6.5 Graphs Outlining the US Economy

I’m in a room that’s 8 feet by 10 feet. It’s just me. There’s a small box playing loops of TV shows, but I’m ignoring it. The temperature is 95 degrees but its cold in here. And I have a lot to think about.

I know I’m going to pay for it. Situations like this require penance and it’s going to cost me. It’s part of life though and inevitably I’ll be back.

The bill was a shade under $200. Frankly it could have been a lot worse. My car hasn’t been serviced in a year; it needed an oil change, inspection, tire rotation, and the radiator hose had a hole in it. I paid for the car, but I got time to think.

This cycle of activity drove me to consider the business cycle. It normally looks like a sound wave with peaks (good times) and valleys (recessions).

Are we still in a recession? Are we in an initial recovery? Maybe even an early upswing? Chris Stuart wondered the same thing in his write up Why We’re At The Early Upswing Stage In The Business Cycle.

I predicted the recession after observing a lack of income appreciation and buying patterns changing in October 2007 and although this is a classic supply and demand cycle where aggregate demand is lacking it feels more structural. Structural means the skills needed in the employment arena are lacking in the environment, so a transitional period of training is required. Instead of a sudden shift in skills we have an elongated one. Globalization dramatically changed supply chains and created liquidity in the job market. Goods producing jobs like manufacturing are now feasible almost anywhere. And the education advantage of the US is no longer prevalent.

This is forcing the US to consider it’s jobs strategy, or at least create one in the first place. Many of the assumptions about the viability of the US worker are no longer true. And think about the US consumer. Will they always buy? Like an alarm clock introducing the morning, the US worker and US consumer realized better days are not guaranteed. People are starting to slowly de-leverage. It’s a huge adjustment in the way people live their lives and it will take time. The debt burden is simply too great.

So if this cycle is a classic supply and demand recession and the US consumer isn’t going to buy (low demand) then isn’t this going to take awhile? Yes, the rest of 2011 and 2012.

Here’s my outline of the timescale:

Jobs will be tepid but consistent for the rest of the year and next. Companies large and small are getting creative with their resources. Many are investing in equipment rather than people (you don’t need to buy health insurance for an industrial printer), but the gains will be positive. There is no double dip recession.

The best workers are beginning to jump to other opportunities. They’ve installed micro-innovations for their current employers, but since volume has been low these improvements haven’t knocked anyone’s socks off. But they will.

So after a period of discipline, brighter days are ahead.

——–

I wanted to pull together some graphs showing what’s happened since the beginning of 2008. Below are four time-scaled illustrations showing the situation with jobs.

  1. The first one is the overall jobs report. It shows how far we have to go to balance out the lost jobs.
  2. The second one is a growth rate of jobs for the private sector as they relate to Service Producing and Goods Producing industries. Goods Producing encapsulates manufacturing and construction, two of the harder hit industries. 
  3. Since the ratio of Service Providing jobs and Goods Producing jobs is 5 to 1, I wanted to show the relative impact and that is what the third graph depicts.
  4. The last one the Dow Jones during the same period. It’s the index that most people focus on as a reflection of the stock market.

Lastly, Wired did some research with Linkedin.com about what terms people were using in their titles after they changed jobs. The results below reflect a pool of 7 million linkedin users and a good indication of what jobs are in need in this day in age. But remember, people still need an oil change.

Working Thoughts 6/15/2010
We Respond To Cues Very Effectively

Working Thoughts 6/15/2009
Resilient Attitudes are Rare

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

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

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

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.

January 2011 Jobs Report and Wages

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


Net gain
of 36,000 jobs in the month
(revised in March to a gain of 68,000)

  • Analysts expected an overall gain of 149,000
  • Private sector payrolls increased by 50,000
    • Private service producing industries added 32,000
    • Goods producing industries gained 18,000


  • December was revised to a gain of 152,000 from a revision of 121,000 and from an original reading of 103,000
  • November was revised to a gain of 93,000 from a revised reading of 71,000 and an original reading of 39,000 gain
  • October was revised to a gain of 171,000 from a second revision of 210,000 a revised reading of 172,000 and an original reading of 151,000
  • Payroll processor ADP reported an employment gain of 187,000 jobs (a revised 247,000 jobs in December, 2010)
    • The ADP survey and the Jobs Report survey aren’t usually this varying in their results, which, coupled with other data, makes people think the economy is shifting and the models used in the Government report are not currently effective

  • The Labor Department estimates there were 886,000 workers who had a job but couldn’t get to work due to weather (5th largest account of this situation) – if true, this means the real gain in jobs is estimated to be 200,000
  • 6.2 million people have been jobless for more than 6 months (long term
    unemployed) – down from 6.4 million last month

    • 43.8% of the unemployed are long term unemployed – down from 44.3% last month and up from 41.9% in November, 2010
  • Employers announced plans to cut 38,519 jobs in January, a 20% increase over December, according to outplacement consulting firm Challenger, Gray & Christmas. This is a really low number because it usually averages just over 100,000 for the month of January every year
  • Benchmark revisions were made for April 2009 to March of 2010 and show combined additional loss of 215,000 jobs during that period
  • Overall, it was a  confusing report – the numbers seem to contradict each other

Unemployment rate dropped to 9.0%

  • Analysts predicted it would rise to 9.5%
  • The 0.8% drop in a span of two months is rare: only 4 larger two month declines on record and those were in the 1940s and 1950s
  • The unemployment rate has been at 9% or higher for 21 months
  • Normally, when a decrease in the unemployment number happens without a very large number of new jobs it means people have dropped out of the count, but that isn’t the case this month – this is odd (504,000 people did drop out though)
  • The labor force
    participation rate is 64.2% (66.5% is average to good) – relatively unchanged
  • The employment to population ratio is 58.4% – relatively unchanged from 58.3% 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 to 16.1% from 16.7%.
    This reflects an even greater decrease seen in the overall unemployment rate (9.0% from 9.4%)
  • PMI,
    a measure of manufacturing pace, is 57% and the 20th consecutive
    month of readings over 50 percent. Anything above 50% means the
    machines are running
  • Service sector activity rose to 59.4%, up from 57.1% last month. It was the 14th straight month of growth and the highest reading since August 2005
  • 2010 fourth quarter productivity is reported at 2.6% and annualized at 3.6%

Specific Segment Job numbers:

  • Manufacturing gained 49,000 jobs
  • Construction lost 32,000 jobs
  • Retailers gained 27,500 jobs
  • Leisure and Hospitality Services lost 3,000 jobs
  • Government sector lost 14,000, Federal lost 2,000
  • Education and Health Services grew by 13,000 jobs
    • Health Care and Social Assistance grew by 12,900

  • Professional and Business Services grew by 31,000
    • 11,400 jobs lost in Temporary Help (had been gaining for several months)

Wage (can be revised):

  • The average weekly paycheck (seasonally adjusted) is $645.96 – an increase of $1.42
  • The average hourly earning (seasonally adjusted) is $19.34
  • Average
    weekly hours and overtime of production and nonsupervisory employees on
    private nonfarm payrolls by industry sector, seasonally adjusted is
    33.4 hours

Bureau of Labor Statistics

Job Report Stats Summary

Tracking Employment News

14 million people are without jobs. Imagine everyone in NYC, Chicago,
Philadelphia, and Dallas without a job. That’s almost 14 million. I
mention this because the tone of the news regarding employment has
improved since the beginning of fall 2010. It’s almost like we’ve been
on this long road trip and we can finally see the skyscrapers in the
distance. There’s miles to go, but hope is in sight.

I mentioned a few posts ago about the value of the A employee.
I said they are changing the dynamics of the job market and I praised
them. But I can’t pin them down. Sometimes they are the 35 year veteran
and other times they are the 35 year old hitting their stride. Youth
often prevails and so does being a woman. You just never know.

Anne Fisher over to Fortune.com highlighted a great resource for seeing who’s hiring called A Real-Time Look at Who’s Hiring and Where. Vault.com has a tool called Vault Employment Tracker. It’s a simple database organizing all the job announcements.

Date http://www.vault.com/images/icons/desc-arrow.png

Company 

Layoffs 

Hires 

Notes

Industry 

Info

01/18/11

AM General

300

0

AM will layoff 300 workers after the military reduced its order for Humvees.

Manufacturing

More

01/18/11

Unified Solutions Inc

228

0

Manufacturing – Other

More

01/18/11

Karachi Electric Supply Company (KESC)

4000

0

The layoffs are part of a cost-cutting drive to make the power utility financially viable, sources said on Friday.

Energy

More

01/18/11

Johnson Controls Inc.

0

250

The auto parts planct broke ground on its battery recycling plant in Florence, S.C.; it’s set to be finished next year.

Manufacturing – Other

More

01/18/11

Sam’s Club

0

170

The company is looking to hire every position from cashiers to supervisorsat its new location on  in Riverview, FL.

Department Stores

More

01/14/11

Berkeley College

150

0

Affected employees–non-faculty-members–will be let go by June.

College and University Education

More

01/14/11

Lockheed Martin Corporation

1000

0

LM, which is closing its Eagan plant in 2013 is cutting 250 jobs altogether, down from the original 350 anticipated.

Aerospace and Defense

More

01/14/11

Public Health-Seattle and King County

123

0

Nurses, social workers and other staffers were let go as a result of a 50% budget cut to an aid program for low-income pregant women and babies.

Insurance

More

01/14/11

Sterling Life Insurance

80

0

Sterling is adjusting to reduction of enrollment in one of its key products.

Health Insurance

More

01/14/11

SoloPower

0

170

SoloPower said Thursday that it is opening up a new, solar panel manufacturing facility in Oregon

Manufacturing

More

Picking the Best Team

“You wouldn’t believe it.” he says, although I’m sure I not only would believe it, but I can top it. “I was in first place in my league until Aaron Rodgers has a concussion and has to sit out. My back up was whoever the guy is from the Lions.” I pretended to listen, but I’m really thinking about my own team. These fantasy football stories aren’t for the person hearing the story, they’re for the person telling it. Occasionally it’s about how they won the league, but much more often, the tale is about a loss. “If Rodgers didn’t get hurt…” There’s always an “if.” He’ll be back next year.

The beauty of fantasy football is every year you get to pick your team. Most of the elite players – the A players – are taken in a draft or auction. The handful you select become your guys, your team. You then get a chance to pick up free agents during the season to supplement the team. It’s fun to look over the team and watch on Sundays.

Robots

Something similar is happening in the business world. We’ve hit a sweet spot with demand and productivity and it’s creating a Fantasy Football type of workforce.

Suppose for simplicity sake there are five types of employees – A, B, C, D, and F.

F
- Isn't skilled for the job
- Doesn't show up on time
- Doesn't care
D
- Isn't skilled for the job
- Shows up on time
- Training doesn't work
- Tries hard
C
- Skilled for the job
- Doesn't do anything beyond what is asked
- Performance is adequate
- Must be trained for every part of the job
B
- Skilled for the job
- Performance is good
- Quickly learns new aspects of the job
A
- Skilled for the job
- Performance is excellent
- Quickly learns new aspects of the job
- Can proactively expand the scope of the role
- Able to streamline or automate aspects of the job

 

Normally a big company, and for shorter durations, a smaller one too, will tolerate D employees in the hopes that they can become at least a C employee. But when the economy is tough F, D, and many C employees are let go. The business just can’t support them. This is your basic business cycle economy or put another way, aggregate demand for goods and services is down. When people stop buying, revenue suffers and revenue pays the bills like payroll and health care.

But what’s weird is corporate profits hit an all time high in the third quarter of 2010. A staggering $1.66 trillion. Up from $1.61 trillion in the second quarter and $1.30 trillion in the third quarter of 2009. A tremendous growth rate. Well, when you look closer at it, much of the third quarter growth was from the financial industry and the value of those gains tend to be theoretical or only materialize over long horizons.  But either way, profits are out there and cash is sitting on the books of many large companies. So why aren’t they hiring?

The reason is because of demand and the A employees. Demand is just enough to keep the machines running and creating economies of scale opportunities. But demand isn’t too high to hire extra workers (temporary hires are filling the gaps when needed) to pick up the slack. Meanwhile A employees are reviewing how the processes work and identifying inefficiencies. They are re-engineering their companies without causing disruption. Productivity goes up and meets a slowly improving demand level. The cycle continues.

A employees are talented and are getting raises. And just like in Fantasy Football, they are carrying their teams. If the raise isn’t there, they are being cherry picked by other companies.

This somewhat sounds like a structural economy issue as well. The demand is there, but the skills for the D, C, and B employees aren’t. This is an effect of globalization. The demand is there, but it’s being met not in the US, but in countries like India and China – manufacturing jobs particularly.  This doesn’t spell doom for D, C, and B employees because the scales tend to even out. The rising tide (cheap labor isn’t so cheap) in countries like China will make companies look again at the US, but while that is happening, education – learning how to problem solve – needs to take priority. Otherwise, their skills won’t be differentiated from other workers and other countries. We need more A employees.

This isn’t about labor anymore. It’s about talent. Elite performers get picked and others just fill out the roster or so the story goes.

Working Thoughts 1/11/2008
Examine Each Job as One of Many Crime Scenes

Working Thoughts 1/11/2009
Different Paths to Owning a Professional Sports Team

Working Thoughts 1/11/2010
Job Creation in the 2000s?