Reading some good posts tonight. I heard that it was 660k that were not longer counted, but I suspect that this report is closer to the number. This brought me to something that's been racking my brain. If we add all those who are no longer counted as part of the labor force because of a change of how they define "discouraged or marginal", wouldn't the numbers be bigger?
The reason I got to thinking this was when I was working on a piece, and needed to look up stuff from the BLS. Back in 1994, they changed who they counted as what. Then I came across this (please note the bolded areas, I have also truncated a part of the passage for space sake):
Who is counted as unemployed?
Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work. Actively looking for work may consist of any of the following activities:
Contacting:
An employer directly or having a job interview
A public or private employment agency
Friends or relatives
A school or university employment center
Sending out resumes or filling out applications
Placing or answering advertisements
Checking union or professional registers
Some other means of active job search
Passive methods of job search do not have the potential to result in a job offer and therefore do not qualify as active job search methods. Examples of passive methods include attending a job training program or course, or merely reading about job openings that are posted in newspapers or on the Internet.
Workers expecting to be recalled from temporary layoff are counted as unemployed, whether or not they have engaged in a specific jobseeking activity. In all other cases, the individual must have been engaged in at least one active job search activity in the 4 weeks preceding the interview and be available for work (except for temporary illness).
Now as many of you are aware, in some townships, all there is are those job training programs. How many folks who are in those, yet not getting a paycheck, are not being counted? We've lost a lot of industrial jobs here in Illinois, tens of thousands have probably gone through these programs.
There's something else as well, which I know many of you may think I'm nuts for bringing up. This is about discouragement, which to me may be measured. The government tends to think "ok, he's discouraged, he's stopped looking, he isn't part of the labor force." Case closed. But what if you're discouraged but want to work but cannot find anything remotely that you can do?
Here again is a part from the BLS about this:
These questions form the basis for estimating the number of persons who are not in the labor force but who are considered to be "marginally attached to the labor force." These are persons without jobs who are not currently looking for work (and therefore are not counted as unemployed), but who nevertheless have demonstrated some degree of labor force attachment. Specifically, to be counted as "marginally attached to the labor force," individuals must indicate that they currently want a job, have looked for work in the last 12 months (or since they last worked if they worked within the last 12 months), and are available for work. "Discouraged workers" are a subset of the marginally attached. Discouraged workers report they are not currently looking for work for one of four reasons:
They believe no job is available to them in their line of work or area.
They had previously been unable to find work.
They lack the necessary schooling, training, skills, or experience.
Employers think they are too young or too old, or they face some other type of discrimination.
Frankly I think they are making a big mistake. Because you can have situations where you simply stop looking because the economy not only in your town but region has hit horrible levels.
Imagine these following scenarios:
1) William Jenowski worked at a tool & die shop for the past 22 years, and is approaching 50, earning a decent income. He has a wife who works at the local grocery store part time, and they have a teenage son. Things were good for them, but then William's IRA took a severe hit when the market tanked, the value of his portfolio is a fraction of what it was before. On their home which they purchased a decade ago for $140k, they still owe $75k, yet the value of their home has dropped from an all-time high of $300k to $155k. The family also owes $15k in credit card debt. The tool & die shop mainly served companies that made components for the auto industry. As things deteriorated, the owners of the business decide to close up. Now William is out of work but begins his search immediately. For the next 12 months he looks for jobs in the tool & die or other similar industrial fields. Nothing, in fact where they live, is now part of America's "rust belt." After a year, and a more depressing regional economy, William gives up. He wants to work, but cannot find a job. The last job he interviewed for wasn't even an industrial job, but as a cashier at his wife's grocery store 15 months ago.
2. Agnes Stornello and her husband Eugene both retired early at the same time from the same place they worked, their own bakery which made Italian pastries and cookies. They opted for retirement despite both being under 60, because Eugene was facing mild health problems. The two had saved up a small sum and had invested conservatively, including two rental properties at the height of the market in '07. Two years later, the properties are "upside down", and his retirement portfolio is a fraction of what it used to be. Following Eugene's sudden stroke has left him hospitalized, and Agnes with cash flow issues (both just turned 60). Health costs force her into a short sale with their two rental properties (worth less than half they paid for). Agnes attempts to look for work, first at two nearby bakeries. There is a dry spell for jobs, but Agnes still wants to work to bring in some cash. She learned that a training program for seniors may lead to job openings, desperate she signs up for several courses.
3. Patrick Jung has had a hell of a time at his job as a sales rep for small boutique back office software company targeting financial firms. He earns a commission but no salary, and for the past three years until last year, he was one of the top sales rep for the company he worked at. His largest client was a bank that went belly up and seized by the FDIC. On a good year, Jung could earn 60-80k per year, but for the past year he has earned narily $10k. A young man, he blew through a lot of that money on a BMW and living it up a bit; though he does send money back to his brother Jamie in Ohio and his parents in Florida when he can. It should be noted that Jaime owes a total of $40k on his credit cards. For the past 8 months he hasn't been able to make a sale, his days attempting to find a client but with no luck as the potential client list deminishes as the financial sector weakens.
I have used the criteria listed by the BLS as to whom they either counted as not in the labor pool (discouraged or "retired") or employed. I had several other examples, but this is already a long reply for a blog piece. The bottom line is I don't think the BLS is being realistic as to whom they count as truly employed in terms of making a living. Nor folks who can work, but cannot for lack of opportunities or some fact that still does not exclude their abilities if given the chance. How many do you know, that worked in one of those "rust belt" industries who want to work but can't because of something out of their control? They're either too old to learn new skills, or they cannot move out of the region to get a new job, or the jobs available simply pay too low to even make it to retirement.
We have a whole swath of people who should be counted as STILL part of the labor pool, but we don't. Conversely, we have folks out there who are technically employed, but aren't earning enough to be considered a "living." I always wondered, if we used the federal poverty levels and used it as a filter against earning brackets of the various employment segments to weed out those who are earning a living versus those who arent, if the rates of true unemployment would be much higher.
According to the 2009 Federal Poverty Levels, the bottom of the list for a single household in the District of Columbia and Continuous 48 States is $10,830. If that were used as the bar, say anything above such is considered "employed", what would the real rate be? Because you do have folks working for minimum wage, and just one job because nothing..I mean nothing, is available in some cases.
I don't know that much about annuities (although anything with the Hamilton Project in the title makes me suspect).
This also sounded strange, I just scanned it and it was claimed one "hands over all of your savings"....in exchange for an annuity. Really? No wonder no one buys these things.
I just found this. It's a policy paper that Deputy Assistant Treasury Secretary Mark Iwry wrote while at Brookings Institute. It details exactly what this plan is about.
Unlike the Argentina model it doesn't appear to be an open theft. It's more like a government-sponsored Wall Street theft in which they share in the profits.
BTW, fees on annuities are generally in the 6% range. That's more than twice as high as the typical 401k fees, and three times as high as the administrative fees on SS.
Misuse of the term "homeowner" is one of the problems.
You "own" something only when you pay up the entire amount you promised. Otherwise the real owner is the one who actually paid for it, i.e., the lender who allows you to rent it from him until he is fully repaid. Until then you are only a homebuyer and not a homeowner and there is a huge difference between the two.
If the homebuyer is unable to pay the promised price then the house should go back to the real owner so that he can resell it to someone else who can and that process is called a foreclosure. Artificially blocking them to favor one side against the other penalizes the responsible saver (lender) and rewards the irresponsible spender (borrower) and sends a wrong message to everybody.
H/T to FireDogLake: Chairman Towns has scheduled a hearing on January 18 and has invited Mr. Geithner to testify about AIG email/Bailout of Goldman Sachs scandal.
He didn't have much choice since ranking repuglican member Issa asked for and obtained the emails.
It's really easy to do so much is "shared" online.
Remind me will ya, I'm working on site upgrades (and this is going to be a real bitch, I will post/warn) on when I'm actually doing the code changes....
but to put in the "rules" on EP something to try to cite where materials originated from unless it's not easy to figure it out.
And John Carney at The Business Insider later corrected their graph with a hat tip to Iacono. He also emailed an apology to Tim (don't know where I got "Tom" from!).
Right, that's an interesting view on government jobs vs. private sector..
but I think it's important to site the author (unless you're using government generated graphs, which I use a lot of)
Tim got plain ripped off on his blog post, his graph lifted, not cited, no link by business insider.
I think that's pretty shitty to steal from some blogger to put on your front page and not even citing the graph.
Which is a reminder to all, if you're borrowing someone else's generated graph, always cite it with a link back.
Bloggers borrow from each other all of the time on graphs, but when it's something like the above, where they just literally ripped off the whole insight and front paged it, no citation, that's bad juju, unfair.
Tom Iacono ran this graph the other day while discussing labor trends. What struck me when I looked at it was that we are currently at late 1950's levels of employment in goods producing industries. I don't know what the USA population was back then, but I would chance a guess of about 50% or less compared to today.
I've been working on some site upgrades and some of it is code. (before I upgrade the site I need to finish this up and make sure it all actually works, THEN....I have to deal with the database itself, which is more modifications, I'm going to do it in "one shot" and will put up a blog post to that effect)....
But back to this question, it's not enough to say what we know.....but to try to prove what we know.
So, I plan on writing up some pieces on this topic later.
A duel to this topic, which will probably get a lot of denial is the importation of workers. Right now there are 1.5 million guest workers in the United States....
that's with a U6 of 17.3%. So, this does affect labor supply, sorry, that's the economic reality and I'm going to include in discussion. In terms of offshore outsourcing, I know India alone has 900,000 people employed...in just that sector, that doesn't include all of the job creation going on in other countries..by U.S. multinational corporations, instead of the United States. Krugman just did a rough cut estimate on jobs lost due to China. 1.4 million and that too was met with a huge denial...and from the left....anything that has to do with labor and jobs moving around the globe.....unfortunately it's some of the left who have their heads stuck in the statistical sand and wish to deny these results for some bizarre political agenda (which also happens to be MNC's political agenda too).
Anywho, there it is and I want to start looking at this, from the stats and theory because we've got a major job/multiple industry sectors hemorrhage going on here.
I think I'll revisit my favorite topic, global labor arbitrage in a post soon to try to find the lost jobs and where they are now. Of course the government won't track on those statistics!
I think the "green shoots" are seriously missing how badly trade, offshore outsourcing, consumer predators, the rape of retirement are affecting the middle class.
We have a long slide down, mixed with an Economic "cliff" Armageddon in the middle of it.
It's like memory is erased and they refuse to realize the rhetoric that won Obama the job. That's trade, offshore outsourcing, labor abuses, health care costs, and corporate welfare.
Now all of those much needed changes are simply not happening, so we have this artificial economic float when the real slide is continuing.
Anybody with half a brain who survived the dot con implosion knows the so called "recovery" from that recession was fictional, fueled by a housing bubble and a host bunch of "construction" jobs to make the unemployment stats look better. All the while manufacturing jobs were lost in the millions AND high paying service sector jobs were also lost....in the hundreds of thousands (smaller economic sector).
If we don't change our economic policies particularly when it comes to employment and wage growth the outcome will not be good.
One thing people fail (or chose to ignore) to realize the two economic drivers over the past 25 years has been: 1) more debt and 2) lower saving rate. Both drivers are exhausted. If we don't replace these drivers the New Normal will be devastating for low and middle income families.
Well, I think on EP there are a bunch of us who lean left, (full disclosure), who believe in mixed economies, government help and so on....
but I can really see why conservatives are like "small government" "no taxes" when public works or other programs are as corrupt as hell!
I mean the point of government is they are supposedly responsible to the national interest and to the citizens interests and when you get "big spenders" mixed with "corporate lobbyists" you get something I sure am not pleased with!
In terms of feeling like a serf, I hear ya on that one....citizens are looked at as "consumers" and something to wage arbitrage almost exclusively...
and media manipulation, Axelrod is a grand master of that one....so I'm not surprised to see they have "talking heads" out there spinning the machine.
Cable news has gotten so bad, I'm thinking of canceling cable myself because I don't watch it....
it's like chatter devoid of substance, 24/7 and that's when they bother to "cover" economics topics.
Back in early 2008 I asked people what they thought the post-credit world would look like. I asked that question because the credit markets were broken and they simply weren't going to be coming back in this generation.
I didn't get any response, probably because no one knows the answer. We are going to see the answer soon. We've been coasting on government credit for nearly two years, but this is almost played out now.
Reading some good posts tonight. I heard that it was 660k that were not longer counted, but I suspect that this report is closer to the number. This brought me to something that's been racking my brain. If we add all those who are no longer counted as part of the labor force because of a change of how they define "discouraged or marginal", wouldn't the numbers be bigger?
The reason I got to thinking this was when I was working on a piece, and needed to look up stuff from the BLS. Back in 1994, they changed who they counted as what. Then I came across this (please note the bolded areas, I have also truncated a part of the passage for space sake):
Now as many of you are aware, in some townships, all there is are those job training programs. How many folks who are in those, yet not getting a paycheck, are not being counted? We've lost a lot of industrial jobs here in Illinois, tens of thousands have probably gone through these programs.
There's something else as well, which I know many of you may think I'm nuts for bringing up. This is about discouragement, which to me may be measured. The government tends to think "ok, he's discouraged, he's stopped looking, he isn't part of the labor force." Case closed. But what if you're discouraged but want to work but cannot find anything remotely that you can do?
Here again is a part from the BLS about this:
Frankly I think they are making a big mistake. Because you can have situations where you simply stop looking because the economy not only in your town but region has hit horrible levels.
Imagine these following scenarios:
1) William Jenowski worked at a tool & die shop for the past 22 years, and is approaching 50, earning a decent income. He has a wife who works at the local grocery store part time, and they have a teenage son. Things were good for them, but then William's IRA took a severe hit when the market tanked, the value of his portfolio is a fraction of what it was before. On their home which they purchased a decade ago for $140k, they still owe $75k, yet the value of their home has dropped from an all-time high of $300k to $155k. The family also owes $15k in credit card debt. The tool & die shop mainly served companies that made components for the auto industry. As things deteriorated, the owners of the business decide to close up. Now William is out of work but begins his search immediately. For the next 12 months he looks for jobs in the tool & die or other similar industrial fields. Nothing, in fact where they live, is now part of America's "rust belt." After a year, and a more depressing regional economy, William gives up. He wants to work, but cannot find a job. The last job he interviewed for wasn't even an industrial job, but as a cashier at his wife's grocery store 15 months ago.
2. Agnes Stornello and her husband Eugene both retired early at the same time from the same place they worked, their own bakery which made Italian pastries and cookies. They opted for retirement despite both being under 60, because Eugene was facing mild health problems. The two had saved up a small sum and had invested conservatively, including two rental properties at the height of the market in '07. Two years later, the properties are "upside down", and his retirement portfolio is a fraction of what it used to be. Following Eugene's sudden stroke has left him hospitalized, and Agnes with cash flow issues (both just turned 60). Health costs force her into a short sale with their two rental properties (worth less than half they paid for). Agnes attempts to look for work, first at two nearby bakeries. There is a dry spell for jobs, but Agnes still wants to work to bring in some cash. She learned that a training program for seniors may lead to job openings, desperate she signs up for several courses.
3. Patrick Jung has had a hell of a time at his job as a sales rep for small boutique back office software company targeting financial firms. He earns a commission but no salary, and for the past three years until last year, he was one of the top sales rep for the company he worked at. His largest client was a bank that went belly up and seized by the FDIC. On a good year, Jung could earn 60-80k per year, but for the past year he has earned narily $10k. A young man, he blew through a lot of that money on a BMW and living it up a bit; though he does send money back to his brother Jamie in Ohio and his parents in Florida when he can. It should be noted that Jaime owes a total of $40k on his credit cards. For the past 8 months he hasn't been able to make a sale, his days attempting to find a client but with no luck as the potential client list deminishes as the financial sector weakens.
I have used the criteria listed by the BLS as to whom they either counted as not in the labor pool (discouraged or "retired") or employed. I had several other examples, but this is already a long reply for a blog piece. The bottom line is I don't think the BLS is being realistic as to whom they count as truly employed in terms of making a living. Nor folks who can work, but cannot for lack of opportunities or some fact that still does not exclude their abilities if given the chance. How many do you know, that worked in one of those "rust belt" industries who want to work but can't because of something out of their control? They're either too old to learn new skills, or they cannot move out of the region to get a new job, or the jobs available simply pay too low to even make it to retirement.
We have a whole swath of people who should be counted as STILL part of the labor pool, but we don't. Conversely, we have folks out there who are technically employed, but aren't earning enough to be considered a "living." I always wondered, if we used the federal poverty levels and used it as a filter against earning brackets of the various employment segments to weed out those who are earning a living versus those who arent, if the rates of true unemployment would be much higher.
According to the 2009 Federal Poverty Levels, the bottom of the list for a single household in the District of Columbia and Continuous 48 States is $10,830. If that were used as the bar, say anything above such is considered "employed", what would the real rate be? Because you do have folks working for minimum wage, and just one job because nothing..I mean nothing, is available in some cases.
I don't know that much about annuities (although anything with the Hamilton Project in the title makes me suspect).
This also sounded strange, I just scanned it and it was claimed one "hands over all of your savings"....in exchange for an annuity. Really? No wonder no one buys these things.
I just found this. It's a policy paper that Deputy Assistant Treasury Secretary Mark Iwry wrote while at Brookings Institute. It details exactly what this plan is about.
Unlike the Argentina model it doesn't appear to be an open theft. It's more like a government-sponsored Wall Street theft in which they share in the profits.
BTW, fees on annuities are generally in the 6% range. That's more than twice as high as the typical 401k fees, and three times as high as the administrative fees on SS.
Misuse of the term "homeowner" is one of the problems.
You "own" something only when you pay up the entire amount you promised. Otherwise the real owner is the one who actually paid for it, i.e., the lender who allows you to rent it from him until he is fully repaid. Until then you are only a homebuyer and not a homeowner and there is a huge difference between the two.
If the homebuyer is unable to pay the promised price then the house should go back to the real owner so that he can resell it to someone else who can and that process is called a foreclosure. Artificially blocking them to favor one side against the other penalizes the responsible saver (lender) and rewards the irresponsible spender (borrower) and sends a wrong message to everybody.
Momentary tin hat thought here .... but bear with me.
The Government wants you to buy annuities. Annuities buy treasuries.
AIG is the #1 seller of fixed income annuities in the US.
AIG benefits greatly from this idea.
Aig has increased profits.
AIG then pays back the federal government money we gave them.
AIG is happy ... Government has a never ending supply of treasuries and is happy. Taxpayer is on the hook again.
WIN WIN LOSE
I look forward to whatever you dig out and write.
Cause firstly 401ks themselves are a true screw job on retirement and the U.S. should return to traditional pensions...
but a bait n switch to finance the increasing sovereign debt...
@&*)$!!!
H/T to FireDogLake: Chairman Towns has scheduled a hearing on January 18 and has invited Mr. Geithner to testify about AIG email/Bailout of Goldman Sachs scandal.
He didn't have much choice since ranking repuglican member Issa asked for and obtained the emails.
RebelCapitalist.com - Financial Information for the Rest of Us.
It's really easy to do so much is "shared" online.
Remind me will ya, I'm working on site upgrades (and this is going to be a real bitch, I will post/warn) on when I'm actually doing the code changes....
but to put in the "rules" on EP something to try to cite where materials originated from unless it's not easy to figure it out.
And John Carney at The Business Insider later corrected their graph with a hat tip to Iacono. He also emailed an apology to Tim (don't know where I got "Tom" from!).
Right, that's an interesting view on government jobs vs. private sector..
but I think it's important to site the author (unless you're using government generated graphs, which I use a lot of)
Tim got plain ripped off on his blog post, his graph lifted, not cited, no link by business insider.
I think that's pretty shitty to steal from some blogger to put on your front page and not even citing the graph.
Which is a reminder to all, if you're borrowing someone else's generated graph, always cite it with a link back.
Bloggers borrow from each other all of the time on graphs, but when it's something like the above, where they just literally ripped off the whole insight and front paged it, no citation, that's bad juju, unfair.
Tom Iacono ran this graph the other day while discussing labor trends. What struck me when I looked at it was that we are currently at late 1950's levels of employment in goods producing industries. I don't know what the USA population was back then, but I would chance a guess of about 50% or less compared to today.
David Rockefeller's wet dream has come true.
I've been working on some site upgrades and some of it is code. (before I upgrade the site I need to finish this up and make sure it all actually works, THEN....I have to deal with the database itself, which is more modifications, I'm going to do it in "one shot" and will put up a blog post to that effect)....
But back to this question, it's not enough to say what we know.....but to try to prove what we know.
So, I plan on writing up some pieces on this topic later.
A duel to this topic, which will probably get a lot of denial is the importation of workers. Right now there are 1.5 million guest workers in the United States....
that's with a U6 of 17.3%. So, this does affect labor supply, sorry, that's the economic reality and I'm going to include in discussion. In terms of offshore outsourcing, I know India alone has 900,000 people employed...in just that sector, that doesn't include all of the job creation going on in other countries..by U.S. multinational corporations, instead of the United States. Krugman just did a rough cut estimate on jobs lost due to China. 1.4 million and that too was met with a huge denial...and from the left....anything that has to do with labor and jobs moving around the globe.....unfortunately it's some of the left who have their heads stuck in the statistical sand and wish to deny these results for some bizarre political agenda (which also happens to be MNC's political agenda too).
Anywho, there it is and I want to start looking at this, from the stats and theory because we've got a major job/multiple industry sectors hemorrhage going on here.
This is our current economic policy: wage growth means inflation so we must do whatever we can to suppress wage growth. So what do we do:
1) Unfettered globalization
2) Unfettered off shoring & out sourcing
2) Cheap imports to compensate for wage suppression
3) Destruction of unions.
4) Debt and asset price inflation replaces wage growth
But one big intended or unintended consequence was total abandonment of manufacturing sector.
RebelCapitalist.com - Financial Information for the Rest of Us.
I think I'll revisit my favorite topic, global labor arbitrage in a post soon to try to find the lost jobs and where they are now. Of course the government won't track on those statistics!
;)
I think the "green shoots" are seriously missing how badly trade, offshore outsourcing, consumer predators, the rape of retirement are affecting the middle class.
We have a long slide down, mixed with an Economic "cliff" Armageddon in the middle of it.
It's like memory is erased and they refuse to realize the rhetoric that won Obama the job. That's trade, offshore outsourcing, labor abuses, health care costs, and corporate welfare.
Now all of those much needed changes are simply not happening, so we have this artificial economic float when the real slide is continuing.
Anybody with half a brain who survived the dot con implosion knows the so called "recovery" from that recession was fictional, fueled by a housing bubble and a host bunch of "construction" jobs to make the unemployment stats look better. All the while manufacturing jobs were lost in the millions AND high paying service sector jobs were also lost....in the hundreds of thousands (smaller economic sector).
If we don't change our economic policies particularly when it comes to employment and wage growth the outcome will not be good.
One thing people fail (or chose to ignore) to realize the two economic drivers over the past 25 years has been: 1) more debt and 2) lower saving rate. Both drivers are exhausted. If we don't replace these drivers the New Normal will be devastating for low and middle income families.
RebelCapitalist.com - Financial Information for the Rest of Us.
Well, I think on EP there are a bunch of us who lean left, (full disclosure), who believe in mixed economies, government help and so on....
but I can really see why conservatives are like "small government" "no taxes" when public works or other programs are as corrupt as hell!
I mean the point of government is they are supposedly responsible to the national interest and to the citizens interests and when you get "big spenders" mixed with "corporate lobbyists" you get something I sure am not pleased with!
In terms of feeling like a serf, I hear ya on that one....citizens are looked at as "consumers" and something to wage arbitrage almost exclusively...
and media manipulation, Axelrod is a grand master of that one....so I'm not surprised to see they have "talking heads" out there spinning the machine.
Cable news has gotten so bad, I'm thinking of canceling cable myself because I don't watch it....
it's like chatter devoid of substance, 24/7 and that's when they bother to "cover" economics topics.
Back in early 2008 I asked people what they thought the post-credit world would look like. I asked that question because the credit markets were broken and they simply weren't going to be coming back in this generation.
I didn't get any response, probably because no one knows the answer. We are going to see the answer soon. We've been coasting on government credit for nearly two years, but this is almost played out now.
we did a bunch of comparisons to the Great Depression stats on EP about a year ago and it's more like 18% or so, not Depression era level rates.
Maybe it's time to revisit that one, but regardless this ain't good.
I thought November had to be out of whack from the BLS, so I'll go dig around for any revisions on that as well.
now that is exhausted what do we do? If we don't change economic policies we will see no real economic growth.
RebelCapitalist.com - Financial Information for the Rest of Us.
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