AuthorTopic: 💸 Official Unemployment Thread  (Read 436 times)

Offline RE

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💸 Official Unemployment Thread
« on: March 10, 2018, 08:44:42 AM »
I can't believe we don't have an official thread for this topic!  :o

Kickoff article below with bullshit from Fortune magazine.  ::)  Does anybody here believe we have "full employment"?


RE

Why ‘Full Employment’ Doesn’t Mean Everyone Has a Job

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The U.S. expansion has put millions of people back to work and economists agree that the economy is now at or close to full employment. But what does that mean exactly? When economists talk about full employment, they don’t mean everybody has a job. And they don’t mean that even the rosiest economic health can cut unemployment to zero. If unemployment falls too much, inflation will rise as employers compete to hire workers and push up wages too fast. To economists, full employment means that unemployment has fallen to the lowest possible level that won’t cause inflation. In the U.S., that was thought to be a jobless rate of about 5 percent — above the February rate of 4.1 percent. Is higher inflation therefore on the way? Or is full employment a smaller number than economists supposed?
The Situation

Since the U.S. recovery began in 2009, total employment rose from 138 million to 154 million by the end of 2017. The number of unemployed has shrunk to fewer than 7 million from 15 million. As the labor market tightens, the Federal Reserve is debating the timing of its next rate hikes. The problem is that there’s more uncertainty than usual over how many people want jobs, making it hard to pinpoint how much unemployment has to be tolerated to fend off inflation. That’s because the last recession was exceptionally severe and has shaken up the labor market in ways that aren’t well understood. U.S. Treasury Secretary Steven Mnuchin argues that a fuller unemployment measure should include “discouraged workers” who have stopped looking because they thought there were no openings. That rate, the BLS’s alternative U-5 index, tends to run a full percentage point higher than the commonly cited U-3 index.
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The Background

The government counts as unemployed people who don’t have a job, have “actively looked” for one in the previous four weeks, and are available for work. A wider measure of people needing work would count other potential job-seekers as well. The Bureau of Labor Statistics reported that 1.6 million people were “marginally attached to the labor force” in February — meaning they wanted a job and had looked for one in the previous 12 months, but not in the past four weeks. This included 373,000 discouraged workers. The number of marginally attached surged in recent years partly because the recession was so deep and long; it’s likely to shrink as the expansion continues. Other kinds of disguised unemployment may be temporarily high as well. In February, 5.2 million of the economy’s 27 million part-time workers wanted a full-time job. A stronger economy might also draw back into the labor force people who retired sooner than they’d intended, or who chose to stop working for other reasons.
The Argument

Economists, including the Fed’s policy makers, are divided about how close the economy is to full employment. To discourage inflation, some think that short-term interest rates should rise again soon and that plans to reduce the central bank’s holdings of bonds should be sped up. Others think that rates should be held lower, not least because inflation is still below the Fed’s target. Some economists think that the official rate of unemployment can fall further — say, to 4 percent — before inflation concerns need to be addressed. Others say that changes in wages may be a clearer indicator of labor-market conditions than the post-crash unemployment rate. Wages are showing only hesitant signs of faster growth. The Fed’s big concern: It’s possible that we won’t know what full employment means until inflation takes off.
« Last Edit: March 10, 2018, 08:49:02 AM by RE »
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Offline RE

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💸 More Non-existent Job Growth Reported
« Reply #1 on: March 14, 2018, 03:28:06 AM »
https://www.paulcraigroberts.org/2018/03/09/non-existant-job-growth-reported/

Paul Craig Roberts
Institute for Political Economy

More Non-existent Job Growth Reported
March 9, 2018


More Non-existent Job Growth Reported

Paul Craig Roberts and Dave Kranzler

According to the Bureau of Labor Statistics, the US economy added 313,000 jobs in the 28 days of February, causing a big jump in the Dow Jones average. Where does BLS find these jobs?

The BLS finds 61,000 in construction, which, if correct, suggests in view of falling new and existing home sales, that those building at this stage are going to experience financial difficulties.

Manufacturing conjured up 31,000, but in high tech areas such as computer and electronic products only 1,100 jobs were created. Communications equipment actually lost 100 jobs and electronic instruments lost 800 jobs.

50,300 jobs were created in retail trade, allegedly. This is inconsistent with store closings and what seem to be round-the-clock sales at online retailers. Is February the month people purchase cars, garden supplies, and clothing? The BLS seems to think so.

According to the BLS, 50,000 jobs were creatped in professional and business services, of which about three-fifths were in administrative and waste services, almost all of which were in temporary help services. In other words, we are not talking about employment for architects and engineers.

Waitresses and bartenders did not supply the usual out-sized number of new jobs, adding only 11,500 new jobs.

Local government added 31,000 jobs, almost all of which were in education.

As my long-term readers know, my analyses of the monthly payroll jobs reports are a tradition on this site. I am doing less of them, as I am sure it bores you to hear again the same conclusion that we are being lied to about job creation. The jobs, of course, are not the higher paid jobs we were promised by globalists in exchange for moving offshore American industrial and manufacturing jobs. That promise was never anything more than a lie, even though it was the repeated assurance from Ivy League economists and Washington policymakers. The lie protected itself by wrapping itself in the holy grail of “free trade.” Any economist or financial media presstitute who dared to point out that jobs offshoring is the antithesis of free trade was kaput. The economists were well paid for serving the jobs offshoring corporations.

As I explained yesterday, the economic information we are fed is false. It is intended to give us a non-existent, fake reality picture of the economy. https://www.paulcraigroberts.org/2018/03/08/make-believe-america/

For almost a decade the economic policy of the US, Europe, UK, Canada, Japan has been directed to the support of the financial speculation that caused the 2008 worldwide economic crisis. Nothing has been done for the populations of the countries who experienced the crisis. Indeed, many of these populations, such as the Greeks, have had their living standards forced down in order to protect the big banks. This proves beyond all doubt that in the “Great Western Democracies,” economic policy only serves the hyper-rich and the hyper-powerful. Citizens simply do not count. They are as nothing.

To give you a break from my analysis, I offer you below the analysis of my sometime coauthor Dave Kranzler, an experienced Wall Street participant who went good:

313k Jobs Added? Nice Try But It’s Fake News

by Dave Kranzler

March 9, 2018: The census bureau does the data-gathering and the Bureau of Labor Statistics feeds the questionable data sample through its statistical sausage grinder and spits out some type of grotesque scatological substance.  You know an economic report is pure absurdity when the report exceeds Wall Street’s rose-colored estimate by 53%.  That has to be, by far, an all-time record-high “beat.”

If you sift through some of the foul-smelling data, it turns out 365k of the alleged jobs were part-time, which means the labor market lost 52k full-time jobs.  But alas, I loathe paying any credence to complete fiction by dissecting the “let’s pretend” report.

The numbers make no sense.  Why?  Because the alleged data does not fit the reality of the real economy.  Retail sales, auto sales, home sales and restaurant sales have been declining for the past couple of months.  So who would be doing the hiring?  Someone pointed out that Coinbase has hired 500 people.  But the retail industry has been laying off thousands this year. Given the latest industrial production and auto sales numbers, I highly doubt factories are doing anything with their workforce except reducing it.

And if the job market is “so strong,” how comes wages are flat?  In fact, adjusted for real inflation, real wages are declining.  If the job market was robust, wages would be soaring.  Speaking of which, IF the labor market was what the Government wants us to believe it is, the FOMC would tripping all over itself to hike the Fed Funds rate.  And the rate-hikes would be in chunks of 50-75 basis points – not the occasional 0.25% rise.

The Housing Market Is Starting To Fall Apart
Last week I summarized January existing home sales, which were released on Wednesday, Feb 21st. Existing home sales dropped 3.2% from December and nearly 5% from January 2017. Those statistics are based on the SAAR (Seasonally Adjusted Annualized Rate) calculus. Larry Yun, the National Association of Realtors chief salesman, continues to propagate the “low inventory” propaganda.

But in truth, the economics of buying a home has changed dramatically for the first-time and move-up buyer demographic plus flipper/investors. As I detailed a couple of issues back, based on the fact that most first-time buyers “buy” into the highest possible monthly payment for which they can qualify, the price that a first-time, or even a move-up buyer, can afford to pay has dropped roughly 10% with the rise in mortgage rates that has occurred since September 2017. The game has changed. That 10% decline results from a less than 1% rise in mortgage rates.

That same calculus applies to flipper/investors. Investors looking to buy a rental home pay a higher rate of interest than owner-occupied buyers. Most investors would need the amount of rent they can charge to increase by the amount their mortgage payment increases from higher rates. Or they need to use a much higher down payment to make the investment purchase. The new math thereby removes a significant amount of “demand” from investors.

It also occurred to me that flippers still holding homes purchased just 3-4 months ago are likely underwater on their “largesse.” Most flippers look for homes in the price-range that caters to first-timers (under $500k). This is the most “liquid” segment of the housing market in terms of the supply of buyers. Any flipper that closed on a home purchase in the late summer or early fall that needed to be “spruced up” is likely still holding that home. In addition to the purchase cost, the flipper has also incurred renovation and financing costs. Perhaps in a few markets prices have held up. But in most markets, the price first-time buyers can pay without significantly increasing the amount of the down payment has dropped roughly 10%. Using this math, any flipper holding a home closed prior to October is likely sitting on a losing trade.

Similar to 2007/2008, many of these homes will be sold at a loss or the flipper will “jingle mail” the keys to the bank, in which case the bank will likely dump the home. I know in some areas of metro-Denver, pre-foreclosure listings are rising. Some flippers might turn into rental landlords. This will increase the supply of rental homes which, in turn, will put pressure on rental rates.

New home sales – The plunge in January new home sales was worse than existing homes. New home sales dropped 7.8% from December. This follows December’s 9.3% plunge from November. The December/January sequence was the biggest two-month drop in new home sales since August 2013. Back then, mortgage rates had spiked up from 3.35% in June to 4.5% by the end of August. The Fed at that time was still buying $40 billion worth of mortgages every month. With QE over and an alleged balance sheet reduction program in place, plus the Fed posturing as if it will continue nudging the Fed Funds rate higher, it’s likely that new home sales will not rebound like they did after August 2013, when mortgage rates headed back down starting in early September 2013.

Contrary to the Larry Yun false narrative, the supply of new homes jumped to 6.1 months from 5.5 months in December. How does this fit the Yun propaganda that falling sales is a function of low inventory? The average price of a new home is $382k (the median is $323k). New home prices will have to fall significantly in order for sales to stop trending lower. What happens if the Fed really does continue hiking rates and mortgage rates hit 5%?

January “Pending” Home Sales – The NAR’s “pending home sales index,” which is based on contract signings, was released this past Wednesday. It plunged to its lowest level since October 2014. The index dropped 4.7% vs. an expected 0.5% rise from the optimist zombies on Wall St. It’s the biggest 1-month percentage decline in the index since May 2010. On a year-over-year comparison basis, the index is down 1.7%. December’s pending home sales index was revised down from the original headline report.

Years ago when the US still had an honest, or semi-honest, financial press, you could have read this story in the Wall Street Journal. But not today. You have to read it here on my site or on Kranzler’s site: http://investmentresearchdynamics.com/313k-jobs-added-nice-try-but-its-fake-news/

If you want to continue to have honest information, donate: https://www.paulcraigroberts.org/pages/donate/
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Offline RE

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💸 Hiding the Real Number of Unemployed
« Reply #2 on: June 10, 2018, 12:00:17 AM »
https://www.counterpunch.org/2018/06/08/hiding-the-real-number-of-unemployed/

June 8, 2018
Hiding the Real Number of Unemployed
by Pete Dolack


Photo by James Lee | CC BY 2.0

Your government believes that exhausting your unemployment benefits is a cause for celebration — because you are no longer unemployed!

Huh? Well, there is a slight of hand here. Only working people who are receiving unemployment benefits are counted as “unemployed” in official statistics issued by countries around the world. Thus the actual unemployment rates are much higher than the “official” rates, generally about twice as high. Most governments make it difficult to find the actual rate, and the corporate media does its part by reporting the official rate as if that includes everybody.

Then there is the matter of how much of a given national population is actually engaged in paid employment, another useful number difficult to discover. Finally, we can consider wages, both how fast they might be rising as compared to inflation and whether they are increasing in concert with increases in productivity.

To cut to the chase, things ain’t so hot. But you already knew that, didn’t you?

Let’s start our global survey with the United States, where, contrary to expectations, the real unemployment figure is easier to discover that most other places. Perhaps the Trump régime hasn’t gotten around to suppressing it, busy as it is hiding scientific evidence about global warming, pollution and other inconvenient facts. The official U.S. unemployment rate for May was reported as 3.8 percent, the lowest it has been in several years, and less than half of what it was during the post-2008 economic collapse. Predictably, the Trump administration was quick to take credit, although the trend of falling employment has carried on for eight years now.

Nonetheless, you might have noticed that happy days aren’t exactly here again. The real U.S. unemployment figure — all who are counted as unemployed in the “official” rate, plus discouraged workers, the total of those employed part-time but not able to secure full-time work and all persons marginally attached to the labor force (those who wish to work but have given up) — is 7.6 percent. (This is the “U-6” rate.) That total, too, is less than half of its 2010 peak and is the lowest in several years. But this still doesn’t mean the number of people actually working is increasing.

Fewer people at work and they are making less

A better indication of how many people have found work is the “civilian labor force participation rate.” By this measure, which includes all people age 16 or older who are not in prison or a mental institution, only 62.7 percent of the potential U.S. workforce was actually in the workforce in May, and that was slightly lower than the previous month. This is just about equal to the lowest this statistic has been since the breakdown of Keynesianism in the 1970s, and down significantly from the peak of 67.3 percent in May 2000. You have to go back to the mid-1970s to find a time when U.S. labor participation was lower. This number was consistently lower in the 1950s and 1960s, but in those days one income was sufficient to support a family. Now everybody works and still can’t make ends meet.

And that brings us to the topic of wages. After reaching a peak of 52 percent in 1969, the percentage of the U.S. gross domestic product going to wages has fallen to 43 percent, according to research by the St. Louis branch of the Federal Reserve. The amount of GDP going to wages during the past five years has been the lowest it has been since 1929, according to a New York Times report. And within the inequality of wages that don’t keep up with inflation or productivity gains, the worse-off are doing worse.

The Economic Policy Institute noted, “From 2000 to 2017, wage growth was strongest for the highest-wage workers, continuing the trend in rising wage inequality over the last four decades.” The strongest wage growth was for those in the top 10 percent of earnings, which skewed the results sufficiently that the median wage increase for 2017 was a paltry 0.2 percent, the EPI reports. Inflation may have been low, but it wasn’t as low as that — the typical U.S. worker thus suffered a de facto wage decrease last year.

What this sobering news tells us is that good-paying jobs are hard to come by. An EPI researcher, Elise Gould, wrote:

    “Slow wage growth tells us that employers continue to hold the cards, and don’t have to offer higher wages to attract workers. In other words, workers have very little leverage to bid up their wages. Slow wage growth is evidence that employers and workers both know there are still workers waiting in the wings ready to take a job, even if they aren’t actively looking for one.”

The true unemployment rates in Canada and Europe

We find similar patterns elsewhere. In Canada, the official unemployment rate held at 5.8 percent in April, the lowest it has been since 1976, although there was a slight decrease in the number of people working in March, mainly due to job losses in wholesale and retail trade and construction. What is the actual unemployment rate? According to Statistics Canada’s R8 figure, it is 8.6 percent. The R8 counts count people in part-time work, including those wanting full-time work, as “full-time equivalents,” thus underestimating the number of under-employed.

At the end of 2012, the R8 figure was 9.4 percent, but an analysis published by The Globe and Mail analyzing unemployment estimated the true unemployment rate for that year to be 14.2 percent. If the current statistical miscalculation is proportionate, then the true Canadian unemployment rate currently must be north of 13 percent. “[T]he narrow scope of the Canadian measure significantly understates labour underutilization,” the Globe and Mail analysis conclude.

Similar to its southern neighbor, Canada’s labor force participation rate has steadily declined, falling to 65.4 percent in April 2018 from a high of 67.7 percent in 2003.

The most recent official unemployment figure in Britain 4.2 percent. The true figure is rather higher. How much higher is difficult to determine, but a September 2012 report by Sheffield Hallam University found that the total number of unemployed in Britain was more than 3.4 million in April of that year although the Labour Force Survey, from which official unemployment statistics are derived, reported only 2.5 million. So if we assume a similar ratio, then the true rate of unemployment across the United Kingdom is about 5.7 percent.

The European Union reported an official unemployment rate of 7.1 percent (with Greece having the highest total at 20.8 percent). The EU’s Eurostat service doesn’t provide an equivalent of a U.S. U-6 or a Canadian R8, but does separately provide totals for under-employed part-time workers and “potential additional labour force”; adding these two would effectively double the true EU rate of unemployed and so the actual figure must be about 14 percent.

Australia’s official seasonally adjusted unemployment rate is 5.6 percent, according to the country’s Bureau of Statistics. The statistic that would provide a more realistic measure, the “extended labour force under-utilisation” figure, seems to be well hidden. The most recent figure that could be found was for February 2017, when the rate was given as 15.4 percent. As the “official” unemployment rate at the time was 5.8 percent, it is reasonable to conclude that the real Australian unemployment rate is currently above 15 percent.

Mirroring the pattern in North America, global employment is on the decline. The International Labour Organization estimated the world labor force participation rate as 61.9 percent for 2017, a steady decline from the 65.7 percent estimated for 1990.

Stagnant wages despite productivity growth around the world

Concomitant with the high numbers of people worldwide who don’t have proper employment is the stagnation of wages. Across North America and Europe, productivity is rising much faster than wages. A 2017 study found that across those regions median real wage growth since the mid-1980s has not kept pace with labor productivity growth.

Not surprisingly, the United States had the largest gap between wages and productivity. Germany was second in this category, perhaps not surprising, either, because German workers have suffered a long period of wage cuts (adjusted for inflation) since the Social Democratic Party codified austerity by instituting Gerhard Schröder’s “Agenda 2010” legislation. Despite this disparity, the U.S. Federal Reserve issued a report in 2015 declaring the problem of economic weakness is due to wages not falling enough. Yes, the Fed believes your wages are too high.

The lag of wages as compared to rising productivity is an ongoing global phenomenon. A separate statistical analysis from earlier this decade also demonstrated this pattern for working people in Canada, the United States, Britain, France, Germany, Italy and Japan. Workers in both Canada and the United States take home hundreds of dollars less per week than they would if wages had kept up with productivity gains.

In an era of runaway corporate globalization, there is ever more precarity. On a global scale, having regular employment is actually unusual. Using International Labour Organization figures as a starting point, John Bellamy Foster and Robert McChesney calculate that the “global reserve army of labor” — workers who are underemployed, unemployed or “vulnerably employed” (including informal workers) — totals 2.4 billion. In contrast, the world’s wage workers total 1.4 billion. Writing in their book The Endless Crisis: How Monopoly-Finance Capital Produces Stagnation and Upheaval from the USA to China, they write:

    “It is the existence of a reserve army that in its maximum extent is more than 70 percent larger than the active labor army that serves to restrain wages globally, and particularly in poorer countries. Indeed, most of this reserve army is located in the underdeveloped countries of the world, though its growth can be seen today in the rich countries as well.” [page 145]

Having conquered virtually every corner of the globe and with nowhere left to expand into nor new markets to take, capitalists will continue to cut costs — in the first place, wages and benefits — in their ceaseless scrambles to sustain their accustomed profits. There is no reform that can permanently alter this relentless internal logic of capitalism. Although she was premature, Rosa Luxemburg’s forecast of socialism or barbarism draws nearer.
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Pete Dolack writes the Systemic Disorder blog and has been an activist with several groups. His book, It’s Not Over: Learning From the Socialist Experiment, is available from Zero Books.
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