The Expansionary Times

The Examiner

The Jobs Dearth: Fewer Americans Have Jobs Today Than in 2000!

February 29, 20129:34 AM MST

By Michael G. Zey

The recent news that in January 2012 200,000-plus jobs were created and the unemployment rate dropped to 8.3% prompted many media pundits, economists, and politicians to suggest that the years-long jobs dearth has finally ended. Unfortunately, a closer inspection of the employment picture suggests that their optimism is premature.

In evaluating the US jobs picture, it is important to remember that the national policy goal always has been full employment, the level at which basically anyone who desires a full-time job has a reasonable chance of landing one. Full employment is achieved when the unemployment rate drops to around 4%-4.5% or lower, economists say. An unemployment rate of 8%-9%, even for a few months, is unacceptably high. Three straight years in that range is intolerable.

Unfortunately, based on current labor trends, not only are we years from reaching full- employment, but the chances of reaching that goal in the next several years seem to be diminishing. In other words, the US jobs situation is going in the wrong direction.

One glaring indicator of an overall weakening of the US labor market is the fact that fewer Americans are employed today than in 2000.

Yes, that is correct. In December of 2000, the total number of American employed in the “non- farm” sector stood at 132,481,000. As of January 2012, that number dropped by 70,000, to 132,409,000 workers.

During that same period, while the number of job-holders decreased, the US population has grown by more than 30 million people. Job increases in the 200,000 range cannot accommodate all the new workers—immigrants, college students, and other first time workers—who are entering the work force. The percentage of the working-age population that is employed peaked at 63.4 percent in December 2006, but now has been in the 58% range for months.

According to the Economic Policy Institute, the job losses in 2008-2009 have created a jobs deficit of about 10.5 million jobs. This figure represents the over 5 million jobs lost plus the more than five million jobs needed to keep up with normal growth in the working-age population.

If we continue to add jobs at the current anemic pace, it will take until 2019 to reach full employment levels. If we hope to achieve full employment by the year 2015, EPI says we would have to add 440,000 jobs per month, a rate not seen since the 1980s.

Do not expect US economic conditions to foster the creation of millions of new jobs. In 2011 the economy expanded by a recessionary 1.7%, roughly slightly higher than that of many European countries now considered in recession. Gas prices have already started to affect retail sales and corporate purchases of durable goods. The net worth of millions of American consumers is shrinking as they watch the value of their houses decline month-by-month.

If US companies anticipate a double-dip recession, which they well could in the coming months, they will most likely restrict their hiring and reduce payroll. Given the current global and national economic climate, it would not be surprising for monthly job numbers to drop to 100,000 or even lower.

Official Washington’s words and deeds clearly indicate that policy makers are becoming increasingly concerned that job creation in 2012 and beyond will be anemic at best. A Congressional Budget Office report revealed that government economists expect the US unemployment rate to remain over 8% for the next several years. In recent testimony before Congress Fed Chairman Ben Bernankeexpressed concern that high jobless rates will continue to put a damper on US economic growth. Congress just passed, and the President signed, another extension of the 99-week unemployment package. To stimulate what it perceives as a moribund jobs economy, the Fed is promising to keep interest rates at near-zero percent for the next several years, and has left the door open to the possibility of new rounds of money-printing or “quantitative easing.”

Perhaps Bernanke and Congress are monitoring the Gallup Poll jobs figures, which many consider a more accurate reflection of the real nature of the employment problem than the Labor Department’s monthly reports. Gallup’s daily polling revealed a February 2012 unemployment rate of 9.0%. However, the underemployment number, which includes discouraged workers plus those working part-time, is 19.1%.

In other words, close to one out of five Americans who want to work full time are either unemployed or working part-time unwillingly.

In a subsequent article I will outline the impact this moribund job market is having on America’s young workers, mature employees, and the very social fabric of the country.

One fact is clear. As long as the nation’s citizens must live under the continued threat of long- term unemployment and underemployment, its seems ludicrous to cling to the belief that the US has entered a period of “economic recovery.” In fact, we would be better served by recognizing that this is an economy that the US must recover from. And we must start taking the necessary steps to make a true economic recovery a reality!.

Large Companies Creating More Jobs Overseas Than in US

April 15, 201211:18 AM MST

Since 2000 US Companies Prefer Hiring Overseas

OLX Corporation

It is no secret that the US job market is sputtering. As of March 2012, there were 150,000 fewer Americans with jobs than at the beginning of 2009. In that same time period 7.9 million new workers joined the workforce.

No matter what positive spin the media puts on the employment situation, it is clear that this economy will struggle to produce enough jobs to keep pace with the growth of the civilian working age population. In March 2012 only 120,000 new jobs were created. This is not good news for anyone in the job hunt, including the soon-to-graduate Class of 2012

Large US companies, many flush with cash, have emerged from the recession leaner and stronger. They would seem to be in position to improve the labor picture by simply stepping up and hiring more American workers.

It is not that these companies are reluctant to hire. They have added as many as 1.1 million jobs since 2007, the WSJ recently reported..

But many of those jobs were outside of the US.

This represents an acceleration of an already established trend. According to the Commerce Department, during the 2000s U.S.-based multinational corporations added 1.5 million workers to their payrolls in Asia and the Pacific region and 477,500 workers in Latin America. Much of that hiring was concentrated in China, Brazil, India and Eastern European. General Electric Co., Caterpillar Inc., Microsoft Corp. and Wal-Mart Stores Inc. are expanding their reach into Asia particularly.

During that same decade US companies cut payrolls in the US by 864,000

While larger US companies' global reach enables them to generate profits (and cushion the impact of the recession), it also enables them to take a "global" perspective on hiring. In other words, such companies have the organizational wherewithal to hire outside the US.

For instance, Watson Pharmaceuticals Inc. had most of its manufacturing facilities in the US. Since the recession the company closed North American factories and moved them to India. Many of Watson's customers are in India, a well.

Companies are attracted by the strong growth overseas, particularly in emerging markets, and a regulatory environment that is sometimes more friendly in foreign countries.

According to Jim Dugan, a Caterpillar spokesman, "As a greater percentage of our sales have been outside the U.S., we have seen our work force outside the U.S. grow."

I recently had the opportunity to attend a seminar featuring the CEO of a large US data processing company. His presentation was impressive--the company is expanding globally, and

seems to be ahead of the curve technologically. Their marketing and market research efforts insure future company financial success.

The audience reacted positively to this dazzling presentation of a true American success story. Their enthusiasm was dampened, however, during the Q&A session, when a young attendee asked about employment possibilities in this prosperous US corporate dynamo.

The CEO explained that, like many US companies, most of its hiring would be done overseas. The reasons were couched in terms of "globalization" and "worldwide expansion."

One of the reasons for the company's decision to shift hiring overseas emerged from an interview I conducted recently with a laid-off employee of a 500-person division of that organization. Most of the employees, skilled IT professionals, felt that their jobs were secure. They were shocked when as a cost-cutting measure the company closed down the US division, and simultaneously opened up essentially the same division in India staffed with foreign professionals earning roughly one-quarter the salaries of their American counterparts.

This experience sent her scurrying back to school, determined to acquire a skill for a field not easily outsourced to an offshore location. That field, she told me, is cyber-security. She feels that companies would be reluctant to outsource the development and implementation of their secretive computer security systems. Only time will tell if she has made the proper career choice.

The reasons that US companies are hiring more foreign workers than homegrown talent vary. US companies can hire high-skilled workers at substantially lower wages than their American counterparts. A more critical reason might be the onerous US tax and regulatory environment many companies see threatening long term corporate growth.

According to the Gallup organization, close to one in five Americans is either unemployed or underemployed, that is, working part time while desiring full-time employment. If US policy makers are serious about improving the employment prospects for American workers, they must take whatever steps necessary to encourage US companies to hire here and not oversees. A starting point would be lowering the corporate tax rate and embarking on a steady course of deregulation.

Until that happens, corporate America will continue to shift overseas its business activities as well as the bulk of the new jobs its creating.

WEAK US ECONOMY SLOWING BIRTHS, MARRIAGE, HOMEOWNERSHIP

April 6, 20129:56 AM MST

For Many, The American Dream Seems Unattainable

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The disappointing March 2012 jobs numbers remind us that the USeconomy continues to struggle.

The Bureau of Labor Statistics reports that only 120,000 jobs were created last month, and thousands of discouraged workers have simply dropped out of the labor force. Fewer Americans are working today than were employed in 2000 even as our population has grown by 30 million people. According to the Gallup organization, nearly 1 out of 5 Americans is either unemployed or working part time while desiring full time employment.

In 2011 the economy expanded by an extremely weak 1.7%, and will be lucky to grow at a 2% pace this year. Gas now averages $4 a gallon, and could reach $5 by the summer. The real inflation rate, as measured by the EPI (Everyday Price Index), stands close to 8%. New home sales are at historical lows. Millions of Americans have seen their net worth shrink

as housing prices have declined. A Wall Street Journal article described this recovery as the weakest on record, including the years directly following the depths of the Depression.

Most recessions since the end of WWII have been relatively short, lasting 6-12 months. As a result, their long term effects on society and the economy have been minimal.

Unfortunately, this current contraction has been so deep and so long-lasting that its impact is being felt throughout American society.

The economy has become a drag on population growth. Starting in 2009, the US population has grown by only 0.7% a year, down from annual increases of around % in previous years. This is the lowest rate of increase since the Great Depression. The US fertility rate is declining as well. That measure now stands at 1.9 children per female ages 18-64, below the replacement rate of 2.1.

When a country’s fertility rate stays significantly below replacement levels its population eventually shrinks. America seems to be following in the footsteps of Italy, Spain, Portugal, Ireland and other low-birth countries who must increasingly depend on imported often poorly- skilled labor to keep their societies functioning. A shrinking population base also means there are fewer younger workers to contribute to America’s already burgeoning safety net, including Social Security and Medicare.

Population Reference Bureau demographer Carl Haub linked these demographic changes to the weak economy. He stated that ”Almost anybody who observes these things over the years can say this is almost all recession-related."

The reasons for such declines can be traced to the changing life choices the nation’s younger people are making as they adjust to difficult economic conditions. Quite simply, the Great Recession has made it difficult for many young Americans to get married, buy a home, and raise families.

According to the Gallup organization, as of the end of 2011 44% of 18-to-29-year-olds classified as part of the labor force were unemployed or underemployed. The census bureau said that between 2008 and 2010 householders under age 25 saw their median income fall by 13 percent after adjusting for inflation. The 25-to-29 group’s income fell five percent during the same period.

Poor job prospects are forcing many under the age of 30 to postpone marriage.. 64% of men aged 25 to 29 were still single in 2011, up from 59 percent in 2008. Women in the never-married group grew from 45% to 50% in that same short period. Overall, marriages dropped 5% between 2009 and 2010.

The weak economy also has made it difficult for the younger generation to afford homes. Among the 30-34 age group, home ownership has dropped below 50% for the first time in recent memory. It is also forcing many to abandon the dream of a house in the suburbs and staying put in crowded urban areas.

Burdened by college loans, young people are having difficulty getting their lives started. For the first time, Americans owe more in student debt than they do in credit-card debt. Two-thirds of college graduates carry some debt at commencement. The Class of 2010 graduates owed on average $25,250, up 5 percent from the previous year. As a result, Americans now owe the Federal and private lenders nearly $1 trillion.

Worse, our often unemployed or underemployed graduates are struggling to repay these loans. Two-year default rates on all student loans hit 8.8 percent for those starting repayment in 2009, with 15 percent defaulting at for-profit institutions.

Young workers who default on such loans will be saddled with poor credit ratings that will reduce their chances of getting a home mortgage later on. This is bad news for boomers who were hoping to sell their homes, pocket the income, and retire. They might have to wait some time before the new generation of prospective home buyers can actually afford a new home.

Americans assume the “pursuit of happiness” is an unalienable right. Many include in their definition of happiness the opportunity to marry, raise children, and eventually own property. Unfortunately, this weak economy is preventing many Americans from participating in the American Dream.

In order to insure Americans’ opportunity to pursue their happiness, the US must first and foremost get its economy in order. But that will only happen when the country’s leaders discard the fanciful notion that US economy is now undergoing a significant recovery.

A whopping 66% of Americans think the US is still in the throes of a recession. Perhaps the country’s leaders should ask them why.

Number of US Full-time Workers Stagnant, As Incomes Languish

December 15, 20129:41 AM MST

Number of Full Time Workers in US Stagnant Since 2001

St.Louis Federal Reserve

For the last few years, the White House and the mainstream media have routinely regaled the public with news about a recovering job market. The unemployment rate is dropping, and jobless claims have stabilized, they claim.

However, more rigorous analysis and data crunching by the Federal Reserve and academics reveal a distressing picture of a stagnantemployment market plagued by declining incomes and a dearth of full-time jobs.

According to the St. Louis Federal Reserve, the number of Americans fortunate enough to secure full-time employment has hit a wall. In 2001, roughly 114 million Americans held full-time jobs. By 2012, the number of full-timers has inched up to about 115 million, an increase of a mere one million workers.

The problem with this near zero-growth in full-time employment is that the US population has increased dramatically, from 282 million in 2001 to314 million by 2012.

In other words, over little more than a decade the population has grown by 34 million while the number of full-time workers has remained roughly the same!

These numbers are reflected in Gallup's recently-developed "Population to Payroll" index, which measures the percentage of over-18 Americans who work 30 hours or more per week. Gallup reports that only 43% of Americans over 18 years of age now hold full-time jobs!

The news on incomes is hardly more encouraging. According to data featured on Jim Quinn's informative blog The Burning Platform, 38 million Americans earn less than $10,000 per year, 50 million earn less than $15,000, and another 61 million earn less than $20,000 annually.

All told 100 million employees, or 2/3 of the entire US workforce, earn less than $40,000 per year!

Ironically, according to the New York Times, citizens suffering most in this economy, low- income workers, were more likely to vote for President Obama's re-election than were higher income workers. In essence, the millions stuck in low-wage marginal jobs overwhelmingly voted for a continuation of economic policies that by most objective standards have hardly helped improve their standard of living!

The economy will never produce large numbers of full-time, well-paying jobs as long as GDP continues to grow at an anemic 1%-2% per year. For the US to get back on the path to prosperity, the government must adopt a set of aggressively pro-growth policies, such as lessening the tax burden on consumers, reducing the regulatory stranglehold on business, and

most of all unleashing the productive power of the nation's oil, coal, natural gas, and nuclear power industries.

Such changes can only come when those suffering the most in this recessionary economy demand and work for real improvement in their current lives and their future prospects.

Gallup: Only 45% of Americans Over-18 Have Full Time Jobs!

Gallup: Only 45% of Americans Working Full time

Gallup Organization

October 19, 201210:35 PM MST

Almost daily the media outlets report to the American public numerous jobs measures, most generated by the Bureau of Labor Statistics, which purport to describe the depth of the USunemployment crisis.

The public reads about the "headline unemployment number," which has been fluctuating between 8% and 10% since 2009.

The media might also mention another number, the "U6", which includes the unemployed and those working part-time but who want to work full time. According to this measure, 16%, or one out of six, Americans who want to work full-time are either unemployed or working in part-time jobs.

Yet, most members of the public realize that these numbers, however weak, still are not a true representation of the real-life struggle that they, their children, and their acquaintances encounter in finding, and keeping, a full-time job in today's stagnant economy.

The Gallup organization has developed a new metric, the Payroll To Population Index, which many believe more realistically captures the essence of the employment malaise in which Americans now finds themselves.

The Bureau of Labor Statistics calculates unemployment and underemployment figures as a percentage of what many consider a very limited definition of "the workforce."

The BLS workforce definition includes only those between 18-64, and excludes many different groups, including all those who have given up looking for work. Moreover, many of the BLS unemployment measures count part-time workers, even those working one hour per week, as "employed," and include them in the "jobs created" numbers.

On the other hand, Gallup's Payroll to Population indicator measures the percentage of all Americans over 18 "who are employed by an employer for at least 30 hours per week." In other words, it only counts as "employed" those working full-time. The results are based on daily telephone interviews with approximately 30,000 adults.

What the new Gallup metric reveals is quite disturbing and certainly deserves the attention by policy makers and mainstream economists.

According to Gallup, only 45% of Americans over 18 years of age have full-time jobs!

Even if we assume that some of the 55% of Americans without full-time jobs--retirees, college students, the disabled, and stay-at-home parents--have voluntarily chosen to work part time or not at all, thePayroll to Population figure of only 45% is nevertheless an indication of a profound unemployment crisis.

As we approach 2013, Americans might find it even more difficult to find and retain full-time jobs. Morgan Stanley's proprietary Business Conditions Index, which measures top business leaders' perceptions of the direction of the overall economy, collapsed in October, to 41% from 55% in September. Driving down the numbers were the hiring index, which dropped 10 points to 44%, and the "hiring plans index" which declined 13 points to 44%.

These hiring and retention indices have not been this low since 2009, when the unemployment rate hovered around the 10% level.

The report said that companies are becoming anxious about America's brutally high debt levels and the dramatically higher taxes they expect will be levied on businesses to help pay down that debt.

Hence, companies will want to cut costs, and plan to do so primarily by reducing hiring and laying off employees, possibly as early as January 2013.

We might have just experienced an earliy indicator that US companies are shedding workers. In mid-October jobless claimsjumped by almost 50,000 in one week to nearly 400,000 new jobless.

As I have repeatedly pointed out in this column and in my books, there is only one solution to the growing threat of massive unemployment.. The US must aggressively pursue a broad-based pro- growth strategy, one that that includes ramping up our manufacturing base and revitalizing our energy production efforts.

By not adopting such expansionary growth policies, we condemn all Americans to a future in which chronically high unemployment shrinking wages become the "New Normal."