Jobs and the Job Market
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» Normxxx - Jobs Lost, Lower Pay
It's Not Just the Jobs Lost, but the Lower Pay in the New Ones
By EDMUND L. ANDREWS | August 9, 2004
WASHINGTON, Aug. 8 - The stunningly slow pace of job creation, which sank to growth of just 32,000 in July, has provided new ammunition in an intense political debate over job quality.
For months, Democrats have said that the long-delayed employment recovery was concentrated in low-wage jobs that paid far less than those that were lost. White House officials replied that the available data failed to settle the matter one way or the other.
The data is still inconclusive. But the weakness in job creation and the apparent weakness in high-paying jobs may be opposite sides of a coin. Companies still seem cautious, relying on temporary workers and anxious about rising health care costs associated with full-time workers. Many economists say that over the long term, the most vulnerable positions are those at the low end of the wage scale that require fewer skills and are easily replicated.
Even now, at a time when a disproportionate number of new jobs appear to be lower-paying ones, there has been growth in some high-income occupations like accounting, architecture and software.
Yet the earnings gap between the highest-paid employees and the rest of the work force is still widening, as it has over most of the last 30 years. The trend is most striking in factories, which accounted for the bulk of job losses in the last three years and tended to pay above-average wages.
In contrast to previous recoveries, when companies rehired a large proportion of laid-off workers, manufacturers have added only 91,000 jobs this year, having eliminated more than two million jobs in the previous three years.
The largely permanent decline in manufacturing employment, which has been more acute after this recession than in previous ones, spans all levels from blue-collar workers through senior management. It has coincided with a bulge in the number of jobs in low-paying fields that are comparatively easy to enter: retail sales, hotel services and clerical work.
The ragged pattern of the recovery has given rise to the political debate, with Senator John Kerry, the Democratic nominee, saying that new jobs pay, on average, $9,000 a year less than the jobs that were lost.
White House officials disagree, saying that such calculations are based on an erroneous comparison of median wages between industries that are expanding and contracting. The main error, they say, is that even low-wage industries like retailers and fast-food chains hire high-income executives and managers.
"McDonald's has C.E.O.'s and accountants, and investment banks hire janitors," said N. Gregory Mankiw, chairman of the president's Council of Economic Advisers. "Simply knowing what broad categories are rising and falling doesn't tell you anything about the jobs people are getting."
But a growing number of analysts say the evidence increasingly suggests that the current recovery has indeed been tilted toward lower-paying jobs. Industries ranked in the bottom fifth for wages and salaries have added 477,000 jobs since January, while industries in the top fifth for wages had no increase at all, according to an analysis of Labor Department payroll data by Economy.com, an economic research firm.
"Since employment peaked, we've lost many more higher-paying jobs than lower-paying jobs," said Mark Zandi, chief economist at Economy.com. "In recovery, we've created more lower-paying jobs than higher-paying jobs."
Though acknowledging that the payroll data was inconclusive, Mr. Zandi said that the pattern had become firmer over the last month and that it was increasingly similar to what had been found in the Labor Department's household survey, which categorizes work by occupation as well as industry.
But many economists say the long-term pattern, and problem, are quite different.
Daniel Aaronson, a senior economist at the Federal Reserve Bank of Chicago, said the pattern of high-paying and low-paying jobs routinely fluctuates with economic cycles. "When aggregate employment growth is strong,'' Mr. Aaronson said, "you see more jobs created in higher-income sectors, and when employment growth is weak, the number of those jobs just tanks. We shouldn't be concerned about short-term wiggles in the data, but on the bigger issues of increasing productivity and increasing worker education.''
Other economists say the more enduring pattern is the widening gap between people with different levels of education.
"You want to think of two job markets - roughly speaking, one for college graduates and the other for high school graduates,'' said Frank Levy, professor of economics at the Massachusetts Institute of Technology and an author of a new book on the subject, "The New Division of Labor.''
"The market for college-grad jobs over the last four years has been expanding,'' Professor Levy said. "But the market for high school graduates has been deteriorating, with production and clerical jobs shrinking and being replaced by lower-paying service sector jobs.''
Other analysts say the long-term trend is more complicated, noting that real wages for middle-income workers have been losing ground to those in the top 10 percent of earners over most of the last 30 years.
The problem confronting President Bush is that job creation of all kinds has been slower in this recovery than in other ones, and White House officials acknowledged they were disappointed by Friday's report.
Employment finally seemed to surge in March and the economy added just over a million jobs in the first six months of the year. But the nation still has about 1.2 million fewer jobs than when Mr. Bush took office, and the work force has expanded by more than a million since that time.
Adjusted for inflation, average hourly wages have fallen slightly in the last year. And for many who have lost their jobs as a result of plant closings and layoffs, the impact has been more acute: a recent survey of displaced workers by the Labor Department found that 57 percent of those who had found work were earning less than they did in their old jobs. As of December, when the survey was taken, 4 of 10 displaced factory workers had yet to start a new job.
-- posted by Normxxx
» Normxxx - Late-Summer ''Delayoffs''
Watch for Those Late-Summer ''Delayoffs''
Job cuts that make the headlines, but that are slated to take place over an extended period, freeze spending not only by individuals who ultimately lose their jobs but also by many of their co-workers.
By Stephen Taub, CFO.com | September 15, 2004
Is the nation's employment picture really getting any brighter?
Earlier this month we learned that the August unemployment rate held steady at 5.4 percent, down from its recent high of 6.3 percent in June 2003. That same week the Business Roundtable reported that 88 percent of the CEOs it surveyed expect to keep their staffing at the same level or higher in the next six months.
And yesterday, in a survey of 16,000 U.S. employers by Manpower Inc., the employment firm announced that the hiring pace for the fourth quarter will probably remain consistent with the past two quarters.
According to the survey, 28 percent of respondents plan to add staff in the fourth quarter, while 7 percent expect to reduce their payrolls. A majority — 60 percent — expect no change in their staffing levels. Even so, Manpower chairman and chief executive officer Jeffrey A. Joerres asserted in a statement that "hiring plans remain the most upbeat they have been since the hiring boom of the late 1990s that continued into the new millennium."
Trouble is, there seems to be a disconnect between predictions and reality. In the past week, a slew of large companies have announced thousands of layoffs that feel less like the late 1990s and more like early 2002:
• Electronic Data Systems Corp. announced that it may cut 15,000 to 20,000 jobs. If it follows through, EDS will lop off nearly one-sixth of its workforce over the next two years.
• Financially troubled Delta Air Lines Inc. announced that it would eliminate 6,000 to 7,000 jobs, or about 10 percent of its work force, over the next 18 months and scrap its Dallas hub.
• US Airways, which employs 28,000 people, filed for bankruptcy earlier this week; you can be sure some layoffs will follow.
• A regional, Alaska Airlines, will cut nearly 900 jobs and close its Oakland maintenance facility.
• In another industry indicating a major slowdown in business, Mitsubishi Motors Corp. announced that it will end second-shift production at its only U.S. auto plant and lay off about 1,200 workers.
• Dishware maker Oneida Ltd. will eliminate about 500 jobs.
• Goodyear Tire & Rubber Co. will cut 340 jobs in its engineered products and chemical businesses.
These are real job losses, not theoretical future hires. And the nature of the industries dominating these large layoffs — airlines, autos, industrial products, and chemicals — portend a slowdown of the economy as a whole.
What's more, when companies like EDS and Delta announce plans for huge layoffs — then add that those layoffs will take place over an extended period — they exacerbate the adverse impact on the economy. These "delayoffs" freeze spending not only by individuals who ultimately lose their jobs, but also by many of their co-workers who believe their jobs are endangered, even though they eventually survive the cuts.
Yesterday we also learned from the Department of Commerce that August retail sales (excluding autos) rose 0.2 percent, in line with analysts' projections. Retail sales overall, however, fell 0.3 percent, more than the projected decrease of 0.1 percent. Will September bring us another month of pocketbooks pinched tight and wallets tucked away? Stay tuned.
The contents of this letter/report does not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.
The content of this message is not to be construed as constituting market or investment advice. It is intended for educational purposes only. Individuals should consult with their own advisors for specific investment advice.
-- posted by Normxxx
» Normxxx - US loses 400,000 IT jobs
US loses 400,000 IT jobs
By John Oates | Wednesday 15th September 2004 08:34 GMT
America saw 403,300 hi-tech jobs disappear between April 2001 and April 2004. More than half the jobs lost were lost after the recession was pronounced officially over, by the National Bureau of Economic Research, in November 2001. San Francisco and San Jose were the worst-hit places, according to the survey from the University of Illinois-Chicago.
The fall represents 18.8 per cent of America's technology jobs - researchers estimate there are 1,743,500 hi-tech jobs in total. The survey looked at jobs in six areas and was paid for by the Washington Alliance of Technology Workers - a Seattle group which wants to unionise Microsoft workers.
Marcus Courtney, president of WashTech, noted that only a few years ago, the high-tech economy in the U.S. was the most dynamic sector and touted as the new economy that was going to be the backbone of job creation for the future as the nation moved away from its manufacturing roots. "It is stunning to think that in every region of the country, we have fewer high-tech jobs today than we did three years ago. We must focus on exporting our products instead of our jobs to turn this critical situation around."
"Most of the time the focus is on the month to month unemployment and job creation numbers. This report provides a three-year look at what those monthly statistics have meant for high-tech workers and their families," said Snigdha Srivastava, researcher at the UIC Center for Urban Economic Development.
-- posted by Normxxx
» Kirk - Backups are back
.The article misses the most likely reason: Many are comming back as CONTRACTORS where their "new jobs" don't show in the data.
It is not just traffic on the road:
There are clues that the uptick goes beyond the typical post-Labor Day bump. Transit ridership is up on BART, light rail, Caltrain and on the Altamont Commuter Express, which also suggests more people are working -- or the highway commute would be easing.
This is good news. 
Kirk
http://www.mercurynews.com/mld/mercuryne...
posted on Thu, Sep. 16, 2004
Backups are back
DESPITE WORKFORCE FIGURES, TRAFFIC TIE-UPS RISE IN REGION
The state says that 11,000 fewer people are working in Santa Clara County this year. But commuters, Highway Patrol officers and traffic reporters all agree that traffic is turning nasty again, with freeways and intersections jamming up.
So, here's a puzzler: Where are all those cars heading? The unemployment office?
Part of the answer is seasonal. Traffic always picks up some after Labor Day, when kids are back at school and fewer workers are on vacation.
But it's clear that something else also must be happening -- maybe a higher percentage of the workforce is commuting, or commuting longer distances. Or maybe the job figures somehow lag what's happening on the highways, such as what happened in the early '90s when moderate growth was forecast but clogged highways previewed the dot-com boom.
Whatever the reason, the creep-and-crawl commute is back.
The morning backup on Highway 87 stretches until 10 o'clock. Dozens of cars idle on the ramp from south Interstate 280 to I-880 at 9:30 a.m. Traffic is down to 40 mph on Highway 101, widened just a year ago outside Morgan Hill. Tie-ups on I-580 begin as early as 2:30 p.m. and last until 7.
Highway 17 through the Santa Cruz Mountains, Highway 101 along the Peninsula and I-680 over the Sunol Grade -- all roads where traffic seemed to disappear during the depths of our recession?
Delays, delays, delays.
No, not as horrendous as four years ago at the peak of the dot-com boom, but still . . .
``It's been terrible,'' said Celeste Tillman, who has traveled over highways 1 and 17 for 14 years.
Added Brad Houser, an Almaden Expressway commuter: ``Worse, definitely.''
John McLeod, who has been broadcasting South Bay traffic reports since 1965 -- the last two years for KLIV (1590-AM) -- is hearing it too.
``Drivers were calling in the other day about 280, saying it was really slow all the way between 101 and 17,'' he said. ``They are frustrated and wanted to know what's causing it. I look at our computer screens -- nothing. No stalls, no accidents, nothing.
``You can only assume there are more cars on the roadway.''
Even the Highway Patrol is taking notice. CHP officers who commute over the Altamont Pass from 4:30 to 5:15 a.m. are having to leave home 10 to 15 minutes earlier to be on time for their morning shift.
``From the I-580 morning commute perspective,'' said officer Steve Creel, ``yes, it appears that there are more vehicles on the road.''
There are clues that the uptick goes beyond the typical post-Labor Day bump. Transit ridership is up on BART, light rail, Caltrain and on the Altamont Commuter Express, which also suggests more people are working -- or the highway commute would be easing.
Need more evidence? There has been a rash of big-rig crashes, a tip that 18-wheelers are having trouble negotiating a surge of compacts, pickups and SUVs.
Congestion levels reached record highs in 2000, when 60 percent of local freeways had traffic traveling under 35 mph. That's bumper to bumper.
By last year, just 39 percent of the freeways in Santa Clara County had traffic that bad. Drivers were whizzing along at the speed limit on once-congested highways. Traffic hadn't been this light since 1997. Caltrans will release updated data later this year.
The hot spot is Highway 87 near Interstate 280. Traffic inches along in the two northbound lanes and some drivers want metering lights kept on later.
``At least until 10,'' said Steve Brock of San Jose, saying that when meters go off at 9 a.m., the road is at a snail's pace.
Highway 85 turned into an autobahn a couple of years ago, but jams are suddenly back. When Ed Davenport popped onto that freeway last week after 9 a.m., he was shocked. At that late hour, it took 25 minutes to cover five miles.
``It was stop and go -- way too much stop, not enough go -- all the way to 237,'' he said.
Even the notorious Sunol Grade -- the highway bellwether of the economy -- defies the latest job report.
In 1995, the trip over the Sunol Grade ranked as the 28th most congested in the Bay Area, so far down the list of hot spots that it seldom was mentioned on radio reports.
Three years later as the economy began to roar, I-680 jumped to No. 1 -- the only year any highway in the region has topped the Bay Bridge as the most congested location. But in the past couple of years, vroom. Drivers have been flying well above the 65 mph limit.
It was so light that consideration was given to removing the camera that had been installed near Mission Boulevard for TV stations to monitor traffic.
``We'd turn that camera on and there was nothing out there,'' said KTVU (Ch. 2) traffic reporter Sal Castaneda. ``Why even show it?''
Then, last week, commuters suddenly blanketed all four southbound lanes. A sea of red lights had returned.
``It was `wow, it's the old Sunol Grade,' '' Castaneda said. ``Now we're glad we kept that camera.''
Contact Gary Richards at mrroadshow@mercurynews.com or (408) 920-5335.
-- posted by Kirk
» Kirk - Re: Re: Backups are back
In response to message posted by Normxxx:exactly!
Temps are usually hired first when companies worry about the economy further down the road... but they need help NOW. After 6 monhts, the temps often turn into full time employees since they are trained and it is more expensive to train new ones if they leave for a better paying temp job.
-- posted by Kirk
» Normxxx - Re: Re: Re: Backups are back
In response to message posted by Kirk:No. Businesses are now using temps in place of permanent workers. They save the overhead, which by now is running over 50% of direct compensation! MSFT had some temps on the "payroll" for over 5 years, or until they got sued and also got into trouble with the IRS and SS. That's also the big savings of overseas workers-- direct salaries are moving right up there.
Remember, we are now some 2 - 3 years into the recovery?
-- posted by Normxxx
» Kirk - Re: Re: Re: Re: Backups are back
In response to message posted by Normxxx:what he heck are you arguing about?
I said there are more working now that don't show up in the job numbers so the recovery is better than the numbers indicate as verified by the traffic.
I didn't say business have not switched PERMANENTLY to CONTRACTORS which are quite differnt than temporary workers. This is not just in high tech. My friend owns a surfboard and windsurfing shop with his brother. They converted their employees over to contractors. One does board repairs. Others teach windsurfing or run the rental shop or surf board shop. It avoids much of the mess in CA that make it impossible to make money in a small business. Of course, the contractors have to pay their own medical and if business slows... they don't get paid as they are often paid on what they deliver.
-- posted by Kirk
» Normxxx - Re: Re: Re: Re: Re: Backups are back
In response to message posted by Kirk:I wasn't arguing. I was just pointing out a structural change in the job market which casts some doubt on your statement:
After 6 monhts, the temps often turn into full time employees since they are trained and it is more expensive to train new ones if they leave for a better paying temp job.
We are all "temps" or "contract workers"-- or, in other words, pretty much "piece workers." In a 24/7 world, the sweat shop is back.
-- posted by Normxxx
» Normxxx - Do we know a good situation when we see it?
EDITORIAL COMMENTARY: Jobs by the Numbers
Do we know a good situation when we see it?
By THOMAS G. DONLAN, Barron's | 20 September 2004
THE REASON THAT ECONOMICS has been called the dismal science is that its honest practitioners offer so little comfort to politicians and other wishful thinkers. Since money is the measure of all things, economic facts are easy to gather -- at least they have been since the invention of the cash register. To some, that is dismal. If we can know a dollar was spent on ice cream, we can know it won't be available later to spend on potatoes.
We also can know, or should know, that dollars spent on wages won't be available later to purchase new equipment or build new factories, and so later there will be fewer jobs, less well-paid, than there might have been had we spent less.
Many of our leaders would prefer to hear something else -- for example, that businesses can spend more money on wages and benefits and still have enough profits to create more jobs, or that corporate profits can be cut without cutting investment and productivity.
What is really dismal is that there are so many economists ready to feed the fire of political redistribution. Multipliers and money illusions are the kindling wood; inflation is the gasoline. Reckless economists advise politicians to favor consumption over investment, to favor labor over capital, to favor jam today over meat and potatoes and jam tomorrow.
Both parties are easily tempted by such advice. In the current election season, for example, one candidate takes credit for stimulating the economy with tax cuts and (less frequently mentioned) runaway spending. The other promises to stimulate the economy with a different set of tax cuts and his own exorbitant spending proposals. Each argues over whether the other guy's program will raise the national debt by $3 trillion (it will), and whether his own program will cut the deficit in half in four years (it won't).
Changing Share
Over the Labor Day weekend, a Washington economics spa called the Center for Budget and Policy Priorities produced a study intended to be a fire-starter for another round of efforts to create jobs. The center has its own view of the dismal science, which is to make everybody believe that things are dismal.
The center announced that, since the end of the recession in November 2001, only 15% of the growth in national income had gone to wages and salaries, while 47% had gone to corporate profits.
Not entirely true: Another 28% of the growth had gone to workers' health insurance and other benefits, so the distribution was more even than at first blush -- 43% for workers, 47% for corporate profits. (Landlords and proprietors earned the other 10%.)
Set aside the fact that today's workers, in their role as future pensioners, are in serious need of more corporate profits so their invested retirement funds don't go the way of those in steel, coal and airlines. Just look at what the report really shows:
The center focused on the growth in national income since the trough of the recession, not on the size of the whole pie. Corporate profits in the second quarter this year ran at a seasonally adjusted annual rate of $985 billion, out of $11.5 trillion of national income. That's 8.5% of national income.
The pie goes mostly to the workers. Also at a seasonally adjusted annual rate, workers' pay and benefits currently are 56.5% of national income -- $5.3 trillion in wages and $1.2 trillion in benefits. Back in the fourth quarter of 2001, profits were $591 billion, or 6% of the $10.2 trillion national income, compared with $5.9 trillion for workers' pay and benefits, which was 58% of national income.
If the change in share means anything, it means that corporate employers as a group kept a bit more of their work force on staff than needed in the hard times, and took a hit on the bottom line because of it. As times got better, their profits had to grow faster just to get back where they belonged.
Many observers, including some national political correspondents, swallowed the message from the Center for Budget and Policy Priorities without even noticing the hook. The center focused them on the relative magnitude of the change; they failed to notice that the dollar amount of growth in wages and benefits was more than all after-tax corporate profits.
That's dismal.
Changing Power
As we mentioned in a Labor Day editorial commentary, the market share of union membership in the private sector has declined substantially. We celebrated the rise of economic freedom and worried about the decline of "legacy" industries unable to compete while carrying the burden of ossified union contracts and unfulfillable pension promises.
Unfortunately, we gave short shrift to the economic effects of the decline in union power. To fill the gap there came an annual report by the Economic Policy Institute called "The State of Working America." The authors updated their data, considered their assignment and offered this conclusion:
"This falling rate of unionization has lowered wages, not only because some workers no longer receive the higher union wage, but also because there is less pressure on nonunion employers to raise wages." Indeed, in 2003, the average union pay scale was $30.76 an hour in wages and benefits, but the average nonunion job paid $18.11 an hour.
Like most people in search of "good jobs," these economists working at a union-sponsored think tank did not answer a more important question: Are union jobs on average worth $30.76 an hour in wages and benefits? Do the labor inputs in their industries cumulatively produce more than $30.76 per hour per person of added value? Their employers know the answer, and could -- if they dared -- cite productivity and wage rates to explain why employment in certain industries is rising and why it's falling in other industries. One apt definition of a "good job" is a job that pays more than the worker is worth -- though in the long run that might be a bad job.
Changing Jobs
A leading economic analyst, Sen. John Kerry, has made it abundantly clear that he cares more about paychecks than productivity. He promised the Detroit Economic Club last week:
"We will create good-paying, middle-class jobs right here in America. Today, if a company is torn between creating jobs in Michigan or Malaysia, we now have a tax code that encourages you to go overseas."
Setting aside the ridiculous assertion that presidents create jobs or destroy them, the real danger is that old political bugaboo, the demand for a "level playing field" that's actually tilted toward favored interests. Currently, the tax code doesn't care whether a company goes to Michigan or Malaysia -- it taxes business profits too much wherever the business goes. Kerry wants to tilt the tax code to build a Berlin Wall around the American economy. It would keep capital and jobs from escaping the way the East Germans prevented their workers from escaping. (He also endorsed the equally futile goal of energy independence, no matter what the cost.)
If Kerry lived up to his campaign rhetoric (it's doubtful that he would be so powerful or so foolish), the U.S. economy would gradually look like that of East Germany, stagnating in a cesspool of autarky. Americans would pay too much for goods and services that are cheap and readily available elsewhere in the world and would have little left over for investment in the future. Eventually, they would have no future.
You can't blame a challenger for running against an economic downturn. His job is to point out problems and offer different solutions. Kerry's political problem is that there are so few economic problems.
Yes, there has been a jobless recovery: The economy lost 1.6 million nonfarm payroll jobs between March and November 2001 -- the months of decline in GDP -- and another 870,000 jobs were lost in the 21 months of recovery from November 2001 to August 2003. From there to June 2004 1.2 million jobs were created, but that left the economy with 1.2 million fewer jobs than there were when the recession started.
As significant as the number of jobs lost, however, is the number of jobs that existed when the recession began. That also was unprecedented, at 132.5 million. The recession in employment saw a modest decline from a very prosperous starting point. Compare it with losing nearly three million jobs from a starting point of 91.5 million, as happened in the tough recession of 1981-82.
Most people didn't lose their jobs or take pay cuts this time; most have moved ahead. Today's 5.4% unemployment rate isn't dismal. It would have looked like a difficult goal to the economists of any era between 1929 and 1995.
[Normxxx Here: The U.S. still has the best relative job situation overall for workers of any country in the world. ]
-- posted by Normxxx
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