Job Growth Is Strong

Average monthly new jobs                          Yearly average unemployment

By Year 2006 ti 2015  Source: The New York Tmes

How the U.S. Employment Pattern Changed Since the Crash of 2008

There are fewer government workers, and more caregivers, servers and temps. http://pewrsr.ch/1IxqFJT

Important information for the young -- how to choose a career!

College Majors: How do they pay? How meaningful it the work? Are they recommended?

This graph is a screenshot of an interactive site provided by the Washington Post. I suggest that you check out the original. If you put your pointer on a point, it will tell you what the major is.

The graph shows that a lot of majors lead to meaningful jobs with not very satisfactory pay, and a lot of majors lead to not very satisfactory jobs but with pretty good pay. A lot of people will opt for one or the other of those options. Still, the green spots, representing majors that are recommended by the folk who pursued them are primarily in the top part of the graph, and the red dots below the mean.

The majors in the high pay, high satisfaction quadrant  that are most recommended tend to be in engineering fields. Of course, not everyone is cut out to be an engineer, and some would not find the work rewarding. Still, if you are about to choose a major, consider engineering. I did, and I enjoyed the work and found the training great when I went on to other kinds of work.

Check out the: 10 most-meaningful majors | 10 least-meaningful majors |10 best-paying majors | 10 lowest-paying majors

A thought about women's wage gap

Source

There is an interesting article by the National Women's Law center. It reflects some of the data which shows gender discrimination against women, and that black women face even more discrimination in the workplace than to white women.

A lot of that discrimination seems likely to be unconscious in today's organizations. The people making the discriminatory decisions probably would not only deny bias, but be unaware of the bias. There is some reduction that organizations can make in reducing such bias. Objective tests might be used in hiring and promotion; resumes might be blinded -- the names and other indicators of gender removed. Managers might receive sensitivity training, and might be disciplined if the data suggest that the are discriminating. However, I would expect progress to be slow.

I suspect that couples make decisions that one person will sacrifice income to do more unpaid work, while the other person will do less unpaid work to maximize monetary income. Thus one may stay at home with pre-school children while the other works and advances his/her career and pay level; one may be responsible to leave work and take care of family or home emergencies while the other stays at work. Often these decisions act to the detriment of the woman's monetary income and favor that of a man's. (If the woman's pay rate is lower than that of the man, as seems common, then it makes economic sense to forego the woman's pay rather than the man's.)  Increasing wages equity for women might lead to these family decisions more often favoring a woman's monetary income.

I note the following however:

• A study by labor economists Francine Blau and Lawrence Kahn found that when you look at the combined effects of occupation, industry, work experience, union status, race and educational attainment, 41 percent of the wage gap remains unexplained.
• Occupational segregation – the fact that women and men are concentrated in different occupations – contributes to the wage gap. 

Note that 59 percent of the variance in the Blau and Kahn study is due to the named factors. Thus having women work in higher paid occupations, in industries with higher pay profiles, with more work experience, more often as union members, and with more education will be likely to help increase their monetary income. Those are long term goals, involving working with young women and girls to prepare them for more remunerative careers, as well as opening opportunities for women with the required qualifications.

New Data on the Value of the Minimum Wage

Source

So, a single person who works 52 weeks a year, 40 hours per week at minimum wage would have been above the US poverty level for the entire time covered in this graph.

For most of the time from 1960 to 1982, one person working at minimum wage could keep a family of three out of poverty. Vietnam cut into the value of such a wage from the late 60s to the mid 70s. However, since the Reagan revolution, a single worker at the minimum wage did not earn enough to keep a family of three out of poverty.

A family of four has always needed two workers, if working at minimum wage.

Job Losses -- Why this is called "The Great Recession"

Source

Thinking about employment and industrial development

I quote from a recent post on Roger Peike Jr.'s Blog:

Consider that from 1970 to 2001 jobs in the overall economy grew by 1.8% per year. In government they grew at half that rate. From 2001 to 2011 government jobs grew at 0.4% per year -- less than half the rate of the previous three decades.

• If government jobs had grown 2001-2011 at the same rate as government job growth 1970-2001, then the US would presently have 1 million more jobs.  The current unemployment rate would be 6.4% rather than 7.0%.

• If government jobs had grown 2001-2011 at the same rate as overall growth of jobs in the US economy 1970-2001, then the US would presently have 3.03 million more jobs. The current unemployment rate would be 5.1%.

What could the US government do with 3 million more employees?  Oh, I'm sure we could think of something.

Could we use more teachers, more public health workers, more government employees protecting our environment and managing our wildlife? I suspect so. How about an increase in public servants providing mental health, emergency medical and child welfare services? We should not base our public policy on slogans ("Government is not the solution to our problems, it is the problem.")

Peike also provides this graph:

The graph shows the long term trend of reduction in U.S. manufacturing employment and increase in U.S. employment in service industries.

Manufactured goods tend to be eminently tradable. As transportation technology and communications technology have improved and consequently international transportation and communications infrastructures have improved, the costs of transporting goods from country to country have dropped. Labor intensive manufacturing has migrated to countries with relatively low labor costs, and the United States and other countries with relatively low capital costs have specialized in capital intensive manufacturing. There are exceptions, such as food processing which the manufacturing plants have to be close to the sources of raw materials, but the U.S. focuses on manufacturing with lots of capital per worker. Manufacturing remains a major factor in the U.S. GDP. As Pieke states:

While manufacturing has shrunk dramatically as a proportion of all jobs, since 1950 the US has only seen a decrease of 3.7 million manufacturing jobs.

 Once unionized manufacturing jobs provided high school grads with entry into the middle class; no longer! Now we are educating large numbers of young people through college, and many of them are taking jobs that don't fully use the capacities generated by their educations -- if they can get jobs at all.

I think we need a new industrial strategy. The country needs to develop new industries that will produce goods and services utilizing a highly skilled and educated workforce, with value added that justifies good salaries enabling workers to status in the middle class. And it needs to develop many, big industries fast.

How to do so? I don't know. I suppose offering easy immigration to anyone offering ideas for such industries is one step. Tax breaks for new enterprises in new industries. Government support for universities pioneering in technology development and education in new industrial areas seems important. Perhaps some protective tariffs and strong IPR for new industries.

I am suggesting that we not focus policy on training for existing industries, but on developing new industries for the workforce of the future.

A thought about jobs and education

People used to talk about education planning to provide trained people to fill industrial requirements. Maybe now we should think about industrial planning to create new jobs with productivity consonant with the abilities and educational investment of generations of young people.

Who Are The People Working For Minimum Wage?

Source: The Washington Post

The graphs show, as one might expect, that a lot of the people working for minimum wage are under 25 years of age, and that working women are much more likely to be paid the minimum wage than working men.

What surprised me is that nearly 30 percent of American workers are employed in the leisure and hospitality industry or in wholesale and retail trade. Reminds me of an economy in which people work by taking in each other's laundry, or worse a society where lots of poor people work for peanuts serving their more affluent countrymen. 

Technology, Education, Jobs and the Distribution of Income.

Interesting comment from the OECD:

Jan Tinbergen....argued that the way incomes were distributed across society reflected in part a “race between technology and education”. When technology was winning, more rewards went to fewer people; when education was winning, more people were able to make use of technology in their work, and the rewards were spread much further. 

At the moment, technology seems to be winning, which is one reason why you hear so many calls for more investment in education. But the MIT researchers seem to go further, arguing that today’s technologies and “digital versions of human intelligence” may prove to be permanent game changers: “I would like to be wrong,” Andrew McAfee says, “but when all these science-fiction technologies are deployed, what will we need all the people for?”

The Move Towards a Service Economy.

Source: The Economist

Developed countries are making a transition from manufacturing economies to service economies, as the graph above shows. The good jobs on factory assembly lines that allowed people with high school education or even less to enter the middle class are disappearing (as we know) and the people who held them are not qualified to work as doctors or nurses, teachers, game designers, movie stars, or professional athletes.

We can surely employ more people if the people with the required skills were available. Immigration and education should be priorities.

I personally am rather glad to see less enthusiasm for the mcmansions and expensive autos. Perhaps we might consume fewer goods and work less. Longer vacations, fewer people with two jobs, less overtime might lead to more people with at least one job (with a living wage).

More Americans in their early 20s are not in school and don't have jobs than average for developed nations.

Youth aged between 20 and 24 who are not in education nor in employment

As percentage of that age group

Source: The OECD

Twenty percent of Americans between the ages of 20 and 24 are neither working nor in school. That is not only costing them big time, but it will cost the country for the next half century.

From the time I got my first job at 13 until I finished my PhD at 35, I was both working and going to school for 17 years. The two both contributed to my education. Now a lot of young people don't get both kinds of education simultaneously, they don't even get to choose one or the other.

A thought about unemployment data

Every month, the Bureau of Labor Statistics releases a flood of data about employment and unemployment in the previous month. And every month, the lion’s share of the attention goes to one figure — the unemployment rate — as an indicator of where the U.S. economy stands. Senior Pew Research Center writer Drew DeSilver explains. http://pewrsr.ch/1beg1VI

The unemployment rate is based on the people who are out of work looking for a job versus those who are employed.

There is a problem when some of the people with jobs have part time jobs or jobs for which they are overqualified, but can not move up to more remunerative employment because of the current conditions.

A lot of young people are staying longer in school because of the job market, but might say that they would rather have a job but are not looking. Their investment in their own future may pay off in the future.

Did you know?

The percentage of individuals working for federal, state, and local governments is at a decades-long low. The Hamilton Project explains why in this month's jobs numbers update: http://bit.ly/16zfz6s

Education Counts in the Job Market!

Unemployment rates by educational attainment, 2007 and 2012

Source

What is full employment? I like the idea that there is a "structural unemployment".  I have been unemployed once on returning from an overseas job when the government job I had been promised fell through. Another time after I left the government it took some time to build a consulting career. If the economy is healthy and people feel that they can get new jobs, they will sometimes leave their current jobs and go on the job market. This is structural unemployment.

I suspect that the 1.7 percent unemployment among people with advanced degrees in 2007 was indicative of a situation in which those folk were being hired away from their existing jobs, making the transition without any pause. I have done that in the past, leaving one job on a Friday afternoon and starting the next on the following Monday morning. One might think of that as a situation of "excess demand" in which there are jobs searching for people to fill them.

In 2007, the 5.4 percent unemployment among people with only a high school diploma might be seen as full employment. The youngest, just out of high school may have been unemployed for a while trying to find a real job (supported by their parents during the search); older workers might spend several months after leaving one job before finding another.

The 2012 employment levels are clearly more than structural unemployment. The economy is not able to employ all of the people that it might. We are losing production of goods and services we will never recover.

Even now, however, the job market is OK for college graduates and good for people with advanced  degrees.

The job market is always tough for the folk who haven't got a high school diploma, but is worse now. One out of six is out of work!

Reform immigration laws to better support the U.S. economy

I quote from The Economist (from which I took the figure above):

Mark Zuckerberg, the boss of Facebook, and a bunch of other Silicon Valley types are planning to launch a well-funded political-advocacy group to lobby for more visas for skilled immigrants. Applications for this year’s quota of 65,000 “H-1B” visas for such workers began on April 1st. In less than a week they were oversubscribed........ 

Some 40% of Fortune 500 firms were founded by immigrants or their children, according to the Partnership for a New American Economy, a pressure group. So were the firms behind seven of the ten most valuable brands in the world. Although the foreign-born are only an eighth of America’s population, a quarter of high-tech start-ups have an immigrant founder (see left-hand chart).

Thanks to Mr. Zuckerberg. I join in his concern that not only do we need reform of our immigration laws in the United States, that reform ought to bring more people to our shores that will create businesses and jobs. I suspect that bringing techies who will fill jobs that companies can not fill from the existing U.S. workforce will also create jobs for others who are here. 

A thought about migration.

The Bureau of Labor Statistics reported 3,693.000 job openings in the United States in January 2013. The Manpower Group reported that 49 percent of U.S. employers cited talent shortages in 2012, leading to unfilled job vacancies. The most frequent fields in which there were talent shortages in the Americas were engineers, technicians, sales representatives, skilled trades workers and production operators.

If you assume that a million jobs could be filled from abroad with more open immigration for people in these fields, and that they might earn say $50.000 per year on average, then that would be a $50 billion shot in the arm for the economy. I suppose that the impact would be higher since these folk would spend money in the U.S. that they earned here, creating a multiplier effect. Moreover they would create more profits for their firms, and they would enable their firms to expand businesses in ways that would create still more jobs.

So why does Congress only allow 65,000 people per year with specialty occupations to come to the United States per year with temporary H-1B visas?

Great report on jobs today!

As I have pointed out before, President Obama took office in January 2009, but the first budget prepared by his administration and passed by Congress only took effect in September 2010. Basically, properly understood, both of these graphs indicate success of the Obama administration. Note also, that public sector employment has been slow to recover. State and local governments usually are required to balance budgets, and lost tax income both due to the devaluation of property values on which property taxes are based, and due to the economic downturn which effected sales tax income.

I quote from the Washington Post on the new employment results released today:

Employers reported adding 171,000 jobs in October, beating both analysts’ expectations (125,000 jobs added) and September’s job creation (a revised 148,000). 

The unemployment rate rose to 7.9 percent, up from 7.8 percent, but the reason behind the uptick also points to an improved job market. Some 578,000 more Americans counted themselves as part of the labor force, and only 410,000 more people reported having a job. In one particularly welcome sign, the proportion of the population reporting that they had a job rose one-tenth of a percent to 58.8 percent.

It is important to understand the economy if you want to understand policy.

I quote from an article in The Economist:

America has around 197,000 medium-sized firms, defined as those with annual revenues between $10m and $1 billion, according to data from the National Centre for the Middle Market at Ohio State University. Together, they employ over 40m people in the country and account for around one-third of private-sector GDP (equivalent to the economies of India and Russia combined). 

Some 82% of medium-sized firms survived the dark years of 2007-10, compared with 57% of small firms. And although the survival rate among the 2,100 big firms (with revenue over $1 billion) was 97%, these giants shed 3.7m jobs during those years. Mid-sized companies, by contrast, added 2.2m jobs. This trend has continued as the economy has struggled back to its feet. In 2010-11, medium-sized firms increased employment by 3.8%, compared with growth of 2.5% by small firms and 0.8% by big business.

You would never suspect that there is a network of medium size enterprises listening to our politicians, much less that they are the job creators. 

How we misread the numbers that dominate our politicsS

Source: "How we misread the numbers that dominate our politics"

The graphs above are taken from an article in the Washington Post by Zachary Goldfarb. His point is that Obama and Romney are citing different figures, each accurate in its way, but each seeking to make a point in favor of his own candidacy.

You need some background to understand these figures. The federal government functions on a fiscal year that begins October 1 and ends September 30. The budget for that fiscal year is submitted to the Congress in January, revised by the Congress, and usually appropriated by September 30. Presidents are inaugurated on January 20, after their election the previous November.

Thus Barack Obama was elected in November, 2008 and took office in January 2009. The government continued operating on the budget submitted to Congress by President Bush in January 2008, as modified by the Congress in 2008) until September 2009. The federal government had prepared a budget under President Bush for the period October 1, 2009 to September 2010 but the Obama administration had great influence in the appropriations for that period after it assumed office.

Thus the Obama administration policies took effect in October 2009.

It appears that the catastrophic fall in employment had begun to bottom out before that time, probably as a result of the stimulus package that was put in place under the Bush administration on the basis of a bipartisan agreement. On the other hand, I believe it is legitimate for President Obama to claim credit for the long term growth of employment after October 2009.

Of course, the Republicans took control of the House of Representatives in January 2011. It is clear that that Congress introduced gridlock in the legislative process. The Republican majority in the House and the Democratic majority in the Senate both influenced the federal budget that began to be implemented in October 2011. You will notice that there has been a slowing of growth in employment after that time, with a possible downturn at the end of that fiscal year.