Citizen Economists » jobs

Lies, damn lies, and context

Christopher Briem — Thu, 01 Dec 2011 20:25:54 +0000

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!

Simon Grey — Fri, 11 Nov 2011 20:10:12 +0000

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

Eldon Mast — Wed, 09 Nov 2011 14:45:57 +0000

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

Christopher Briem — Mon, 14 Mar 2011 16:03:26 +0000

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?

Ajay Shah — Mon, 22 Mar 2010 16:10:11 +0000

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

Eldon Mast — Mon, 07 Dec 2009 12:47:14 +0000

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

Eldon Mast — Thu, 10 Sep 2009 15:40:19 +0000

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.

Employment Index Makes Monster Jump

Eldon Mast — Fri, 04 Sep 2009 12:15:09 +0000

Wednesday we pointed to three reports that reflect job market improvement. On Thursday another encouraging sign emerged.

The Monster Employment Index for August was released. It recorded its highest monthly rate of improvement in four years spiking 6% higher than its July reading. The report — produced monthly by the popular online jobs bulletin board — registered increased job availability in a majority of industries, occupations, and regions.

The Monster Employment Index is a dynamic gauge of U.S. job demand based
on a real-time review of millions of employer work opportunities selected from a large representative sampling of corporate career Web sites and job boards, including Monster’s own listings.

During August positive indications were broad based with online job postings rising in 15 of the Index’s 20 industry sectors and 18 of the 23 occupational categories monitored by Monster.

In an press release, Monster’s senior Vice President Jess Harriott reflected on the report: “The significant jump in the Monster Employment Index in August offers encouraging signs of improvement in the US economy with the demand for managers and professionals as well as sales and office workers picking up in time for the fall hiring season.”

Indeed we would agree that the second half of 2009 will be characterized by surprisingly strong economic growth.

Merry Christmas In September – Jobs Outlook Continues to Improve

Eldon Mast — Thu, 03 Sep 2009 15:40:29 +0000

On Wednesday, two jobs related reports continued to show a labor market on the mend. The Christmas, Challenger and Grey report showed corporation layoff counts fell sizably in August, to 76,456 versus July’s 97,373.

The more closely watched ADP employment report also showed improvement on Wednesday. And Tuesday, the ISM manufacturing report also showed employment improvement for 4 months in a row.

More employment reports (including new jobless claims and overall unemployment) are on the way Thursday and Friday. Don’t be surprised if they also point to an improving jobs climate.

Financial Market Conditions at Mid-Year

D H Smith — Mon, 06 Jul 2009 10:49:09 +0000

As one of the large number of Americans who depends on a positive business and investment environment for his prosperity, I regarded the election of Barack Obama as president with Democrat majorities in the House and Senate with considerable concern.

But more than the usual number of my fellow businesspeople and investors supported them, contrary to their own interest as it always seemed to me. Of course many of these unlikely Obama voters were as eager for hope and change anyone else. If they gave consideration to the implications of Democrats supermajorities led by Obama for the economy from which they draw life and livelihood, they allowed their desire to believe to outweigh more sober analysis.

Obama took them in totally with the charisma, the gaseous uplift, and the promise of racial reconciliation; they convinced themselves that the redistribtionist, high-tax, anti-business, anti-capital policies to which he rallied his party constituted red meat for their base, not a program for governing.

This misapprehension survived the election, and permitted modest financial market recovery through the end of December 2008, followed by modest declines through Inauguration Day. On Inauguration Day, President Obama delivered a speech that any fair-minded listener would have to admit was far less than a rhetorical tour de force, and far more evocative of class envy and racial struggle than was expected.

Financial markets tanked that day and kept tanking for weeks, pressured further by the stimulus package that offered little real economic stimulus, but a shocking grab bag of packages to traditional Democrat constituencies and not the merest nod to the rights or concerns of the minority.

We experienced headlong collapse from Inauguration Day through first week of March. Obama Democrats in the business and investment community awoke too late to the realization that the Democrat program now encompasses nationalization of vast swathes of industry on the pretext of emergency (autos and banks) or necessity (health care); that owners’ property rights are provisional and expendable; that the ideological attachment of our rulers’ to the green agenda trumps their duty of care to the free-market economy; and that they mean to bleed the productive sectors of the economy to feed the non-productive to the full extent that they can get away with.

So far, so bad. But then something interesting happened — we had a dramatic bounce in stock markets from March through early May. Some of this is probably pricing out the possibility of a 1929-37 depression; some might even be what I regard as an unrealistic pricing in of a rapid economic recovery, when what we still have in prospect is a deep and long recession as in the 70s and early 80s.

But some of the bounce is almost certainly due to the business and investment interest of this country re-assessing President Obama’s grand and ambitious schemes and concluding that they represent impossible over-reach. Rightly or wrongly, they came around to the view that he has expressed extreme initial positions as a negotiating tactic to get more than he could with conventional bipartisanship, but less than he asks. Republicans and responsible Democrats in Congress will push back on the crazier ideas. The American people will not go along, will resist with mute passive aggressiveness and loud argumentation, once the full implications are clear. And if it is not just a tactic, if Obama really insists on every bit of what he says, Republicans will gain enough seats in 2010 to apply the brakes, if not an outright majority. On this view, one way or another, the entire Obama agenda can be resisted.

After stock price gains of over 30% from March to May, markets have stalled since then, and fallen into a few air pockets. The public policy problems for the markets at this point remain the administration’s apparent readiness to overturn our carbon energy-based economy and radical intentions toward the 15% of the economy that health care represents. But the overarching sentiment problem comes from a second reassessment among business people and investors: even if the entire Obama agenda can be resisted and its worst effects rolled back later, on this view a tremendous amount of violence can still be done to the U.S. economy now. In the meantime, we are still losing jobs at a sickening pace while Obama and the Congress wastes unimaginable sums of money on projects lacking any other point beside paying off their friends and allies. In the background the Chinese, our principal creditors, are objecting more and more forcefully to American fiscal unsustainability and the debasement of the U.S. Dollar that this portends.

At the very least, these mid-year movements call upon investors to review their portfolio allocations with care. My own view is currently defensive on U.S. Dollar assets, and seek for growth in Chinese stocks.

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