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The Politics of the Unemployment Number: This Week in Employment

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Let’s start with the big one. The piece of data that would sway the electorate one way or the other in the upcoming elections, determining once and for all which party knows best when it comes to job creation. That’s right: we’re talking the final monthly jobs report prior to the mid-terms. In political punditry, it doesn’t get much more fevered than that—especially when the best you’ve got to on otherwise is speculation over whether one of the candidates happens to be a witch.

As with most regular events that get a fevered build-up (New Year’s, anyone?), the announcement just had to fail to live up to expectations—and it surely did, with the economy leaking just enough jobs to ensure that the overall number came in at an unchanged 9.6 percent. Politically, that’s the worst outcome either party could have hoped for: the failure to get the expected rise to 9.7 percent leaves Republicans without an easy case to make when it comes to accusing Democrats of job-killing policies, while the fact that things haven’t improved means the Democrats can’t claim to have figured out anything approaching a solution either.

(Incidentally, a recent Vault poll found that the public is more or less aware of that: when asked which party was most likely to make a difference to the unemployment crisis, the number of respondents who plumped for one side or the other came to less than 50 percent combined. That compares to 38 percent who stated that the two parties need to work together, with the remainder suggesting that government should get out of the way altogether and just let business get on with it.)

By far the most interesting employment-related number of the week came from the Pew Economic Policy Group, which found that a record 30 percent of unemployed Americans had been out of work for at least in August. And it gets worse: the technical definition of “long-term unemployed” is someone who’s been out of work for over 6 months. In August, 71 percent of the “long-term unemployed” had been out of work for at least a year—dating their layoffs back to some of the darkest days of the recession. The risk, of course, is that the longer someone is out of work, the harder it is for them to find a new position—especially if the type of job that person did isn’t likely to return. That scenario gave rise to perhaps the most depressing sentence of the week, courtesy of USA Today (emphasis added): ” Many of the long-term unemployed will struggle to find work even after the job market picks up, and some will never work again.

Things don’t look much rosier when considering the major hiring announcements from the past week, either; notwithstanding the announcement that Kohl’s is hiring 40,000 seasonal workers, any other significant announcements of new opportunities tended to be in overseas markets.

It’s unlikely that we’ll see much improvement in the job market before the elections take place at the end of the month, but at least there’s one thing to be thankful for: the attempted politicization of the unemployment number should die down, at least for the foreseeable future.

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Written by Phil Stott

October 8, 2010 at 2:44 pm

A Second Stimulus, and Bad News for the Finance Industry: This Week in Employment

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If one thing has become clear over the last week, it’s that the road to the midterm election is going to be a long, long, slog—especially for those of us who have set up alerts for the words “economy” and “jobs” in Google Reader and.

In case you somehow missed it, the biggest thing that happened to the world of jobs this week is that President Obama came out swinging as he attempts to save the Democratic majority in the House come November. Accordingly, almost everything he said throughout the week was tailored towards the issues that voters are most concerned about right now. Don’t know what that is? Here’s a clue: starts with “j”, ends in “obs.”

Mindful of the tarnished reputation of Stimulus I, the President was careful to avoid the term when rolling out his latest plan to, uh, stimulate the economy. His new plan has three main prongs, with each designed to spur hiring and investment in the economy: infrastructure spending, a 100 percent tax break for companies on new investments in plant and equipment, and increasing the budget for an R&D tax credit while also making it permanent. Oh, and there was also something about “holding the middle class hostage” that didn’t get any press attention at all.

Outside of Washington, one of the biggest hiring stories of the week turned out to not be much of a story at all. There we were all breathless with excitement over the news that Spanish bank Santander was hiring 6,000 in the UK. There was speculation on what it could possibly mean in terms of their plans for expansion (the company only has 22,000 employees in the UK).. And then there was another announcement: the company is hiring a mere 600 employees. Typos, eh?

Compounding the bad news for the finance industry was the prediction from Wall Street analyst Meredith Whitney that some 50,000 jobs related to the securities industry could be at risk. Her reasoning: that ” underwriting and advisory fees account for around 80 per cent of investment banks’ revenues and those areas have suffered badly.”

It was a bad week for those in aerospace and defense contracting as well: BAE Systems, Boeing and Lockheed Martin all announced layoffs, with tightened spending at the Pentagon prompting the firms to cut costs.

Elsewhere, it was another better-than-expected week for new jobless claims, with further “good” news to be found in the fact that there are now only five jobless workers for every open position. Woeful as that figure sounds, it’s a significant improvement from just a few months ago, when it was as high as six per opening.

There’s fresh hope on the horizon regarding that number as well: the birth rate appears to be among the many things negatively affected by the economy. All we need to do is hold on for a generation or so, and there will be more jobs than people. Right?

The Job Market Stays Flat: This Week in Employment

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Employment-related news hasn’t been difficult to come by this week; the fevered speculation over the August jobs report made sure of that. As it turned out, the report was neither as good or as bad as feared: a loss of 54,000 jobs overall was offset by the fact that the private sector increased hiring by 67,000. And, with the overall rate climbing only slightly to 9.6 percent, the abiding concern now seems to be stagnation. Or to put it another way: employers aren’t laying off anymore, but they don’t seem to be hiring either.

That reality is reflected not only by the flat response to Vault’s job seeker sentiment poll, but also in the postings on the Employment Tracker this week. Sure, there’s news of a major restructuring at JAL—with the airline cutting 16,000 jobs–but that event stands out precisely because it’s no longer the norm.

A look at the hiring news on the tracker seems to confirm the thesis that hiring is stuck too. While there are some fifteen reports of firms seeking to add employees, collectively they will add less than 15,000 jobs to the economy—and that doesn’t factor in the fact that many of the positions are in international markets, or that the biggest U.S.-based announcement came from the government, which is seeking 1,700 cybersecurity pros.

If that isn’t indication enough of the kind of difficulty the economy is seeing, check out the following chart from The New York Times’ Economix blog. It compares this recession to previous ones in terms of percentage of jobs lost (left axis) over the duration of the recession (bottom axis). As you can see from the chart, we’re definitely in unfamiliar territory—and bottoming out to boot.

NY Times chart of job change vs previous recession

With all of that in mind, perhaps the most telling story of the week—and certainly the most unusual—has nothing to do with unemployment figures or projections of where the economy might go next. Rather, it’s the slightly absurd news that the Irish agency tasked with job promotion was forced to lay off staff as part of the government’s efforts to balance its budget.

All told, then: lots of talk about the unemployment number, but very little action.

–Phil Stott, Vault.com

Vault Poll Finds Low Expectations for Economic Recovery in 2010

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With the state of the economy and the question of whether we’re actually witnessing a recovery becoming ever more pressing, the results of a recent Vault poll are far from encouraging. Some 61 percent of those who took the poll expressed negative sentiments about the current or future state of the recovery effort, with just 37 percent of respondents expressing optimism.

More worrying is that only a quarter of respondents indicated that the rest of 2010 will be better than what we’ve seen to date. Fully 22 percent, meanwhile, predicted a double dip.

Whether those predictions say anything about what is likely to come in the job market for the rest of the year remains to be seen. What they say about the current mood regarding the economy, however, is quite different. Clearly there’s a lot of skepticism and negativity around the issue—a sentiment that’s likely behind the high numbers of job seekers becoming discouraged in their search and giving up altogether.

recovery

Written by Phil Stott

July 14, 2010 at 10:11 am

Is the Unemployment Number on the Road to Recovery?

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A reason to be cheerful about the future of the economy from the folks at NPR: freight traffic is up significantly since this time last year and “has climbed back to where it was just before the recession.”

That’s good news for a number of reasons: obviously, it’s putting truckers back to work, but the implications of a rise in freight carriage is significantly bigger than that. It’s evidence that the gears of the wider economy are once again beginning to shift—more goods being hauled presumably points to more sales being made, and more jobs being created.

And, while it may be tempting to look at the boom in hiring truckers as a simple result of companies having cut too deep during the recession, the following chart from the NPR article suggests that’s not entirely the case: the recovery in terms of tonnage has been marked, but still remains some way off its peak, which seems to have been in 2007:

Having seen that chart, take a look at the one for the national unemployment rate over the same period. Am I the only one who thinks they bear an inverse relationship to one another—with unemployment trailing freight? Or is that just wishful thinking on my part?

Of course, if it’s not wishful thinking, it could be that the coming months will see a decent improvement in the unemployment number. It’s unlikely that it’ll get us “back to where it was just before the recession,”—it would take a dramatic improvement to hit even eight percent, let alone anywhere in the range between seven and eight—but it is a fairly convincing indicator that we’re at least headed in the right direction.


Written by Phil Stott

June 25, 2010 at 9:47 am

How Disappointing Were May’s Unemployment Figures?

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What do we make of today’s jobs report? On the surface, it seems like good news all around: 431,000 new jobs in May, and the unemployment rate dipping back down to 9.7 percent. Nothing to complain about there, it would seem. So why the following headline on The Huffington Post?

Dreadful Jobs Report Headline

Well, turns out part of the clue is in the sub-head: the private sector—something of a bellwether for economic growth—did indeed only add 41,000 jobs throughout the month. Worse, according to the accompanying article: “Virtually all the job creation in May came from the hiring of 411,000 census workers. Such hiring peaked in May and will begin tailing off in June.”

So that dip in the unemployment number—down from 9.9 percent last month—is largely the result of temporary hiring, and therefore likely to shoot back up next month? Well, yes, but it would appear that even that doesn’t capture the full story: “The dip partly reflected 322,000 people leaving the labor force for a variety of reasons.” One of those reasons: people giving up looking for work altogether because they’re discouraged by the market.

It’s a strange time to be trying to predict job market movement. On the one hand, you have a constant flow of news suggesting things are getting better in the economy, and that a recovery is well under way. Sure, you get the odd week or two of panic over the Greek economy (and an undercurrent of concern over the PIIGS), but consensus seems to suggest that we’re headed in the right direction. And then you get a weak hiring number. Even more confusing: that weak number comes out in the same week as a study that finds a significant number of employers are planning to hire in 2010.

Confusing, eh? Even the President admitted that “[t]here are going to be some ups and downs,” although he remains bullish—at least on the surface—about the direction of the economy. According to The New York Times, he told workers at a trucking company today that “the economy was ‘getting stronger by the day.'” As proof, he pointed to the fact that May is now the fifth straight month in which jobs have grown—a fact, it should be noted, that would have been true even without the ramp up in Census hiring.

So where does that leave us? Cautiously optimistic? Just glad that we’re not losing jobs anymore? Depressed that things aren’t any better? If anyone knows, feel free to let us know—either in the comments section or on Twitter.

Written by Phil Stott

June 4, 2010 at 12:04 pm

March Jobs Number: “We Are Turning The Corner”

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The March unemployment number is in and—surprise!—not much has changed. The news was mostly positive: the DOL figures show a net gain of 162,000 jobs during March, but that figure wasn’t enough to shift the overall unemployment rate below 9.7 percent—the same place it’s been all year. (There’s a medical term for what the overall number has done this year: flatlining. Unfortunately for us, the “patient” in this case is the US economy, and no-one’s quite figured out how the defibrillator paddles work yet.)

Perhaps the most disheartening thing about the statistics is that even as the President was announcing that “[w]e are turning the corner,” he still took time out to acknowledge that we’re nowhere near a healthy economic situation. We’ve kind of come to expect doom, gloom and monthly updates on an “unacceptably high jobless rate from Tim Geithner, but when the Commander in Chief feels compelled to point to the “staggering” losses of late, it’s a little harder to ignore.

He has a point, though: eight million job losses over the past two years is a staggering number.

Still, as we head into a holiday weekend that promises—among other things—nicer weather for vast swathes of the country, we’re keen to accentuate the positive. And there’s nothing quite as positive—we think—as job gains. On that note, then, have a great weekend!

Written by Phil Stott

April 2, 2010 at 2:59 pm

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