The end of jobs

I posted about the driverless trucks a while ago. Now Amazon unveiled the no-checkout store, which would threaten the jobs of 3.5 million cashiers according to the Financial Times (subscription required). I was surprised by the figure below.

It shows that one of the growing demands in the future will be statisticians. Statisticians? Oh well. Among the losers not just clerks, but also lawyers that specialize in shoplifting (and DUI in the case of the driverless vehicles, besides the obvious, truck drivers).

Weak jobs report should kill interest rate hike

Or so it seems. The BLS last employment situation summary says that only 38000 jobs were created last month. Unemployment fell to 4.7%, but that is mostly the result of the fall in the participation rate, that is, less people in the labor force (see below).

In other words, unemployment rate is lower not because unemployment decreased (at least not much), but because workers stopped looking for jobs. Since the crisis there has been no recovery in the labor force participation rate, as shown in the figure above. This report is consistent with the slow rate of GDP growth announced last week. The economy is slowing to a halt. The Fed should not hike the rate later this summer, but that's not enough. The US needs less austerity. Urgently.

New ILO Book: "Transforming Economies - Making industrial policy work for growth, jobs and development"

From the introduction

Building on a description and assessment of the contributions of different economic traditions (neoclassical, structural, institutional and evolutionary) to the analysis of policies in support of structural transformation and the generation of productive jobs, this book argues that industrial policy goes beyond targeting preferred economic activities, sectors and technologies. It also includes the challenge of accelerating learning and the creation of productive capabilities. This perspective encourages a broad and integrated approach to industrial policy. Only a coherent set of investment, trade, technology, education and training policies supported by macroeconomic, financial and labour market policies can adequately respond to the myriad challenges of learning and structural transformation faced by countries aiming at achieving development objectives. The book contains analyses of national and sectoral experiences in Costa Rica, the Republic of Korea, India, Brazil, China, South Africa, sub-Saharan Africa and the United States. Practical lessons and fundamental principles for industrial policy design and implementation are distilled from the country case studies. Given the fact that many countries today engage in industrial policy, this collection of contributions on theory and practice can be helpful to policy-makers and practitioners in making industrial policy work for growth, jobs and development.

Be sure to see the chapter by Robert Hunter Wade - "The mystery of US industrial policy: the developmental state in disguise" - on page 379.

The book is available as a pdf for free download here.

Class of 2014, You're Screwed

By Heidi Shierholz, Alyssa Davis, and Will Kimball

The Great Recession officially ended in June 2009, nearly five years ago. However, the labor market has made agonizingly slow progress toward a full recovery, and the slack that remains continues to be devastating for workers of all ages. The U.S. labor market still has a deficit of more than 7 million jobs, and the unemployment rate has been at 6.6 percent or higher for five-and-a-half years. (In comparison, the highest unemployment rate in the early 2000s downturn was 6.3 percent, for one month in 2003.) The weak labor market has been, and continues to be, very tough on young workers: At 14.5 percent, the March 2014 unemployment rate of workers under age 25 was slightly over twice as high as the overall unemployment rate, 6.7 percent. Though the labor market is headed in the right direction, it is improving very slowly, and the job prospects for young high school and college graduates remain dim. A key finding of this paper is that there is little evidence that young adults have been able to “shelter in school” from the labor market effects of the Great Recession. Increases in college and university enrollment rates between 2007 and 2012 were no greater than before the recession began—and since 2012, college enrollment rates have dropped substantially. This means there has been a large increase in the share of young high school and college graduates who are idled—neither employed nor enrolled in school—by the weak economy. This represents an enormous loss of opportunities for this cohort that will have lasting consequences.

Read rest here.

US Economy Adds 192,000 Jobs in March; Long-Term Unemployment Rate Unchanged

In two recent posts (here and here), it was noted that educational credentials have had next to zero significant causal influence on structural unemployment, and that stagnation is primarily due to lack of adequate effective demand and appropriate fiscal policy. According to CEPR,

[with] population growth implying labor force growth in the neighborhood of 90,000, the economy is cutting into the backlog of unemployed workers at the rate of 90,000 a month. With the economy still down close to 7 million jobs from trend levels, this would imply that we would reach full employment some time in 2020. 

Read rest here

The ‘Better Off Budget’: An EPI Analysis of The Congressional Progressive Caucus Proposal

By Joshua Smith

The Congressional Progressive Caucus (CPC) has unveiled its fiscal year 2015 (FY2015) budget, titled the “Better Off Budget.” It builds on recent CPC budget alternatives in prioritizing near-term job creation, financing public investments, strengthening the middle and working classes, raising adequate revenue to meet budgetary needs while restoring fairness to the tax code, protecting social insurance programs, and ensuring fiscal sustainability. The Better Off Budget aims to improve the economic well-being of the working and middle classes by focusing on ending the ongoing jobs crisis, and it provides substantial upfront economic stimulus for that purpose. This paper details the budget baseline assumptions, policy changes, and budgetary modeling used in developing and scoring the Better Off Budget, and it analyzes the budget’s cumulative fiscal and economic impacts, notably its near-term impacts on economic recovery and employment.

Read rest here.

For Dean Baker's critique of Obama's platform, see here 

Heidi Shierholz: Still No Jobs for More Than 60 Percent of Job Seekers

By Heidi Shierholz

The Job Openings and Labor Turnover Survey (JOLTS) data released this morning by the Bureau of Labor Statistics showed that job openings increased by 60,000 in January, bringing the total number of job openings to 4.0 million. In January, the number of job seekers was 10.2 million (unemployment data are from the Current Population Survey). Thus, there were 10.2 million job seekers and only 4.0 million job openings, meaning that more than 60 percent of job seekers were not going to find a job in January no matter what they did. In a labor market with strong job opportunities, there would be roughly as many job openings as job seekers. We are not in a strong labor market. Furthermore, the 10.2 million unemployed workers understates how many job openings will be needed when a robust jobs recovery finally begins, due to the existence of 5.7 million would-be workers who are currently not in the labor market, but who would be if job opportunities were strong. Many of these “missing workers” will become job seekers when we enter a robust jobs recovery, so job openings will be needed for them, too.

Read rest here.

The Madness of Austerity in One Chart

From Mother Jones

January's job numbers were fairly dismal, but the bad cheer wasn't equally spread. Private sector employment, as usual, increased—by 142,000 jobs last month. At the same time, public sector employment declined. Government employment at all levels was down 29,000 in January.Aside from the brief census blip in early 2010, this has been the usual state of affairs for the past four years, ever since the recession officially ended. The chart below shows public and private sector employment indexed to 100 at the end of the recession. Private sector employment is up 6.8 percent. Public sector employment is down 3.4 percent. And that's during a period when population grew 2.3 percent. On a per capita basis, government employment has declined more than 5 percent since 2009, and it's still declining.This is the price of austerity. If public sector employment had been growing normally during this period, we'd have about a million more jobs than we do now and the unemployment rate would probably be below 6 percent. We are our own worst enemies.

See more here.

Austerity Sucks: Another Drag on the Post-Recession Economy Is Public-Sector Wages

By Monique Morrissey

The aftermath of the Great Recession has led to outright wage declines for the vast majority of American workers in recent years, resulting in a full decade of essentially stagnant wages. Though you might expect public-sector wages to have weathered the recession and its aftermath better than private-sector wages, the opposite appears true: While the decline in real public-sector wages started later, it was steeper and ultimately more damaging. According to the Bureau of Labor Statistics’ Employment Cost Index, public-sector wages have fallen by about 1.3 percent in inflation-adjusted terms since 2007, where private-sector wages have been essentially flat (an increase of 0.3 percent). Unlike in previous recoveries, state and local government austerity has been a major drag on job growth and the broader economy. The number of public-sector jobs fell by almost 3 percent in the three years following the recession, while the number of private-sector jobs grew (albeit anemically). The fact that public-sector wages have lagged behind those in the private-sector exacerbates government’s drag on the economy.

Read rest here.

The Economic Policy Institute on the Unfinished March

An EPI Report that is worth reading on the incomplete economic goals of the civil rights movement . From the intro:

"On August 28, 1963, more than 250,000 people participated in the March on Washington for Jobs and Freedom. They marched for equal access to public accommodations, voting rights, and the end of racial discrimination in employment. While achieving the full measure of these rights remains a work-in-progress, legislative and policy commitments to these goals were secured. But the marchers also demanded the following:

• decent housing
• adequate and integrated education
• jobs for all
• a minimum wage worth more than $13 an hour today

Fifty years later, on all socioeconomic measures, African Americans still lag whites by wide margins. At the same time, economic opportunities are shrinking for working people of all races. Until we achieve all of the march’s goals, there is little hope for reducing black-white socioeconomic disparities and providing genuine opportunity for economic advancement to all Americans."

Read the rest here.

EPI: Raising the Federal Minimum Wage Would Lift Wages for Millions and Provide a Modest Economic Boost

At a briefing at the Economic Policy Institute on Tuesday, January 14, 2014, Jason Furman (Chairman of the White House Council of Economic Advisers), Sen. Tom Harkin (D-Iowa), Rep. George Miller (D-Calif.) and Lawrence Mishel of the EPI  discussed the economic case for raising the federal minimum wage and the path forward to enact the Fair Minimum Wage Act of 2013.

EPI research shows (see here) the Harkin-Miller bill would give a raise to 27.8 million workers, who would receive about $35 billion in additional wages. A $10.10 minimum wage would increase GDP by $22 billion, creating roughly 85,000 new jobs.

Mind you, raising the federal minimum wage to $10.10 is meager...should be at at least $20.00, which would provide more than just a 'modest boost' to the US economy.

New Book By Baker & Bernstein: Getting Back to Full Employment - A Better Bargain for Working People

By Dean Baker and Jared Bernstein

From the Introduction:

A strong labor market with full employment need not be a rare economic anomaly that returns roughly twice for every one appearance of Halley’s Comet. Full employment can be a regular feature of the policy landscape, with tremendous benefits for rising living standards, poverty reduction, the federal budget, and equitable economic growth. In this book we present the benefits and importance of full employment in ways that are particularly germane to the economy today, and we offer policies to begin moving to full employment now. Full employment can be defined as the level of employment at which additional demand in the economy will not create more employment. All workers who seek a job have one, they are working for as many hours as they want to or can, and they are receiving a wage that is broadly consistent with their productivity.

Full PDF here.

Unemployment Insurance Extensions Haven't Expired With Long-Term Unemployment So High

Following the last post (see here and here), it is worth pointing out that over the course of preceding recessions since 1957, Congress has not let long term unemployment insurance to cease with sustained high unemployment. 

By Heidi Shierholz

Four and a half years after the official end of the Great Recession, there is still a gap in the labor market of nearly 8 million jobs. With job opportunities so weak for so long, workers have gotten stuck in unemployment for unprecedented lengths of time. The share of the workforce that is long-term unemployed is nearly twice as high today as it was in any other period when Congress allowed an extended benefits program to expire. The figure shows the share of the labor force that has been unemployed for more than six months. In the Great Recession, that share rose to more than two-thirds higher than the previous record set during the downturn of the early 1980s. It has since come down significantly, but it is still above the previous record. Today’s long-term unemployment crisis is no mystery; it is exactly what we would expect given how long our labor market has been as weak as it has. It is not the fault of individual unemployed workers failing to exert enough effort or flexibility in their job search.

Read rest here

Foster & Magdoff: The Plight of US Workers

By Fred Magdoff & John Bellamy Foster

Modern capitalism, sociologist Max Weber famously observed early in the twentieth century, is based on “the rational capitalistic organization of (formally) free labor.” But the “rationality” of the system in this sphere, as Weber also acknowledged, was so restrictive as to be in reality “irrational.” Despite its formal freedom, labor under capitalism was substantively unfree.This was in accordance with the argument advanced in Karl Marx’s Capital. Since the vast majority of individuals in the capitalist system are divorced from the means of production they have no other way to survive but to sell their labor power to those who own these means, that is, the members of the capitalist class. The owner-capitalists are the legal recipients of all the value-added that is socially produced by the labor in their employ. Out of this the owners pay the wages of the workers, while retaining for themselves the residual or surplus value generated by the social process of production. This surplus then becomes the basis for the further accumulation of capital, leading to the augmentation of the means of production owned by the capitalist class. The result is a strong tendency to the polarization of income and wealth in society. The more the social productivity of labor grows the more it serves to promote the wealth and power of private capital, while at the same time increasing the relative poverty and economic dependency of the workers.

Read rest here

For more extensive analyses on the plight of the US working class, see here

Austerity Explains Extremely Weak Recovery From Great Recession

Recovering from the Great Recession has been accompanied by the slowest growth of public spending following lower troughs of the business cycle since World War II. Read more here.

Dean Baker on the corruption of the economics profession

By Dean Baker

Most of us are willing to believe the direct opposite of what we can see with our own eyes because we accept the analysis of the solar system developed by astronomers through many centuries of careful observation. The overwhelming majority of people will never go through the measurements and reproduce the calculations. Rather, our belief that the earth revolves around the sun depends on our confidence in the competence and integrity of astronomers. If they all tell us that the earth in fact orbits the sun, we are prepared to accept this view. Unfortunately the economics profession cannot claim to have a similar stature. This is both good and bad. It is good because it doesn’t deserve that stature. Economists too often work as hired guns for those with money and power. It is bad because the public needs expertise in economics, just as it needs expertise in medicine and other areas.

Read rest here.

PS: A post on why the current crisis has not undermined the mainstream can be seen here.

Don't Believe The Hype!

 

The latest news is that the U.S. unemployment rate slipped to to a five-year low of 7 percent in November, apparently an encouraging sign for the American economy.

The US Labor Department notes that employers added 203,000 jobs, nearly matching October’s revised gain of 200,000; this supposed strengthening of the job market is likely to fuel speculation that the Fed may start to scale back bond purchases when it meets later this month (according to Mark Weisbrot, however, this would not necessarily be a good idea - see here)

Before we get swindled, let's look at some data; according to the Economic Policy Institute, millions of potential workers are still sidelined and if we were to count those who have fallen out of the labor force due to discouragement, the real picture is as follows:

• Total missing workers, October 2013: 5,660,000;
• Unemployment rate if missing workers were looking for work: 10.3%;
• Official unemployment rate: 7.0%.

For tables & charts: see here; for info on methodology: see here.

Despite Upshot in Employment, No Real Changes in Long-Run Trends

Source: EPI's analysis of Bureau of Economic Analysis National Income and Product Accounts (Table 1.1.1 and Table 1.4.1)

By Josh Bivens

The Bureau of Economic Analysis (BEA) reported today that gross domestic product (GDP)—the widest measure of overall economic activity—grew at a 2.8 percent (annualized) rate in the third quarter of 2013. This was a slight increase relative to the second quarter’s 2.5 percent growth rate. 

However, there is little reason to celebrate today’s GDP numbers. For one, they remain disappointingly weak for an economy with so much productive slack. Further, growth in final demand—GDP stripped of the contribution of volatile inventory investments—grew at just a 2.0 percent rate in the third quarter. This arguably better indicator of underlying economic strength indicates that growth in the second quarter is essentially on the same disappointing trend that has characterized most of the recovery phase since the official end of the Great Recession. Additional evidence that third quarter growth was insufficient to soak up the economy’s productive slack is the continuing very low rates of core inflation measures. All in all, this is a status quo GDP report, and it clearly remains the case that the economy needs further support from both fiscal and monetary policy to generate growth sufficient to spur real improvement in the U.S. labor market.

See rest here.

By Heidi Shierholz

The jobs report released this morning by the Bureau of Labor Statistics showed the labor market gained 204,000 jobs in October, along with an upward revision of 60,000 to prior months’ data, bringing the average growth rate of the last year to 194,000. There appears to be no discernible impact on the payroll numbers of the partial government shutdown in October; in the payroll survey federal employees on furlough during the partial government shutdown were still considered employed. Importantly, the labor force participation rate dropped 0.4 percentage points to its lowest point of the downturn, 62.8%. The unemployment rate was little changed in October, ticking up slightly to 7.3%. The partial government shutdown may have played a role in the unemployment numbers, since federal employees on furlough during the partial government shutdown should have been counted as unemployed on temporary layoff in the household survey.

See rest here.

More on Unemployment: "Missing Workers"

 

The official US unemployment rate significantly underestimates the weakness of available job opportunities. This is due to the existence of a large pool of “missing workers” (also termed 'discouraged workers' in the literature)—potential workers who, because of weak job opportunities, are neither employed nor actively seeking a job.

EPI's “missing worker” estimates:

Total missing workers as of September 2013: 5,190,000

	Actual unemployment rate	Unemployment rate if missing workers were looking for work
Jan-2006	4.7%	5.1%
Feb-2006	4.8%	4.9%
Mar-2006	4.7%	4.8%
Apr-2006	4.7%	4.9%
May-2006	4.6%	4.8%
Jun-2006	4.6%	4.7%
Jul-2006	4.7%	4.8%
Aug-2006	4.7%	4.6%
Sep-2006	4.5%	4.5%
Oct-2006	4.4%	4.4%
Nov-2006	4.5%	4.4%
Dec-2006	4.4%	4.1%
Jan-2007	4.6%	4.3%
Feb-2007	4.5%	4.3%
Mar-2007	4.4%	4.2%
Apr-2007	4.5%	4.8%
May-2007	4.4%	4.7%
Jun-2007	4.6%	4.7%
Jul-2007	4.7%	4.8%
Aug-2007	4.6%	5.0%
Sep-2007	4.7%	4.8%
Oct-2007	4.7%	5.1%
Nov-2007	4.7%	4.7%
Dec-2007	5.0%	5.0%
Jan-2008	5.0%	4.7%
Feb-2008	4.9%	4.9%
Mar-2008	5.1%	5.0%
Apr-2008	5.0%	5.1%
May-2008	5.4%	5.3%
Jun-2008	5.6%	5.5%
Jul-2008	5.8%	5.6%
Aug-2008	6.1%	5.9%
Sep-2008	6.1%	6.1%
Oct-2008	6.5%	6.4%
Nov-2008	6.8%	6.9%
Dec-2008	7.3%	7.4%
Jan-2009	7.8%	8.1%
Feb-2009	8.3%	8.6%
Mar-2009	8.7%	9.2%
Apr-2009	9.0%	9.3%
May-2009	9.4%	9.6%
Jun-2009	9.5%	9.7%
Jul-2009	9.5%	9.9%
Aug-2009	9.6%	10.2%
Sep-2009	9.8%	10.8%
Oct-2009	10.0%	11.2%
Nov-2009	9.9%	11.0%
Dec-2009	9.9%	11.4%
Jan-2010	9.8%	11.2%
Feb-2010	9.8%	11.2%
Mar-2010	9.9%	11.1%
Apr-2010	9.9%	10.8%
May-2010	9.6%	10.8%
Jun-2010	9.4%	10.9%
Jul-2010	9.5%	11.1%
Aug-2010	9.5%	11.0%
Sep-2010	9.5%	11.1%
Oct-2010	9.5%	11.3%
Nov-2010	9.8%	11.5%
Dec-2010	9.3%	11.3%
Jan-2011	9.1%	11.2%
Feb-2011	9.0%	11.1%
Mar-2011	8.9%	11.0%
Apr-2011	9.0%	11.2%
May-2011	9.0%	11.1%
Jun-2011	9.1%	11.3%
Jul-2011	9.0%	11.4%
Aug-2011	9.0%	11.2%
Sep-2011	9.0%	11.0%
Oct-2011	8.9%	11.0%
Nov-2011	8.6%	10.8%
Dec-2011	8.5%	10.7%
Jan-2012	8.3%	10.6%
Feb-2012	8.3%	10.4%
Mar-2012	8.2%	10.4%
Apr-2012	8.1%	10.6%
May-2012	8.2%	10.3%
Jun-2012	8.2%	10.3%
Jul-2012	8.2%	10.6%
Aug-2012	8.1%	10.7%
Sep-2012	7.8%	10.2%
Oct-2012	7.9%	10.1%
Nov-2012	7.8%	10.2%
Dec-2012	7.8%	10.1%
Jan-2013	7.9%	10.3%
Feb-2013	7.7%	10.3%
Mar-2013	7.6%	10.4%
Apr-2013	7.5%	10.3%
May-2013	7.6%	10.2%
Jun-2013	7.6%	10.1%
Jul-2013	7.4%	10.2%
Aug-2013	7.3%	10.1%
Sep-2013	7.2%	10.2%

Source: EPI analysis of Mitra Toossi, “Labor Force Projections to 2016: More Workers in Their Golden Years,” Bureau of Labor Statistics Monthly Labor Review, November 2007; and Current Population Survey public data series

More here.

The Unfinished March

Dr. Martin Luther King Jr. gave his famous “I Have a Dream” speech at the 1963 March on Washington for Jobs and Freedom and many Americans know the speech quite well enough to paraphrase its concluding passages. What many fail to recall, however, is King's calling not just for legal rights, but for social & economic rights with respect to jobs and a living wage. The Economic Policy Institute has published a research brief that critically revisits this forgotten history - see here.