Jobs, Jobs, Jobs

There’s some rejoicing over the Labor Department’s most recent jobs report:

The U.S. economy added 236,000 jobs in February, according to a Labor Department report released Friday. That’s much stronger growth than in January, when employers hired a revised 119,000 workers.

The gains were broad-based as offices, restaurants, construction firms and hospitals all added jobs.

Meanwhile, the unemployment rate dipped to 7.7%, as 12 million workers were counted as unemployed. The drop was partly because more people said they got jobs, but also because 130,000 people dropped out of the labor force.

Well, that’s good. All that’s needed now is to repeat that amount of job growth every month over the period of the next six years. Assuming that the job market is last in-first out, i.e. the first fired will be the last rehired, some of those people will have been unemployed for ten years by the time they’ve found new jobs. If they lost their jobs when they were 45, they’d be 55 when they went back to work and would have lost ten of what should have been their most productive years. Expect an increasing number of people to continue working well into their 70s.

In the interest of contributing to the project of job creation let me propose a few broad principles for promoting job growth:

1. Encourage the creation of “brown jobs”.

We need more jobs in mining, manufacturing, farming, lumber, and oil and gas production, not fewer. Those industries are dirty, hence “brown jobs”. Go ahead and regulate them but don’t try to regulate them out of existence. Solar power is a declining industry in the West not a growing one—both Siemens and BP have gotten out. They can’t beat the huge subsidies the Chinese government is pouring into their own “green jobs” companies.

2. Negotiate more bilateral free trade deals.

The freer, the better. Remember that you can write a free trade deal on the back of a napkin. When it runs into thousands of pages, it’s managed trade, not free trade.

3. Insist that China play by the rules it agreed to.

China has been violating foreign currency reserve limitations, intellectual property laws, and subsidizing its own industries in violation of international agreements to which it is party for more than a decade now. It has also failed to open its banking sector to foreign competition as it agreed to when it was admitted to the WTO. It is more than five years behind schedule in honoring those commitments. If China refuses to play by the rules it agreed to, throw it out of the WTO. Remove its “Most Favored Nation” trading status. And so on.

4. Keep the tax code simple.

Our tax code is long overdue for an overhaul. Our present byzantine tax code benefits companies that have the money to work the tax code at the expense of its competitors who don’t. The tax code is there to raise revenue, not modify behavior or function as a method of preventing upstart competition.

I could add to that list but that’s a start. Feel free to contribute you own ideas.

17 comments… add one

  • Icepick

    Mish has looked at the numbers, and not surprisingly has found that the report isn’t as good as it appears at first blush. There’s been a surge in part-time employment and a loss of full-time employment going on. Upside: More people have jobs than would otherwise. Downside: Fewer full-time employees isn’t really good news.

    Still, it looks like hours worked and average wages both ticked up. All things considered this report isn’t bad, although it isn’t really good, either, in an absolute sense. I seem to recall that we had surges in the previous two February/March periods that were quickly wiped out during the summer. We’ll see if that holds true again.

    Other bad news: LTUE has started climbing again; more people have dropped out of the workforce. Other good news: For the first time in some months more people reported getting work on the household survey than reported dropping out of the workforce.

    Ultimately, though, we’re still in a situation in which the cratering of the participation rate is the only reason the UE numbers aren’t much worse. Mish seems to think that UE-3 would be over 10% now if those who have just given up were counted, but I’m not sure that quite holds true. The best analysis I’ve seen (IIRC) indicates that we could probably add about 2% to the UE numbers, accounting for demographic shifts. (Note: Participation rates were expected to start declining with the aging of the boomers, but this cratering has been much faster than what was anticipated, and older age brackets (55+) are the only ones which have seen INCREASES in participation rates. So that isn’t what’s driving most of the decrease in participation.)

  • older age brackets (55+) are the only ones which have seen INCREASES in participation rates

    That’s why I don’t find the claims that demographic changes are responsible for the change in the participation rate particularly credible. It would be barely possible if they had expected everybody to start retiring at 55. Otherwise, not so much.

  • PD Shaw

    I didn’t realize this survey counted part-time towards employment. June 30th appears to be the drop-dead date to get workers under the 30 hour a week cap before being responsible for subsidizing their health care. I would expect part-time employment to continue to increase over the next few months.

  • Icepick

    Well, even with participation rates rising in the older age groups they’re still lower than the rates for the 25-54 age group, so it should STILL be contributing for an overall downward participation rate with the Boomer cohort moving into the older brackets. But what has happened has been much worse than any projection. Mish has looked at this, and some of his readers have run some compelling figures about it too. What’s happening has been far worse than the projected declines.

    You mention one of the really bad things, which is that so many of us have had the heart cut out of our working careers. Worse still, if I ever get another job, I’ve got zero chance of making what I was before (not even accounting for inflation), much less of getting on the track where I would have been in a more normal progression. And unless I win a small lotto jackpot, I’ve lost five years (and counting) of wages that I will never get back, period.

    But the really scary thing, from a demographic perspective, is what’s happening to the youngest working cohorts. They’re not only seeing epic participation declines, they’re also amassing large amounts of student debt which they cannot discharge in bankruptcy, and a significant portion of those will not find work that makes it feasible to pay off that debt. Even those that do will have it hanging like a millstone around their necks.

    This means putting off household formation and having children. Which will make for another demographic hit long term. And those diminished career expectations mean less tax revenue to give to the old people and the doctors. They’re going to get crushed for their entire “working” careers unless something is done to change the way the country is run.

    There’s a demographic time bomb ticking away in all these numbers….

  • Icepick

    PD, yep, part-time counts the same as full-time for BLS purposes. It can also create some confusion on other numbers. For example, the Household Survey, from which the UE rates are calculated, show 170,000 more people employed this month than last, but the Establishment Survey shows an increase of 236,000 jobs. This is partly noise from how the surveys are done but it is also partly how things are counted. Remember, two new PART-time jobs can both be held by one person. Only one person counts for the Household Survey, but two jobs get counted on the Establishment Survey.

  • Jimbino

    Besides a need for reforming the tax code, there is a need to reform state and federal regulation regarding certification of professionals, not only taxi drivers and barbers, but plumbers, electricians, lawyers and doctors.

  • Ben Wolf

    By now I think it obvious to all the U.S. values the dollar’s status as global reserve currency more than it values trade parity and employment. The chances of trade playing a significant role in jobs recovery are nil given the thinking among world elites.

  • PD Shaw

    @Icepick, I was wondering how multiple part-time jobs was being treated. As you know, the survey indicated the uptick on part-time was voluntary, so I wonder what that could mean.

    Looking through the report I see that weekly hours in retail dropped from 31.9 to 31.6 from February to February. (Table B-2) Meanwhile, retail hourly pay increased 2.8% during that same time period. (Table B-3) More pay for less hours might be a part of a shift to more part-time work and this survey suggests that there may be some success in it.

  • PD Shaw

    voluntary = mostly voluntary

  • Icepick

    As you know, the survey indicated the uptick on part-time was voluntary, so I wonder what that could mean.

    Examples of voluntarily shifting to part time:

    (a) You’ve been fired from a full time job, and after five months of unemployment you are happy with getting a part time job.

    (b) You’re retired, and having had your savings wiped out in the Crash, you now voluntarily take a job as a Walmart greeter.

    (c) Your employer offers you the chance of going from full time to part time, or from full time to unemployed. You voluntarily take the part time job.

    Et cetera….

  • TastyBits

    @Icepick

    … they’re also amassing large amounts of student debt which they cannot discharge in bankruptcy …

    It will be interesting to see the faces of these youngsters when they learn the government is not their friend, and President Obama screwed them big time. He “whispered sweet nothings in their ears”, but they are getting f*cked dry.

  • sam

    I gather you don’t think this is helpful. Why not?

    Feds: New Student Loan Repayment Options Set

    A new version of the income-based federal student loan repayment program that’s more favorable to many borrowers will go into effect starting Dec. 21, according to regulations scheduled for publication Friday.

    The “Pay as You Earn” program will allow eligible student-loan borrowers to cap monthly payments to 10 percent of discretionary income, and have their loans forgiven after 20 years. An earlier version of the program capped payments at 15 percent and offered forgiveness after 25 years. Congress had scheduled the new program to phase in in 2014, but the Obama administration took regulatory measures to make those options available sooner. It’s estimated 1.6 million borrowers could take advantage of the program.

  • PD Shaw

    @sam, I think that will just further increase costs of education at the taxpayor’s expense, and perhaps direct students down a difficult path (what’s 20 years when you’re young; I certainly don’t think I appreciated the nature of such commitments). I don’t know if I have all of the answers, but I would start along these lines:

    1. Not all education is intended to increase productivity. Education, like travel or a wine class, can be a good that makes life more enjoyable. It can also create status and the impression, but not the fact, of added productivity.

    2. The government should not be in the business of subsidizing education not tied to productivity.

    3. All disciplines have different means by which one could measure productivity. Very specific, vocational disciplines like medicine can or should be measured by the probability of getting a chance to become a doctor. Others, like a liberal arts degree, might be require more generalized criteria.

    4. Colleges use privacy concerns to prevent research into whether their program succeeds in the outcomes the students are seeking. Those laws should be repealed.

    5. Colleges should be able to make probability commitments, such as 75% of our political science graduates are accepted into law school. The commitments can be flexible, so long as they are measurable.

    6. Student loans can be offered on the basis of those commitments and dischargeable in bankruptcy if those outcomes are not met. That is, if the political science major is not accepted into law school, and becomes unable to pay his loans, he can discharge the loan through normal means if <75% of his classmates are accepted into law school.

    7. Competing student loan companies would then be in a position to offer student loans at amounts and various rates based upon the risk of non-payment and discharge.

    8. Schools would be free not to make commitments, but without government subsidy for those programs.

    9. Schools can respond to these pressures by lowering education costs and thus the risk of default.

    One problem with this sequence is that students change majors midstream, but I think that can be dealt with.

  • Icepick

    It will be interesting to see the faces of these youngsters when they learn the government is not their friend, and President Obama screwed them big time. He “whispered sweet nothings in their ears”, but they are getting f*cked dry.

    Oh, on this issue he’s not the only one. W. and Willie also whispered these sweet nothings into students’ ears. With the ongoing explosion of college expense it’s just worse now.

  • Icepick

    PD, loans should only be dis-chargeable after a certain amount of time too. It would be easy to get a degree and then kick around for a while and not work. Make it five years after the last class, though, and most that can get work will get work.

  • PD Shaw

    Icepick, I agree there needs to be a time period.

  • jan

    1. Encourage the creation of “brown jobs”.

    These are the very jobs that the EPA under the current administration are targeting for extinction, via their heavy-handed regulations — clean coal being a prime example.

    2. Negotiate more bilateral free trade deals.

    Nothing gets done around DC, these days, unless thousands of trees contribute to the paper they are written on. The more complex the laws the less people understand them,. And, that seems to suit the DC suits just fine.

    3. Insist that China play by the rules it agreed to.

    I seem to remember the guy running against Obama highlighted having a new and fairer relationship with China. But, that seemed to fall on deaf ears, didn’t it.

    4. Keep the tax code simple.

    The only conversation about taxes, in this administration, is raising them on one small faction of the populace — the excoriated ‘rich’ who do not happen to be personal friends and donors of Obama.

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