magazine notes: “Where things get sticky in his proposal is under standards development and federal enforcement, for which the administration is seeking a $3.3 million and $17.6 million increase, respectively. Given the Republicans’ historically sour view of enforcement in favor of compliance assistance, I have a hard time seeing that dramatic rise happening.”

As PoliticusUSA wrote in 2011: “It is understandable that business is not enamored with regulations, regulatory agencies, or in many cases their workers’ safety, especially when their sole regard is the bottom line. But their workforce is why they have a bottom line in the first place — and one would expect that ensuring the health and safety of the people making them millions would be every bit as important as profits; but apparently that is not always the case.”

And as the National Law Review recently opined about the proposed budget increase for OSHA:

As expected, the White House budget had Democrats praising it and Republicans expressing opposition. Senator Patty Murray (D-WA), ranking member on the Senate Committee on Health, Education, Labor and Pensions, described the White House proposal as “a strong starting point” for building a “bipartisan budget deal.” Representative Hal Rogers (R-KY), who chairs the House Appropriations Committee, called it “irresponsible.” (More here at the OSHA law blog)

Continue reading Red States Gutting Worker Comp Laws

Infrastructure Spending at Historically Lowest Level

by Bud Meyers, published March 10, 2015

Follow the money…

January 22, 2015 — Wall Street Journal: Qualcomm Gives Top Executives $95 Million in Stock Grants
March 9, 2015 — Forbes: Qualcomm Plans $15 Billion Stock Buyback, Hikes Dividend

Qualcomm is but one of many examples where worker productivity has been going — and where tax revenues have NOT been going. A CEO’s real “fiduciary duty” is to pay themselves first. Meanwhile, Hewlett-Packard will acquire the networking company Aruba Networks in a deal valued at $2.7 billion. (Just as Hewlett-Packard is but one of many examples.)

These corporations have been spending billions of dollars every year on mergers and acquisitions — and stock buybacks to increase the value of their executive stock-options. But yet, very little (if any) of their profits are invested in employees’ wages — because (the CEOs say) raising wages would slow hiring, reduce worker hours, cause layoffs, raise consumer prices, destroy the economy, and end life as we know it on Earth.

But what the “job creators” never tell us is, if they did raise workers’ wages, these CEOs might also have to buy one less beachfront mansion, a smaller private jet or a shorter luxury yacht.

If we tax the capital gains these corporate execs make off their stock-options as regular wages, we can pay for infrastructure. Otherwise, all that cash is going to be sitting idle in the Cayman Islands.

Congress should remove corporate tax loopholes and use the added revenues to invest in infrastructure, which has been falling behind other countries. Because of America’s skewed tax code (favoring the very wealthy and large corporations), it has allowed U.S. infrastructure spending to fall far behind China’s.

Continue reading Infrastructure Spending at Historically Lowest Level

Nearly At ‘Full Employment’? 10 Reasons Why The Unemployment Numbers Are A Massive Lie

by Michael Snyder, Economic Collapse Blog

What-Public-Domain-300x245On Friday, we learned that the official “unemployment rate” has fallen to 5.5 percent. Since an unemployment rate of 5 percent is considered to be “full employment” by many economists, many in the mainstream media took this as a sign that the U.S. economy has almost fully “recovered” since the last recession.  In fact, according to the Wall Street Journal, some Federal Reserve officials believe that “the U.S. economy is already at full employment“.  But how can this possibly be?  It certainly does not square with reality.  Personally, I know people that have been struggling with unemployment for years and that still cannot find a decent job.  And I get emails from readers all the time that are heartbroken because they are suffering through extended periods of unemployment.  So what in the world is going on?  How can the government be telling us that we are nearly at “full employment” when so many people can’t find work?  Could it be possible that the government numbers are misleading?

It is my contention that the official “unemployment rate” has become so politicized and so manipulated that it is essentially meaningless at this point.  The following are 10 reasons why…

#1 Since February 2008, the size of the U.S. population has grown by 16.8 million people, but the number of full-time jobs has actually decreased by 140,000.

#2 The percentage of working age Americans that have a job right now is still about the same as it was during the depths of the last recession.  Posted below is a chart that shows how the employment-population ratio has changed since the beginning of the decade.  Does this look like a full-blown “employment recovery” to you?… Continue reading Nearly At ‘Full Employment’? 10 Reasons Why The Unemployment Numbers Are A Massive Lie

Forced Out of the Labor Market

by Bud Meyers, published March 9, 2015

The highest-paid talking heads on the big cable news channels have been misreporting to millions of gainfully employed Americans that the labor force participation rate has been declining because: “People are leaving the labor force because they think they can’t find a job.

Not true at all. This is a myth that needs to be debunked.

This false reporting by the media might lead many good hard-working working people to believe that all these “lazy slackers” haven’t really been looking for work, and that instead, they might only be looking for a hand-out. This misrepresentation of the unemployed harms them that much more?—?with reduced jobless benefits and cuts in other social programs.

Please allow me make two points: First of all, most people aren’t “leaving” the labor force, they are being “forced out”. Most of the exceptions would be retirees, and the small percentage of disabled people?—?but even many of them would also prefer to work, if a job were offered to them.

Continue reading Forced Out of the Labor Market

Not in Labor Force at Record High (Tell Paul Krugman)

by Bud Meyers, published March 8, 2015

Paul Krugman at the New York Times is complaining about “Employment Truthers”. Why doesn’t Krugman also mention the labor force participation rate (LFPR), instead of just the number of jobs created?

Yes, the U.S. added 295,000 jobs in February 2015 — but we also see that the number of those “not in the labor force” has also risen again during that same time — from 92.544 million in January to A NEW RECORD HIGH of 92.898 million in February — for an increase of 354,000, which exceeds the 295,000 number of jobs created.

Over 11 million more are “not in the labor force” since the Great Recession officially ended in June 2009 — about the same number of jobs that were created during that same time. What does this mean? That 50% of new entrants are finding temp or low-paying jobs, while the other 50% are dropping out of the labor force?

Continue reading Not in Labor Force at Record High (Tell Paul Krugman)

Excess Profits Funneled to CEO Pay Packages

by Bud Meyers, published March 8, 2015

Corporate earnings, in many cases, are taxed lower than executive pay packages — which are also tax deductible as “employee wages”. It’s a win-win situation for the CEOs and other boardroom members, because they get paid with stock-options, which are taxed as “capital gains” — which is much lower than the top marginal rate for regular hourly wages and salaries.
In addition, these companies are using “stock buy-backs” to increase the value of their stock-option pay packages, rather than actually invest in the company or pay their regular employees better wages. And to do this, these companies have been borrowing money to buy back their shares, because interest rates are so low — making it a win-win-win situation for corporate execs.

Whenever you hear a CEO say, “I have a fiduciary duty to our investors”, they aren’t just talking about huge institutional investors or retirees trading from home online at Etrade, TD Ameritrade or Charles Schwab. The CEOs are speaking for themselves as well — because their executive compensation packages often include (if not mostly include) company shares as “incentives” to do whatever they can to raise their company’s share prices. They are setting their own salaries, year after year after year — even when they bomb at their jobs.

So a CEO’s real “fiduciary duty” is to pay themselves first. In the past several years, profits have been increasingly paid back to shareholders, rather than invested in hiring more people and/or paying their employees better. Instead, companies have been borrowing in order to buy back their own company stock, which not only boosts their company’s stock price for investors — but also for company executives, who are paid with stock-option grants as “performance pay“.

Forbes: “It’s increasingly common for common-man honchos to volunteer for a nominal $1 salary. And they may not want a cash bonus, either. Stock growth and capital gain is a lot more attractive and is taxed much more favorably … Facebook founder and CEO Mark Zuckerberg is now the company’s lowest-paid employee, according to its latest proxy filing. Zuckerberg — worth $27.8 billion mostly in Facebook stock — requested an annual wage of $1 in 2013, joining the ranks of a handful of other very wealthy CEOs who take a symbolically negligible base pay.”

And companies have been borrowing money to buy billions of dollars worth of stocks to make those shareholder payouts, because with interest rates so low, it’s a relatively cheap way to push stock prices higher. And that may be why some had pushed so hard for “quantitative easing” (QE) — and why they are so worried about the Fed raising interest rates:

Confessions of a Quantitative Easer: (Wall Street Journal) — “I can only say: I’m sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed’s first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I’ve come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time.”

Waiting for the $3 trillion payoff? (Al Jazeera) –“Excess [reserves] have exploded from $267 billion in October 2008 to $2.2 trillion in September 2013. Banks aren’t willing to lend the money out or because there simply isn’t the demand for the loans that could be created. Either way, the banks don’t have to lend excess reserves to realize a [profit] because the Federal Reserve pays 0.25% interest on them.”

Continue reading Excess Profits Funneled to CEO Pay Packages