Pittsburgh Scoring Jobs

Some new jobs numbers are out for April. These are the Pittsburgh jobs, not the state data in the news today. Not much change from trend. Region up YOY and for April only below the 2001 über peak that I have argued is a bit anomalous.

Maybe we will just summarize in a graph below.  Note always the scale of the axis.  So the slope of the trend I put in there may appear larger than you might think. It is not the largest rates of job growth, but when you think about it, it is a lot steadier than some in town presume.   Why is it not so large?  You have to consider that by the middle of the 1990’s the natural population change for the region turned negative.  More deaths than births reflect changes long ago, and are not really reflective of current economic competitiveness in any way.  Yet fewer people mean fewer jobs needed.  Roughly 2/3rds of the regional economy is for jobs that provide goods and services to the regional population.  So at the end of the day there were jobs being taken outof the local economy no matter and continue to this day.  Pittsburgh remains the only large metro region with natural population decline.  Still, for everyone who is convinced all positive economic stories of Pittsburgh are ephemeral, or for some who believe it is all outright fiction, here is my annotated version of the last 20 years of job growth in the Pittsburgh region. Unctuous bafflegab it may very well be.

Jobs, and jobs again

Not anything in the news today that I see, but in general I have to admit I get confused when I read most opining on the source of job growth in the region’s economy.  So below is just a straight up look at where recent job gains are coming from in the Pittsburgh region.   It’s the job gains that are most likely fueling the migration gains of late which then has a big impact on local real estate markets. The big decline in ‘government’ jobs is of note.  Of the 3,300 job loss over the year, just about half (1,600) are losses in state government jobs.  600 jobs were lost in the Federal government, 500 in local school districts and 600 in local government other than the school districts.

Looking back - a better jobs year than we thought

The Bureau of Labor statistics just put out its routine revisions of employment data and it looks like 2011 was actually a better year for jobs in the Pittsburgh region that previously thought. Here is what I get for the scale of change which is positive every month by some nontrivial amounts.

Total Nonfarm Jobs in thousands
Previous Revised
Jan 1111.2 1116.1
Feb 1112.3 1118
Mar 1122.7 1128.3
Apr 1137.6 1142.7
May 1139.6 1152.5
Jun 1154.7 1160.6
Jul 1143.2 1149.9
Aug 1140.5 1147.5
Sep 1147.7 1155.9
oct 1162.6 1170.4
Nov 1163.5 1171.1
Dec 1164 1169.7

Lies, damn lies, and context

First off,though  it has nothing to do with what I started writing except that it talked about Bradford County and the international attention Pennsylvania shale gas development is getting.  BBC looks at the whole Marcellus thing:  How fracking affects a community in Pennsylvania

What really got me going was a far less read piece that also looked at some Marcellus impacts.  A publication called Area Development has this:  Natural Gas Boom Boosting Regional Economies.  Iin passing they have a neat little factoid also about Bradford County.  It says with clear implication that it is all Marcellus related

“In Bradford County, Pa., the 2009 unemployment rate of 10 percent has been halved because of Marcellus Shale gas development. ”

Half?  I was like.. really?  I had to go check.  So here is the unemployment rate in Bradford County back a few years:

So it is true that Bradford county had one month, one, where the local unemployment rate hit 9.9%.   Problem is that the current unemployment rate is 6.4%, so half is quite a stretch.  Skipping that the 9.9% was just one month and that the average unemployment rate in 2009 was 8.3% you really are getting further away from justifying that half claim.  The  kindest I could is that there was one month in April of 2011 that the county’s unemployment rate was 5.1%.  So really cherry picking two specific months I’ve highlighted there with the two recent extremes in the unemployment rate might get you to justifying that half comment.  But it raises a bigger question then does it not?  Bradford County, the heart of Marcellus, has seen its unemployment rate go up a lot this year?  Further, what is the best baseline to really judge the impact on the local labor force up there?  One month in 2009, or all of 2009, or some earlier year. The average unemployment rate for 2008 was 5.3%.   So yes, the current unemployment rate in Bradford county is up from what was the end of the recession technically. How about 2007? 4.7%.   So now go back and think about that half claim.  Methinks it all may be a bit more complicated than that.

Occupy That!

Austin Hill, ladies and gentlemen:

Will you allow this question to “occupy” your minds for a moment? Seriously, what would happen to our country if we all chose to do nothing but take up space on “public” property (or even on other people’s private property as some of you have done), consume resources at other people’s expense, and spend several days in a row not producing things? Have you even thought of what might happen, if the rest of us followed your “example?”

Well, I suppose it would first depend on who all quit their jobs. If every politician, bureaucrat, and bankster quit their jobs, I would be willing to bet that everyone would considerably better off. Toss in superfluous workers that are only necessary because of government interference, like tax lawyers, compliance officers, safety managers, CPAs, etc., and suddenly this country wouldn’t be shackled in economic regression. As for everyone else, point taken.

However, it should probably be pointed out that many OWSers are able to OWS because they don’t have jobs. See, the funny thing about recessions, even those caused by massive government intervention leading to housing bubbles which are then exploited for massive profit by Wall Street banks who are defrauding home owners as well as Americans by using the Fed as an ATM machine, is that jobs tend to be more scarce. And when that recession turns into a depression, those scarce jobs don’t come back for a while. So, for the most part, Occupy Wall Street is not a matter of people quitting their jobs as much as it is a matter of people not having jobs in the first place because the government, acting as a pawn of the banks, decided to wreck the economy.

Participants in the nationwide “occupy” movement would probably be shocked to know this. But the fact is, their oh-so-important demonstrations are able to occur as they do because the majority of us in America do not think and act the way they do. In fact, to be even more precise, their choices are enabled in no small part by – gasp!- American-styled Capitalism! Yet just as those who burn the U.S. flag fail to understand that the object they desecrate is emblematic of the freedom they exercise, the occupiers fail to see that the “C-word” which they loathe is precisely what makes their occupying possible. [Emphasis added.]

Actually, it is the distinctly American form of crony capitalism, as typified by TARP and other recent bailouts, that led to the current set of choices OWSers face.  The banks have looted the American economy, quite illegally, it should be noted (and note that the linked article only concerns itself with judicial rulings, not investigative allegations, which means that the assertion of fraud was either proved in a court of law or admitted to by the perpetrators!)  Jobs are scarce because politicians had to tax small business and mid-sized businesses to death in order to fellate pay off the major banks that have bought them contributed to their campaigns in the past election cycles.  And the cost of those taxes have been jobs that would have otherwise be filled by those currently OWSing.Quite simply, the free market is dead in America, and has been for decades.  The result is exceedingly high unemployment—the U6 index indicates it’s been in the high double digits for some time—which is the direct result of massive government intervention in the economy, for the benefit of enriching the banks.  This is in no way free-market capitalism.  In fact, a certain someone has noted quite acutely that America doesn’t actually have a free market, in practice.  Yet, said someone wants to act as if suddenly the market is perfectly free and all the decades of government intervention no longer have consequences and therefore all those who are currently OWSing are simply socialists who want to redistribute the wealth.

But yes, American-styled capitalism has not only made OWSing possible, in that it has eliminated productive jobs, but it has also made it necessary because the system is corrupt and redistributionist.

Also, in regards to the burning of American flags, could Mr. Hill please provide proof of this occurrence?  I searched on Google for photographic evidence of OWSers burning the American flag, but all I could find was the occasional desecration, and a few instances of burning the Israeli flag, presumably in honor of Ben Bernanke.  I would very much like proof that OWSers are actually the anti-American protestors that the conservative media make them out to be.

(For those who are interested, Karl Denninger has a rather thorough takedown of Thomas Sowell’s article on OWS.)

Job Openings Now at Highest Level in Over Three Years

The Labor Department announced on Tuesday that the number of positions waiting to be filled in the U.S. rose in September to the highest level in more than three years. Job openings increased by 225,000 to 3.35 million, the most since August 2008.

Hiring also advanced by 185,000 to 4.25 million.

Last Thursday the government announced that payrolls grew by 80,000 workers in October, and that gains in the prior two months were revised up, by nearly 102,000 positions.

In the 12 months ended in September, the recovery has now created a net 1.3 million jobs, from a gross total of 48.3 million new hires.

Don't Shoot the Messenger

Hard to be the bearer of good news in this town.  This is something just out and quite honestly I am surprised. If it holds up over next few months it is pretty big economic news.

You can check out the latest dump of total non-farm jobs for the region from the BLS here. I have done absolutely nothing other than calculate the year over year change over the last 3 years. What is interesting about the January data just released?

Like I said.. if it holds up.  January is still a preliminary number, so something to keep an eye on.

Actually, let’s update that chart to see how far back you need to go.  The answer is February 2001.  More the evidence it must be an anomaly.  Can’t be true right?  Here is the longer term picture of same:

What Does it Mean When a Million People Apply for a Thousand Jobs?

Several economists have commented on the remarkable and relatively new phenomenon that’s seen in India, where a government agency (or a state owned enterprise) advertises (say) 100 job openings and gets a million applications. This is generally interpreted as a problem, as a reflection of the very high extent of unemployment amongst the educated in India.

At the same time, this is hard to reconcile with the picture one gets from private recruiters, who say that it’s hard to recruit fairly minimal levels of skills when paying the market price.

The metaphor of market efficiency is useful in thinking about this. Suppose there is a liquid market with many buyers and sellers. Suppose supply and demand clear and the price of the widget is Rs.100. Now suppose you step into the market and offer to buy at Rs.101. In an efficient and well functioning market, you should be deluged with a very large number of sellers trying to sell to you at 1% above the fair market price. Conversely, if you step into the market and try to buy the widget at Rs.99. Nobody should be willing to sell to you at this price. A dramatic shift in the number of bids that you get — from zero at Rs.99 to a deluge at Rs.101 — is the hallmark of an efficient market.

I think this is a useful way to think about what is going on with government recruitment. As a thumb rule, researchers like Lant Pritchett and Jeff Hammer believe that in rural India, for junior positions, the government overpays by 3x. Also see Wage differentials between the public and private sectors in India by Elena Glinskaya and Michael Lokshin, in Journal of International Development, 19(3), page 333-355, 2007.

I quit the Ministry of Finance in 2005 and roughly a year later, I bumped into a person who had been my driver while there. He said that he’s set himself up to collect the wage of the driver from the government, but has recruited another driver to go to work to do the actual work of driving. He was pocketing a neat profit out of this because the government’s price of a driver is roughly 2x the price in the private labour market.

Policemen are apparently poorly paid but with ubiquitous corruption and outright shakedowns being run by the police, the true income of a policeman in India is massive. I bumped into a young fellow on the beach in Goa a few weeks ago. He makes a living helping tourists do stretching exercises on the beach. A full 25% of his monthly income is paid to the local policemen as protection money.

Junior clerical staff in PSU banks reap a bonanza because they’re overpaid (when compared with the market price of clerical staff) and get job security for life. The NPV of that job is very high.

There is a risk aversion dimension also. People with high risk aversion might particularly favour these public sector jobs because they are both high wage and low risk.

In this environment, when the government advertises for 50 policemen, what do you think would happen? In an efficient market, a large number of suppliers of labour would see that there’s an opportunity to sell their services at much, much more than market price. There should be an outright deluge of job applicants.

The phenomenon of a million applicants showing up for a hundred positions is a reflection of civil service wages and job security being way out of line with what is found on the private labour market, and not a reflection of large scale unemployment in India. If anything, a very big deluge of applicants is a reflection of a rational information-rich environment where many individuals are able to access information and act on it.

Obama’s Brilliant Jobs Move

President Obama convened a “jobs summit” at the White House Thursday morning. It was likely one of the more brilliant moves of his presidency.

One of the most notable early promises from Obama was that the massive stimulus measure signed into law earlier this year would save or create 3.5M American jobs. The President and the White House have continued to defend that claim vigorously since stimulus spending began.

The biggest challenge for them has been that even though spending has reduced the number of jobs losses, net job losses have continued and thus the unemployment rate continued to rise… until this week.

For months business groups, financial blogs, labor leaders, think tanks and lawmakers were lining up to offer the President their ideas about creating jobs. The Left arguing that more spending is required, while those on the Right argue that the government intervention and spending programs have been wrong all along.

So why hold a “jobs summit,” and underscore a 10.2% unemployment rate right at the dawn of an congressional election year? The move is brilliantly timed.

Based on the job loss data that we’ve been tracking here, we’ve said repeatedly that a return to net jobs growth will be real and measurable in the data by Christmas. This week showed more evidence that economic activity has now resumed to such a level that the unemployment rate has peaked, joblessness has started to fall, and jobs growth is now resuming.

So the timing could not have been better for Obama to go on record on Thursday: “We are going to be bringing together people from all across the country — business, labor, academics, not-for-profits, entrepreneurs, small and large businesses — to explore how we can jump-start the hiring that typically lags behind economic growth, but we don’t want to wait. We want to see if we can accelerate it.”

The summit came one day ahead of the government’s latest jobs report, which showed job losses all but ended during November and that the unemployment rate is now starting to fall from its peak level of 10.2%. Congressional Democrats who have been bracing for a rough election year in 2010 (owing in part to the weak jobs market), could not be more pleased to see a trend line that now clearly points to jobs creation in the months leading up to those elections.

The $787 billion economic stimulus package has now conservatively saved more than one million jobs — a point highlighted again by Vice President Joe Biden on Tuesday. And more projects are in the pipeline that will put Americans to back to work, including very exciting new infrastructure, Internet broadband, and high-speed rail initiatives.

As these new programs actually ramp up, as economic recovery continues to gain momentum, and as jobs growth resumes, Obama can now point to a stimulus plan that got the economy back on track, a TARP program that saved our large banks, and a December 2009 jobs summit that was the catalyst to employment creation in 2010. Perfectly timed.

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Fed Beige Book: Economic Outlook Cautiously Positive

On Wednesday, the Fed’s Beige book was released for July and August. It summarizes reports from the 12 Federal Reserve Districts and pointed to economic activity that continues to stabilize.

Compared to the summary from the Fed’s last report 11 out of 12 regions asserted that economic activity had either stabilized or improved. Even in the 12th region — St. Louis — their read-out pointed to a pace of decline that was moderating.

Almost all regions remarked that among business leader contacts in their territories, the economic activity outlook is now cautiously positive.

The reports underscore what we’ve been reporting here that clunkermania boosted auto showroom traffic and subsequent new car sales in all regions. Several regions confirmed that the program has also resulted in increases or planned increases in automobile-related production. Beyond the auto industry, most regions reported general improvements in manufacturing production.

Most territories also reported improvement in the residential real-estate markets.

It also came as no surprise that with labor markets on the mend, 8 of 12 regions report upticks in demand for temporary workers – usually a leading indicator of a return to job growth.