A Brighter Jobs Report for a Change

There is today a bright spot to report in the nation's unemployment picture. For the first time since the recession began in 2007, the nation's unemployment rate fell. According to the Bureau of Labor Statistics, the unemployment rate edged down from 10.2 percent in October. to 10.0 percent in November, and nonfarm payroll employment was essentially unchanged.

Nonfarm payroll employment was down 11,000. In the prior 3 months, payroll job losses had averaged 135,000 a month. In November, employment fell in construction, manufacturing, and information, while temporary help services and health care added jobs.

In November, both the number of unemployed persons, at 15.4 million, and the unemployment rate, at 10.0 percent, edged down. At the start of the recession in December 2007, the number of unemployed persons was 7.5 million, and the jobless rate was 4.9 percent.

Among the major worker groups, unemployment rates for adult men (10.5 percent), adult women (7.9 percent), teenagers (26.7 percent), whites (9.3 percent), blacks (15.6 percent), and Hispanics (12.7 percent) showed little change in November. The unemployment rate for Asians was 7.3 percent, not seasonally adjusted.

Among the unemployed, the number of job losers and persons who completed temporary jobs fell by 463,000 in November. The number of long-term unemployed (those jobless for 27 weeks and over) rose by 293,000 to 5.9 million. The percentage of unemployed persons jobless for 27 weeks or more increased by 2.7 percentage points to 38.3 percent.

The civilian labor force participation rate was little changed in November at 65.0 percent. The employment-population ratio was unchanged at 58.5 percent.

The number of people working part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed in November at 9.2 million. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

About 2.3 million persons were marginally attached to the labor force in November, an increase of 376,000 from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 861,000 discouraged workers in November, up from 608,000 a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.5 million persons marginally attached to the labor force had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.

The labor report came in ahead of analysts' expectations which had forecast a rise to 10.4 percent. Moreover, economists had predicted an inflection point in the late Spring or early Summer and while one month does not a trend make, the November report does break 24 months of an eroding jobs environment.

On the negative side, long-term unemployment remains a persistent thorn. The number of long-term unemployed (those jobless for 27 weeks and over) rose by 293,000 to 5.9 million. The percentage of unemployed persons jobless for 27 weeks or more increased by 2.7 percentage points to 38.3 percent setting another record.

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The Structural Unemployment Problem

Former Labor Secretary Robert Reich offers some worrisome thoughts on his way to the jobs summit.

[H]ere's the real worry. The basic assumption that jobs will eventually return when the economy recovers is probably wrong. Some jobs will come back, of course. But the reality that no one wants to talk about is a structural change in the economy that's been going on for years but which the Great Recession has dramatically accelerated.

Under the pressure of this awful recession, many companies have found ways to cut their payrolls for good. They've discovered that new software and computer technologies have made workers in Asia and Latin America just about as productive as Americans, and that the Internet allows far more work to be efficiently outsourced abroad.

This means many Americans won't be rehired unless they're willing to settle for much lower wages and benefits. Today's official unemployment numbers hide the extent to which Americans are already on this path. Among those with jobs, a large and growing number have had to accept lower pay as a condition for keeping them. Or they've lost higher-paying jobs and are now in a new ones that pays less.

Yet reducing unemployment by cutting wages merely exchanges one problem for another. We'll get jobs back but have more people working for pay they consider inadequate, more working families at or near poverty, and widening inequality. The nation will also have a harder time restarting the economy because so many more Americans lack the money they need to buy all the goods and services the economy can produce.

So let's be clear: The goal isn't just more jobs. It's more jobs with good wages. Which means the fix isn't just temporary measures to accelerate a jobs recovery, but permanent new investments in the productivity of Americans.

Let's take the situation in Tennessee where the unemployment rate is now 10.5 percent for example. In the Volunteer state, manufacturing jobs have fallen 12.6 percent in the past two years. According to Tennessee Manufacturing Register, 56,647 jobs were lost due to closures and layoffs. A month ago, Manufacture's News Inc. (MNI), a Chicago based manufacturer's directory publisher, released a report on the industrial jobs in Tennessee. They found that a total of 15,110 jobs were lost between September 2007 and September 2008 but that serious bleed came over the past year. 41,537 jobs in Tennessee's manufacturing sector were lost between September 2008 and September 2009.

But while the loss has been accelerated over the past year, the loss has been actually been on-going for quite some time. According to the MNI report, Tennessee's 7,711 manufacturers now employ 403,030 workers compared to 547,494 workers in 2001. That represents a 26.4 percent decline amounting to 144,464 job losses.

Among the hardest sectors over the past 24 months are the furniture and fixtures sector down 20.8 percent; the transportation equipment sector down 20.6 percent; the rubber and plastics sector down 20.4 percent; the lumber and wood saw sector down 19.5 percent; the textile and apparel sector down 16.1 percent; the industrial machinery and equipment manufacturing sector down 13.6 percent; the fabricated material manufacturing sector down 12.6 percent; and the stone, clay and glass manufacturing sector down 9.6 percent.

Some of these sectors are just never going to regain their footing even when the economy recovers. Our textile and apparel has been in a slow and steady decline for 30 years.

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Fault Lines - The Color of the Recession

Al Jazeera's Fault Lines presenter Avi Lewis hosts a debate about race & the US recession with Jesse Jackson of the Rainbow Coalition; Rosa Clemente, an activist and former Green Party Vice Presidential candidate; Linda Chávez, director of the conservative Center for Equal Opportunity and the Reverend Greylan Hagler of the United Church of Christ.

If we are living through a Great Recession, for people of color it is a quiet depression. Among whites with a college degree, the unemployment rate as of September 2009 is 4.0 percent. For blacks with a college degree, the unemployment rate is nearly twice as high at 7.2 percent. Hispanics fare slightly better. The unemployment rate for Hispanics with a college degree 5.6 percent.

The unemployment rate is higher among men than among women. For black men, 25 and over and at all education levels, the unemployment rate is 16.1 percent while for black women, 25 and over and at all education levels, the unemployment rate is 11.0 percent. For black men and women ages 15 to 24 without a high school degree the unemployment rate is a staggering 42.7 percent. The New York Times has an interactive feature where you can find the unemployment rate by various demographics.

Below the fold is a breakout of unemployment data (U3) by demographic groups.

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3Q09 GDP Revised Lower

The Commerce Department has revised its original estimate for GDP growth downwards from 3.5 percent to 2.8 percent. From the New York Times:

The nation's gross domestic product -- the total value of goods and services in the economy -- rose at an annual rate of 2.8 percent from July through September, the Commerce Department said, falling short of the 3.5 percent originally reported last month. The revised number, based on more complete data, was in line with analyst expectations.

But even though growth was slower, the third quarter still marked the end of the longest economic contraction since World War II, with the economy expanding for the first time in a year.

Much of the growth can be attributed to the billions of dollars the federal government has pumped into the economy as it seeks to mitigate the effects of a deep recession.

Popular government-financed initiatives, like a credit for first-time home buyers and the cash-for-clunkers program, have helped prop up spending in crucial sectors. But the nation is still grappling with the highest unemployment rate in 26 years, hampering efforts to persuade consumers to open their wallets again.

The Commerce Department said Tuesday that consumer spending in the third quarter increased 2.9 percent, falling short of the 3.4 percent it reported last month. That number worried some economists, who said it was below healthy margins and lower than the levels seen in 1983, when unemployment was equally high. Consumer spending makes up about 70 percent of the economy.

At the risk of sounding repetitive, the initial fiscal stimulus was insufficient, the labor markets remain weak and though the rate of bleed has slowed the economy continues to shed jobs. Moreover, the average length of unemployment is at a record high. Thirty-eight percent of the unemployed have been unemployed for 27 weeks or longer.

 

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Roubini: The Job Loss is Permanent

In an op-ed in the New York Daily News economist Nouriel Roubini, known as Dr. Doom for his dire yet accurate predication for the global economy, warns the US labor market remains weak and should continue to shed jobs through the end of 2010 at the earliest. He adds that "the jobs just are not coming back."

As for a response, he advocates a second round of fiscal stimulus.

There's really just one hope for our leaders to turn things around: a bold prescription that increases the fiscal stimulus with another round of labor-intensive, shovel-ready infrastructure projects, helps fiscally strapped state and local governments and provides a temporary tax credit to the private sector to hire more workers. Helping the unemployed just by extending unemployment benefits is necessary not sufficient; it leads to persistent unemployment rather than job creation.

The long-term picture for workers and families is even worse than current job loss numbers alone would suggest. Now as a way of sharing the pain, many firms are telling their workers to cut hours, take furloughs and accept lower wages. Specifically, that fall in hours worked is equivalent to another 3 million full time jobs lost on top of the 7.5 million jobs formally lost.

This is very bad news but we must face facts. Many of the lost jobs are gone forever, including construction jobs, finance jobs and manufacturing jobs. Recent studies suggest that a quarter of U.S. jobs are fully out-sourceable over time to other countries.

Other measures tell the same ugly story: The average length of unemployment is at an all time high; the ratio of job applicants to vacancies is 6 to 1; initial claims are down but continued claims are very high and now millions of unemployed are resorting to the exceptional extended unemployment benefits programs and are staying in them longer.

Based on my best judgment, it is most likely that the unemployment rate will peak close to 11% and will remain at a very high level for two years or more.

While the U3, the nation's official unemployment rate is 10.2 percent, the broader U6 rate, which measures underemployment, is a stunning 17.5 percent. The U6 tops the 20 percent mark in Michigan, Rhode Island, Nevada, California and South Carolina reflecting a widespread coast-to-coast malaise.  

I think it is time to for the nation's first urban President since Teddy Roosevelt to think about rebuilding urban America that has seen a deterioration in its infrastructure. It's time to rescue Detroit and offer a vision for greener, smaller, sustainable Detroit. It's time to look at Portland's success as a urban model. An extensive light rail project has been integral to Portland's success. Rebuilding our urban transportation infrastructure, that we foolishly abandoned in the 1940s and 1950s, is the sort of national project that can provide jobs in the short-term while addressing our long-term energy needs.

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