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It is an article of faith among Republicans (and far too many Democrats) that all those pesky “regulations” are to blame for the lack of jobs today and the ongoing economic slowdown. Just the first of this month, McClatchy had an article where they had surveyed small business owners across the country and the consensus was that in fact regulations are not the problem for small business but lack of demand is:
When it’s asked what specific regulations harm small businesses _which account for about 65 percent of U.S. jobs — the Chamber of Commerce points to health care, banking and national labor. Yet all these issues weigh much more heavily on big corporations than on small business.
…snip…
None of the business owners complained about regulation in their particular industries, and most seemed to welcome it. Some pointed to the lack of regulation in mortgage lending as a principal cause of the financial crisis that brought about the Great Recession of 2007-09 and its grim aftermath.
…snip…
Other small firms say their problem is simply a lack of customers.
My bold and I think we see where the folks complaining about regulations are really coming from. While the small businesses are struggling to make traction and find customers, the big businesses are squeezing every penny out of their operations in order to meet the quarterly demands of Wall St. Read the rest of this entry →
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This morning (Wednesday, June 22) David Dayen at FDL News reports that the entire Senate Democratic leadership is getting behind a jobs/stimulus push:
The Senate Democratic leadership – all of them, Harry Reid, Chuck Schumer, Dick Durbin, Patty Murray, Debbie Stabenow and Mark Begich – planned a morning press conference today where they will call for job creation measures, or stimulus, to be included in any debt limit deal.
Fearing the economy may be getting worse, Democrats plan to soon unveil what they’ll call a “Jobs First” agenda — and the stakes are high. A bleak economic outlook, like the May jobs report, could cost Democrats their thin Senate majority and even the White House if they can’t make a strong case to an anxious electorate that their policies will create jobs.
Senate Democrats are now grappling with ways to gain an edge in the economic debate dominated by budget talk. For instance, in an attempt to woo Republicans, Sen. Chuck Schumer (D-N.Y.) and the White House are open to extending a payroll tax break to stimulate the economy, but that has spawned unease from Democratic senators such as Maryland’s Ben Cardin who worry that it would drive up the deficit and unnerve liberals such as Vermont’s Bernie Sanders, who are concerned it would deplete the Social Security trust fund.
While the Politico piece reinforces for me the idea of the Dems actions as just so much posturing, so does this, also from the Dayen piece:
There’s a sense that this is mainly rhetorical. Democrats have seen Republicans obstruct even the most piddling of jobs bills in the Senate. Yesterday the reauthorization of the Economic Development Administration, an old Great Society program, failed to break a filibuster.
The debt-reduction package emerging in talks between the White House and congressional leaders would not “fundamentally change” the alarming rate of growth in the national debt, the chairman of the Senate Budget Committee said Tuesday.
Sen. Kent Conrad (D-N.D.) said the goal of slicing more than $2 trillion from the federal budget by 2021 falls far short of the savings needed to stabilize borrowing, reenergize the economy and avert the threat of a debt crisis.
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First-time claims for state unemployment benefits fell 29,000 to 409,000 last week, the Labor Department said.
The bigger-than-expected drop eased fears that a large increase last month reflected a fundamental deterioration in the jobs market, buttressing the view that the run up was due to auto plant shutdowns and other one-time factors.
…snip…
While the initial claims decline was more than economists’ expectations for a fall to 420,000, they remained anchored above the 400,000 level that is normally associated with stable job growth for a sixth straight week.
While any drop in Initial Unemployment Claims is a positive, it is only a faint ray of light within otherwise dismal economic news. Tuesday, CNN had an article on new graduates struggling to find jobs in their chosen career fields, even when coming “highly credentialed.”
NEW YORK (CNNMoney) — The brutal job market brought on by the recession has been hard on everyone, but especially devastating on the youngest members of the labor force.
About 60% of recent graduates have not been able to find a full-time job in their chosen profession, according to job placement firm Adecco.
And for those just entering the workplace, a bout of long-term unemployment can affect their career plans for years to come.
The individual stories are familiar. The chemistry major tending bar. The classics major answering phones. The Italian studies major sweeping aisles at Wal-Mart.
Now evidence is emerging that the damage wrought by the sour economy is more widespread than just a few careers led astray or postponed. Even for college graduates — the people who were most protected from the slings and arrows of recession — the outlook is rather bleak. Read the rest of this entry →
I would like to start today by pointing out an error I made yesterday. I assumed that since March was not finished with us, that the ADP jobs report for March would not be issued until next Wednesday. I guess ADP figures the last few days of the month don’t matter so long as they get a report out two days prior to the BLS report for the overall economy issued on the first Friday of the new month.
(Reuters) – Private employers added 201,000 jobs in March, while February’s figure was revised down slightly, a report by a payrolls processor showed on Wednesday.
The data was largely in line with expectations. Economists surveyed by Reuters had forecast the ADP Employer Services report would show a gain of 203,000 jobs. The report is jointly developed with Macroeconomic Advisers LLC.
February’s figure was revised down to 208,000 from 217,000.
“Basically the number was very much in line with expectations and shows that the labor recovery continues at a reasonable pace,” said David Katz, chief investment officer at Matrix Asset Advisors in New York.
Of course, Mr Katz is not accounting for the loss of jobs in the public sector. And there have been job losses in the public sector this past month.
But there have been a few articles I’ve seen during my daily surfing of the toobz, from today and earlier, that tell us a bit more about the state of the economy than the ADP report and the words of Mr Katz can tell us.
First up is this article from today’s Hartford Courant on New London, CT schools that are now providing free suppers (to go with free breakfasts and lunches) for students from low income families. From the article:
While many schools across Connecticut provide free or reduced lunch and breakfast to students from low-income homes, New London was the first to provide supper, too. Bridgeport recently launched a similar program, and Norwich is considering it. Read the rest of this entry →
As I read news sites across the toobz and see the occasional cable talking heads populated by the Beltway Village Idiots Pundits, it is often difficult to keep myself from dissolving into a mass of protoplasm due to simple rage.
(Reuters) – The U.S. labor market is finally improving, just when many of the other economic indicators are wavering.
Jobs are considered a lagging indicator. They typically recover many months after the economy comes out of a recession, and this cycle was no exception. So will troubles in Japan, Libya and elsewhere push up U.S. unemployment later this year?
…snip…
Friday brings the March employment report, and economists polled by Reuters are looking for growth of about 188,000 jobs, with the unemployment rate holding steady at 8.9 percent.
Any bets on how the headlines Friday will include some variant of “economists surprised“? I’m betting right now that the 188K figure will be way high for the entire economy. Of course, since the BLS jobs numbers will be first out this month ahead of the ADP Jobs reports on private sector jobs created for the previous month which appears the first Wednesday of each month, my bet will also be that the ADP report will be more positive than the BLS report so that will get all the good publicity next week and folks will forget the reality of the BLS report.
When the Obama administration awarded $10.4 billion for high-speed rail projects last year, Florida was a big winner, scooping up 20 times as much money as Massachusetts. But now that Florida’s new governor has rejected his state’s $2.4 billion for political reasons, Massachusetts officials are racing to make another pitch to Washington. Read the rest of this entry →
Back in December ’08 I wrote a couple of diaries (here and here) comparing the pensions received by retiring Members of Congress compared to the pensions of union member auto workers. Well, today (Tuesday, March 15) McClatchy once again is reporting that for all the sturm und drang from Congress about the costs of state pensions, it seems they rarely manage to speak up about the excesses of their own pensions. From the McClatchy article:
Since 1984, members of Congress have enjoyed both a defined-benefit plan and a defined-contribution plan. The defined-benefit plan gives them a fixed pension in retirement that’s scaled to their number of years in office.
By McClatchy’s calculation, 13 sitting senators and 31 members of the House of Representatives — about 8 percent of the Congress — have served at least 25 years and accrued annual pensions worth at least $50,000. By comparison, for average U.S. former workers 65 or older who receive private pension payments, the median annual amount is $8,016, according to the nonpartisan Employee Benefits Research Institute.
As long as they’ve served five years, lawmakers can collect their pensions starting at age 62; if they’ve served 20 years, they can collect them at age 50; and if they’ve served 25 years, they can collect them no matter how old they are. Their annual pension annuities cannot exceed 80 percent of their final salaries.
Only 30 percent of active workers in the country had defined-benefit plans last year like the one available to lawmakers, according to the Employee Benefits Research Institute.
Now, this is coming on the heels of this article from Saturday’s NY Times “decrying” the pension burden on the states. Although once again, the Times manages to bury pertinent information near the end of the article:
Workers in Wisconsin point out that their payments in retirement are hardly a king’s ransom. Their average annual benefit is about $26,500, and they believe they have been wrongly portrayed as greedy chiselers who game the system and walk away with six-figure pensions.
But it can be a huge burden for states and municipalities to provide even a modest, $26,000-a-year pension to hundreds of thousands of people, at least in today’s economic environment, and especially if those people are able to retire well before 65 and collect that money for many years.
“When interest rates are low, these plans are really expensive to run,” said Gordon Latter, an actuary at RBC Global Asset Management (U.S.) Inc., (formerly Voyageur Asset Management) whose clients include both corporate and public pension funds.
Despite the furor in Wisconsin, collective bargaining does not appear to be the main factor driving pension costs higher.
My bold. Now where have we heard of this type of situation before? Oh right. Social Security for example. Last Friday, MSNBC’s Tom Curry offered up a standard Beltway Village Idiot Pundit rationale for “reforming” Social Security:
According to the latest Social Security trustees report, about 14 years from now, the interest earned on the bonds won’t be sufficient to cover the annual difference between benefits and tax revenues.
At that point, the trust funds will be drawn down — the bonds will be cashed in — until the bonds are gone in 2037. If Congress does nothing before 2037, benefits would need to be cut by 22 percent to keep the system in balance.
“What often confuses people is that they see these securities as assets for the government,” the CRS report said. They aren’t really assets, but liabilities.
Or as the Congressional Budget Office explained in a report to Congress, “The balances in the trust funds (in the form of government securities) are assets to the individual programs (such as Social Security) but liabilities to the rest of the government.”
“When an individual buys a government bond, he or she has established a financial claim against the government,” the CRS said. But “when the government issues a security to one of its own accounts, it hasn’t purchased anything or established a claim against some other person or entity. It is simply creating an IOU from one of its accounts to another.”
The bonds are a promise to pay benefits in the future — but not the ability to pay those benefits.
Back-of-an-envelope solvable: Raise the retirement age, tweak the indexing formula (from wage inflation to price inflation) and means-test so that Warren Buffett’s check gets redirected to a senior in need.
The relative ease of the fix is what makes the Obama administration’s Social Security strategy so shocking. The new line from the White House is: no need to fix it because there is no problem. As Office of Management and Budget Director Jack Lew wrote in USA Today just a few weeks ago, the trust fund is solvent until 2037. Therefore, Social Security is now off the table in debt-reduction talks.
…snip…
Here’s why. When your FICA tax is taken out of your paycheck, it does not get squirreled away in some lockbox in West Virginia where it’s kept until you and your contemporaries retire. Most goes out immediately to pay current retirees, and the rest (say, $100) goes to the U.S. Treasury – and is spent. On roads, bridges, national defense, public television, whatever – spent, gone.
In return for that $100, the Treasury sends the Social Security Administration a piece of paper that says: IOU $100. There are countless such pieces of paper in the lockbox. They are called “special issue” bonds.
Special they are: They are worthless. As the OMB explained, they are nothing more than “claims on the Treasury [i.e., promises] that, when redeemed [when you retire and are awaiting your check], will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures.” That’s what it means to have a so-called trust fund with no “real economic assets.” When you retire, the “trust fund” will have to go to the Treasury for the money for your Social Security check.
Bottom line? The OMB again: “The existence of large trust fund balances, therefore, does not, by itself, have any impact on the government’s ability to pay benefits.” No impact: The lockbox, the balances, the little pieces of paper, amount to nothing.
Basically, Krauthammer is advocating that the US Government default on Social Security. And he misses the easiest option of all – remove the cap on Social Security earnings (currently capped at $106K per annum).
So folks like Curry and Krauthammer want to see the government default on the Treasury bonds backed by the full faith and credit of the US rather than raise taxes while Congress and TradMed mostly whine about public sector pensions and unions, even while they keep their own Cadillac (Beemer? Porsche? Ferrari?) pensions.
Oh, and this blog post from Forbes points out that in Wisconsin at least, those public pensions cost the taxpayers nothing as they are deferred compensation for the workers.
It is real easy to demonize public sector workers, teachers, and unions at all levels. Too bad that the real thieves are still stealing from the rest of us via Wall St and their pet politicians.
Today, I’d like to offer up a few more examples of how the new governors of Florida, Ohio, and Wisconsin are treating workers within their states as they “create” jobs.
To begin with, we have yesterday’s report of Initial Unemployment Claims for last week. After falling to a two-and-a-half year low the week before, yesterday’s report showed an increase once again in the initial claims:
There were 410,000 initial jobless claims filed in the week ended Feb. 12, according to the Labor Department. That was up 25,000 from the week before, and slightly more than the 408,000 claims economists surveyed by Briefing.com had expected.
Continuing claims — which include people filing for the second week of benefits or more — rose by 1,000 to 3,911,000 in the week ended Feb. 5, the most recent week available.
Of course, the economists interviewed looked on the sunny side of life because the trend “is still pointing downward.” I’m sure that is bringing a warm feeling to the nearly 15 million unemployed and the 25 to 30 million un and underemployed. Why at the rate things are trending downwards, we might once again reach full employment in, oh, maybe in the year 2525? . . . Read the rest of this entry →
Well, the January Jobs Report that is issued by ADP each month, detailing the number of private sector jobs created the month before is out. Last month, the ADP report had this number at 297K new jobs. When the official Department of Labor Bureau of Labor Statistics report came out a couple of days later, the real number of jobs was pegged at 103K new jobs for the month. Of course, the difference is because ADP only evaluates private sector jobs while the BLS report details all jobs, including those in the public sector where a lot of state and local governments have been cutting jobs.
The private sector added 187,000 jobs in January, compared with a downwardly revised 247,000 jobs in December, a report by payrolls processor ADP Employer Services showed on Wednesday.
The ADP figures come ahead of the government’s more comprehensive January labor market report on Friday, which includes both public and private sector employment.
But ADP figures for December — both initial and revised — turned out to be much stronger than the government report showed, adding to doubts about the reliability of ADP as a predictor of payrolls.
Now as I mentioned above, the differences between the ADP numbers and the BLS numbers are most likely due to the addition of public sector jobs being included in the BLS figures. I do though find it a bit interesting that ADP revised their December numbers down 50K jobs, an almost 17% downward revision from the original report. If that happens for January, then the 187K jobs becomes 155K jobs, which is just above the jobs break even point of 125K to 150K needed each month just to maintain status quo on employment and absorb new people entering the work force each month. And with the public sector most likely showing a decline again it will still keep the official unemployment rate well above 9% and the un and underemployment rate in the official area of 17% (which I believe is an under count myself). So we still will be in the 25M to 30M range of un and underemployed with millions of people out long term (defined as more than six months). . . . Read the rest of this entry →
While I write mostly about the need for jobs and long term un and underemployment, there are always a number of related issues bubbling just below the surface for me. The past couple of days, I’ve seen a few articles that are seemingly unrelated but are probably more closely related than most folks realize.
S.& P. lowered its sovereign credit rating for Japan to AA- from AA. That is three levels below the highest possible rating, and S.& P.’s first downgrade of Japanese government debt since 2002. With the lower grade, Japan’s debt rating is now on par with China’s, which last year overtook Japan as the world’s second-largest economy, after the United States.
S.& P.’s move came just weeks after both it and its rival ratings agency, Moody’s, cautioned that they might take a more negative stance on the United States. It highlighted just how deeply indebted many of the world’s developed economies remain — despite concerted efforts on the parts of governments to improve their balance sheets.
(Reuters) – Some U.S. states face so much pressure to fund pensions for public employees that it could hurt their credit ratings, Moody’s Investors Service said on Thursday.
As concerns grow over the financial health of many states after the 2007-2009 recession and how they will cut spending to cope, the ratings agency combined pension and debt data to rank the liabilities of each state.
In the past, Moody’s evaluated credit risks from pensions and debt levels separately. Lower credit ratings could raise the costs to states of borrowing money.
Interesting isn’t it how suddenly Moody’s has to change how they figure things for rating the states and combine debt AND pension liabilities all of a sudden. One might think they have an ulterior motive in doing so. . . . Read the rest of this entry →
A lot of spin but no more actual jobs. (photo: Robert Couse-Baker via Flickr)
Well the December Jobs and Jobless reports are coming in and while there’s still the big one from the US DoL’s Bureau of Labor Statistics due tomorrow (Friday, 1/7/11), we can already see the spinmeisters in operation.
First off is the monthly report from ADP that is released on the first Wednesday of each month (yesterday) detailing the job growth or shrinkage in private sector employment for the previous month. Via McClatchy:
WASHINGTON — Private businesses hired new workers at a surprisingly energetic pace in December, according to a widely tracked job-tracking report released on Wednesday.
The ADP National Employment Report showed that private-sector employment rose by 297,000 in December. That’s the highest monthly gain since the report’s inception in 2000, and it’s double or triple what was expected by mainstream economists.
Most important, job gains that high are what’s needed to knock down the stubbornly high unemployment rate, which has been stuck at just under 10 percent for more than a year. Currently it’s at 9.8 percent, with a new official BLS report on December employment due on Friday.
Now, if we can have another four plus years of similar growth, we might make a dent on the current Unemployment rate of 9.8%. But you will pardon me if I’m a bit skeptical about this wonderful news. December is a time when there are a lot of short term hires due to the holiday season. I assume that ADP does make some adjustment for the seasonal factor and while 297K new jobs is definitely a good start, as I (and others) have noted recently, even if those jobs are something more than short term, minimum wage positions for the holidays, the odds are good that a lot of them are of the Perma-Temp fashion, with limited to no benefits. So I guess I’m going to hold off on the cheerleading the report. . . . Read the rest of this entry →
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