May 2011 Jobs Report and Wages

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

Net gain of 54,000 jobs in the month (revised to a gain of 25,000 jobs)
  • Analysts expected an overall gain of 180,00Private sector payrolls increased by 83,000
  • Private service producing industries added 80,000 (194,000 last month and 154,000 the month before
  • Goods producing industries gained 3,000 (38,000 last month and 40,000 the month before)
  • The US has added 908,000 private sector jobs this year and 2.1 million since the start of 2010
  • April was revised to a gain of 232,000 from an original reading of 244,000
  • March was revised to a gain of 194,000 from an original reading of 216,000 and a revision of 221,000
  • Revisions subtracted 39,000 jobs from earlier readings
  • Payroll processing company ADP said private-sector payrolls grew by 38,000 in May
  • downwardly revised 177,000 increase in April
  • economists’ expectations for private sector job growth of 170,000 for the month.
  • the manufacturing sector cut 9,000 jobs
  • the financial services sector lost 6,000 jobs
  • the construction sector cut 8,000 workers
  • the broader services sector added 48,000 jobs overall
  • McDonald’s hired 62,000 workers, which are part of a subcategory called food services. Without this hiring spree, the report could conceivably be a neutral report (no jobs gained or lost)
    In April, the number of job openings was 3 million, down a touch from 3.1 million in March
    About 13.9 million people were out of work in April
  • 6.2 million had have been jobless for six months or longer
    45.1% of the unemployed are long term unemployed.
  • Employers announced plans to cut 37,135 jobs in April, down 4.3% from May 2010
  • 1.8% increase over April’s 36,490 planned job cuts
  • comparing the first five months of 2010 to 2011 shows 2011 has 21% fewer announced job cuts (things are bad, but not as bad as last year)

Unemployment rate rose to 9.1%

  • Analysts predicted it would remain at 8.9%
  • The labor force
    participation rate is 64.2% (66.5% is average to good) – unchanged for the fifth straight month
  • The employment to population ratio is 58.4% – No change
  • 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), rose to 15.8% from 15.9% last month
  • PMI, a measure of manufacturing pace, is 53.5% and the 22nd consecutive month of readings over 50 percent. Anything above 50% means the machines are running. This is a significant drop from April’s reading of 60.4%
  • Service sector activity rose to 54.6% (52.8% last month and 57.3% before that and down from 59.7%). It was the 17th straight month of growth


Specific Segment Job numbers:

  • Manufacturing lost 5,000 jobs
  • Construction gained 2,000 jobs
  • Retailers lost 8,500 jobs
  • Leisure and Hospitality Services lost 6,000 jobs
  • Government sector lost 29,000, 28,000 was in local government
  • Education and Health Services grew by 34,000 jobs
  • Health Care and Social Assistance grew by 27,200
    • Professional and Business Services grew by 44,000
    • 1,200 jobs lost in Temporary Help

Wage (can be revised):

  • The average hourly earning (seasonally adjusted) is $19.43 – up six cents from last month and 11 cents over the last two months
  • Average weekly hours and overtime of production and nonsupervisory employees on private nonfarm payrolls by industry sector, seasonally adjusted is 33.6 hours, no change again

Bureau of Labor Statistics

Huge Layoffs and What They Mean

I got a great email from Rose King of Accountingdegree.com the other day. She shared with me a blog entry they authored about 13 Huge Layoffs. Below is an excerpt from it.

I’ve always been fascinated by layoff announcements. Not in a positive way, but in a curious way. It prompts questions about what went so wrong? I tend to group these reductions in one of two ways.
- The first is as a communication to their shareholders that they are working to reduce the imbalance built up in the cost structure. Usually, this is when the number of people is very high. A classic example is when orders have fallen off over an extended period and the company needs to face the music.
- The other is when the bottom line is going to be missed and the executives need to find a few million dollars. Usually this isn’t a high number, but rather its individuals with high compensation.

But both are an admission that the strategy isn’t panning out. The company should state what is changing in their business plan or their focus. Is the product portfolio no longer innovative? Can extraneous business units be sold off? and so on.

The sports fan in me is wondering when we’re going to hear about mass layoffs by the NFL? I guess pay cuts have already begun.

The other aspect of this blog entry that grabbed my attention is how most of these are fairly recent (within the last decade).

These days, many Americans are suffering at the hands of layoffs,
but mass job cuts are hardly a new thing. Often a result of new
efficiency or simply running low on cash, thousands of employees can be cut at a time. Here we’ll take a look at 13 massive layoffs in American history.

  1. Intel:
    In 2006, Intel announced a major restructuring that included the layoff
    of 9,500 employees, and an additional 1,000 managerial jobs. Then in
    2009, Intel closed chip plants, resulting in up to 6,000 layoffs.
  2. Microsoft:
    In its then-34th year of business without mass layoffs, Microsoft cut
    an initial 5,000 jobs, and even more by the end of 2009. The layoffs
    came in response to a major loss in profits and a need to reduce
    operating expenses and capital expenditures.
  3. Airlines:
  4. Citigroup:
    In 2008, Citigroup laid off 52,000 employees, making up for massive
    write-downs. The number of jobs cut by Citi is about the same as the
    total amount of cuts in the entire US financial services industry in
    2006. As New York City’s second largest private employer, Citi’s
    layoffs had a major impact on the city, as well as Citi stock.
  5. Merck:
  6. Dow Chemical:
  7. US Postal Service:
    The public workforce is not immune to layoffs, as evidenced by the USPS
    cut of 7,500 administrative positions. This cut impacted 2,000
    postmasters, which will likely mean closing the post offices they
    operate.
  8. HP:
    After an acquisition of Electronic Data Systems Corp, HP cut 7.5% of
    its workforces fo realize savings. That amounted to a cut of 24,600
    jobs over three years. Additionally, HP announced plans to spend $1
    billion and cut 9,000 jobs over three years to move to fully automated
    commercial data centers, with job cuts stemming from automation and
    productivity gains.
  9. Borders:
    The popular bookstore Borders announced plans to close 200 of 488
    superstores as part of a bankruptcy protection filing. These closings
    resulting in the laying off of 6,000 employees out of 19,500.
  10. IBM:
    IBM made drastic new cuts in 1993, letting go of 35,000 jobs as part of
    an $8.9 billion program to cut costs. The company also let go of some
    factories and equipment, shuttering plants. The measure was applauded
    by investors, and was praised for being a clean, drastic cut, rather
    than dragging out painful layoffs over several years. Employees were
    given incentives to leave, and there was also an early retirement
    program to encourage a positive outcome for both employees and the
    company.
  11. NASA:
  12. Automakers:
  13. Pfizer:

Split Personalities – Tax Breadth and Tax Depth

We seem to have split personalities when it comes to the news and our politics. In the news we hear about natural disasters and the sour economy. In politics we hear about the failings of the President and the deficit. Why are these two voices talking about different subjects?

The truth is they are talking about the same problem, just different ends of it. The US is maturing. A large portion of the population is entering their retirement years. Every day, for the next 19 years, 10,000 baby boomers will turn 65. By 2030, 18% of the U.S. population will be over 65, compared with today’s 13%.

This is important for several reasons, but here are two:

  1. Federal tax collection is based on income. Those that are retired usually don’t make significant income, so the taxes they contribute are very low. A change or decrease of 5% is a huge impact to the revenue of the government. Or said another way, 10,000 people, who have a high average income, can drop out of the tax pool everyday.
  2. The baby boomers have been in leadership positions for two decades. The groups behind them, smaller in numbers, will need to fill the void.

The first reason is why you hear about Medicare and the budget. The second reason is why you hear about stimulus and silicon valley.

- When we talk about the deficit and paying down the debt we are talking about the inevitability of time. Our demographics show an aging population who will not be contributing to tax rolls. Less income means less spending. Tax Breadth.

- When we talk about innovation and stimulus spending we are pushing for investment and hopefully an improvement in future wealth and the standard of living. This would offset the loss of tax income from those no longer in the workforce. Tax Depth.

Both of these are concerns. I tend to be more transfixed with the latter. Many young professionals are either not entering the workforce or they are at compensation levels below the norm of 5 years ago. This lag in pay is not easily overcome and tends to persist for a career. Smaller income means smaller taxes paid. In addition to that, younger professionals are not moving into challenging roles as they would have in the past. Opportunities for learning experiences are reduced. Plus what they’ve been taught in school isn’t applicable e.g. China has changed dramatically since 2007, but the text books didn’t.

The 18% not in the workforce is unavoidable, but what should be asked is what’s to come of the under employed?

There will always be some number of the under employed, but we are currently looking at a devastating mix of long durations and loss of skills. The recession as it began in 2007 was a supply and demand recession, meaning nothing out of the ordinary occurred. But the last two years has led to a structural recession. This means that the skills and knowledge the US worker has isn’t quite matching up with what labor is needed. If this is more than a blip then high unemployment will continue for a few years as education and training requirements sort themselves out.

But I also feel like the 16-24 group, or more broadly the under 30 age group, is pioneering a new track. The way the view the world is much different than their older counterparts. As a consumer group they can influence the creation and offering of products and services. The next 24 months will be telling about the future of this country.

April 2011 Jobs Report and Wages

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


Net gain
of 244,000 jobs in the month

  • Analysts expected an overall gain of 185,000 (200,000 for private sector growth)
  • Private sector payrolls increased by 268,000
    • Private service producing industries added 224,000 (199,000 last month and 152,000 the month before)
    • Goods producing industries gained 44,000 (31, 000 last month and 70,000 the month before)


  • The US has added 800,000 private sector jobs this year and 2.1 million total over the past 14 months
  • The last three months have averaged a job gain of 233,000- this is the fastest rate of growth since early 2006
  • February was revised to a gain of 235,000 from a revised 194,000 and an original reading of 192,000
  • March was revised to a gain of 221,000 from an original reading of a 216,000 gain
  • Revisions added 46,000 jobs
  • There are 6,955,000 fewer total nonfarm jobs since the recession started in December 2007. Although 244,000 jobs added is good, it will take 29 more months to dig out of the hole
  • Payroll processor ADP reported an employment gain of 179,000 jobs
    • 47% of the 179,000 ADP reported gain came from small business (firms with less than 50 employees). It was 49 last month and 46% the month before
    • Large businesses (greater than 500 employees) hired 6.25% of the 179,000 gain


  • McDonald’s hired 62,000 workers, but those hirings missed the survey window and will be more associated with the May Jobs Report
  • About 13.7 million people were out of work in April – however, in a positive move many newly unemployed people are not getting fired.
    Instead they are leaving voluntarily, presumably because they think they
    can do better.
    The number of people unemployed because they lost jobs fell to 8,144,000 in April, the lowest figure in two years
  • 5.8 million had have been jobless for six months or longer (a drop of 283,000 from last month, which is good) down from 6.5 million in March 2010

    • 43.4% of the unemployed are long term unemployed. Down from 45.5% last month
  • Employers
    announced plans to cut 36,490 jobs in April, down 4.8% from April 2010 when the economy stalled

Unemployment rate rose to 9.0%

  • Analysts predicted it would remain at 8.8%
  • The labor force
    participation rate is 64.2% (66.5% is average to good) – unchanged for the fourth straight month
    • Lowest since 1984
    • The participation rate was dropping before the recession began due to changing demographics of the US population
    • Every day, for the next 19 years, 10,000 boomers will turn 65. By 2030, 18% of the U.S. population will be over 65, compared with today’s 13%
    • Job expansion to account for population growth (keeping the unemployment rate steady) is estimated to be 150,000 and 200,000, but the partially delayed retirement of the baby boomers is moving these numbers to 75,000 to 100,000
  • The employment to population ratio is 58.4% – No change
  • Normally the unemployment rate moves in lock step with changes to the participation rate and the employment ratio but the diverge this month because the household survey is finding a reduction of employed people by 190,000 people. With surveys there tends to be noise and the drop from 10% to 8.8% was probably too quick so a little rise is natural to sort things out
  • 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), rose to 15.9% from 15.7% last month
  • PMI,
    a measure of manufacturing pace, is 60.4% and the 22nd consecutive
    month of readings over 50 percent. Anything above 50% means the
    machines are running
  • Service
    sector activity dropped to 52.8% from 57.3% last month and down from 59.7% in February. A dramatic drop when compared to other improvements (lowest level since August 2010). It was the
    16th straight month of growth
  • GDP, the most widely used measurement of the the American economy grew at a lackluster 1.8 percent in the first quarter,
    according to the government’s estimate for the first quarter
  • Nonfarm business sector labor productivity increased at a 1.6 percent annual rate during the first quarter of 2011

Specific Segment Job numbers:

  • Manufacturing gained 29,000 jobs
  • Construction gained 5,000 jobs
  • Retailers gained 57,100 jobs
  • Leisure and Hospitality Services gained 46,000 jobs
  • Government sector lost 24,000, 22,000 was state and local government
  • Education and Health Services grew by 49,000 jobs
    • Health Care and Social Assistance grew by 41,800

  • Professional and Business Services grew by 51,000
    • 2,300 jobs lost in Temporary Help

Wage (can be revised):

  • The
    average weekly paycheck (seasonally
    adjusted) is $650.83
  • The average hourly earning (seasonally adjusted) is $19.37 – up a nickle from last month
  • Corporations set a new record for profits: $1.68 trillion annual rate in the fourth quarter of 2010
  • Average
    weekly hours and overtime of production and nonsupervisory employees on
    private nonfarm payrolls by industry sector, seasonally adjusted is
    33.6 hours, no change

Bureau of Labor Statistics

Using Data as a Predictor of Sports Success

There’s a huge celebration going on this week – a celebration of decision making. You see the NFL Draft starts Thursday (4/28/11) and runs through Saturday (4/30/11) and fans tune in to see who their team selects. No games are played, just people’s names being called.

Why do we care? The simple answer is hope. We’ve entrusted the future of our favorite teams to a room full of guys with spreadsheets. We want to believe they have the magic formula for selecting the players who succeed in the NFL. They’ve studied film, measured height, weight, speed, interviewed the candidates, and surveyed other experts. They’ve quantified all these inputs and ranked the candidates. Most of the time they tier them for purposes of trading up or down. Teams win Super Bowls because of these three days.

It’s a lot of data and yet every year mistakes are made. As a General Manager, the person ultimately making the decision, you need the hits to be proportionally more successful than your misses. And you need to learn from your data year over year to see which inputs pan out and which ones do not. From there you can use heuristics to simplify the ranking order and reduce the risk of missing on a selection.

Below are two videos. One is from the Sloan Sports Conference and it features Peter Tingling. I’m a fan of Mr. Tingling and his company, Octothorpe Software (this is not a paid endorsement). Peter provides a presentation about how how successful NHL drafts are.

The second video is from the most famous sixth round pick ever – Tom Brady. He is your classic case of not using the data correctly.

http://www.kaltura.com/index.php/kwidget/wid/_203822/uiconf_id/1898102/entry_id/1_bukfpvkn/

[youtube http://www.youtube.com/watch?v=vGF4l3hcgBg&w=640&h=390]

March 2011 Jobs Report and Wages

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


Net gain
of 216,000 jobs in the month

  • Analysts expected an overall gain of 192,000
  • Private sector payrolls increased by 230,000
    • Private service producing industries added 199,000 (152,000 last month)
    • Goods producing industries gained 31,000 (70,000 last month)


  • February was revised to a gain of 194,000 from an original reading of 192,000
  • January was revised to a gain of 68,000 from a revision of 63,000 and an original reading of a 36,000 gain
  • Payroll processor ADP reported an employment gain of 201,000 jobs
    • 49% of the 208,000 ADP reported gain came from small business (firms with less than 50 employees). It was 46% last month
    • The last four months average an increase of 211,000 jobs. The prior four months saw an average increase of 74,000 jobs


  • 6.1 million people have been jobless for more than 6 months (long term
    unemployed) – up from 6.0 million last month
    and down from 6.5 million in March 2010

    • 45.5% of the unemployed
      are long term unemployed

  • Employers
    announced plans to cut 41,528 jobs in March. It was 50,702 jobs in February and 57,724 in March 2010

Unemployment rate dropped to 8.8%

  • Analysts predicted it would remain at 8.9%
  • Since November 2010 the unemployment rate has dropped 1%
  • The labor force
    participation rate is 64.2% (66.5% is average to good) – unchanged
  • The employment to population ratio is 58.5% – up from 58.4%
  • 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 to 15.7% from 15.9% last month and from 16.7% in December 2010
  • PMI,
    a measure of manufacturing pace, is 61.2% and the 22th consecutive
    month of readings over 50 percent. Anything above 50% means the
    machines are running
  • Service
    sector activity dropped to 57.3%, down from 59.7% last month. An unexpected drop when compared to other improvements. It was the
    16th straight month of growth

Specific Segment Job numbers:

  • Manufacturing gained 17,000 jobs
  • Construction lost 1,000 jobs
  • Retailers lost 17,700 jobs
  • Leisure and Hospitality Services gained 37,000 jobs
  • Government sector lost 14,000, all state or local
  • Education and Health Services grew by 45,000 jobs
    • Health Care and Social Assistance grew by 44,500

  • Professional and Business Services grew by 78,000
    • 28,800 jobs gained in Temporary Help

Wage (can be revised):

  • The
    average weekly paycheck (seasonally
    adjusted) is $648.48 –
  • The average hourly earning (seasonally adjusted) is $19.30 – down 2 cents from last month
  • Average
    weekly hours and overtime of production and nonsupervisory employees on
    private nonfarm payrolls by industry sector, seasonally adjusted is
    33.6 hours, up slightly from 33.5 last month and 33.4 in January 2011
  • 6.3% of hourly-paid workers in Pennsylvania earned the minimum wage or less in 2010
  • 9.5% of hourly-paid workers in Texas earned the minimum wage or less in 2010

Bureau of Labor Statistics

The March 2011 Silicon Valley Positive Outlook Update

The focus of my last post was on whether or not I believe Silicon Valley has inflated like a 1999 bubble. I don’t think it has, but the stock valuations are still pretty high. If I were to guess, I’d say the apparent investment upswing is a byproduct of cash sitting on the sidelines. Investors have it and big companies have it. Investors plant the seeds and companies like Google buy the fruit at the first sign of flowering.

Silicon Valley is an interesting place though. Many of the companies there don’t want to be viewed as uncool. Once that happens it means a particular culture has set in. Which of these companies seem more exciting: Facebook or Yahoo? Google or Microsoft? You get the picture.

Earlier this week there was an article on cnn.com in the Tech section about the hiring on Silicon Valley. Here are some quotes and stats from the article “Silicon Valley experiencing new hiring boom” by Dan Simon:

  • Silicon Valley: 10.6% unemployment rate
  • Last month’s (March 2011) national average was 8.8%
  • Silicon Valley produced 1,200 jobs last month and expected to add thousands more in 2011.
  • According to SimplyHired.com, a search engine for job listings:
    • nearly 40% of 130,000 open positions in Silicon Valley are for software engineers
    • Since July of 2009 there’s been a 245% increase in openings that have “Facebook” as a keyword
    • Over the same time period, a 421% increase in “Twitter” job postings
  • Innovations in social media, mobile and cloud computing are driving the growth, said Dion Lim, SimplyHired’s president.
  • LinkedIn, the social-networking site for professionals, hired nearly 500 workers last year — almost doubling its workforce.
  • “As we grow the company, we’re always on the lookout for top talent,” said Jeff Weiner, LinkedIn’s CEO.

Differentiating Using Strategy and Technology

The Academy Awards were a few weeks back and the popular movie The Social Network was nominated for Best Picture. It didn’t win the award, but it did elevate Facebook into a cultural phenomenon. It’s no longer another website – it’s Facebook. People care about it like their Nike running shoes, Apple iPod, and Starbucks coffee.

Each of these brands has used slight advantages in their products to become the dominate company in the space. How or why does this happen? Well, first I’ll mention luck. It always plays a role. In addition to luck, it’s the people.

Individuals and teams within these companies differentiate their offerings. They do so within a cost structure that maintains competitiveness and they do so with an eye toward value. Most people think of value as what Wal-Mart offers. One product 10 cents cheaper than a competitor and that is true in a commodities evaluation. Paper towels are paper towels. Value becomes much more abstract when the offering – product or service – has an association related to it. Starbucks originally pulled people in because the coffee was stronger. The association was that it woke up better than other options. And Apple combats technophobia because they create electronic devices that are easy to use.

This value is marginal at first, but then it snow balls. Getting it to snow ball is the key and then building on that is paramount. Facebook used exclusivity as the differentiator and then opened up the site to ride the network effect. Now it can exploit it’s pure numbers for monetary gain.

Earlier this year Goldman Sachs in a backroom deal valued Facebook at $50 billion dollars. Valuations like this have some to speculate that there is another tech bubble. Groupon, Google, Facebook, and others are the poster children.

In the world of the internet, small differences in your products can be the difference in sinking or swimming. Because of that Silicon Valley is leading the way in an escalating war for tech talent. Google is offering $20,000 more than average to the people they’ve targeted. Some firms are teaching their employees how to be entrepreneurs. In Silicon Valley it’s an inevitability, might as well make it a perk.

Do I think its a new tech bubble? I don’t. How engineers are using the internet now is very different than 15 years ago. Now it’s used to implement strategies that were inconceivable just three years ago. New approaches can separate and new technology can accelerate. What goes into the making of a Best Picture? It’s more than just film, it’s artistry.

February 2011 Jobs Report and Wages

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


Net gain
of 192,000 jobs in the month
(Revised in March to a gain of 194,000)

  • Analysts expected an overall gain of 190,000
  • Private sector payrolls increased by 220,000
    • Private service producing industries added 152,000
    • Goods producing industries gained 70,000


  • December was revised to a gain of 152,000 from a revision of 121,000 and an original reading of 103,000
  • January was revised to a gain of 68,000 from a revision of 63,000 and an original reading of 36,000 gain
  • Payroll processor ADP reported an employment gain of 217,000 jobs
    • 46% of the 217,000 came from small business (firms with less than 50 employees)


  • 6.0 million people have been jobless for more than 6 months (long term
    unemployed) – down from 6.2 million last month
    and 6.4 two months ago

    • 43.9% of the unemployed are long term unemployed – up from 43.8% last month (the overall population count has changed resulting in one number improving positively, but another appearing to be negative compared to last month)
  • Employers
    announced plans to cut 50,702 jobs in February, a subdued number but a year over year increase (42,090 in Feb 2010)

Unemployment rate dropped to 8.9%

  • Analysts predicted it would rise to 9.1%
  • The unemployment rate dipped below 9.0% for the first time 21 months
  • Last month there was an oddity of a low increase in jobs but a large drop in unemployment rate. After further inspection this is the result of an unusual squeeze of the components to this equation Number of people in the workforce (civilian labor force) – number of people with jobs (employed) = number of unemployed people.
    • The civilian labor force shrunk a little more than a normal drop with people dropping out of the labor force and the number of people with jobs increased a touch resulting in a significant drop in the unemployment rate
    • The “Not in Labor Force” number rose by 2.4 million people from February 2010 to February 2011

  • The labor force
    participation rate is 64.2% (66.5% is average to good) – unchanged
  • The employment to population ratio is 58.4% – unchanged
  • 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 to 15.9% from 16.1%.
  • PMI,
    a measure of manufacturing pace, is 61.4% and the 21th consecutive
    month of readings over 50 percent. Anything above 50% means the
    machines are running
  • Service
    sector activity rose to 59.7%, up from 59.4% last month. It was the
    15th straight month of growth

Specific Segment Job numbers:

  • Manufacturing gained 33,000 jobs
  • Construction gained 33,000 jobs (lost 32,000 so an even start to the year)
  • Retailers lost 8,100 jobs
  • Leisure and Hospitality Services gained 21,000 jobs
  • Government sector lost 30,000, all state or local
  • Education and Health Services grew by 40,000 jobs
    • Health Care and Social Assistance grew by 36,200

  • Professional and Business Services grew by 47,000
    • 15,500 jobs gained in Temporary Help (lost jobs last month after several months of gains)

Wage (can be revised):

  • The average weekly paycheck (seasonally adjusted) is $647.56 – an increase of $1.94 and a $3.35 positive change from December, 2010. $19.08 gain in the last year (there’s been low inflation so this is good)
  • The average hourly earning (seasonally adjusted) is $19.33 – flat from last month
  • Average
    weekly hours and overtime of production and nonsupervisory employees on
    private nonfarm payrolls by industry sector, seasonally adjusted is
    33.5 hours, up slightly from 33.4

Bureau of Labor Statistics

An Economic Transition – Negotiate It

    Jurgis talked lightly about work, because he was young. They told him stories about the breaking down of men, there in the stockyards of Chicago, and of what had happened to them afterwwards – stories to make your flesh creep, but Jurgis would only laugh. He had only been there four months, and he was young, and a giant besides. There was too much health in him. He could not even imagine how it would feel to be beaten. “That is well enough for men like you,” he would say, “silpnas, puny fellows – but my back is broad.”
    Jurgis was like a boy, a boy from the country. He was the sort of man the bosses like to get hold of, the sort they make it a grievance they cannot get hold of. When he was told to go to a certain place, he would go there on the run. When he had nothing to do for the moment, he would stand round fidgeting, dancing, with the overflow of energy that was in him. If he were working in a line of men, the line always moved too slowly for him, and you could pick him out by his impatience and restlessness. That was why he had been picked out on one important occasion; for Jurgis had stood outside of Brown and Company’s “Central Time Station” not more than half an hour, the second day of his arrival in Chicago, before he had been beckoned by on of the bosses. Of this he was very proud, and it made him more disposed than ever to laugh at the pessimists. In vain would they all tell him that there were men in that crowd from which he had been chosen who had stood there a month – yes, many months – and not been chosen yet. “Yes,” he would say, “but what sort of men? Broken-down tramps and good-for-nothings, fellows who have spent all their money drinking, and want to get more for it. Do you want me to believe that with these arms” – and he would clench his fists and hold them up in the air, so that you might see the rolling muscles – “that with these arms people will ever let me starve?”

This is the beginning of Chapter 2 of Upton Sinclair’s The Jungle. Jurgis Rudkus, an immigrant looking for the American Dream – opportunity, is confident in his physical strength. He has an ability for stockyard work.

The Jungle is often cited as the catalyst for work reform in the US. It was published in 1905 and the industrial revolution was picking up steam; the transition from an agricultural capitalism into a manufacturing one was well underway.

Here we are a little over a 100 years later and another transition is under way. The economy is moving from being goods producing to services and intellectual based. And we are experiencing a fundamental change in the relationship between employer and employee. For instance unions were an off shoot of what Sinclair set in motion. Unions, or collective bargaining, raised the standards for total compensation for all workers. Health care, vacation, and pay levels all improved.

But in today’s age, unions have a dramatically smaller participation rate and there seems to be a general animosity towards them. I can reason for the low participation rate: they’ve served their purpose and are not seen as needed. But the animosity is sort of bewildering to me. I suppose it’s because of the handling of terminations. There’s a notion that someone in a union can’t be fired. For the most part that isn’t true. But I understand it portrays an unfair situation. We, as Americans, believe the best should be rewarded. And the opposite is true too: those that don’t perform are let go.

As I mentioned before, we are transitioning to a different nature of our economy. In a goods producing economy, unions play an important role because the difference in work performed is small. But in a intellectual economy the difference between someone who designs a new microprocessor chip and someone who monitors the ripeness of apples at the grocery store is vast. Should the two jobs only be differentiated by pay grades? Are health care, vacation, and other benefits a given? At one point they were, but with competition being so tough, they are all up for review.

In the long run, it’s tough to review cuts to benefits without the inclusion of the employee. The job structure of the economy assumes certain consistencies. Skills are acquired based on those consistencies – Wall Street pays well, so Harvard graduates go to work there and teaching doesn’t pay well, but it affords flexibility and continued learning opportunities.

From a business perspective, it’s always better to negotiate. Whether it’s with your suppliers or your  workforce. It’s the American Dream.