Why the Jobs Situation Is Worse Than It Looks- Zuckerman

Discussion in 'Economy' started by Trajan, Jun 22, 2011.

  1. Trajan
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    Trajan conscientia mille testes

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    My opinion is, this whole piece speaks to a lost decade, or more.
    *shrugs*


    its 3 pages long so, lets try and gets past the first 1.5 IF you are going to comment or broach a point for discussion eh? .......Please?


    Why the Jobs Situation Is Worse Than It Looks
    We now have more idle men and women than at any time since the Great Depression

    By Mortimer B. Zuckerman

    Posted: June 20, 2011

    snip- page 2-

    In past recessions, the economy recovered lost jobs within 13 months, on average, after the trough. Twenty-three months into a recovery, employment typically increases by around 174,000 jobs monthly, compared to 54,000 this time around. In a typical recovery, we would have had several hundred thousand more hires per month than we are seeing now—this despite unprecedented fiscal and monetary stimulus (including the rescue of the automobile industry, whose collapse would likely have lost a million jobs). Businesses do not seem to have the confidence or the incentive to add staff but prefer to continue the deep cost-cutting they undertook from the onset of the recession.

    But hang on. Even to come up with the 54,000 new jobs, the Bureau of Labor Statistics assumed that 206,000 jobs were created by newly formed companies that its analysts believe—but can't prove—were, in effect, born in May under the so-called birth/death model, which relies primarily on historical extrapolations. Without this generous assumption in the face of a slowing economy, the United States would have lost jobs in May. Last year the bureau assumed that 192,000 jobs were created through new start-ups in the comparable month, but on review most of them eventually had to be taken out, as start-ups have been distressingly weak given the lack of financing from their traditional sources such as bank loans, home equity loans, and credit card lines. [Read more stories on unemployment.]

    Where are we today? We have seemingly added jobs, but it is not because hiring has increased. In February 2009 there were 4.7 million separations—that is, jobs lost—but by March 2011 this had fallen to 3.8 million. In other words, the pace of layoffs has diminished, but that is not the same thing as more hiring. The employment numbers look better than they really are because of the aggressive layoffs in the early part of this recession and the reluctance of American business to rehire workers. In fact, the apparent improvement in job numbers has been made up of one part extra hiring and two parts reduced firing.

    Even during past recessions, American firms still hired large numbers of workers as part of the continual cycle of replacing employees. Of the 150 million workers or job seekers in America, about one third turn over in a typical year, leaving their old jobs to take new ones. High labor "churn" is characteristic of our economy, reflecting workers moving to better jobs and higher wages and away from declining sectors. As Stanford business professor Edward Lazear explains so clearly in the Wall Street Journal, the increase in job growth over the past two years is attributable to a decline in the number of layoffs, not from increased hiring. Typically, when the labor market creates 200,000 jobs, it has been because 5 million were hired and 4.8 million were separated, not just because there were 200,000 hires and no job losses. But when an economy has bottomed out, it has already shed much of its excess labor, as illustrated by the decline in layoffs—from approximately 2.5 million in February 2009 to 1.5 million this April. In a healthy labor market like the one that prevailed in 2006 and into 2007, American firms hired about 5.5 million workers per month. This is now down to about 4 million a month. Quite simply, businesses have been very disciplined in their hiring practices. [Read Zuckerman: America's Fading Exceptionalism.]

    We are nowhere near the old normal. Throughout this fragile recovery, over 90 percent of the growth in output has come from productivity gains. But typically at this stage of the cycle, labor has already taken over from productivity as the major contributor of growth. That is why we generally saw nonfarm payroll gains exceeding 300,000 per month with relative ease. This time we have recouped only 17 percent of the job losses 23 months after the recession began, as compared to 207 percent of the jobs lost from previous recessions (with the exception of 2001). There is no comfort either in two leading indicators of employment, with no growth in the workweek or in factory overtime.


    moooore at-

    Why the Jobs Situation Is Worse Than It Looks - US News and World Report
     
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  2. expat_panama
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    expat_panama Silver Member

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    Zuckerman says the US gov't shouldn't 'play' politics while he ignores specific legislative issues and hints that somehow both parties are the equal and bad. If he were truly stepping back from playing games he'd have logically connected jobs with policy and policy with legislation and enforcement. Typical for a leftist approach though, just like the Zuck's idea that job creation is exclusively a government operation.
     
  3. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    Great article, thanks for posting it. He laid out the situation pretty well, but no mention of any solutions. Maybe cuz he didn't have the space. Wonder what we're going to do when the UE benefits run out in Jan 2012? I don't see the situation improving much at all before then. In an election year who's going to say enough is enough?
     
  4. iamwhatiseem
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    iamwhatiseem Gold Member

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    Well folks...when 67% of consumer spending was on credit...when negative savings was the thing to do for over a decade, when 3/5th of the population have greater than 36% debt/income ratio...when all this comes to a head...
    This is what happens.

    This isn't a simple economic downturn. It is a looong-term, if not permanent - adjustment.
     
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  5. william the wie
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    william the wie Gold Member

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    Mort Zuckerman got into publishing after the internet began killing the business. This is the reason I ignore him. He invariably comes across as reasonable, plausible, sensible and competent. If you look at his track record he is in the middle of a drawnout egoruptcy sort of like a non-bombastic Trump.
     
  6. FiscalSanity
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    FiscalSanity Member

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    You know, I have trouble understanding why people think a debt to income ratio of more then 36% is high. I'm about as financially prudent as you can get and I make decent money, but between my mortgage, student loans, and car payment I'm running something like 60% myself. Tack on things like insurance, public service and all the other monthly bills that everyone has to pay and it's more like 85%.

    Frankly, anyone that's got relatively recent student loans has one heck of a debt burden, because even getting a two year degree from a local community college is expensive these days. Get a degree like mine that requires 4.5 years to get a bachelors and you're looking at a small fortune. By my senior year I was spending over $1K per class.....
     
  7. expat_panama
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    expat_panama Silver Member

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    That sounds like a decent financial order for someone under 40, and for someone over 60 it would be trouble. My take is most of the talk we've been hearing about US savings rates usually ignors demographics because the goal is America-bashing/to hell with facts.
     
  8. FiscalSanity
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    FiscalSanity Member

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    expat,

    Im actually a little over 40, but I got off to a slow start. Tried to make a go of it without a college education, then got a two year degree, then finally finished my bachelors off in my (very) late 30's.
    I learned an important lesson that i can't seem to get through to my nieces and nephews-get your education out of the way when you're young. Not having that degree makes it a lot more likely that all your hard work will only bring you to the edge of success without pushing you over the top. It's also a pain in the butt to have to pay off student loans in your 40's. :)
     
  9. percysunshine
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    percysunshine Gold Member

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    "We now have more idle men and women than at any time since the Great Depression."

    Does posting on an internet message board count as 'idle time'?
     
  10. uscitizen
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    uscitizen Senior Member

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    yep and when you combine the fact that most of what we buy comes from overseas and that we are in a global economy now and must compete with labor costs around the world.

    We MUST learn to live with less folks.
     

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