Job Creation AND Loss Slowing Down: What's the Obvious Question?

Wednesday, November 28, 2007 at 09:10 PM

So today's NY Times section on Business carries a lengthy story by David Leonhardt headlined "A Slowdown in Jobs Lost, and Created." The gist is that in the past "few years" the rates of both new job creation and old job loss have been slowing. Why?

Don't ask the Times. The only real suggestion of what could be behind such a strange statistic is that we're more productive, doing more with fewer people. Which is, of course, a pretty odd suggestion. After all, the total number of jobs in the economy is higher than it was "a few years go," so productivity should have zip to do with it.

The article does, however, beat the favorite drum of mainstream business types, claiming that this stat is--surprise--evidence that globalization, offshoring, etc., are not a problem for the American worker.

Let's start with the fact that, if you really buy what the article is selling, the American job market is more stable than it was a few years ago. I'd venture that the Times and Mr. Leonhardt are among the very few who can actually look at today's American job market and see more stability. To make this argument, you have to ignore some facts and, most important of all, you have to not ask some obvious questions that might start you down a road that leads somewhere you don't want to go.

Mr. Leonhardt starts with a description of the job experience of Honeywell, which laid off thousands starting in the late 1990s when its business was bad, then never really did a lot of new hiring when its business picked up again. Then he offers this:

The biggest problem with the job market isn’t the jobs that are being eliminated, shipped overseas or filled by temporary workers. The biggest problem is on the other end of the equation. There are far fewer jobs being created by new or expanding companies than there were throughout the 1990s. You can think of this as the Honeywell syndrome.
Then he cites the following facts from the most detailed of the reports from the Bureau of Labor Statistics (BLS):
  • Recent stats show that private sector job cuts "have fallen to a near-15-year low"
  • In 2007's first quarter, private sector employers "eliminated 7.1 million jobs, equal to 6.2 percent of the nation’s total private-sector employment"
  • In the same quarter, they created 7.5 million new jobs
  • This rate of job creation is "the slowest pace of job creation on record" (these records begin with 1992)
  • Job loss was about 20% higher in the late 1990s than it is now
  • Job creation was about 25% higher in the late 1990s than it is so far in 2007
  • Job creation in the first quarter of 2007 was actually weaker than in early 2002 "when the economy was still shaking off the effects of the 2001 recession"
According to Leonhardt, although some people look at this set of information and see the fingerprints of NAFTA, China, and corporate downsizing, globalization, these factors all affect only job loss, hence don't explain the current phenomenon. Further, these explanations rest on the idea of too much "dynamism" in the job market, while the stats actually show too little.

He goes from that to pointing out "the benefits"of a decline in "job churn," which is that companies don't often find themselves "suddenly stuck with too many workers or too few." So, if I understand him correctly, a benefit of having never been hired is that you are less likely to be fired. Hmmmm.

This seems to me to be just another shovelful of the fertilizer that American business has been spreading over the top of the job problem for more than a decade. In Leonhardt's weak defense, he does point out that "Economists don’t completely understand why" we have this pattern. But only after planting the seed that this is NOT, repeat NOT the result of globalization.

Well, I have an alternate explanation, one which I don't think someone as versed in business as Mr. Leonhardt should have had much trouble identifying: globalization has sent the most volatile jobs overseas, so that the rise and fall in manufacturing and similar employment that typically accompanies changing business conditions now occurs overseas, not here.

Part of the game being played seems again to be restricting the focus to (1) only at jobs "lost" to overseas--those jobs that actually existed in America and were formally transferred overseas, which excludes new jobs that would at one time have been created here, but are now created in China, Vietnam, Indonesia, and so on, and (2) beginning your analysis with a time period which is itself not particularly typical of the way things "used to be."

As to the latter point, the article's focus on "the late 1990s" encompasses the dotcom bubble years, and excludes the many years of offshoring that preceded it. Surely our government, or business analysts such as Mr. Leonhardt, could count up the total number of worldwide employees of our major corporations and compare the percentage that "used to" be employed in America at some relevant time period (1980?) to the percentage is that employed here now?

At least Leonhardt recommends a useful fix: government policy that would encourage investment in areas that could produce new jobs. I'll vote for that, but I'd prefer voting after an honest discussion of what's going on.

At the very, very end of his piece, Mr. Leonhardt does point out that:

In related news, a survey of consumer confidence released yesterday showed the sort of decline that, according to Merrill Lynch, “is rarely seen outside of an impending recession or a natural disaster.”
That survey is from The Conference Board and includes the following:
Consumers' assessment of present conditions waned further in November. Those claiming conditions are "good" decreased to 22.3 percent from 23.2 percent. Those saying conditions are "bad" increased to 19.1 percent from 16.6 percent. Consumers' assessment of the job market was mixed. Those saying jobs are "hard to get" edged down to 21.3 percent from 22.8 percent, while those claiming jobs are "plentiful" decreased to 23.2 percent from 24.1 percent in October.
And I would be remiss if I didn't point out that the very same statistics that Mr. Leonhardt finds to indicate a unique problem are the ones that David Brooks recently cited as evidence of the strength in "fundamentals" that America retains. In his column of yesterday, "Follow the Fundamentals," Brooks actually said (emphasis added):
Meanwhile, the number of jobs actually lost to outsourcing is small, and recent reports suggest the outsourcing trend is slowing down. They are swamped by the general churn of creative destruction. Every quarter the U.S. loses somewhere around seven million jobs, and creates a bit more than seven million more. That double-edged process is the essence of a dynamic economy.
So Leonhardt's unusual loss of dynamism is our Mr. Brooks's essence of a dynamic economy. Maybe Brooks should talk to the guy from Merril Lynch about the consumer confidence levels being "rarely seen outside of an impending recession or a natural disaster.”



"Figures lie and liars do figure."

Ever since The Fake Pilot slithered into office, his friends at MSM print pure caca. This "data" they wave at us (hack-cough) is pretty, but, you look past it and the real truth emerges: The Fake Pilot has taken Raygunomics to a whole, new, feudalistic era.

Translation: There never WAS a recovery. All smoke, all mirrors, a lady being levitated courtesy a forklift through the curtain.

I trust data I can see: My job which paid pretty nicely packed up for Beijing. So, I can get a job that I can. Multiply this by a few million. No COS increase since The Actor was in the White House. Gas going up. Lying mothereffing credit card vultures rewriting our laws so THEY get paid first.

And by the by, the recession is up and running. My homeowner's agent told me they are getting one cancellation a week, due to foreclosure. So, somebody tell King George we peasants ain't buying the PR bullshit anymore.

So, here are, as I predicted years ago: Turn a Rethug loose and watch it all go up in smoke.

Six: If you ever feel like writing again for Watchers, send me an email. We'd love to have you contributing again.

You really don't have a good understanding of the economy Roger.

Milton Friedman was an Amoral Corporate Whore.

The numbers have been unreliable fer a while.

Like Cheney "they create their own reality"

Mostly cos if most folks figured out the truth there might be a run on piano wire, wooden rails, tar and feathers.

You really don't have a good understanding of the economy Roger.

Modern economists post Keynes are this centuries equivilant of "alchemists". They aren't scientists per se, they are more like rationalisation prone apologists.

The proof there is the growing gap between rich and poor not just in the US but all over the planet.

The advent of the hyper rich just goes to show that Chomskey has been right all along. The prosperous few and the restless many, indeed. But please Libster do tell us poor befuddled masses wot the deal is. Dumb it down so that even the great unwashed and unenlighteded souls can follow along.

Wot's the skinny on these numbers?

Be Well.

There's an old joke we learned long ago whilst the Six person was in Florida at a QA school: Several people were being interviewed for some position, all asked one question, "What is two and two?"

The statistician replied: "What would you LIKE it to be?"

Pause with me as I stare out my door here in The South Village: Ever watch baseball, football, basketball? Sure. You actually listen to the announcers?

"Yeah, the only other guy who could finish a sixth inning with a combined double-play against a left-hander like that was back in 62 when the Mets...."

In other words, the economy, so to speak is like watching the worst baseball team playing, yet, the announcers talk it up like these clowns are this close to taking game seven of the series, mmm?

Lee and I have pointed this out more than once: It's all smoke and mirrors. Ross Perot's "giant sucking sound" these days is like standing a little too close to a GE fan as they light the girl off, with me and a few million others playing the dear victim.

I left school eons back, told by my teachers and others that "Oh, the electronics field is wide open, dude, go for it!"

MmmHmm. Then, The Actor cuts a deal with Japan: We can have cute little bases for flying the SR-71 and they can dump all the cheap TV's they wish. Before Airwolf flew, the electronics industry in America was already camped out all around the Pacific.

These days? Radio Shack is more interested in selling you a cell phone and not matching a 2N3055. Nothing made anymore can be repaired whatsoever, one walk through Best Buy and you're looking at shelves of Use It, Blow It Up, Toss It, Eff It, Buy Another. An industry America invented is now solely owned by PRC and Thompson Consumer of France, all made in downtown Beijing.

And that's ONE industry. Just ONE.

Washingturd does not want us to think about that; that the standard of living here has been in steady decline since 1975, that our chatty potato pal up north gets his meds much cheaper than I do, that our petroleum is now an expensive commodity, nor mention that some of the money creeps play around with "oil futures", driving the prices UP, then, in no real order, well, you get the idea.

My point is I do not require Washingdumb or MSM's fanboy database to bamboozle me. Bill collectors circle me like buzzards. Grocery shopping is now worse than ever. Refilling my meds costs more and more and more and more.

Yet, the Fake Pilot tells us all to trust him, eh? Him and his 2nd Edition Rubber Stamp congress?

And why do I feel like Edward Gibbon was more right than wrong?

Y'all come back now, y'hear?

The numbers have, indeed, been unreliable for a while. A hell of a long while. One major reason is the manner in which unemployment, employment, and "out of the labor market" are determined.

If you don't already know how the government comes up with these figures, check out this post.

Two things continue to amaze me about unemployment stats:

(1) How many people think that the government simply knows, down to the individual, who is and is not employed. I can tell you from having asked questions of several elected officials, that many of the congressional talking heads with expensive haircuts and suits do not know how the unemployment figures are obtained.

2. How many members of the public contiinue to accept these numbers, and the idea that "the economy" is doing fine, at face value despite the obvious and overwhelming evidence to the contrary. Another case of believing the lying numbers over their "own lying eyes?"

And Libby, if you can shed any light, any whatsoever, on how the economy works, or why both job creation and job loss might be decreasing, please do. Surely you know that your accusatory comment adds nothing to the debate at all.

"The advent of the hyper rich just goes to show that Chomskey has been right all along. The prosperous few and the restless many, indeed. But please Libster do tell us poor befuddled masses wot the deal is. Dumb it down so that even the great unwashed and unenlighteded souls can follow along" six

I agree with most of the comments above about the use of statistics.

There is not however a permanent "hyper rich" class. The latest breying of the democrats pertaining to gap between the rich and poor is misleading at best. Look at the Forbes top 400 list at inception and compare it to now. There is maybe a handful still remaining. The "stats" used to show the income gap growth does not track movement between income groups. Those numbers come from census figures not income tax figures. When tracking income growth by tax returns you get a much better picture of how upwardly mobile most people are over time.

The growth in the income gap from methods used by John Edwards and others will continue to grow at the baby boomers retire (income from investments is not taken into consideration, only salaried income) and the every increasing illegals immigration which keeps the low end artificially low.


Before you put too much stock in the upward mobility theory, you might want to read this post from May of this year. And since then, the Pew Trusts have published several studies on economic mobility in the US.

As for the shuffling of the Forbes 400:

--I'd bet that the reason that many original members have dropped off is simply that the original fortunes have now been split up among the many heirs of the original rich person. Those heirs are still very, very rich, even if they don't make the 400 list.

--I'd also want to be sure exactly which members of the original families are still on the list, but under a different surname that makes it hard to compare the original and current lists.

--The Forbes 400 list isn't much of a gauge of who is "hyper-rich" unless you restrict the quoted term to the 400 richest. Given the size of the economy and the population now compared to when the list was originally compiled, I'd think that you'd need to go a lot deeper than 400 to corral all the people that I'd consider "hyper-rich."

Finally, the gap between rich and poor is growing under any sort of measurement that makes sense to me. Since just about the time that Mr. Reagan became our esteemed leader, incomes at the top have been growing faster than incomes at the bottom, and the higher the income, the faster it has grown in terms of percentage increases:

At the end of World War II, income inequality was lower in the United States than at any time since the 1920s. During the ensuing three decades, incomes grew briskly and at about the same rate - almost 3 percent per year - for households up and down the income ladder.

That pattern began to change in the 1970s. Since 1979, for example, the incomes of families in the bottom 80 percent of the income distribution have grown by less than 1 percent each year, and only households in the top 20 percent have enjoyed income growth comparable to that in the earlier period. For a small group at the very top of the economic ladder, however, incomes have been growing explosively.

Robert Frank, originally from the Philadelphia Inquirer, preserved at Common Dreams.

How do you account for the fact that incomes at the top & bottom grew at roughly similar rates for some 30 years, then suddenly began a major shift in favor of the wealthiest? This isn't something John Edwards or anyone else just made up.

Lee, the major shift upwards for the wealthiest seems to correlate with the middle class beginning to invest in the stock market thru 401K's, IRA's and other products that have made the financial markets more readily accessible to us common folk. As the markets grew in value due to the influx of more investment dollars the top incomes levels saw their investments pay off at a tremendous rate.

the major shift upwards for the wealthiest seems to correlate with the middle class beginning to invest in the stock market thru 401K's, IRA's and other products.....

That's one possible explanation for some of the shift. On the other hand, these investment devices really weren't all that popular or widespread when the shift began. It also presumes that middle class investment is the major reason for market price increases. If that's true, then the entire market boom is, indeed, artifical and doomed to bust.

It also ignores the fact that income for most Americans has been stagnant or near stagnant for some time. And the correlative fact that corporate profits are way up given the reduction in the proportion of costs represented by wages. And lots of other factors that are far less neutral than a shift in investing habits by the middle class.

According to many folks who really can't be considered biased in favor of labor, labor is being shorted, and that shorting is a/the main cause of growing income inequality. Take, for example, the opinions of folks from Dow-Jones, Merrill Lynch and Goldman Sachs summarized in this piece from Z Magazine's February isssue:

For the first time since the U.S. government began to collect the data in 1947, wages and salaries no longer constitute more than half of total national income. In contrast, corporate profits are at their highest levels since World War II, having risen double digits every quarter in the last three and a half years alone and 21.3 percent in the most recent year, 2005, according to the Dow-Jones "Market Watch." Corporate profit margins are higher than they have been in more than half a century, according to Merrill Lynch economist David Rosenberg. After tax profits are now equal to 8.5 percent of the U.S. GDP-that's more than a trillion dollars-and the highest percent since the end of World War II in 1945. A June 2006 report by the leading investment bank Goldman Sachs aptly summed it up: "The most important contribution to the higher profit margins over the past five years has been a decline in Labor's share of national income."

The same article notes that the data we use when discussing income and wealth inequality do not, and cannot, take account of the amount of wealth now stored by the extremely wealthy in offshore tax shelters in the Caymans and similar havens.

And that author's take on what caused this wealth/income shift:

The policies and practices responsible for today's widening income gap date back to the 1978-1982 period. At that time, policies and practices-both corporate and government-underwent a fundamental shift. The consequence of this shift has been a major restructuring of the U.S. economy since 1980 along a number of fronts, including an overhaul of jobs and job markets, widespread de-unionization, breakup of industry-wide collective bargaining agreements, a realigning of the federal tax structure, a new free trade offensive by corporations and government, cost shifting of health care and pension plans, government assisted compression of the minimum wage and overtime pay, annual diversion of social security fund surpluses to the U.S. general budget to offset federal deficits, deregulation and privatization of entire industries-to name the most significant.

"It also ignores the fact that income for most Americans has been stagnant or near stagnant for some time"

That is simply not true Lee.

Not true according to whom, based on what?

The Bureau of Labor Statistics reported that the average worker is no better off in 2006 that he was in 1999; in August 2006, average weekly earnings were $275.49, compared to $275.61 in August 1999 (both stated in 1982 constant dollars).

According to the Census Bureau, the average "real" weekly wage--adjusted for inflation using the consumer price index--fell 14% between 1970 and 1996 (between 1970 and 2000, by contrast, "real" GDP increased from $3.77 trillion to $9.82 trillion).

And, also according to the Census Bureau, median annual earnings for men fell to $41,386 in 2005 from $43,158 in 2003 (in 2005 dollars).

And what about the myriad other points of my previous response?