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Recovery? What recovery?

10:29 am in Economy, Jobs by dakine01

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This morning (Sunday, April 8) I was at the laundromat here in beautiful downtown Ruskin, FL and picked up a copy of the local, Tampa area Jobs Finder free newspaper. I’m sure most all of you have seen these free papers for your local area.

As I skimmed this paper, it reinforced for me that there is no economic recovery, at least not in this part of Florida. When I picked the paper up, I noticed it was awfully skinny so I counted pages. Eight whole pages. With large ads covering each page so I counted up all the ads. Thirty-nine ads for 8 pages. Then I looked even closer. Two ads were for the paper itself. Another two ads were for “start your own cleaning company” services. Then I counted nineteen ads for various types of training programs. Not for jobs. For for-profit training programs that might, maybe, if you can afford it and complete it, maybe get you a minimum wage job if you can survive to complete the six month to a year plus training program being offered.

No ads for local delivery drivers. No handyman type ads. No manual labor/construction service ads. No help wanted for local businesses and restaurants. No ads for jobs for any of the thousands of job types one usually sees in these types of free newspapers.

Now granted, this is obviously anecdotal but I would wager that in a lot of parts of the country, this is the current norm. It isn’t much better with the ads on Craigslist or Monster or other online job search services. One of the metrics I use to check for job market improvements is the number of job ads from body shop/consulting services/head hunter agencies versus the number of ads from employers directly. My WAG is that the former ads are running nearly 10 to 1 over the latter. Businesses that are hiring directly are still able to be extremely picky about who they interview and hire.

But I guess we are not to worry. Everything must be getting better since the Beltway Village Idiots Pundits and Politicians seem to be in full pearl clutching mode after DNC Chair Rep. Debbie Wasserman Schultz went on CNN this morning and accused the Republicans of rooting for the economy to fail. Oh the horror of it all. Too bad that it seems to be beneficial to both parties to have the economy in doldrums. They all seem to forget that the 25M to 30M long term un and underemployed are each and every one, living, breathing, feeling human beings and not just statistics on the page full of numbers

And because I can:

Cross posted from Just A Small Town Country Boy by Richard Taylor

How does an interconnected global economy avoid a global recession?

1:04 pm in Economy, Jobs, Unemployment by dakine01

(photo: athoshun/flickr)

(photo: athoshun/flickr)

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As I was surfing through various news sites this morning (April 2), I noticed a number of articles discussing problems with the European and US economies which lead directly to the question I have posed in the title of this post:

How does an interconnected global economy avoid a global recession?

Unfortunately, I do not know the answer but if I had to guess, it would be to say “It can’t.”

The first article I noticed was from tha AP via Yahoo titled, “Euro unemployment spikes to record 10.8 percent.” Reuters reported it as “Euro zone unemployment reaches near 15 year high“:

Unemployment in the euro zone reached its highest level in almost 15 years in February, with more than 17 million people out of work, and economists said they expected job office queues to grow even longer later this year.

Joblessness in the 17-nation currency zone rose to 10.8 percent – in line with a Reuters poll of economists – and 0.1 points worse than in January, Eurostat said on Monday.

Economists are divided over the wisdom of European governments’ drive to bring down fiscal deficits so aggressively as economic troubles hit tax revenues, consumers’ spending power and business confidence which collapsed late last year.

As a companion to these was this blog post from Reuters on youth unemployment across Europe: Read the rest of this entry →

I really do want to believe in the economy…

2:56 pm in Uncategorized by dakine01

I want to believe (photo: xyotiogyo, flickr)

I want to believe (photo: xyotiogyo, flickr)

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In the coming up on two years that I have been writing about the economy, jobs, un and underemployment at this little corner of the Intertoobz, I’ve tried to admit when my predictions have been a bit off. Like here and here where last summer I predicted we would be in a double-dip recession by the end of 2011. While we didn’t fall back into recession on the time frame I envisioned, I still see it as quite possible.

I do hope I get to admit being wrong on that. I so very much want to believe the economy is really improving and the jobs picture will brighten but I just can’t shake the feeling that it is all smoke and mirrors.

Today, (Thursday, January 19), the report of Initial Jobless Claims for last week came out and once again, the economists are surprised. Via Bloomberg:

Claims plunged by 50,000 to 352,000 in the week ended Jan. 14, the lowest level since April 2008, Labor Department figures showed today in Washington. The median forecast of 41 economists in a Bloomberg News survey projected 384,000. A Labor Department spokesman said the decrease reflected volatility seen during this time of year. The four-week average, which smoothes out fluctuations, decreased to 379,000 last week from 382,500.

…snip…

Jobless claims were projected to decrease from 399,000 initially reported for the prior week, according to the Bloomberg survey. Estimates ranged from 363,000 to 405,000. The Labor Department revised the previous week’s figure up to 402,000.

I am not at all surprised that last week’s figures were revised upwards as that is the pattern over the last few months at least. I did not make an official prediction but will admit that I thought this week’s number would be back well above 400K. Once again, I do prefer to be wrong on these.

But then I see articles across the Toobz like this from Tuesday from US News (via Yahoo) with the headline “Are We Entering a Jobless Recovery?” and I just want to weep at the incredible combination of stoopid and duplicity to that gives us such a headline. Read the rest of this entry →

Capitalists: Venture vs. Vulture

11:48 am in Economy, Government, Jobs by dakine01

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So there I was, surfing around the intertoobz this morning when I came across this headline at CNN:

Stop vilifying venture capitalists

I have to admit, I was a bit taken aback at the headline as it surely did not reflect anything I had read.

In reading the piece, it starts off in a fairly standard fashion:

From 1984 to 1999, Mitt Romney was in charge at Bain Capital, an investment firm that sought out small and sometimes troubled companies that, with careful management and Bain-provided cash, offered the chance for big profits. Bain, like many venture capital firms, invested in startups with the hope that the profits they made on the successes would outweigh the losses they incurred on the failures.

Venture capital markets are simple things. Two groups of people who want to create new businesses come together. Venture capitalists have money but lack ideas. Entrepreneurs have ideas but lack money. When they get together, they trade and new businesses are born.

Then I realized that the author was not really saying much I could disagree with – other than his implication that Bain Co. was this benign entity only helping entrepreneurs to find the needed funding to bring their ideas to market as wiki defines it.

Today’s Boston Globe addresses this in this article.

Mitt Romney has long called himself a venture capitalist, experience he says helps him understand the economy better than other candidates for president. But he spent much more of his career in leveraged buyouts than in the investments in start-up companies known as venture capital.

Romney’s one true venture deal was Staples Inc., the office supply superstore, two years after he started Bain Capital. He wasn’t the first to discover Staples; another Boston venture firm introduced him to Staples founder Tom Stemberg. But Romney did lead the deal in 1986 in classic fashion – at first investing $650,000 in the start-up, then becoming its chief cheerleader and assisting with strategy to expand the seller of paperclips and pens.

…snip…

With leveraged buyouts, the investment firm purchases a mature company, partially with its money and with debt it transfers to the company. The new owners then usually streamline the business and seek to resell it.

For example, in the same year that Romney invested in Staples, he led the firm in its $200 million acquisition of Accuride, a wheel rim maker that was part of Firestone. Bain put down only $5 million and borrowed the rest, using junk bonds from Drexel Burnham Lambert. Eighteen months later, Bain resold the company and reaped $121 million in its first taste of the big time in the go-go 1980s.

Soon after, Romney steered Bain Capital more toward debt-driven buyouts. There was more money at stake and less risk for Bain than betting on untested technology.

My bold. And there you have it. While maybe starting life as a “venture capital” firm, Bain Co under Romney quickly turned to being Vulture Capitalists using the leveraged buyout.

At this point, I guess I should queue cue the chorus of voices shouting “FREE MARKET! FREE MARKET!”

Point of fact – there is no such thing. The LBO gets to use the debt interest to write down their taxes. By “streamlining” the business, the methods have often included cutting wages and benefits, selling off assets, and dumping pensions onto the taxpayers through the Pension Benefit Guarantee Corp. Dean Baker explains it quite nicely here and here. From the first link:

If private equity firms were successful in making companies more efficient and lowering prices to consumers, then it could lead to more jobs in the economy, even if there were fewer workers directly employed in the firms under its control. (This does not really apply in the current economy, where inefficiency means more workers are employed. This is good in the context of a poorly managed macroeconomy with high unemployment.)

However private equity firms do not profit just by making firms more efficient. Private equity also profits by financial engineering. For example, it is standard practice for private equity firms to load their firms with debt. This means that interest payments, which are tax deductible, are substituted for dividend payments, which are not tax deductible.

Private equity companies also often force firms into bankruptcy to offload debt. This can often include pension obligations, which are then taken over by the Pension Benefit Guarantee Corporation. Insofar as private equity companies are drawing their profit from this sort of financial engineering, it is not providing a benefit to the economy. In fact, it is a direct drain on the productive economy.

So much for the nonexistent “free market.” If a firm has to offload their debts and pensions on the taxpayers, there ain’t a diddly damn thing free about it.

While I am still trying to figure out how it is possible for the LBO group to incur debt for an entity that they are acquiring (don’t you have to actually own something before you can mortgage it?), I’ll close this little rant with this article from today’s Cincinnati Enquirer headlined “Tax breaks for jobs: Half fall short.” A story for another day.

And because I can:

Cross posted from Just A Small Town Country Boy by Richard Taylor

Improvement, yes, but not that much improvement

1:32 pm in Economy, Jobs, Unemployment by dakine01

The Scariest Chart - Calculated Risk

The Scariest Chart – Calculated Risk. Click to embiggen

 

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OK, so you might have noticed a few headlines the last few days talking about how the economy is getting better, unemployment is dropping, and we’re all going to win Powerball tonight and retire tomorrow with our sparkly ponies.

Yeah, I ain’t holding my breath on any of those things either.

Yes, the economy is getting a little better. Slightly. But not to a level to make an appreciable difference to the millions of long term un and underemployed. As David Dayen noted at FDL News on Friday:

The reason that the unemployment rate was able to tick down, however, is that the labor force participation rate remained unchanged at 64.0%. This low participation rate means that, even with the economy growing and the job market improving, a fair number of able-bodied workers have not rejoined the labor force. When they do, and when the labor force participation rate increases, that will put upward pressure on that topline unemployment rate. And unless everyone came into found money, that’s fated to happen. The employment-population ratio also remained unchanged in December (58.5%), despite the job additions. The average workweek and average pay went up very slightly over the month.

Even if those folks who have given up and left the workforce were to stay away and not return, it will still take years for the current problems to right themselves.

Let’s pretend that we stay on the current level of seeing the official unemployment rate drop .2% each month. At the end of 2012, the unemployment rate would be at 6.1%, a number that sounds much better than it has been. But that number would still not be addressing the millions of folks working part time (probably minimum wage) jobs who want full time employment. Nor does it account for all the folks forced into being “independent contractors” or all the college grads from 2008, 2009, 2010, and 2011 still trying to get their first position in their fields.

Just today (Wednesday, January 11), MSNBC had this post with the headline, “Four job seekers for every opening, report shows”: Read the rest of this entry →

Wait! I thought the South was where all the jobs are!

12:30 pm in Uncategorized by dakine01

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Jobs.

Although the official time frame for “The Great Recession” was December 2007 through June 2009, for the millions of long term un and underemployed, the daily reality is that not only has the recession never ended, it is more applicable to The Great Depression than it is to any of the various acknowledged recessions since the end of WWII. One of the articles of faith from the always surprised Economists is that job creation lags other indicators, yet here we are, over two years since the “end” of the last recession and the official unemployment rate is still at 9.1% with the underemployed figure at 16.2% for August 2011.

Each week on Thursday, there’s a report of the Initial Jobless Claims for the week before. Like many of the earlier weeks, last week’s report forced the headline writers to find the lone tidbit of almost good news to concentrate on in their ledes. From Reuters:

(Reuters) – Americans filed fewer new claims for jobless benefits last week but the decline was not enough to dispel worries the economy was dangerously close to falling into a new recession.

Applications for unemployment benefits dropped 9,000 to 423,000 in the week ended September17, the Labor Department said on Thursday. That was roughly in line with expectations.l

Of course, once again, the earlier report had been revised upwards (from 428K reported on September 15). It is not going too far out on a limb to predict that the 423K reported for September 22 will be revised upwards on September 29.

I did not go too far out on a limb back in June when I first predicted a “double-dip” and it still was a short limb when I reiterated the prediction in July. Nouriel Roubini has made the same prediction last Thursday documented from his tweets (via Business Insider). A few days earlier (September 19), Roubini had written this op-ed on how to keep the coming Recession from being a Depression.

Economist Magazine offered this analysis of Growth and jobs across the country on September 15. Their close:

Two things seem clear, however. Across the country, a greater level of demand growth is necessary to boost employment. And at the same time, there are places within the country experiencing strong growth which aren’t producing the jobs we’d expect them to. If America could find ways to make San Jose just a little more like Dallas, that might make a meaningful dent in America’s employment problems.

MSNBC offered this article with a touch of good news involved, i.e., that there is some hiring going on, although not to a level necessary to reduce the official un and underemployment rates. One point to note from that MSNBC link – all the reasons offered for the slow hiring have to do with demand levels and not the skills of the workers.

Today’s (Tuesday, September 27) NY Times had this article analyzing some BLS figures on how the economic map is being redrawn due to the lingering economic ill-effects:

When the unemployment rate rose in most states last month, it underscored the extent to which the deep recession, the anemic recovery and the lingering crisis of joblessness are beginning to reshape the nation’s economic map.

The once-booming South, which entered the recession with the lowest unemployment rate in the nation, is now struggling with some of the highest rates, recent data from the Bureau of Labor Statistics show.

Several Southern states — including South Carolina, whose 11.1 percent unemployment rate is the fourth highest in the nation — have higher unemployment rates than they did a year ago. Unemployment in the South is now higher than it is in the Northeast and the Midwest, which include Rust Belt states that were struggling even before the recession.

…snip…

The long cycle of “lose jobs, gain jobs, lose jobs” that kept Georgia’s unemployment rate at 10.2 percent in August — the same as it was a year earlier — is illustrated by Union City, a small city on the outskirts of Atlanta.

It suffered a blow when the last store in its darkened mall, Sears, announced that it would soon close. But the city had other irons in the fire: a few big companies were hiring, and earlier this year Dendreon, a biotech company that makes a cancer drug, opened a plant there, lured in part by state and local subsidies.

Then, this month, Dendreon said it would lay off more than 100 workers at the new plant as part of a national “restructuring.”

…snip…

In a sign of how severe the downturn has been, the Brookings analysis found that only 16 of the nation’s 100 largest metropolitan areas have regained more than half of the jobs they lost during the recession.

So here we are. After all the years of hearing about the Rust Belt failing everyone and how the South was the leader in everything, well, maybe not so much. Businesses will accept all the subsidies and tax breaks in the world, but they will cut and run at the slightest sign of problems. Of course, I’m from a small town in Kentucky that bragged over the years about bringing in jobs from the Rust Belt (make sure you use plenty of Post-It Notes to keep the folks in my hometown working). I would almost suggest the governors of Georgia and South Carolina might want to contact their rust belt counterparts for some advice except that most of the governors involved seem to be intent on learning the wrong lessons.

And because I can:

Cross posted from Just A Small Town Country Boy by Richard Taylor

Keep the Expectations Low – While Expecting to Be Disappointed

12:08 pm in Uncategorized by dakine01

"Low Expectations" by Emm Enn on flickr

"Low Expectations" by Emm Enn on flickr

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So, here we are, waiting for President Obama to give his long awaited “Jobs” speech tonight. However, from the news reports and “analyses” in the TradMed speculating on the content and potential proposals I will not be holding my breath on there being much if anything worthwhile coming out of the speech. The cliche of “too little, too late” most comes to mind. While CNN had this report today on the stimulus from February 2009 having created jobs, it was nowhere near large enough. This article from Center for Economic and Policy Research from October ’10, points out that there was a need for a stimulus nearly three times the size of the $787B from February ’09.

We are and have been in an employment/jobs crisis for years now. Even while the official unemployment figure stays above 9%, even optimistic projections have unemployment to stay high through 2012, some projections have the high unemployment continuing as far out as 2020. Unfortunately, the current White House seems to be more willing to pretend to do something for show rather than actually doing something that will be effective.

As always, there are just some things that I do not understand. A large part of President’s Obama’s plan is further tax cuts (or rather, extending existing tax cuts such as the payroll tax cut). We have fairly strong evidence starting with the initial Bush tax cuts in 2001, that tax cuts have created few if any jobs over the past ten years yet we continue to be presented with tax cuts as a job creating panacea. Read the rest of this entry →

If Beltway Pols Were 1st Responders, No Foundations Would Be Saved

10:59 am in Uncategorized by dakine01

foundation - frame

foundation - frame. Photo by ClintJCL

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So here we are, coming to the end of another month with limited economic growth. Friday (August 26), the Commerce Department downgraded the second quarter US Gross Domestic Product (GDP) from 1.3% as initially reported to 1%. Via Reuters:

The rate of growth between April and June was cut from the government’s first reading of 1.3 percent and followed a lethargic 0.4 percent pace in the first three months of 2011. 

This means the economy grew only 0.7 percent in the first half of the year. Nonetheless, and despite a sharp fall in consumer confidence this month, economists do not believe the economy will fall back into recession.

Note for those with short memories – the first quarter GDP was initially reported at 1.8%, upped to 1.9% with some fanfare before being downgraded to .4%. That seems to be a bit of a trend these past few weeks and months where the various economic indicators get revised in a negative direction (negative that is in relation to what would be good news). For example, when the Initial Unemployment Claims for last week came out on Thursday, the previous week’s claims were revised upwards (via CNN):

The number of first-time filers for unemployment benefits rose to 417,000 in the week ending Aug. 20, the Labor Department said Thursday. That’s up 5,000 from a revised 412,000 the prior week. 

The original report for the previous week was at 408K so the upwards revision was 4K. Since the business reporters like to latch onto a factoid or two to try to explain things, they’ve all seemingly latched onto the point that some striking Verizon workers had filed claims. But the number provided was 8.5K which means even without the Verizon worker claims (which will most likely be denied as strikers are rarely allowed to collect unemployment), it would still have the initial claims at 408.5K. From the previously linked CNN article:

In most states, workers on strike are not eligible for unemployment benefits. And the weekly initial claims number merely reflects applications for the benefits — not all of which will be approved and paid out. 

Today (Sunday, August 28), Bloomberg has an article on their survey of economists for the August jobs and economic numbers. Read the rest of this entry →

Trickle Down Exists, Just Not as Commonly Supposed

11:04 am in Uncategorized by dakine01

Trickle Down Economy

"Trickle Down Economy Bin" by LauraFries.com on flickr

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Trickle down economics is the phrase that has often been supplied to describe whatever current flavor of economics theory being propounded that says cutting taxes for the well-to-do is the quickest path to an economic nirvana. Supply-side is just one of the variants of this from over the years.

While what I just described is the most commonly used version of “trickle-down,” we are now seeing examples of true trickle-down, i.e., the trickle-down of pain through the economy from all the various budget cuts at all levels of government. The past two days the Tampa Tribune has had articles showing the affects of cuts. First up is this one from yesterday on cuts for caregivers of the disabled:

The state Agency for Persons with Disabilities needs to slash about $90 million in services this year to meet its budget. The cuts not only affect contract workers like Davison, but employees in group homes who coordinate training programs, community outings and other activities for the disabled. 

About 33,000 people in Florida with developmental disabilities like Cherta go through the agency to find companions who will not only care for them but also find ways to make them a part of their communities.

The agency serves about 50,000 people with autism, cerebral palsy, spina bifida and intellectual disabilities.

Today was this article on cuts to child services providers in Hillsborough County (Tampa): Read the rest of this entry →

So where exactly is that good economic news?

11:22 am in Uncategorized by dakine01

"Good News and Bad News"

"Good News and Bad News" by Mike Licht, NotionsCapital.com on flickr

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Well, here we go again. As usual, the past couple of weeks there have been a few articles on how the economy really isn’t THAT bad. In fact, that was a large part of the title of this article from McClatchy while USA Today offered up this from a Maria Bartiromo interview with the head of AIG, Robert Benosche (with a McCainesque “There’s a core of strength to the economy”). However once again, the reality on the ground rears up to refute the cheerleaders. Today’s (Thursday, August 18) Initial Unemployment Claims report for last week is out and the numbers are back over the dreaded 400k line once again (via Reuters):

Initial claims for state unemployment benefits increased 9,000 to a seasonally adjusted 408,000, the Labor Department said.

Economists polled by Reuters had forecast claims rising to 400,000. The prior week’s figure was revised up to 399,000 from the previously reported 395,000.

Given that the trend the last few weeks has been for an upwards revision of the previous week’s numbers, I am not at all surprised at the upward revision from 395K initially reported to the 399K (although since I did not write a post on last week’s report, I can’t claim to have officially predicted the revision.)

Last Thursday, CNN had this article showing the lost jobs holes each state has to crawl out of to regain their pre-recession jobs numbers, especially when the new job seekers and residents for each state are factored in. Meanwhile, we got to ‘enjoy’ President Obama’s photo op Midwest bus tour this week (not to be confused with Cincinnati’s own Midwestern Hayride). Even though the lack of jobs has been an economic crisis for months years now, the elected officials, when they see fit to do something seem most intent on doing the wrong things. Marcy Wheeler has taken a few whacks at the stupidity of “free trade,” deficit reduction clueslessness, and the White House propensity for rhetoric over accomplishment, but I have to chime in with a big WTF over this NY Times article from this past Sunday: Read the rest of this entry →