Category Archives: Unemployment

“The End of Employees”

Naked Capitalism | February 03 2017 

The Wall Street Journal has an important new story, The End of Employees, on how the big company love of outsourcing means that traditional employment has declined and is expected to fall further.

Some key sections of the article:

Never before have American companies tried so hard to employ so few people. The outsourcing wave that moved apparel-making jobs to China and call-center operations to India is now just as likely to happen inside companies across the U.S. and in almost every industry.

The men and women who unload shipping containers at Wal-Mart Stores Inc. warehouses are provided by trucking company Schneider National Inc.’s logistics operation, which in turn subcontracts with temporary-staffing agencies. Pfizer Inc. used contractors to perform the majority of its clinical drug trials last year….

The shift is radically altering what it means to be a company and a worker. More flexibility for companies to shrink the size of their employee base, pay and benefits means less job security for workers. Rising from the mailroom to a corner office is harder now that outsourced jobs are no longer part of the workforce from which star performers are promoted…

For workers, the changes often lead to lower pay and make it surprisingly hard to answer the simple question “Where do you work?” Some economists say the parallel workforce created by the rise of contracting is helping to fuel income inequality between people who do the same jobs.

No one knows how many Americans work as contractors, because they don’t fit neatly into the job categories tracked by government agencies. Rough estimates by economists range from 3% to 14% of the nation’s workforce, or as many as 20 million people.

As you can see, the story projects this as an unstoppable trend. The article is mainly full of success stories, which naturally is what companies would want to talk about. The alleged benefits are two-fold: that specialist contractors can do a better job of managing non-core activities because they are specialists and have higher skills and that using outside help keeps companies lean and allows them to be more “agile”.

The idea that companies who use contractors are more flexible is largely a myth. The difficulty of entering into outsourcing relationships gives you an idea of how complex they are. While some services, like cleaning, are likely to be fairly simple to hand off, the larger ones are not. For instance, for IT outsourcing, a major corporation will need to hire a specialist consultant to help define the requirements for the request for proposal and write the document that will be the basis for bidding and negotiation. That takes about six months. The process of getting initial responses, vetting the possible providers in depth, getting to a short list of 2-3 finalists, negotiating finer points with them to see who has the best all-in offer, and then negotiating the final agreement typically takes a year. Oh, and the lawyers often fight with the consultant as to what counts in the deal.

Continue reading “The End of Employees”

Baby Boomers not to Blame for lack of Jobs

by Bud Meyers | December 16 2016

Baby Boomers are not to blame for the dramatic rise in the number of people “not in the labor force”. Retirees and those on disability are making for a smaller and smaller share (on a monthly basis) as to the number of people “dropping out” of the labor force.

A little over half (56.8%) of those in the U.S. who are not employed and “not in the labor force” receive some form of Social Security. To date (12/16/2016) 54 million working-age American adults are receiving Social Security benefits (retired, disabled, widowed, etc.) out of a total of 95 million working-age American adults who are not in the labor force.

Only 18% of the additional people who the Bureau of Labor Statistics added to the category of “not in the labor force” since last month had retired on Social Security (as the number of those receiving disability DECREASED); the other 82% of those who were added to the category of “not in the labor force” are just without jobs, but are not counted in the 7.4 million who are “unemployed”. From November 2016 to December 2016 (over the past month alone) the U.S. had an additional 366,275 people NOT IN THE LABOR FORCE that did NOT retire or go on disability.

41,174,259 Nov.
41,082,060 Oct.
92,199 MORE people retired

8,833,909 Oct.
8,821,435 Nov.
12,474 LESS people on disability

A difference of 79,725 who are now on Social Security since last month and are no longer in the labor force — from a total of 446,000 additional people who are now “not in the labor force” from Nov to Dec. Over time, more and more people “not in the labor force” have been exceeding the number going on Social Security because there has not been enough job creation to keep up with those graduating from school (not comparing to population growth or the employment-to-population ratio because of foreign-born workers: Foreign-Born New Hires Outpace Native-Born)

Continue reading Baby Boomers not to Blame for lack of Jobs

Iowans on their wages: ‘I’m not stupid or lazy. It’s just not there’

Mike Kilen | October 21 2016 | Des Moines Register

FORT MADISON, Ia. — After being laid off from her factory job in 2008, Becky Haage took a job at Dollar General.

She started out making $8.50 an hour and moved up to $11 an hour as an assistant manager, but says she knew that was as much as she could make at the retail job.

“Retail is almost sickening to me, how much corporate America makes and throws peanuts to their workers, who are working so hard,” she said. “So you just have to fight for yourself, is what it’s come down to.”

The anemic rise in wages over the past five decades is one factor stirring unease among voters as the Nov. 8 election nears.

In Iowa, wages for low- and middle-income workers have not increased as much as for high-income earners.

And Iowa workers have seen even slower wage growth than their counterparts across the country. In the past 35 years, their wages dropped to 81 percent of the U.S. average, while the cost for Iowans to purchase all goods and services is roughly 90 percent of the U.S. average, said economist Dave Swenson of Iowa State University.

In other words, it’s cheaper to live in Iowa, but average wages of about $42,000, which have increased only $2,300 in seven years, don’t necessarily cover living costs

Presidential candidates Hillary Clinton and Donald Trump have both supported spending on infrastructure to create jobs and a boost in the minimum wage — Clinton to $15 an hour and Trump to $10 — but they differ on other strategies to boost wages. Trump, the Republican nominee, supports cutting taxes and reducing costly regulations, while Clinton, the Democratic nominee, has promoted plans to grow the economy through investment in manufacturing and clean energy.

Some economists see recent signs of improvement, including last month’s Census Bureau national data that showed a 3.8 percent gain in real median household income in 2015.

That’s little comfort to employees like Haage, who has struggled to find better-paying work since her layoff eight years ago, amid the Great Recession, and now makes $11.50-an-hour at a Fort Madison factory.

The factory worker

“I’m not a genius. I haven’t gone to college,” Haage said. “But I’m not stupid or lazy. It’s just not there. Used to be, you work at a factory, and you have it made. With two of us working factory jobs, we should have it made. We don’t. We’re paycheck to paycheck.”

Both Haage, 41, and her husband, Dan Haage, 47, were laid off from factories in Missouri during the recession. They moved to Fort Madison four years ago with their three children.

She eventually left Dollar General for a temporary job at Silgan Containers, slipping plastic sleeves over can lids in the canning factory, for $11.50 an hour. Her husband found a job at a nearby factory starting at $20 an hour, and with union backing has been able to move up to $25 in the last four years.

“It’s not like we are starving, but we could be better off,” Becky Haage said.

They have student loans from when her husband returned to college after his layoff and are trying to buy a house on contract. The house needs a new roof, windows and a bathroom remodel.

Continue reading Iowans on their wages: ‘I’m not stupid or lazy. It’s just not there’

How they manage to hide a weak jobs market with numbers

caucus99percent | October 18 2016

On June 6, Federal Reserve Chair Janet Yellen said in a speech at the World Affairs Council that the U.S. economy was “now fairly close to the … goal of maximum employment.”

At President Obama’s State of the Union address, he proudly claimed to have created a “more durable, growing economy” with “15 million new private-sector jobs since early 2010”.

Both Yellen and Obama have the numbers to back up their claims. So why is the public’s economic outlook still negative? Why has nearly half of the unemployed given up looking for work?

Some 59 percent of those who have been out of work for two years or more say they have stopped looking, the Harris Poll of unemployed Americans showed. Overall, 43 percent of the jobless said they have given up, according to the poll released in conjunction with Express Employment Professionals, a job placement service.

“This is a tale of two economies,” Express CEO Bob Funk said in a statement. “It’s frightening to see this many people who could work say they have given up.”

Something doesn’t add up.

The political shills may not want to admit it, but the workers are always right about the labor market. Their opinions are the only ones that really matter.

There is more than one way this disconnect of official stats from reality is done.

For starters, there are the people filing new and continuing unemployment claims.

Initial filings have remained below 300,000 for 84 straight weeks — the longest streak since 1970 — and continuing unemployment claims, at 2.05 million, are at the lowest level since 2000….

New laws implemented across several states after the recession have cut the duration of benefits. Until 2011, all states paid at least as many as 26 weeks of aid to eligible, unemployed individuals, according to an August report from the Congressional Research Service. Now, about eight states have less generous plans in effect, ranging from as few as 12 weeks of aid in Florida and North Carolina, conditional on the state’s unemployment rate. That makes it less attractive for people to file a claim to begin with.

unempl

Continue reading How they manage to hide a weak jobs market with numbers

Great Depression Unemployment Would Be 1.7% Using Today’s Unemployment BLS Calculations

The Great Depression’s highest unemployment came in 1933 at 24.75% (or 25% if you round up).

The 1933 U.S. population was 125,579,000; the Labor Force was 51,840,000; the number of unemployed was 12,830,000.  As a percent of the Labor Force, 24.75% were unemployed; as a percent of the entire population, 10.2% were out of work.

This is what is remembered most about The Great Depression: massive unemployment at 25% and long lines to the soup kitchens.

They calculated unemployment simply back then:
Unemployed / Labor Force  = Unemployment Rate  (12,830,000 / 51,840,000 = 24.75%)

 19321933Jan 1997Jan 2009Dec 2012Jul 2016
1. Population (U.S.Census Bureau)124,840,000125,579,000272,650,000307,000,000313,914,000322,762,018
2. Labor Force (DLT not for 1932 & 1933)51,250,00051,840,000135,456,000154,210,000155,597,000159,287,000
3. Percent of population working (labor force / population)41.1%41.3%49.7%50.2%49.6%49.4%
4. Unemployed (BLS)7,158,00012,058,00012,299,0007,700,000
5. + Not in Labor Force (BLS)66,829,00080,529,00087,918,00094,333,000
6. + Discouraged Workers (BLS)397,000734,0001,068,000591,000
7. = All Unemployed

12,060,00012,830,00074,384,00093,321,000101,285,000102,624,000
8. Labor Force Unemployment Rate (unemployed / labor force)23.5%24.7%54.9%60.5%65.1%64.4%
9. Population Unemployment Rate (unemployed / population)9.7%10.2%27.3%30.4%32.3%31.8%
10. Actual number of people working (labor force – unemployed)39,190,00039,010,00061,072,00060,889,00054,312,00056,663,000
11. Employment Rate (Actual Number of People Working / Labor Force)76.5%75.3%45.1%39.5%34.9%35.6%
Modern U-3 unemployment rate (BLS)1.6% (7% of 23.5%)1.7% (7% of 24.7%)4.9% (7% of 64.4%)
Change in population from 1932 (people added since 1932)739,000147,810,000182,160,000189,074,000197,922,018
Population growth (number of times the population has doubled) 2.52.52.6

Since The Great Depression, the following categories (definitions included) have been added (the common thread in all these categories is that people are all without jobs):

  1. 1948 – Unemployed persons (Current Population Survey) (from the BLS Glossary):
    Persons aged 16 years and older who had no employment during the reference week, were available for work, except for temporary illness, and had made specific efforts to find employment sometime during the 4-week period ending with the reference week. Persons who were waiting to be recalled to a job from which they had been laid off need not have been looking for work to be classified as unemployed.
  2. 1975 – Not in the labor force (Current Population Survey)  (from the BLS Glossary):
    Includes persons aged 16 years and older in the civilian noninstitutional population who are neither employed nor unemployed in accordance with the definitions contained in this glossary. Information is collected on their desire for and availability for work, job search activity in the prior year, and reasons for not currently searching.
  3. 1994 – Discouraged workers (Current Population Survey) (from the BLS Glossary):
    Persons not in the labor force who want and are available for a job and who have looked for work sometime in the past 12 months (or since the end of their last job if they held one within the past 12 months), but who are not currently looking because they believe there are no jobs available or there are none for which they would qualify.

In addition, in 1994, Marginally attached workers (Current Population Survey) (from the BLS Glossary) was added, they are identified as a percent:
Persons not in the labor force who want and are available for work, and who have looked for a job sometime in the prior 12 months (or since the end of their last job if they held one within the past 12 months), but were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. Discouraged workers are a subset of the marginally attached.

Continue reading Great Depression Unemployment Would Be 1.7% Using Today’s Unemployment BLS Calculations

“July Jobs Data Nowhere As Strong As Headline”

Tyler Durden | August 06 2016 | Zero Hedge 

One week ago, the BEA admitted that it had “found a problem” when it comes to calculating GDP numbers. Specifically it blamed “residual seasonality” adjustments for giving historical GDP numbers a persistent optimistic bias. This came in the aftermath of last week’s shocking Q2 GDP report which printed at 1.2%, less than half of Wall Street’s consensus.

Today, seasonality made another appearance, this time however in the much anticipated July jobs number, which unlike the woeful Q2 GDP number, was the opposite, coming in far higher than expected. In fact it was higher than the top Wall Street estimate.

consensus drift

And, just like in the case of GDP, it appears that seasonal adjustments were the culprit for today’s blowout headline print which excluding the Arima X 13 contribution to the headline number, would have been notably weaker.

As MUFG Securities strategist John Herrmann wrote in a note shortly after the report, the “jobs headline overstates” strength of payrolls. He adds that the unadjusted data show a “middling report” that’s “nowhere as strong as the headline” and adds that private payrolls unadjusted +85k in July vs seasonally adjusted +217k.”

In Herrmann’s view, the government applied a “very benign seasonal adjustment factor upon private payrolls to transform a soft private payroll gain into a strong gain.

Continue reading “July Jobs Data Nowhere As Strong As Headline”

About the July Jobs Numbers

From Shadowstats:

• Just a Week into Headline 1.2% Second-Quarter GDP Growth, New Trade and Construction Spending Details Promise a Downside Revision

• Trade Deficit Widened and Deepened in Revision, Worst Since 2007

• With Quarterly and Annual Growth Collapsing Anew, Real Construction Spending Growth Was Weakest Since 2011 Series Trough

• Ten Years after its June 2006 Pre-Recession Peak, Real Construction Spending Remained Down 26% (-26%) from Recovering that Benchmark Level

Month-to-Month Unemployment Data Remained Meaningless and Nonsensical, Heavily Skewed by Inconsistent and Not-Comparable Seasonal Adjustments

• Though Heavily Bloated by Seasonal-Factor Distortions and Add-Factors, Annual Payroll Growth Effectively Held at a 29-Month Low

• July 2016 Unemployment: U.3 Held at 4.9%, U.6 Notched Higher to 9.7% and the ShadowStats-Alternate Rate Rose to 23.0%

• Annual M3 Growth Eased to 4.1% in July 2016, from 4.5% in June,

 

The July numbers:

U3: 4.9% (June was 4.9%)

U6: 9.7% (June was 9.6%)

Shadowstats: 23% (June was 23.9%)

Not in the Labor Force: 94,333,000 (June was 94,517,000)

Labor Force Participation Rate: 62.8% (June was 62.7%)

Jobs Created: 255K (P) (June was 292K (P)) (Note: May had its second revision; originally it was 38K, then revised downward to 11K, now revised up to 24K)

 

Oddly

Obama’s job creation has been at best, erratic and inconsistent during his time in office.

Now with an election  just over 3 months away, the lipstick is being heavily applied to his jobs pig.

There are no coincidences.

 

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Why this Job Market is Still Terrible: The Politically Incorrect Numbers Everyone is Hushing up

Wolf Richter | August 05 2016 | Wolf Street

For individuals, it has barely improved since the Great Recession.

If you have a salary well into the six figures, stock options, nearly free healthcare, and other benefits such as access to free gourmet lunches and dinners at the company’s food court, you might have missed something that a lot of folks feel every day: It’s still a very tough battle out there in this job market. And here is why.

Today we got what was called a “stellar jobs report”: Non-farm payrolls rose 255,000 in July. In the other component of the report, the household survey showed that 420,000 new jobs were created. There are now a record 123.9 million full-time jobs. Government hiring was strong. Numerous sectors added to payrolls. And the unemployment rate remained stuck at 4.9%, with 7.8 million people deemed officially unemployed.

So everyone was happy. Well, certainly the stock market was. The S&P 500 closed at a new high. The Treasury market started worrying about a Fed rate hike, and the 10-year yield rose to 1.59%

But on an individual basis, on a per-capita basis – and this is what people feel when they’re looking for a job or asking for a raise – these “stellar” figures depict a job market that is only a little better than at the worst moment of the Great Recession.

On its population clock, the Census Bureau estimates that the US population on August 5, 2016, at 4:49 p.m. ET (yup, down to the minute) was 324.17 million.

That’s up from 308.76 million in April 2010. Since the darkest days of the Great Recession, the US population has grown by 15.4 million.

Continue reading Why this Job Market is Still Terrible: The Politically Incorrect Numbers Everyone is Hushing up

May 2016 Jobs Number Revised Downward to 11,000

Jobs

Despite the preliminary June jobs report of 287,000the May jobs report of 38,000 (which was awful) was revised downward to 11,000 (even worse yet).

Screen Shot 2016-07-18 at 8.28.48 AM

There was not much change in economic conditions to explain the jump in the June numbers, so expect them to revised by the next jobs report.

 

Unemployment

May had awful jobs numbers (originally 38,000, revised downward to 11,000) and the U-3 unemployment rate dropped from 5.0% (April) to 4.7% (May).  June U-3 unemployment increased to 4.9%.  Notice what happened: bad jobs report in May caused unemployment to go down, and good jobs report in June caused unemployment to go up.

Screen Shot 2016-07-18 at 8.40.00 AM

 

People Not In The Labor Force

Continue reading May 2016 Jobs Number Revised Downward to 11,000