Calculated Risks – A Book Review

Summary: Few of us have a confident understanding of probabilities and statistics. I’d say most of us relate to a scene from Dumb and Dumber:

Loyd Christmas: What do you think the chances are of a guy like you and a girl like me… ending up together?
Mary Swanson: Well, Lloyd, that’s difficult to say. I mean, we don’t really…
Lloyd Christmas: Hit me with it! Just give it to me straight! I came a long way just to see you, Mary. The least you can do is level with me. What are my chances?
Mary Swanson: Not good.
Lloyd Christmas: You mean, not good like one out of a hundred?
Mary Swanson: I’d say more like one out of a million.
[pause]
Lloyd Christmas: So you’re telling me there’s a chance… YEAH!

Telling me theres a chance

And the reason we relate is because at some point it becomes meaningless to us. We play the lottery and we see commercials for wonder drugs. It all seems great, even if we don’t understand why.

Would I say this book is for everyone, no. It doesn’t rule anyone out, but it can be dry. The reader must want to improve their grasp of probabilities and uncertainty, to improve their innumeracy. This book provides a mental tool to help – natural frequencies.

 

Calculated Risks

Detail Review: Before I get to the contents of Gerd Gigerenzer’s book, I’d like to comment on the tangible book. It has many small numbers creating a grey pallet. The name of the book is reflected so two versions of it are represented on the cover. There’s also a symbol which appears to be a sigma, but I’m not sure. Together it makes for a busy visual. Within the book the font is of average size and there are helpful visuals sprinkled throughout. The result is 246 pages you can get through without feeling overcome by it.

The introduction sections of the book layout the ideas with the middle going into real world examples to explain them. The last few sections provide some funny and light hearted content.

Early on he sets the stage. I like the definitions, the philosophy, and the varying views of risk people have. Here are some examples:

The definition of innumeracy in general is the inability to do basic math, but this book is focused on the inability to understand statistical relevance. Gigerenzer breaks it into four types: illusion of certainty, ignorance of risk, miscommunication of risk, and clouded thinking. The excerpt from Dumb and Dumber was an example of clouded thinking since Lloyd understood the sheer magnitude of the chances Mary was giving him but didn’t know how to draw proper inferences from it.

The author also defines different views of risk. He describes three types – degrees of belief, propensities, and frequencies. Degrees of belief are similar to what a doctor would assign the chances of survival are to a patient who is undergoing a new surgical procedure. Propensities are more about the properties of an object like a die. The traditional die has six sides and given a uniform weighting and edge will result in a distribution of 1 in 6. The design dictates the likeliness. Six Sigma design and quality programs stress this sort of risk.

The last is Frequencies and it’s the focus of the book. Frequencies take actual events, defines a reference class, and observes what happens. Roll the die a thousand times and see how many sixes resulted. Frequencies are both powerful and flawed. They are powerful because they take design to the next level, the system. With frequencies you can draw conclusions with complex situations. The downside is the event has to happen… well frequently.

With frequencies the book then goes on to explain relative risks and conditional probabilities. The writings use health care as the back drop. Here’s an excerpt for Relative Risk:

What is the benefit of a cholesterol-lowering drug on the risk of coronary heart disease? In 1995, the results of the West of Scotland Coronary Prevention Study were presented in a press release “People with high cholesterol can rapidly reduce… their risk of death by 22 per cent by taking a widely prescribed drug called Pravastatin sodium. This is the conclusion of a landmark study presented today at the annual meeting of the American Heart Association.” The benefit of this cholesterol-reducing drug, just like that most medical treatment, was reported by the press in the form of a relative risk reduction. What does “22 percent” mean? Studies indicate that a majority of people think that out of 1,000 people with high cholesterol, 220 of these people can be prevented from becoming heart attack victims. This, however, is not true… Out of 1,000 people who took Pravastatin over a period of 5 years, 32 died, whereas of 1,000 people who did not take Pravastatin but rather a placebo, 41 died. The following three presentations of the raw result – a total mortality reduction from 41 to 32 in every 1,000 people – are all correct, but they suggest different amounts of benefit and can evoke different emotional reactions in ordinary citizens.

Three Ways to Present the Benefit

Absolute risk reduction: The absolute risk reduction is the proportion of patients who die without treatment (placebo) minus those who die with treatment. Pravastatin reduces the number of people who die from 41 to 32 in 1,000. That is, the absolute risk reduction is 9 in 1,000, which is 0.9 percent.

Relative risk reduction: The relative risk reduction is the absolute risk reduction divided by the proportion of patients who die without treatment. For the present data, the relative risk reduction is 9 divided by 41, which is 22 percent. Thus, Pravastatin reduces the risk of dying by 22 percent.

Number needed to treat: The number of people who must participate in the treatment to save one life is the number needed to treat (NNT). This number can be easily derived from the absolute risk reduction. The number of people who needed to be treated to save one life is 111, because 9 in 1,000 deaths (which is about 1 in 111) are prevented by the drug.

Another situation described in the book is mammography screening for breast cancer. Several randomized trials of women 40 and older were conducted in Sweden. What the trial found was screening resulted in reducing the risk of dying from breast cancer by 25%. That’s a huge number and one that can change health behaviors. However, this number is the relative risk reduction. What the study found was out of 1,000 women, 4 would die without screening. With screening, 3 die. That’s an absolute risk reduction of 0.1%(1 out of 1,000) and a relative risk reduction of 25% (1 out of 4). Another way to think of these results is out of every 1,000 women who did not get regular mammography screening, 4 die of breast cancer. For 1,000 women who did get regular mammography screening, 3 die of breast cancer. If you’re one of the four, this is a big deal. If you’re one of the 996 then the screening made no discernible difference (may have actually led to false positives, pain, discomfort, or anxiety). Alternatively, for women between the ages of 50 and 69 who participate in breast cancer screening will average an increase in their life expectancy by 12 days.

For those who remember the OJ Simpson case, you’ll recall the name Alan Dershowitz. He was one of Simpson’s lead attorneys. After the case was over he penned a book describing how they strategized the defense. One aspect involved domestic violence. He used figures from the FBI crime reports for 1992 and found a ratio of 1 out of 2,500 battered women are killed annually by a husband or boyfriend. OJ had previously hit Nicole Brown Simpson, the murder victim. The defense used these figures to argue that men who beat their domestic partners rarely go on to murder them.

But these numbers aren’t quite right. Dershowitz is arguing what the chances are someone murders their spouse after they have beaten them – about 1 in 2,500. A low likelihood. But the question should be spun around and stated: what is the probability of a man murdering his domestic partner given that he battered her and that she was murdered. The part about Nicole Brown Simpson being murdered is relevant. Here’s the frequency tree illustrating it (for round numbers 1 in 2,500 equates to 40 out of 100,000):

 OJ2The book ends with fun accounts of how statistics can be used for game shows or brain teasers. I enjoyed them. Here’s an excerpt of one I got a chuckle out of:

In the late 70s, the Mexican government faced the problem of how to increase the capacity of the Viaducto, a four-lane motorway. Rather than building a new highway or extending the existing one, the government implemented a clever, inexpensive solution: It had the lines on the four-lane highway repainted to make it six-lanes wide. Increasing the number of lanes from four to six meant a 50 percent increase in capacity. Unfortunately, the much narrower lanes also resulted in an increase in traffic fatalities, which, after a year forced the government to turn the highway back into a four-lane road. Reducing the number of lanes from six to four meant a 33 percent decrease in capacity. In an effort at touting its progress in improving the country’s infrastructure, the government subtracted the decrease from the increase and reported that its action had increased the capacity of the road by 17 percent. In reality, of course the capacity returned to what it had been, resulting in no net benefits. The net costs were the price of the paint and increase in traffic fatalities.


Other Book Reviews by Ben Leeson:

Simple Heuristics That Make Us Smart / The IBM Data Governance Unified Process: Driving Business Value with IBM Software and Best Practices – A Book Review / How Pleasure Works – A Book Review / Why We Make Mistakes – A Book Review / Drive: The Surprising Truth About What Motivates US – A Book Review / Rules of Thumb – A Review / I Hate People – A Review / The Job Coach for Young Professionals – A Review / A Review of The Fearless Fish Out of Water: How to Succeed When You’re the Only One Like You / A Quick Review of Johnny Bunko (a manga story)

 

The Future of the Middle

Tyler Cowen is the author of a book called Average is Over: Powering America Beyond the Age of the Great Stagnation. I haven’t read it, but David Brooks recently highlighted some aspects of it which initially I agreed with. Cowen is an influential economist who wrote the Great Stagnation, a book about why incomes have stalled for the last few decades. Average is Over describes a new economic reality and the skills needed to be successful in it. His new economy emphasizes the ability to meld with intelligent machines.

 These are the skills as defined by David Brooks:

Freestylers. They let the computer program make most of the moves, but, occasionally, they overrule it. They understand the strengths and weaknesses of the program and the strengths and weaknesses of their own intuition, and, ideally, they grab the best of both.

Synthesizers. The computerized world presents us with a surplus of information. The synthesizer has the capacity to surf through vast amounts of online data and crystallize a generalized pattern or story.

Humanizers. People evolved to relate to people. Humanizers take the interplay between man and machine and make it feel more natural.

Conceptual engineers. They are looking for the ability to come up with creative methods to think about unexpected problems.

Motivators. Managers who can motivate supreme effort in a machine-dominated environment are going to be valuable.

Moralizers. Mechanical intelligence wants to be efficient. It will occasionally undervalue essential moral traits, like loyalty. Soon, performance metrics will increasingly score individual employees. A moralizing manager will insist that human beings can’t be reduced to the statistical line.

Greeters. An economy that is based on mechanized intelligence is likely to be a wildly unequal economy, even if the government tries to combat that inequality. Cowen estimates that perhaps 15 percent of workers will thrive, with plenty of disposable income. There will be intense competition for these people’s attention. They will favor restaurants, hotels, law firms, foundations and financial institutions where they are greeted by someone who knows their name. People with this capacity for high-end service, and flattery, will find work.

Economizers. The bottom 85 percent is likely to be made up of people with less marketable workplace skills. Some of these people may struggle financially but not socially or intellectually. That is, they may not make much running a food truck, but they can lead rich lives, using the free bounty of the Internet. They could use a class of advisers on how to preserve rich lives on a small income.

Many of the people who struggle economically will lack the self-motivation to build rich inner lives for themselves. Many are already dropping out of the labor force in record numbers and drifting into disorganized, disaffected lifestyles. Public and private institutions are going to hire more people to fight this social disintegration. There will be jobs for people who combat the dangerous inegalitarian tendencies of this new world.

I read these and I like it. I can see a future with these sorts of roles in it; these are roles tailored to someone like me. But as I contemplate the last few – Moralizers, Greeters, and Economizers – I start to see a result of a machine enabled society. Brooks implies the jobs in the middle will go away and with it comes income disparity. To his credit he points to other personal values as key ingredients to a rich life.

I’ll circle back to the values angle in a moment, but first I’d like to describe what this machine enabled world looks like. I agree people will need to be able to work with data and the logic that goes with it, but the machines will fade into the background. What will actually come to be is a computational mesh with sensors constantly collecting data and providing scenario probabilities. People will work within it, not noticing the technology, only thinking of it as a decision framework. The mesh would be thousands of sensors sharing information, checking on variables, and changing the environment to best meet the needs of the people within it. At first the individuals who create this mesh will benefit with immense wealth, but then it will stabilize. The power is in the decision framework. If everything is presented with statistical outcomes, the optimal solution, not necessarily the perfect solution, will be chosen. In this world, the middle doesn’t get minimized.

In this world, the middle is filled with people with skills which Brooks identifies, but also a set of different ones. Ones which Dan Pink highlighted almost 10 years ago. Implied in Brooks editorial and perhaps the book Average is Over, is the notion the machines will take care of everything. They will get smarter and smarter. And this is true. They will get smarter. But they won’t get more creative. And that is the future of the middle. Unique problems will still arise and they’ll require inspired solutions.

Every day those in the middle will develop artistic assets. Some of it will simply be art. Emotional value. Some of it will be new or differing perspectives. Creating value from this work reminds me of integrative thinking as spelled out in The Opposable Mind: How Successful Leaders Win Through Integrative Thinking, a book published in December 2007 by Roger Martin. He gives a working definition of integrative thinking as: “The ability to face constructively the tension of opposing ideas and, instead of choosing one at the expense of the other, generate a creative resolution of the tension in the form of a new idea that contains elements of the opposing ideas but is superior to each.” These assets won’t always be monetized and if they are it might only be for a local beneficiary, but they will be significant.

The machines willl be able to figure out the puzzles, but can’t solve the mysteries.

Marina Keegan Leaves an Essence

It’s graduation time. May and June are filled with speeches, reflection, and change. Perhaps it fits with the circle of life – the birds are ready to leave the nest? I don’t know. But every year I’m impressed with the thoughtfulness conveyed in the different commencement speeches and the wonderment of the soon to be former students.

The world is ahead of them. They know it. And they terrifyingly own it.

These thoughts are shared by Marina Keegan. Below is an excellent snippet from Song for the Special, a remarkable essay of hers.

Everyone thinks they’re special – my grandma for her Marlboro commercials, my parents for discos and the moon. You can be anything, they tell us. No one else is quite like you. But I searched my name on Facebook and got eight tiny pictures staring back. The Marina Keegans with their little hometowns and relationship statuses. When we die, our gravestones will match. Here Lies Marina Keegan, they will say. Numbers one, two, three, four, five, six, seven, eight.

And here is another from The Opposite of Loneliness which she wrote upon graduating.

For most of us, however, we’re somewhat lost in this sea of liberal arts. Not quite sure what road we’re on and whether we should have taken it. If only I had majored in biology…if only I’d gotten involved in journalism as a freshman…if only I’d thought to apply for this or for that…

What we have to remember is that we can still do anything. We can change our minds. We can start over. Get a post-bac or try writing for the first time. The notion that it’s too late to do anything is comical. It’s hilarious. We’re graduating college. We’re so young. We can’t, we MUST not lose this sense of possibility because in the end, it’s all we have.

Read these two short essays. Read them now.

——

Marina Keegan imagined the world ahead of her. She wrote of being scared she’d never do anything. The feeling of a life without meaning. Of being scared she has nothing to put on her business card.

 

Life is Short
Marina Keegan - Director of Possibility

Spotting Innovative Talent – External and Internal to Your Company

The job market is a lagging indicator for the economy. And over the last several months, readings from each of the different national surveys have been positive. To accompany those reports is an underlying uptick in stories about how to hire innovative personnel. These individuals will always command a market for their skills, so its especially important to have a plan for this talent. Here are a couple articles I found valuable.

————————

Geil Browning

Inc.com ran an article titled How to Spot Innovative Hires by Geil Browning. In it she has a few recommendations:

In resumes: Look for “I enjoy developing solutions that are fresh and new,” “I’m an idea person,” or “I’m a visionary.” She also suggests that you don’t be scared off by stops in different industries.

In the interview: Observe who the person is making connections in their mind. When explaining a point or telling a story they seem to go off on a tangent, be OK with that. They are most likely connecting the dots in their minds – creating associations. They’ll also pepper the conversation with terms like brainstorming, big picture, global, vision, hunch, oneness, synchronicity, and cutting edge.

Here are a few blurbs from the piece regarding Interview questions to ask:

If you were to assemble a piece of furniture from the directions, how would you go about it?
I love this question because each thinking type answers it so differently. Someone whose thinking is very innovative will often say, “I look at the picture on the box, dump the pieces in a pile on the floor, and then begin. When the project is complete, I use the directions to start a fire.”

When a deadline is a month away, how do you finish a project—and when?
An innovative thinker will say something like, “First, I search the Internet for ideas. Then I’ll take a walk or ponder until a solution makes itself known. This may happen immediately or it may happen three days before the deadline, but when the solution surfaces, it will come all at once—and it will come.”

What would you do if you showed up ten minutes early for a meeting?
Does this individual talk about striking up a conversation with the nearest person, or quietly prepare for the meeting? Only you know which trait would offer an appropriate balance at your company.



———————–

Bill J. Bonnstetter & Ron J. Bonnstetter

The Harvard Business Review is providing some guidance about how to identify the people who in your organization are the entrepreneurs. In a blog post titled Who are Your Organization’s Entrepreneurs? Bill J. Bonnstetter and Ron J. Bonnstetter label the problem solvers within the company as Entrepreneurial-Minded People (EMPs) and Serial Entrepreneurs (SEs). The risk they see is in the likeliness of an entrepreneur leaving the team. An interesting stat is that 42% of of entrepreneurs have determined they want to own their own business before the age of 12, so companies are facing tough odds.

Entrepreneurial-Minded People (EMPs): They tend to work well in teams, have an organized workplace and enjoy consistency. These individuals are happier within organizations or within a group of people working together to achieve a goal.

Serial Entrepreneurs (SEs): The second group is made up of potential serial entrepreneurs who have a desire to own their own business. Serial entrepreneurs tend to be more individualistic, have a greater sense of urgency and a desire to control. They have demonstrated an ability to sustain a business past the first year, into the higher growth job production years of a young firm.

But how do managers identify entrepreneurial types? It’s often helpful to put these questions to use, especially during the hiring process or a performance review.

  1. Describe your career goals. The EMP’s answer would more likely indicate he could care less about being in management and is happy where he is or where he is applying for. The SE will tend to say she is looking for advancement.
  2. Describe your professional strengths. An EMP will focus on strengths directly related to the job in question. An SE will talk more about leadership and personal identity.
  3. Describe things you’re not good at. Honesty is important for both. Listen closely: If she claims to not have any weaknesses, she is likely more SE-driven. The more weaknesses he confesses to having, the more EM-driven he is.
  4. What activities do you do to keep current in your profession? The EMP is interested in keeping up within his profession and industry. The SE is more focused on keeping up on broader scope, going beyond just her career and may discuss things she is reading, experiencing or sharing.

Entrepreneurs — whether EMPs or serial — already possess the behaviors, attitudes, and values to build successful businesses. Finding out whom within the workforce possesses the traits of an entrepreneur — and which type they are — will allow business leaders to work with their unique approach to business. Recruiting and retaining entrepreneurs will pay big dividends not just for individual companies, but also for the economy as a whole.

Using Computers to Empower Curious Students

Earlier this week I posted about a low cost computer called Raspberry Pi and how the benefits of cheap computing are enormous. At a $25 price point you’re able to be curious, try new things, and make mistakes without costly consequences. Its high upside and low downside.

A few days later the NY Times ran a story about a local community of mine. Moorseville, NC is a town located to the north of Charlotte. Its on the perimeter of the Charlotte metro area near Lake Norman. They’ve seen some success with using Apple devices as learning instruments. Now, of course there isn’t anything new about that.

What is new, is the way they’re being used. The students are not dependent on teacher prescribed lesson plans. The lessons are part of the computers and the kids are encouraged to problem solve individually, with teams, or by working with a teacher. The students are trusted to drive the learning.

Arne Duncan, the Secretary of Education, was on The Daily Show with Jon Stewart and the host made a valid point – teaching is an art, not a science. And like any other form of art, the artist must be allowed to create. The instructor can’t control, only guide. Here’s a blurb from the article:

“You have to trust kids more than you’ve ever trusted them,” he said. “Your teachers have to be willing to give up control.”

That was the primary concern that the 60 visitors expressed during their daylong sojourn to Mooresville in November. “I’m not sure our kids can be trusted the way these are,” one teacher from the Midwest said, speaking on the condition of anonymity to avoid trouble back home.

Thomas Bertrand, superintendent of schools in Rochester, Ill., said he was struck by the “culture of collaboration among staff and kids” in Mooresville and would emphasize that as his district considered its own conversion.

“There’s a tendency in teaching to try to control things, like a parent,” said Scott Allen, a high school chemistry teacher in South Granville, N.C. “But I learn best at my own pace, and you have to realize that students learn best at their own pace, too.”

Programs like this are exciting to me. They show an open mind and a realization that the world has changed. Below are the videos of Arne Duncan with Jon Stewart.

 

Low Cost Options to Develop Computer Skills

Six years ago a project launched called One Laptop Per Child with the aim of creating an inexpensive low power laptop for children in third world countries. They’ve sold over 2.5 million units at a cost of around $200. That’s success.

Having computer skills enables upward mobility.

Another endeavor is launching at the end of the month (Feb 2012) called Raspberry Pi. This group is releasing two very low cost computers at price points of $25 and $35.  They don’t come with a keyboard or a monitor and they are a bare bones assembly. They are aimed at hobbyists and educational use.

I really like how they’ve fashioned the device – it has one USB port so you need to use a USB hub to add components, it runs on Linux, and it uses SD cards as a substitute for a hard drive and it boots from it. It can play Hi-Def video via HDMI and is said to be as good as the first X-Box.

The cost is so low that they can be used for many different purposes. Projects in schools or at start ups can certainly use a hardware solution like this to creatively experiment to achieve different learning goals.

 

Here are some pics of the different computers:

Raspberry Pi Computer

The Raspberry Pi doesn’t come with a case. It has different connections available and is cheap enough to mess with.

 

Raspberry Pi  Layout

Here is the layout of the different components.

 

Original OLPC

The One Laptop Per Child (OLPC) original laptop. It uses 5 watts of power and has a hand crank to add power. The latest version is using only 2 watts of power and will work well with solar energy sources.

 

Tablet OLPC

The latest OLPC is a tablet.

December 2011 Jobs Report and Wages

Here are the job market and compensation numbers for December 2011 (based on the job report):
*

Net gain of 200,000 jobs in the month

- Analysts expected an overall gain of 150,000
– Private sector payrolls increased by 212,000
      – Private sector service providing industries added 164,000 jobs
      – Private sector goods producing industries gained 48,000 jobs
- November was revised from a gain of 100,000
– October was revised to a gain of 112,000 from a gain of 80,000 and a revision of 100,000
- For 2011 1.6 million jobs were added, 1.9 million private sector jobs
     – The number of jobs added in 2010 was 940,000
– The labor force in the US is currently 153,887 million, down from 153,937 from an amended November 2011
– The unemployed totaled 13.1 million, down from 13.3 million last month
– 5.6 million had have been jobless for six months or longer
– 42.5% of the unemployed are long term unemployed
– Payroll processing company ADP (a separate report) said private-sector payrolls grew by 325,000 jobs; the largest gain since December 2010.
      – Analysts thought it would be 180,000
      – According to ADP, small firms, with payrolls ranging from one to 49 employees and thought by many to be the engine of job growth, led the charge, adding 148,000 jobs (added 60,000 two months ago)
      – Again, according to ADP, medium-sized businesses, with payrolls between 50 and 499 employees, added 140,000 jobs in the month (added 36,000 two months ago), while the nation’s largest businesses added 37,000 jobs.
      – Of the 206,000 private sector-jobs added in the month, 28,000 of them came from the goods-producing sector and 178,000 jobs were added in the service providing industries
– The announced jobs cuts for December were 41,785
      – The number of announced cuts for the 12 months of the year is 606,082 , surpassing 2010 year end total (529,973) and 14% higher overall
     – There were 1,288,030 announced job cuts in 2009
*
Unemployment rate dropped to 8.5%
- Analysts predicted it would remain at 8.7%
- Lowest rate recorded since March 2009
- Dropped 0.6% since August 2011
- Its a combination of more workers getting jobs and about 315,000 workers dropped out of the labor force
– the civilian labor force participation rate was 64.0 percent, same as last month
- The employment-population ratio was 58.5 percent, same as last month
- The U-6 report, which is a broader group to count (workers who are part time but want to be full time and discouraged worker), dropped in line with the Unemployment rate to 15.2%, it was 16.6% in December 2010
- PMI, a measure of manufacturing pace, is 53.9% and the 29th consecutive month of readings over 50 percent. Anything above 50% means the machines are running
- Service sector activity fell to 52.6%. It was the 25th straight month of growth and anything over 50% signifies growth

*

Specific Segment Job numbers:

– Manufacturing gained 23,000 jobs
– Construction gained 17,000 jobs
– Retailers gained 27,900 jobs
– Leisure and Hospitality Services gained 21,000 jobs
– Government sector lost 12,000: 14,000 loss in local government
– Education and Health Services gained 28,700
– Health Care and Social Assistance grew by 27,000
– Professional and Business Services grew by 12,000
– Temporary help lost 7,500

*

Wage (can be revised):

– The average weekly paycheck (seasonally adjusted) is $658.50
– The average hourly earning (seasonally adjusted) is $19.54, unchanged
– Average weekly hours and overtime of production and nonsupervisory employees on private nonfarm payrolls by industry sector, seasonally adjusted is 34.4

Bureau of Labor Statistics

November 2011 Jobs Report and Wages

Here are the job market and compensation numbers for November 2011 (based on the job report):
*

Net gain of 120,000 jobs in the month

- Analysts expected an overall gain of 110,000
– Private sector payrolls increased by 140,000
      – Private sector service providing industries added 146,000 jobs
      – Private sector goods producing industries lost 6,000 jobs
- September was revised from a gain of 158,000 to to a gain of 210,000
– October was revised from a gain of 80,000 to a gain of 100,000
– Revisions added 72,000 jobs from the prior 2 month readings and the revisions have consistently been higher than original readings
– The labor force in the US is currently 153,883 million, down from 154,198 in October 2011
– The unemployed totaled 13.3 million, down from 14 million which was the number for most of year
– 5.7 million had have been jobless for six months or longer – relatively unchanged from October (since the recession began 8.8 million jobs were lost and less than a third have been recovered)
– 43.0% of the unemployed are long term unemployed
– Payroll processing company ADP said private-sector payrolls grew by 206,000
      – According to ADP, small firms, with payrolls ranging from one to 49 employees and thought by many to be the engine of job growth, led the charge, adding 110,000 jobs (added 60,000 two months ago)
      – Again, according to ADP, medium-sized businesses, with payrolls between 50 and 499 employees, added 84,000 jobs in the month (added 36,000 two months ago), while the nation’s largest businesses added 12,000 jobs.
      – Of the 206,000 private sector-jobs added in the month, 28,000 of them came from the goods-producing sector and 178,000 jobs were added in the service providing industries
      – The announced jobs cuts for November were 42,474
      – The number of announced cuts for the 11 months of the year is 564,297 , surpassing 2010 year end total and 13% higher overall
- In the first nine months of the year, about 17.3 million people left their jobs by choice
     – Up 9% from last year, when  just under 16 million people called it quits through September
*
Unemployment rate dropped to 8.6%
- Analysts predicted it would remain at 9.1%
- Lowest rate recorded since March 2009
- Its a combination of more workers getting jobs and about 315,000 workers dropped out of the labor force
– the civilian labor force participation rate was 64.0 percent
- The employment-population ratio was 58.5 percent, up slightly from 58.3 percent in September
- The U-6 report, which is a broader group to count (workers who are part time but want to be full time and discouraged worker), dropped in line with the Unemployment rate to 15.6%
- PMI, a measure of manufacturing pace, is 52.7% an increase from 50.8% and the 28th consecutive month of readings over 50 percent. Anything above 50% means the machines are running
- Service sector activity fell to 52.0%. It was the 24th straight month of growth and anything over 50% signifies growth

*

Specific Segment Job numbers:

– Manufacturing gained 2,000 jobs
– Construction lost 12,000 jobs
– Retailers gained 49,800 jobs
– Leisure and Hospitality Services gained 22,000 jobs
– Government sector lost 20,000: 11,000 loss in local government
– Education and Health Services gained 45,000
– Health Care and Social Assistance grew by 27,000
– Professional and Business Services grew by 33,000
– Temporary help gained 22,300

*

Wage (can be revised):

– The average weekly paycheck (seasonally adjusted) is $656.54
– The average hourly earning (seasonally adjusted) is $19.54
– Average weekly hours and overtime of production and nonsupervisory employees on private nonfarm payrolls by industry sector, seasonally adjusted is 33.6

Bureau of Labor Statistics

Give to Charity Day!

Today is the last business day of 2011. Any loose ends need to be tied up, especially for tax purposes. I recommend people do two things, go to your bank accounts and make sure all tax applicable changes are completed and go to your favorite charity and donate. It’s tax deductible.

To help with the second item, I supplied a couple of links below. One is to donorschoose.org and the other is to a NY Times article recapping several great causes. What I like about them is their connection to the beneficiary. Immediate positive feedback tends to reinforce behavior and if the behavior is donating to a charity, well then all the better. Also, at the very bottom is a story of Donors Choose told by Charles Best, the founder. Its a 3 minutes well spent.

Thank You

 

 

 

Donorchoose.org

 

 

 

 

 

 

 

 

 Giving Where It Counts

 

 

 

October 2011 Jobs Report and Wages

Here are the job market and compensation numbers for October 2011 (based on the job report):

Net gain of 80,000 jobs in the month (revised to a gain of 100,000)

- Analysts expected an overall gain of 98,000
– Private sector payrolls increased by 104,000
      – Private sector service providing industries added 114,000 jobs
      – Private sector goods producing industries lost 10,000 jobs
- September was revised from a gain of 103,000 to a gain of 158,000 (final revision to a gain of 210,000)
– August was revised from a gain of 57,000 to a gain of 104,000 (final)
– The labor force in the US is currently 154198 million
– The unemployed totaled 13.9 million, down from 14 million which was the number for most of year
– 5.9 million have been jobless for six months or longer, a drop of 366,000
– 42.4% of the unemployed are long term unemployed
– Payroll processing company ADP said private-sector payrolls grew by 110,000
      – According to ADP, small firms, with payrolls ranging from one to 49 employees and thought by many to be the engine of job growth, led the charge, adding 58,000 jobs
      – Again, according to ADP, medium-sized businesses, with payrolls between 50 and 499 employees, added 53,000 jobs in the month, while the nation’s largest businesses lost 1,000 jobs.
      – Of the 110,000 private sector-jobs added in the month, 114,000 of them came from the service-providing sector and a loss of 4,000 jobs in the goods producing industries
- The announced jobs cuts for November were 42,759
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Unemployment rate dropped to 9.0%
- Analysts predicted it would remain at 9.1%
- the civilian labor force participation rate was 64.2 percent
- The employment-population ratio was 58.4 percent, up slightly from 58.3 percent in September
- The U-6 report, which is a broader group to count (workers who are part time but want to be full time and discouraged worker), dropped in line with the Unemployment rate to 16.2%
- PMI, a measure of manufacturing pace, is 50.8%, the 27th consecutive month of readings over 50 percent. Anything above 50% means the machines are running
- Service sector activity fell to 52.9%. It was the 23th straight month of growth and anything over 50% signifies growth
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Specific Segment Job numbers:

– Manufacturing gained 5,000 jobs
– Construction lost 20,000 jobs
– Retailers gained 17,800 jobs
– Leisure and Hospitality Services gained 22,000 jobs
– Government sector lost 24,000: 20,000 loss in state government
– Education and Health Services gained 28,000
– Health Care and Social Assistance grew by 16,300
– Professional and Business Services grew by 32,000
– Temporary help gained 15,000

Wage (can be revised):

– The average weekly paycheck (seasonally adjusted) is $658.16
– The average hourly earning (seasonally adjusted) is $19.53
– Average weekly hours and overtime of production and nonsupervisory employees on private nonfarm payrolls by industry sector, seasonally adjusted is 33.7

Bureau of Labor Statistics