For years now, every time there is a positive employment report, the President and several high profile economists continue to echo what they had said the month before; "the" job market is strong. Recently, the former Federal Reserve Chairman, Alan Greenspan, went so far as to say that it was "extremely" strong. I cringe every time I hear that employment is strong because it isn't.
An economy isn't strong when the U-6 report of "Alternative Measures" still sits at 10.4%. For those who don't know, the U-6 is a measure of real unemployment that includes the official 5.3% out of work and looking for work; along with those that are underutilized or, in other words, working in jobs that are below their experience and education levels. It also includes persons unable to find a full-time position that are forced to work part time. Finally, it includes those who could work, but who have, in frustration, stopped looking. If employment was "extremely" strong, the U-6 would be at 7% as it was in several months in the year 2000.
Then, there's the issue of wages. You can't have a strong jobs market when real wages (wages adjusted for inflation) are languishing. In 2011, they finally stabilized following the 8% drop due to the recession. In that year the real median household income was $51,842. By 2013, it was $51,939. In 2014, the wage growth was just 4-tenths of a percent; meaning that the real median income -- when it is officially reported later this year -- will be just $52,146. Thus, after 4 years, real wages have only increased by 6-tenths of one percent. In other words, for every $10,000 worth of earnings in 2011, that same income level at the end of 2014 would be just $60 higher at $10,060.
If we continue to grow wages at these rates, it will literally take another 20+ years to get back to the pre-recession median household wage of $56,436.
Lastly, real wages, as reported by the Bureau of Labor Statistics, actually fell 4-tenths of a percent in June 2015. A doubling of the loss that was seen in May.
Really? An extremely strong labor market?
References:
Greenspan: Extremely strong and growing labor market: http://video.cnbc.com/gallery/?video=3000401737
U-6 Unemployment Rate 2000 - 2015: http://portalseven.com/employment/unemployment_rate_u6.jsp
Bureau Labor Statistics: July Employment Report: http://www.bls.gov/news.release/pdf/empsit.pdf
Interactive Chart: Real Median Household Income By Year: https://research.stlouisfed.org/fred2/series/MEHOINUSA672N
Average Real Hourly Wage Growth in 2014 Was No Better Than 2013: http://www.epi.org/blog/average-real-hourly-wage-growth-in-2014-was-no-better-than-2013/
Real Earnings for the Year Ending June 2015: http://www.bls.gov/news.release/pdf/realer.pdf
Showing posts with label labor. Show all posts
Showing posts with label labor. Show all posts
Tuesday, August 11, 2015
Friday, July 4, 2014
Decades Of Labor Participation Wiped Out and Continuing to Decline
In 1997 -- 14 years before the supposed wave of retiring baby boomers were to start hitting the economy -- the number of workers participating in labor peaked at 68.1%. This after having climbed from a low of 57.9% in 1965. Compared to that high in 1997, the current participation rate has fallen nearly 8% to today's level of 62.8%; now equaling levels not seen since 1978. And the current decline -- post recession -- has significantly accelerated since 2007.
In a recent report release by the Center for Immigration Studies (CIS), almost all of the newly created jobs in this country since 2000 have gone to immigrants; both legal and illegal. During that same period, 58 million natural born citizens simply dropped out of the workforce.
So, how do 58 million workers survive not working?
Many find filing for Social Security disability insurance a new way to get a lifetime of pay without having to work. As a result, we now have a record 11 million on disability; or, approximately, one out of every fourteen working age citizens collecting insurance. Because of poor economic times, 36 percent of 18-to-31 year-olds or more than 21 million are living at home; most not working. This, too, is the reason that gang membership has swelled to 1.4 million; up from 1 million in 2009 and 750,000 in 2000. The welfare rolls have been exploding with 15% of the population or 46.5 million in poverty and many eligible for full benefits including income. Others aren't working because of college or the military.
The declining trend in labor participation is putting this country at risk economically. As the participation rate declines, it means that fewer and fewer of us are paying taxes and paying towards programs like Social Security and Medicare; and, subsequently, more and more of us are living off of the government instead of assisting it.
Essentially, the decline in labor participation also means that America is becoming a poorer country with incomes either stagnant or declining while the cost of living increases at a faster pace. This is evidenced by the fact that median incomes in the U.S. pretty much peaked in 1998; exactly one year after the 1997 peak in the participation rate:
During that same period where incomes were in decline, the cost of things we buy went up 48%.
America must wake up to the fact that the country is in decline with too few people working. We are becoming the very essence of the European economies that have high unemployment; high taxes; unmanageable government debt; and, low business profits. You can find all kinds of reasons for this: an increasingly poorly educated workforce with the good jobs either going overseas or being handed to better educated immigrants on work visas; or, because of increased government regulation that accelerated during the Clinton years and are even more oppressive under Obama; and/or, too high taxes on businesses that continue to make our companies less competitive in a world marketplace and which, prevent both the volume and quality of jobs being created. At the same time we need to reassess all of our government assistance programs to insure that people who can work do work.
References:
Civilian Labor Force Participation Rate: http://research.stlouisfed.org/fred2/series/LNU01300000
Disability Beneficiaries Hit New Record: http://cnsnews.com/news/article/terence-p-jeffrey/10996447-disability-beneficiaries-hit-new-record
June 2014: Civilian Workforce Participation Rate: http://www.bls.gov/news.release/empsit.a.htm
America’s Shameful Poverty Stats: http://www.thenation.com/article/176242/americas-shameful-poverty-stats
A Record 21.6 Million Millennials Living With Parents: http://www.huffingtonpost.com/2013/08/01/millennials-live-with-parents_n_3690870.html
2009 Gang Statistics: http://www.statisticbrain.com/gang-statistics/
2014 Gang Data: http://www.fbi.gov/about-us/investigate/vc_majorthefts/gangs
Median Income Falls For 5th Year, Inequality At Record High: http://www.huffingtonpost.com/2013/09/17/median-income-falls-inequality_n_3941514.html
Year-to-Year U.S. Inflation Calculator: http://www.usinflationcalculator.com/
So, how do 58 million workers survive not working?
Many find filing for Social Security disability insurance a new way to get a lifetime of pay without having to work. As a result, we now have a record 11 million on disability; or, approximately, one out of every fourteen working age citizens collecting insurance. Because of poor economic times, 36 percent of 18-to-31 year-olds or more than 21 million are living at home; most not working. This, too, is the reason that gang membership has swelled to 1.4 million; up from 1 million in 2009 and 750,000 in 2000. The welfare rolls have been exploding with 15% of the population or 46.5 million in poverty and many eligible for full benefits including income. Others aren't working because of college or the military.
The declining trend in labor participation is putting this country at risk economically. As the participation rate declines, it means that fewer and fewer of us are paying taxes and paying towards programs like Social Security and Medicare; and, subsequently, more and more of us are living off of the government instead of assisting it.
Essentially, the decline in labor participation also means that America is becoming a poorer country with incomes either stagnant or declining while the cost of living increases at a faster pace. This is evidenced by the fact that median incomes in the U.S. pretty much peaked in 1998; exactly one year after the 1997 peak in the participation rate:
America must wake up to the fact that the country is in decline with too few people working. We are becoming the very essence of the European economies that have high unemployment; high taxes; unmanageable government debt; and, low business profits. You can find all kinds of reasons for this: an increasingly poorly educated workforce with the good jobs either going overseas or being handed to better educated immigrants on work visas; or, because of increased government regulation that accelerated during the Clinton years and are even more oppressive under Obama; and/or, too high taxes on businesses that continue to make our companies less competitive in a world marketplace and which, prevent both the volume and quality of jobs being created. At the same time we need to reassess all of our government assistance programs to insure that people who can work do work.
References:
Civilian Labor Force Participation Rate: http://research.stlouisfed.org/fred2/series/LNU01300000
Disability Beneficiaries Hit New Record: http://cnsnews.com/news/article/terence-p-jeffrey/10996447-disability-beneficiaries-hit-new-record
June 2014: Civilian Workforce Participation Rate: http://www.bls.gov/news.release/empsit.a.htm
America’s Shameful Poverty Stats: http://www.thenation.com/article/176242/americas-shameful-poverty-stats
A Record 21.6 Million Millennials Living With Parents: http://www.huffingtonpost.com/2013/08/01/millennials-live-with-parents_n_3690870.html
2009 Gang Statistics: http://www.statisticbrain.com/gang-statistics/
2014 Gang Data: http://www.fbi.gov/about-us/investigate/vc_majorthefts/gangs
Median Income Falls For 5th Year, Inequality At Record High: http://www.huffingtonpost.com/2013/09/17/median-income-falls-inequality_n_3941514.html
Year-to-Year U.S. Inflation Calculator: http://www.usinflationcalculator.com/
Tuesday, September 8, 2009
Ron Bloom, The Manufacturing Czar: A Blooming Mistake!
I guess if you absurdly think that it is labor -- specifically union labor -- and not management that creates jobs, then, it makes sense that you appoint a man like Ron Bloom as Obama's new manufacturing czar (Click to See Full Story: "President Obama to Appoint Ron Bloom Manufacturing Czar").
But, having spent years working on the opposite side of the labor unions, I know that the only way that hiring increases, at least when unions are involved, is by the time-tested union technique of worker slow downs. As a manager, I was able to create hundreds of in-house jobs because outside, contracted unionized labor for various services was just too expensive. Because of the cost efficiencies in hiring my own staff, our company had more working cash to expand or create manufacturing jobs or to spend more on Research and Development into new products that would ultimately create new jobs.
I find it very interesting that an ex-union executive would be nominated as the person -- another czar -- whose job it is to increase manufacturing activity in America. Ask yourself this simple set of questions: "Which came first? The Unions or the business they work for? " I am personally unaware of any company who started up with its workers already unionized.
One of the primary reasons that manufacturing has left this country -- in addition to high tax rates and strict government regulation -- is the high cost of labor and the inability of unionized companies to increase productivity because the unions will almost always resist any attempts to automate manufacturing. That's because any automation would eliminate union jobs. Like it or not, labor unions are just another form of a cartel; like OPEC for oil prices or De beers for diamonds. They force higher wages through non-competitive tactics. As a result, the lack of competitiveness forces companies to ship more and more manufacturing to overseas locations. For years, they've refused to concede any small losses of jobs; only to have much of their jobs completely lost to other countries like Ireland, China, Japan, and Mexico. Union membership has consistently declined in the last 25 year from a high of 21 percent of the workforce, 25 years ago, to today's 12.4%.
This year's best examples of labor union's having an opposite and negative impact on the manufacturing sector is the bankruptcies of both General Motors and Chrysler. And, if anyone thinks those two companies have any real future with Obama and his people running the show, one only has to look at the Cash For Clunkers program, where both Chrysler and GM failed to match their current market share by selling cars under that program. GM, for example, has an overall 19% market share in auto sales in this country. Yet, in Cash For Clunkers, GM only sold 17 percent of all the cars sold under that program. Chrysler was even worse. The big winners were Toyota, Honda, and Nissan; all of which have non-union production facilities in the United States and who beat American manufacturers in the depth of quality, craftsmanship, and fuel efficiency. One of the reason that Toyota has such high sales against American autos is because of its resale value. In 2 to 3 years of being in service, American cars have higher repair rates and, subsequently, lower resale values. That all has to do with the fact that, in order to be cost competitive, more of the expense of building a vehicle goes into salaries and not into the quality of the parts that make up the car.
I would think that you would want a manufacturing czar who had a proven track record of creating manufacturing jobs in this country. There are hundreds of them; but, they are almost all CEO's and that's when reality and Obama's labor-leaning ideology and anti-bourgeoisie philosophies are at complete odds with each other. For that reason, don't expect American manufacturing to bloom under Ron Bloom.
But, having spent years working on the opposite side of the labor unions, I know that the only way that hiring increases, at least when unions are involved, is by the time-tested union technique of worker slow downs. As a manager, I was able to create hundreds of in-house jobs because outside, contracted unionized labor for various services was just too expensive. Because of the cost efficiencies in hiring my own staff, our company had more working cash to expand or create manufacturing jobs or to spend more on Research and Development into new products that would ultimately create new jobs.
I find it very interesting that an ex-union executive would be nominated as the person -- another czar -- whose job it is to increase manufacturing activity in America. Ask yourself this simple set of questions: "Which came first? The Unions or the business they work for? " I am personally unaware of any company who started up with its workers already unionized.
One of the primary reasons that manufacturing has left this country -- in addition to high tax rates and strict government regulation -- is the high cost of labor and the inability of unionized companies to increase productivity because the unions will almost always resist any attempts to automate manufacturing. That's because any automation would eliminate union jobs. Like it or not, labor unions are just another form of a cartel; like OPEC for oil prices or De beers for diamonds. They force higher wages through non-competitive tactics. As a result, the lack of competitiveness forces companies to ship more and more manufacturing to overseas locations. For years, they've refused to concede any small losses of jobs; only to have much of their jobs completely lost to other countries like Ireland, China, Japan, and Mexico. Union membership has consistently declined in the last 25 year from a high of 21 percent of the workforce, 25 years ago, to today's 12.4%.
This year's best examples of labor union's having an opposite and negative impact on the manufacturing sector is the bankruptcies of both General Motors and Chrysler. And, if anyone thinks those two companies have any real future with Obama and his people running the show, one only has to look at the Cash For Clunkers program, where both Chrysler and GM failed to match their current market share by selling cars under that program. GM, for example, has an overall 19% market share in auto sales in this country. Yet, in Cash For Clunkers, GM only sold 17 percent of all the cars sold under that program. Chrysler was even worse. The big winners were Toyota, Honda, and Nissan; all of which have non-union production facilities in the United States and who beat American manufacturers in the depth of quality, craftsmanship, and fuel efficiency. One of the reason that Toyota has such high sales against American autos is because of its resale value. In 2 to 3 years of being in service, American cars have higher repair rates and, subsequently, lower resale values. That all has to do with the fact that, in order to be cost competitive, more of the expense of building a vehicle goes into salaries and not into the quality of the parts that make up the car.
I would think that you would want a manufacturing czar who had a proven track record of creating manufacturing jobs in this country. There are hundreds of them; but, they are almost all CEO's and that's when reality and Obama's labor-leaning ideology and anti-bourgeoisie philosophies are at complete odds with each other. For that reason, don't expect American manufacturing to bloom under Ron Bloom.
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