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My remarks today will focus on recent and prospective developments in the labor market. We have seen some positive signs on the jobs front recently, including a pickup in monthly payroll gains and a notable decline in the unemployment rate. That is good news. At the same time, some key questions are unresolved. For example, the better jobs numbers seem somewhat out of sync with the overall pace of economic expansion. What explains this apparent discrepancy and what implications does it have for the future course of the labor market and the economy?
Importantly, despite the recent improvement, the job market remains far from normal; for example, the number of people working and total hours worked are still significantly below pre-crisis peaks, while the unemployment rate remains well above what most economists judge to be its long-run sustainable level. Of particular concern is the large number of people who have been unemployed for more than six months. Long-term unemployment is particularly costly to those directly affected, of course. But in addition, because of its negative effects on workers’ skills and attachment to the labor force, long-term unemployment may ultimately reduce the productive capacity of our economy.
Once again, it seems to be a speech that depends on the individual perspective as to the take-away. David Dayen at FDL News titled it “The “Better But Not Good Enough” Economy Conundrum” and it follows a pattern from earlier speeches. Last June, I wrote a post after a Benbernank speech that appeared to be at least four different speeches, depending on the spin. Getting it down to only two spins is a bit better. The problem I have with Bernanke and his speeches is that while he talks about the problems of the long term un and underemployed, he never really seems to get around to doing anything about it, even while “pursuit of maximum employment” is part of the stated Federal Reserve mission.
Mr. Camp said Republicans were strongly encouraging the Obama administration to move forward with free trade pacts that could lead to 250,000 new hires. He noted that half of the eight hearings held by his panel this year were devoted to simplifying and overhauling the tax code to stimulate economic growth. He said he had been in touch with Senator Max Baucus, the Montana Democrat who is chairman of the Senate Finance Committee, about moving forward with tax law changes.
“Fundamental tax reform is key,” Mr. Camp said. “It is a critical issue for us to work on.”
Mr. Upton said the chief job-creating focus of his panel had been to identify and move to block regulatory efforts by the Obama administration, and specifically the Environmental Protection Agency, that he said would strangle the economy.
Many readers reminded me, properly, that the American worker who loses a good job would have paid taxes to the United States government that buys the myriad of services, including military defense, that people in our nation enjoy. If the worker who gained a job in Shanghai or Bangladesh pays taxes, they are not paid to our government.
Others mentioned that these displaced workers had contributed in many ways to local charities.
Surprisingly enough, he did admit that a true free trade system would also have free flowing of labor across borders as well.
One Canadian reader, in his comment, wondered why economists who advocate free trade in the flow of goods and capital do not also advocate the free movement of labor among countries. Read the rest of this entry →
Since today (Wednesday March 2) is the first Wednesday of the new month, Automatic Data Processing (ADP) has released their monthly report estimating the new jobs for February for the private sector. As always, the economists were surprised. From Reuters:
(Reuters) – Private sector employers added more jobs than expected last month in a sign of steady improvement in the labor market, ahead of the closely watched non-farm payrolls report from the Labor Department on Friday.
Employers added 217,000 jobs in February, the ADP Employer Services report showed on Wednesday, above expectations for a rise of 175,000. January’s figure was revised higher by 2,000 to 189,000.
Economists said the private-sector hiring indicates improvement in the labor market, though they noted the month-to-month changes in ADP’s report are not always good predictors of Friday’s larger jobs numbers.
There is a quite simple explanation for why the month-to-month changes in the ADP report do not predict the larger report from the DoL Bureau of Labor Statistics. The BLS reporting includes jobs from all levels including the public sector which has been laying people off even as the pace of hiring has picked up a bit in the private sector.
Of course, even as there was some new hiring in February, layoffs also continued with Reuters also reporting this morning on a report from consultants Challenger Gray & Christmas on an increase in February of the numbers of planned layoffs:
(Reuters) – The number of planned layoffs at U.S. firms rose in February to its highest level in 11 months as government and non-profit employers let workers go, a report showed on Wednesday.
Employers announced 50,702 planned job cuts last month, the highest level since March 2010 and a jump of 32 percent from January’s 38,519, according to the report from consultants Challenger, Gray & Christmas, Inc. Layoffs were 20 percent higher than the 42,090 announced in February of last year, marking the first year-over-year increase since May 2009.
This doesn’t even begin to get to the jobs that will be lost with the budget cuts pushed by the Republican controlled House of Representatives. According to a report by Moody’s Analytic’s Mark Zandi (via the Washington Post), these cuts will mean 700,00 jobs lost from now through 2012:
A Republican plan to sharply cut federal spending this year would destroy 700,000 jobs through 2012, according to an independent economic analysis set for release Monday.
The report, by Moody’s Analytics chief economist Mark Zandi, offers fresh ammunition to Democrats seeking block the Republican plan, which would terminate dozens of programs and slash federal appropriations by $61 billion over the next seven months.
Zandi, an architect of the 2009 stimulus package who has advised both political parties, predicts that the GOP package would reduce economic growth by 0.5 percentage points this year, and by 0.2 percentage points in 2012, resulting in 700,000 fewer jobs by the end of next year.
(Reuters) – Federal Reserve Chairman Ben Bernanke said on Wednesday a Republican spending cut plan would not cause a big dent to U.S. economic growth, but could cost around 200,000 jobs.
Bernanke said that a $60 billion cut along the lines being pursued by Republican in the House of Representatives would likely trim growth by around two-tenths of a percentage point in the first year and one-tenth in the next year.
“That would translate into a couple of hundred thousand jobs. So it’s not trivial,” he said in response to questions from members of the House Financial Services Committee.
Don’t you just love the parsing of his words there. The cuts won’t make a big dent but they aren’t trivial. Nothing like trying to please everyone and pleasing no one.
Of course, things are also not helped when the Law of Unintended Side Consequences comes into play as it has with the recent extension of the Bush (now Bush/Obama) Tax Cuts. It seems the tax cuts are also hitting state budgets to the tune of $5.3B.
Struggling states could lose as much as $5.3 billion in tax collections during the next few years in an unintended consequence of one of the lower-profile federal tax cuts that President Obama signed in December, according to a report released Tuesday.
The tax-cut package the president signed in December is best known for extending the Bush-era tax rates for two years and giving a one-year payroll tax cut to most Americans. But it included a business tax cut that could blow a hole in state budgets: a provision allowing businesses to deduct the full value of new equipment purchases from their taxes through 2011.
That cut, intended to spur the economy by encouraging businesses to spend more money on equipment, could end up costing 19 states as much as $5.3 billion in lost revenue over the next few years, according to the report, by the Center on Budget and Policy Priorities, a research organization based in Washington.
The 19 states stand to lose money because they link their state tax laws to federal tax law. So the newly allowed federal tax deductions that businesses in those states take will lower their taxable incomes, which would in turn have the effect of driving down state corporate and income tax collections.
So we wait until Friday for the official BLS Jobs Report. I usually don’t put a number on the figure of new jobs since I’m not an economist that is always surprised that my figure is wrong. I will however make the bold prediction that the number of new jobs reported Friday for February will be less than half the 217k reported by ADP today. But we shouldn’t worry, Tom Brokaw tells us that all we need are new skills and all will work out in the end.
I assume most folks reading here are aware that Speaker Pelosi and the House released their version of the combined Health Care bill yesterday. I can only laugh at what is passing for "analysis" of this bill. I think the folks at Ye Olde House of Mulch for Brains (h/t Mr Pierce) though have the Republican talking points down pat.
Wow. $2.2M per word tells us a lot about the bill doesn’t it? Well not really but let’s see if there’s some further analysis here:
It runs more pages than War and Peace, has nearly five times as many words as the Torah, and its tables of contents alone run far longer than this story.
Oh yeah, that helps a lot doesn’t it?
“Death” and “taxes” are both in there, but “death panel” is not.
Republicans aide said a print-out of the bill weighs more than 19 pounds and stands nearly nine inches tall.
North Carolina Republican Rep. Patrick McHenry, 34 years old and a few inches taller than 5 feet, said the bill could act as a ”booster seat.”
V-e-r-y insightful statements there, huh?
Now my chosen career filed is something called Software Quality Assurance. A strong component of SQA activities is collecting various metrics in an attempt to quantify the progress in Software Development and Engineering. One primary difficulty is determining which metrics will provide the most information to people to know what is happening. When Ye Olde House of Mulch for Brains (and Republicans and Mornin’ Joe) all use metrics like these, the term FAIL is far too kind.
Useless waste of time is the nicest statement I can make for this gibberish.
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