Tag Archives: employment

The jobs report: another opportunity to shake our confidence in the government

Summary: Today we look at lies about the jobs report from Zero Hedge. These are part of a larger campaign to destroy our confidence in the government as a means of collective action, leaving us isolated and weak.

WW2 propaganda

True then and now

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Conservatives have long waged a campaign to weaken our confidence in unions and government, the only organizations that can resist the 1%. Alone, as individuals, we’re pawns So they’re using their agents to separate us, as shepherds’ dogs work sheep, with a propaganda barrage on us of immense size. Instead of explosives, it consists of ideas — myths and misinformation. Too overwhelming for rebuttals, our only hope lies in skepticism.

Our gullibility is their greatest advantage, but we can do better

These stories comes from sources providing an artfully arranged combination of information and misinformation (like worms on fishhooks). Few do it better than Zero Hedge, which mixes information from valuable sources with misinformation and outright fiction. Today we look at one example, Zero Hedge’s myths about the Bureau of Labor Statistics.

4 Million Fewer Jobs: How The BLS Massively Overestimated US Job Creation
Zero Hedge, 5 August 2014 — Opening:

“When it comes to the all-important monthly payrolls number which sets the tone for risk over the next month, one of the biggest variables in the BLS’ “estimate” (because all jobs numbers are that: statistical estimates) of US jobs is the monthly birth-death adjustment. What this monthly fudge factor is, in a nutshell, is the BLS’ estimation for how many new businesses are created over the period offset by older “dying” businesses, leading to incremental jobs that are only polled by the BLS with a substantial lag. Here is how the BLS explains this adjustment: …”

This is correct, as is the following excerpt they provide from the BLS website. They then add their special mixture of fact and fiction.

The latest proof of just how broken the economy has become, and serves as a big flashing red question mark about just how massively overestimated job creation is due to a wildly erroneous birth/death estimator, comes from a research report by the Brookings Institution titled: “The Other Aging of America: The Increasing Dominance of Older Firms.”

This study, one of several by Brookings about this important trend, shows the decline in entrepreneurship in the US economy. ZH quotes:

Perhaps more striking, our research showed that the decline in new firm formation rates had occurred in every U.S. state and nearly every metropolitan area, in each broad industry group, and in all firm size classes … the rate of new firm formations fell significantly during this period — occurring because the number of new firms being formed each year (numerator) didn’t keep pace with the growth in the stock of total firms in the economy (denominator).

Zero Hedge then assumes the BLS has not accounted for this (guessing), and draws a dramatic conclusion (their bold):

… if indeed this declining dynamism is “contributing to the decline in entrepreneurship as well” then the whole premise behind the birth/death adjustment, or rather the “Birth” contribution … goes out of the window.

…  here is the bottom line: since Lehman, or starting in 2009, the Birth/Death adjustment alone has added over 3.5 million jobs. Or rather “jobs”, because these are not actual jobs – these are BLS estimates for how many jobs newly-formed businesses have created based purely on statistical estimations and hypotheses that the US economy in 2014 is as it was in 1960. Which means that the traditional dynamics used behind the Birth and Death adjustment are now merely Dead, and US employment is overestimated by as much as three and a half million jobs!

This also means that any boasts by Obama about “solid US economic growth” under his regime, and that all those jobs lost since Lehman have allegedly since been recovered, are nothing but even more lies.

From Zero Hedge: Birth Death model

Zero Hedge, 5 August 2014

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This is big news. They even added the standard GOP refrain of “Obama lies”. But false; it’s ignorance on stilts. Note the last sentence from the BLS page about the birth/death adjustment, from which ZH quoted at the start of their article:

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See the true trend of the US economy, hidden in the daily news

Summary: today’s post is another helping you more clearly see the present. We look at the condition of the US economy in pictures, cutting through the statistical noise and economists’ hopes that fog our vision. It’s easy to see, if we try.  When we decide to try, America will become a different (and better) nation.

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Clear vision

During the past 4 years I have reported (& predicted) that the US economy has remained locked into slow growth, vulnerable to a shock (perhaps knocking it into recession), despite constant forecasts of acceleration coming really soon — returning us to normal growth.

If we had accurate newspapers, most economic reports would read like this:

The new economic data released today — the XXXX number — came in slightly less than expected by the consensus of economists, continuing its stable slow growth since early 2011. The monthly numbers change, but the trend does not. Also unchanged are economists’ assurances that the economy will accelerate during the next few quarters.

We often obscure this slow growth by reporting the change in terms of absolute numbers rather than percentages (since the population and economy grow over time, the same number represents a smaller percent change over).

News without the fake drama — would it sell advertisements? Or rather, we get the quality of news that we refuse to pay for.

This week the government released major new economic data. As always, analysis focused on tiny monthly changes (i.e., statistical noise) that support their forecasts, pretending to be ignorant of the tools to show statistical significance. And conservative financial “experts” whined about the large revisions made to past data (amnesiac about their complaints that the government taxes and spends too much, and the resulting gross underfunding of the vital government statistical agencies — our eyes by which to see the world.

So what did we learn?

(1)  Real Gross Domestic Product

Let’s look at real GDP excluding inventory swings (which mask the trend), also called Real Final Sales. It has run at 2% per year for the past 3 years (starting Q2 2011). The month-on-month per cent change shows the trend, if you are familiar with such graphs.
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GDP: Final-Sales
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The same numbers shown as percent change since a year ago (YoY, year-on-year change) more easily shows the trend — flat for 4 years — but will more slowly show the eventual change in the trend.

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Students, cheerleaders, & lawyers all exploited as they scramble for the few opportunities in New America

Summary: One astonishing aspect of the structural changes reshaping America is how fiercely we work to avoid seeing them. Such as the transformation of employment. Breaking unions was the first and essential step. Now comes the larger changes: shifting jobs from full time with benefits and job security into temporary, insecure, part-time, no-benefits — at lower wages.

Here we see four snapshots of this structural change in the power relationships of employers and workers — as people become increasingly desperate for opportunities. We close our eyes to these changes, since seeing the 1% build a New America on the ruins of the old would upset the even tenor of our lives.

Buffalo Jills

Buffalo Jills at Ralph Wilson Stadium on 9 August 2012. Photo by Rick Stewart/Getty Images

“To get the man’s soul and give nothing in return -– that is what really gladdens Satan’s heart.”
— C. S. Lewis, The Screwtape Letters (1942)

Contents

  1. Cheerleaders mistreated for profit
  2. Internships: opportunities for the affluent
  3. Entry level positions for lawyers
  4. For More Information

(1)  Cheerleaders mistreated for profit

Cheerleaders for professional sports teams pay much of their own expenses, work long hours, and earn a pittance — all in the service of fabulously profitable sports businesses.

The Cheerleaders Rise Up: NFL cheerleaders are putting down their pom-poms and demanding a better deal“, Amanda Hess, Slate, 23 April 2014 — Excerpt:

In 2014, the cheerleaders revolted.

This January, rookie NFL cheerleader Lacy T. kicked things off when she filed a class action lawsuit against the Oakland Raiders, alleging that the team fails to pay its Raiderettes minimum wage, withholds their pay until the end of the season, imposes illegal fines for minor infractions (like gaining 5 pounds), and forces cheerleaders to pay their own business expenses (everything from false eyelashes to monthly salon visits).

Within a month, Cincinnati Bengals cheerleader Alexa Brenneman had filed a similar suit against her team, claiming that the Ben-Gals are paid just $2.85 an hour for their work on the sidelines.

And Tuesday, five former Buffalo Bills cheerleaders filed suit against their own team, alleging that the Buffalo Jills were required to perform unpaid work for the team for about 20 hours a week. Unpaid activities included: submitting to a weekly “jiggle test” (where cheer coaches “scrutinized the women’s stomach, arms, legs, hips, and butt while she does jumping jacks”); parading around casinos in bikinis “for the gratification of the predominantly male crowd”; and offering themselves up as prizes at a golf tournament, where they were required to sit on men’s laps on the golf carts, submerge themselves in a dunk tank, and perform backflips for tips (which they did not receive). The Buffalo Jills cheerleaders take home just $105 to $1,800 for an entire season on the job.

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The shortage of STEM workers: another bogus crisis crafted to benefit the 1%

Summary: Another day, another astonishing bogus crisis (the STEM shortage) in which well-meaning Americans labor against their own interests to further enrich the 1%. The true nuggets of insight in the news media reveal so much, but accomplish nothing unless they spark action.

Better days are here, for some of us.

“Big industry constantly requires a reserve army of unemployed workers for times of overproduction. The main purpose of the bourgeois in relation to the worker is, of course, to have the commodity labour as cheaply as possible, which is only possible when the supply of this commodity is as large as possible in relation to the demand for it …”
— Marx (1847, unpublished work)

“Taking them as a whole, the general movements of wages are exclusively regulated by the expansion and contraction of the industrial reserve army …”
— Marx, Das Kapital (1867)

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This is a tale of the New America: the mythical STEM crisis:

  1. The STEM Crisis: Reality or Myth?“, Michael Anft, The Chronicle of Higher Education, 11 November 2013
  2. The truth about the great American science shortfall“, Karin Klein, op-ed in the Los Angeles Times, 24 February 2014
  3. The Tech Worker Shortage Doesn’t Really Exist“, BusinessWeek, 24 November 2014 {update}

It’s an example of how America works in the 21st century: well-meaning but foolish people serving the plutocracy:

  1. Plutocrats (e.g., Bill Gates) see a need for more cheap workers.
  2. Create fake scare: a shortage of workers trained in science, technology, engineering, and mathematics.  STEM! Some seed money, mostly for marketing.
  3. A thousand organizations — Federal to local schools, charities (e.g., Boy Scouts), businesses — rally to action.

That the shortage of STEM workers was bogus was quite obvious from the start, as Klein explains. It is Econ 101:

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Experts see that the 3rd Industrial Revolution is upon us. How many jobs will be lost?

Summary:  It’s been almost 4 years since the first article appeared on the FM website warning about the next wave of job losses from automation. Now experts slowly begin to grapple with this problem, estimating its magnitude, extent, and possible solutions. Here we look at three of these. Properly managed, the 3rd industrial revolution will be an unmixed blessing to all. But only if we manage it better than we’re doing with simpler problems today.

We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come – namely, technological unemployment. This means unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour.

But this is only a temporary phase of maladjustment. All this means in the long run that mankind is solving its economic problem. I would predict that the standard of life in progressive countries one hundred years hence will be between four and eight times as high as it is to-day. There would be nothing surprising in this even in the light of our present knowledge. It would not be foolish to contemplate the possibility of afar greater progress still.

Economic possibilities for our grandchildren” by John Maynard Keynes, The Nation, 11 October 1930. He had confidence in our ability to solve both economic and political problems of modernization.

Jobs of the Future

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Contents

  1. Retail: an example of the coming wave of losses
  2. Number crunching to estimate the jobs at risk
  3. A more realistic analysis
  4. For More Information

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(1)  Retail: an example of the coming wave of losses

The next industrial revolution will improve productivity in many ways, not just the simple machine-replace people exchange seen so often in the past.

Fifteen million people work in retail, plus millions more in jobs supporting them. A large fraction of those jobs will go away in the next decade as e-commerce gains market share. Salespeople, the people that run and maintain the companies and the stores, the people that maintain the buildings — a widening circles of impact.

Here’s one of the many articles appearing as the inevitable approaches: “The Tipping Point (E-Commerce Version)“, Jeff Jordan (Partner, Andreessen Horowitz), 14 January 2014 — Excerpt:

We’re in the midst of a profound structural shift from physical to digital retail. The drivers of this shift are simple:

  • Online retail has strong cost advantages over its offline counterparts and is rapidly taking share in many retail categories through better pricing, selection and, increasingly, service.
  • These offline players have high operational leverage and many cannot withstand declining top-line revenue growth for long.
  • The resulting bankruptcies of physical retailers remove competition for online players, further boosting their share gains.

So, how has this shift been playing out? Recent data suggests that it’s happening faster than I could have imagined.

Online Share of Retail

From Recode, 14 January 2014

The data suggests that there are two very different patterns going on with respect to e-commerce penetration. The two largest categories — “Food and Beverage” and “Health and Personal Care” — show e-commerce penetration well below the overall average. These categories essentially are the domains of grocery stores and drug stores, and e-commerce (at least to date) has achieved only modest penetration of these massive categories (but Amazon Fresh has designs on changing that).

… One additional observation is that the pace of online share gain in the specialty retail categories shows absolutely no signs of slowing down.

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The astonishing news about the December jobs report: it shows continued slow growth

Summary: Manufacturing is strong, household income is growing (driven by gains for the top quintile). Employment is the weak link in the recovery. The news media focuses on the monthly changes, mostly noise. Strong months confirm the narrative; excuses explain the weak months. In fact the economy’s trend remains locked near the 2% stall speed — supported by years of fiscal and monetary stimulus (now fading). Here we look at the December report. The key point: it gives no evidence that the widely expected second half growth acceleration has begun.

Economy

Contents (revised from the usual format)

  1. The big picture
  2. Did bad weather kill jobs?
  3. Household survey
  4. Establishment survey
  5. Unemployment
  6. Wages and hours worked
  7. What are the hot sectors for jobs?
  8. For more information about

(1) The big picture

This report dashes the hopes — again — of those hoping the US economy has returned to “normal” growth. The growth of non-farm payrolls was 75 thousand (SA), not statistically significant from zero (the minimum significant change is 92 thousand; details here).

This is no surprise to those of us who have said for four years that the US remains locked in a slow growth mode (aprox 1.7% in 2013).  Now eyes turn to 2014, with the consensus forecast seeing faster growth 2.6% — but far slower than the 3.5% expected for 2013 in November 2011.

Consider the price paid for this slow growth. Not just the $774 billion in debt the USA accumulated during the past 12 months (4.6% of GDP), but also the as yet unknown results of 5 years of zero-interest rates and 3 rounds of quantitative easing (the third and largest still running, to be tapered in 2014).

As for 2014, there are too many variables to do more than guess.

(2)  Did bad weather kill jobs?

Most questions and objections people raise to the Bureau of Labor Statistics have been considered in detail by their experts. Such as the effect of bad weather. From the report about December:

Unusually severe weather is more likely to have an impact on average weekly hours than on employment. Average weekly hours are estimated for paid time during the pay period, including pay for holidays, sick leave, or other time off.

… In order for severe weather conditions to reduce the estimate of payroll employment, employees have to be off work without pay for the {employee’s} entire pay period. … Employees who receive pay for any part of the pay period, even 1 hour, are counted in the payroll employment figures.

It is not possible to quantify the effect of extreme weather on estimates of over-the-month change in employment.

Below is an attempt to quantify it. Note that this does not show the effect on the jobs numbers! Also, last month’s weather-related job losses were high, but not much higher than previous peaks during the past decade.

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Looking at America’s future: economic stagnation, or will computers take our jobs?

Summary:  “Is the economy in technological stagnation? Or will computers take all our jobs?” An analysis from the Fed gives us an answer. Another in a series of posts about the future of America’s economy and the coming of the next industrial revolution.

Crystal Ball

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The Productivity Paradox: Is Technology Failing or Fueling Growth?
By Andrew Flowers (senior economic research analyst)
EconSouth, of the Federal Research Bank of Atlanta
Q4 2013
“Is the economy in technological stagnation? Or will computers take all our jobs?”

Opening:

The U.S. economy has grown slowly since the recession ended in 2009, more slowly than in past recovery periods. The depth of the recession, and the financial crisis that exacerbated it, surely explain this sluggishness  — right? Not according to some economists, who think we have a bigger problem on our hands: that the underlying dynamics of the economy are impaired and our ability to innovate new technologies is the root cause of the current stagnation. In other words, they argue, slow growth is the new normal.

But other economists take the opposite stance. These economists say that technology is improving so rapidly that machine intelligence and automation will replace much of human labor. And while overall growth will improve, technology is bound to radically reshape our economy, making it more unequal.

Which story is correct? Let’s look at some evidence found in long-run trends. …

That’s an important question, about which he provides an excellent summary. It is also discussed in several posts (links below). But it’s not our focus today.

Labor market implications

Considering these competing views on productivity and technology, we come to the most salient economic issue of our time: jobs. The rate of technological innovation obviously has major labor market effects. What is the relationship between new technological advances and the current skill distribution of the labor force?

Skill-biased technical change is the economic theory for how advances in technology can increase worker productivity, given compatible skills, but how they also displace certain workers. Think of the automation improvements in U.S. manufacturing. Total inflation-adjusted manufacturing production has never been higher than it is now, and manufacturing productivity, if anything, increased following World War II. But the total number of persons employed in manufacturing industries fell sharply, even more so as a percentage of the labor force.

… Cowen and the authors of Race Against the Machine foresee skill-biased technical change as accelerating in the future. They see the fruits of this third industrial revolution — information technology — as having just begun to disrupt the labor market.

This view is augmented by the recent research of David Autor, an MIT economist, who highlights a slightly different, and perhaps more disturbing, phenomenon: labor market polarization. Autor and his coauthors document the rise in demand for both high- and low-skill occupations alongside a decline in demand for middle-skill workers. They then tie technological automation to this erosion of middle-skill occupations. Manufacturing is one big area where these middle-skill jobs exist.

… If the techno-optimists are correct about the future, the combination of skill-biased technical change and greater labor market polarization will complicate the already serious state of the U.S. labor market.

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