GM Layoffs will Boost Unemployment Through the Roof

I just has a truly frightening experience. During a conversation about the auto industry one of my colleagues who researches the auto industry told me that according to his calculations, the GM shutdown is going to send 250,000 off the job in Ohio.

This includes only the multiplier effect at auto suppliers, not any macro economic effect. For example, job losses at retail stores resulting from drops in spending are not included, nor are any further drops from other problems.

As it stands now Ohio unemployment stands at 9.7%.

Overall, the Ohio labor force stands at 5.95 million.

Currently, 578,000 are out of work, up from 409,000 in October of 2008.

Adding another 250,000 to those out of work, bumps the total number of unemployed to 838,000.

Divide this number by the labor force, and you get an unemployment rate of 13.9%, a 44% increase over the present rate.

Assuming a 22 to 1 multiplier off of GM employment, that means that Indiana would see unemployment increase by 112,000, and Michigan by 1,089,000.

In Indiana the labor force is 3.22 million. Unemployment currently stands at 10%.

323,000 are currently out of work. If the numbers about GM are right, that will increase to 435,000. Leaving an unemployment rate of 13.5%.

Michigan is much worse. The labor force is 4.84 million. Unemployment is currently at 12.6%.

609,000 are currently out of work, that will increase to 1,698,000. Leaving an eye-popping unemployment rate of 35.1%

Now this is hopefully going to be a limited situation with the GM layoffs, but the shock of those May unemployment numbers coming out at the end of June will undoubtedly not have a favorable impact on the rest of the country.

And this all assumes that an extended swine flu scare doesn't have a negative economic impact. Nor does it account for macroeconomic issues, or any job losses at dealerships.



the hits just keep on coming

Meanwhile there are various reports surfacing that 17 regional banks plus (no surprise here) Citigroup and BoA need "more capital".

They are just blood sucking the U.S. taxpayer for these friggin' banks while the real economy is still clearly going down.

Usually unemployment is a lagging indicator but we need to do an analysis on this because of this super high unemployment rates. I am suspecting this will be a vortex of economic malaise for the middle class has already been sucked dry.

I feel like the United States has blood sucking spiders all over it.

I can see the light at the

end of the semester, and I really want to look through the year of year changes in sectoral employment at the state level.

The numbers are interesting.

Look at New York. Despite the dire warnings about the collapse of the financial markets, employment in that sector is only down 2.8% or 19,800 jobs.

Compare this to Michigan, where manufacturing employment has dropped by 66,600, or 11.9% since October 2008.

Something seems seriously wrong here.

Government aid needs to be directed to the sectors of the economy most seriously affected by the downturn.

And in the real world

Executive compensation is inversely proportional to morality and ethics.

Maximum jobs, not maximum profits.

MI is in meltdown.

Thousands of unemployed people being pushed in to bankruptcy and foreclosure. These are people with two masters degrees and use to be six figure incomes. We have thousands of unemployed engineers looking for green training. Unfortunately, there aren't thousands of green jobs looking for talent.

U of M Economic Outlook projects that job loss and unemployment will continue to rise through 2012. They say national unemployment will reach12%, and there will be no real job growth until 2016.

I think GM is going to go into bankruptcy and hybernation one month behind Chrysler.

Here's an analysis.

I was just reading this article 1/2 hour ago. Nice charts too. I especially like the description of the OGSGS Team's Keynesian dilemma of continuing to pour in trillions to save the financial sector from its own perfidy.

restating the obvious

but it needs to be said. Common, when you see high quality "good brains" on blogs like that which may not have the readership of EP, invite them to come over and even cross post. There are a lot of people out there, with very good minds, with a financial education as well, trying to write about this but due to the "architecture" of the blogs, sometimes they do not get the readers they deserve or get the interaction they deserve.

we will soon all be freelancers

10% unemployment will be norm by 2010 across this great nation. I see a big shift as the govt breaks unions and we all soon become a nation of freelancers all on our own. you can see the movement already just look at the growth in websites where americans have turned to freelancing. look at the alexa rating ( of or - they have soared doubling in traffic as more americans move away from union labor and go to freelance. is this our future?

those sites

are completely exploitative to workers. People are bidding for work, way below even minimum wage. And then they take money on the form of a "commission" from people's pockets.

I'm sorry but people shouldn't use them.

Oh this is sad

You are the second person to tell me something similar. I was having outpatient surgery at Northwest hospital, well prior to that I was in the waiting room. Lady next to me strikes up a conversation. I don't remember much, except that she was hoping to make money blogging. Now this young lady had to be in her 30s easy. I tried to explain to her that there is no real money in it unless you can generate traffic, but she wasn't going to have none of that. Ok...fine, why argue? She couldn't find work, she had a degree of some kind, nothing technical. But still couldn't find a job outside of working at a chain restaurant. Now she's trying to make money on a blog talking about "common sense" or something like that. Honestly, my mind was on other things at that moment.

But later on, sitting at home eating Chinese, for some reason I thought about how sad it was here. We've become a nation where once you didn't even need a college degree to get a job to put food on the table for your family, to a nation that thinks blogging can be a vocation. Don't get me wrong, even I have a site and I'm not putting down any of Robert's commercial aspirations for this site. Just that, well, you know the economic terms "barrier of entry"? It seems, we've put the bar on that a bit too high in this country. We really have to ask ourselves, do we really want an economy where it is almost mandatory to get a college degree?

Look the sheepskin is nice, and the education you get is just about invaluable. But what if you don't want to go to college? Not everyone can become a computer programmer or a doctor or what have you. Some people are content with high school and their "street education". There is nothing wrong in being a handy man or a construction worker or a janitor. These jobs provide useful economic inputs just as other jobs requiring that degree. But we almost make it shameful to not want to go to college. Economically speaking, we make it so that even though one applies for a job that doesn't require a college degree, that person in Human Resources will put your resume in the trashbin if say I walk in there because I have a degree and you don't.

So yeah, its sad...a nation of would-be bloggers who think they can really make a living out of this. The math tells me that out of the bajillions who will start up a blog, 1-2% will become the stars that make the money. Its odd, today while recovering I was watching the Grapes of Wrath. There is a scene where the Joad family is at a rest stop and they are talking with some others. Well this one guy was already returning from California and telling them that the flyers were bunk. Tom Joad, startled, inquires how so. The man goes on how there is the promise of making $$$, but then everyone from places like Oklahoma or Arkansas or Texas shows up. The laws of supply and demand take over, and it ain't $$$, but now $. How many out there really can write a blog, continously? I tried, of course I have some severe physical problems going on, but I know others who also had series but could not keep up. Are we heading towards quantity versus quality, the Chinese watch maker versus the Swiss watchmaker?

I've probably alienated myself from this site by now with what I'm saying. But my fear is that the so-caleld barrier of entry is non-existant when it comes to blogging. There are millions out there already in existence, but most are of dubious quality. My fear, and my encounter with this young lady almost proves it, is that more and more in desperation will pin their final hopes in that the market for opinions will lay a road to financial security. Sadly, this isn't the case.

not at all JV, you're right

There are sites claiming you can make money at blogging....which do make money. (If you see their ads show up on here, let me know, I try to ban them!)

EP gets healthy traffic, we assuredly need more and I hope all promote EP and invite people as you find them...

but trust me, the ads on the site pay for that cup of coffee I drink while maintaining it for free. ;)

I saw a local news cast promoting these "freelance" websites and about flipped.

The contract law is pathetic, one can get stiffed, they take 15% but the biggest thing is one is bidding on work in a lump sum. People want say 1 months worth of work for $300 dollars, things like this. I mean you could get a paper route and be better off.

You are bidding on work from all over the world, where $500 dollars is a living wage in many other places but here, you won't even be able to pay for dog food.

I have thought the unions should go after these sites for violating US labor laws. They are getting around labor laws by declaring their "freelancers" to be "small businesses" and it's really disgusting, predatory.

EP "needs"?

"EP gets healthy traffic, we assuredly need more and I hope all promote EP and invite people as you find them..."
Are you trying to run this site at a profit?

Executive compensation is inversely proportional to morality and ethics.

Maximum jobs, not maximum profits.

don't get paranoid on me

No, the idea is to get more people aware of actual policy, economic events, understand what is really going on so we can more people demanding policy that actually works for the national interest.

We sure as shit do not have that now.

And to get more people participating, thinking about economics, reasoning it out, learning, writing about it...

That's why I said when one sees someone who is intelligent, logical, analytic, concerned about economic policy to invite them over.

EP is the only community blog in existence for economics.

In terms of this site turning a profit....ha ha ha....
economics isn't exactly sexy and all economics blogs doesn't generate the traffic numbers to turn a "profit" a few might generate one person's income but it sure isn't any gold mine.

If that happened an EP became a top economics blog, I have software mechanisms to distribute the income of the site to the contributors.

But right now, like I said, it's just a little money to help pay for the server and it doesn't cover those costs, much less paying me at all and that's assuming even minimum wage to maintain the site.

If I wanted to generate a blogging income site....I would do
something with free porn and "entertainment" news...

now that would generate some serious hits. (maybe I should do this as a side business!)...

but economics related blog? What's wrong with that business model! ;)

Good, because an expectation of profit

is what shut down that other site I was so prolific on.
Executive compensation is inversely proportional to morality and ethics.

Maximum jobs, not maximum profits.

I hope not

Though I'm attempting to work on something similar in my spare time- an argument that the reason Bush's horrid 13.6% labor-to-population increase didn't result in more unemployment was because people turned to freelancing.

I'm having a hard time getting numbers of freelancers though- best bet seems to be number of alternative tax ids applied for, but the IRS doesn't exactly have a neat and tidy spreadsheet for that one.

Executive compensation is inversely proportional to morality and ethics.

Maximum jobs, not maximum profits.

It is

I had a staffing firm approach my company tauting the "new way" of doing business. It is exactly as you say.

You will see ghost towns and zombie towns

How about layoffs from the retail sector and any local supplier to that industry? I suspect you will see a "die off" of industries and towns. Worst yet, there will be what I call zombie towns. Areas that have had their economic potential killed off, but are still running due to some sort of government assistance or some remaining niche employer. For example, look at Gary, Indiana, where the steel industry is a shadow of its former self and the casinos are laying folks off. A third of the town is vacant, resembling that opening scenes from George Romero's Day of the Dead ('78 Dawn still rocks). 

Actually, what we're seeing here is almost the equivalent or derivative of the Morganthau Plan in action.  Slowly, but surely, we're being de-industrialized.  Years ago, when I was a kid I saw them tear up rail road lines around Chicago.  The same when I visited my late aunt in Indiana.  What did they have in common, most went to factories or industrial areas that today are commercial centers or housing developments.  Ironically, many of the latter now resemble the abandoned factories they replaced!  I suspect that it isn't just my area that witnessed the pogrom on rail lines.  Now maybe they weren't needed, but why weren't they needed?  In most industrial nations, and correct me if I'm wrong here, there has been an expansion in new lines for industrial use.

Well what happened to the rail lines can be applied to stores and soon towns.  I know I keep bringing up things like when I visited so and so, or some other personal experience. So grant me one more for the day.  When I went on a trip out west in places like Arizona, we saw old ghost towns.  My sister, who tought in the Mesa-Phoenix area, told me how the gold was no longer being found the people left and the town tied.  Well, my friends, "gold" or economic activity is starting to not be found in other towns and cities.  Worst yet, the nuggets are there waiting, but some folks would sooner throw them away in favor of importing them from overseas!


Clive Doucet on "Urban Meltdown"

Here is a link to a radio interview with the author of "Urban Meltdown". Clive Doucet is a city of Ottawa (Canada) Councilor, and advocate for livable cities.

Doucet claims many American cities have become disfunctional. People are fleeing them like New Orleans after Katrina. Part of the problem is federal tax grabs, while cities deliver 80 percent of the services to 80 percent of the population.

The whole municipal model depends entirely on growth, and borrowing against future growth. When the big building fiasco stopped, cities begin to crumble. Hospital, schools and pools close down, from Philadelphia to Phoenix.

This 28 minute piece is from the Radio Ecoshock Show, broadcast on 16 college and community stations, plus Green 960 AM in San Francisco on Sunday nights.

No ads, nothing to sell.

Alex Smith
Radio Ecoshock

The problems facing us are

The problems facing us are immense. It's too huge for us to rely on our political/academic leaders alone. We all need to network locally. And, we need some clear direction. Yes, there are increasing numbers of unemployed and homeless. yes, many MSEEs and PhDs are out of work, many filing for bankruptcy. It's not just here, but throughout the world. The new green technologies are no panacea, but merely an added potential for new jobs. I believe the long-term problem is (globally) a systemic excess productive capacity,
due to technology and automation efficiencies. (Just one man's opinion.)


Where did you get that 250,000 people are going to loose their job in Ohio? I have here in NewYork times that from the total of 244,000 jobs around the world GM will cut 47,000 jobs by the end of 2009 and 20,000 jobs cut will occur in US.

It isn't just GM jobs

it's also all the feeder plants.

The 250,000 figure comes from a colleague who studies the auto industry.

Auto plant shutdowns idle a lot of other workers.

Production is rarely integrated these days, meaning that assembly plants generally get their engines, trannies, and other parts from non-GM supplier plants.

It's called the multiplier effect, and it's huge in the auto industry. This is why states try to snag auto plants. A single job at an auto assembly line supports 20-30 jobs elsewhere making components.


The 3 job sites chosen by as getting the best results for job seekers - (professional networking) (agregated listings) (matches you to jobs)

good luck to all.

We've become a nation where

We've become a nation where once you didn't even need a college degree to get a job to put food on the table for your family, to a nation that thinks blogging can be a vocation.