As if one tsunami wasn't enough, America now has another one to deal with. We still have no idea how to fix the Big Credit Kahuna that's smashing down on us, and now we have to deal with big wave number two.
Say hello to the unemployment tsunami.
I think we can finally brand Reagan-esque Voodoo Economics a failure. Most of the money the well-to-do received in the form of tax cuts, investment incentives and the like did not "trickle down" to the middle and lower classes as predicted. Let's face it, people; all that money just stuck to the rich folks like it always has, like it always will. Money just clings to rich people, maybe because rich people cling so well to money.
Anyway, since trickle-down voodoo failed, I propose that we try some 'trickle-up' voodoo... and we had better start by putting people to work. Fortunately for us, there just happens to be an excellent place they can start. America's infrastructure is crumbling; the vast numbers of unemployed can become employed by beginning the incredibly necessary work of un-crumbling our roads, bridges, dams... whatever needs fixing. They should start immediately. Hopefully, the leadership that would be required to pull this off will soon emerge into the American Presidential landscape. I only hope it will be soon enough. Inauguration might not be until January, but the new President should begin his job on November fifth. I don't think we have all that much time to fix our problems before our problems will become unfixable.
Job Losses Accelerate, Signaling Deeper Distress
By Neil Irwin and Michael
S. Rosenwal
Washington Post Staff Writers
Thursday, October 23, 2008Employers are moving to aggressively cut jobs and reduce costs in the face of the nation's economic crisis, preparing for what many fear will be a long and painful recession.
The labor market has been weak all year, with a slow drip of workers losing their jobs each month. But the deterioration of the job market is now emerging as a driver of economic distress, according to a wide range of data and anecdotal reports from corporate America.
In September, there were more mass layoffs -- instances in which employers slashed 50or more jobs at one time -- than in any month since September 2001, the Labor Department said yesterday. And nearly half a million Americans have filed new claims for un-employment benefits in each of the past four weeks, the highest rate of such claims since just after the terrorist attacks seven years ago. Anecdotal reports suggest that the hemorrhaging in the job market has only begun.
Companies that announced plans this week to cut jobs include Internet company Yahoo (1,500 positions), pharmaceutical company Merck (7,200), National City bank (4,000) and Comcast, the cable company (300). The weakening employment outlook is part of the reason that investors have become more fearful of a deep, prolonged recession -- fears that led to yet another miserable day on Wall Street yesterday, with the Dow Jones industrial average down 514 points, or 5.7 percent.
"The customers I've spoken to are all living under a sense of fear," said Paul Villella, chief executive of HireStrategy, a Reston company that matches employers and workers. "They have very limited visibility into the future and have a great degree of uncertainty, so they just want to sit steady and be conservative in hiring."
Villella and others who work with employers said that for many companies, the pullback in hiring is not a direct result of tightening credit. Rather, firms simply don't know whether their own customers will be affected by the financial crisis; as a result, they want to hold their breath and delay hiring decisions until they have a better sense of the future.
The nation has shed jobs every month this year, but at a slower overall pace than in past economic downturns. The slide accelerated in late summer, with declines similar to those in past recessions. Last month, employers shed 159,000 jobs, the most this year and more than the average number of monthly job losses in the terrible labor markets of 2001 and 2002.
More obscure indicators monitored by economists at the Federal Reserve and in the private sector also show an inflection point in late summer. For example, employers had 214,000 fewer job openings in August than in July, according to a Labor Department report. Over the past year, the number of openings dropped by a more modest average of 74,000 per month.
Indeed, many companies are imposing hiring freezes. Such moves don't often get the kind of headlines that layoffs do, but because they shrink the number of places people can turn to for jobs, they still hurt the economy. VMware, a Palo Alto, Calif., software company, is one firm that has curbed hiring. Earlier this week, after reporting third-quarter earnings that beat Wall Street's expectations, VMware told analysts on a conference call that despite a 32 percent jump in revenue, a "hiring pause" had been imposed for all jobs except critical ones.
"We are just being conservative," VMware spokeswoman Mary Ann Gallo said yesterday.
The nation's unemployment rate was 6.1 percent last month, not astronomical by historical standards. But the rate was up from 5 percent in April, and many forecasters now expect it to hit 7 percent or more by the end of this downturn. The construction and manufacturing sectors have been losing jobs for more than a year. But lately, job losses have begun or accelerated in a wide range of other fields. Retailers, stung by less consumer spending, cut 87,000 jobs in the three months ended in September. Employment services shed 100,000 positions in that span, reflecting the fact that companies are slashing temporary jobs. The leisure and hospitality industry cut 51,000 jobs, as people had less money to stay in hotels and eat in restaurants.
In the greater Los Angeles area, Manpower, one of the nation's largest temp agencies, has noticed a steady increase in job seekers since early September. Paul Holley, a spokesman for the company, said there are more applicants for fewer openings and better-qualified candidates seeking work.
What's particularly noteworthy, Holley said, is what's happening in Phoenix. Job applications have held steady, but since September more applicants have had backgrounds in general labor and warehouse distribution. That's unusual because warehouse and logistics jobs usually hold steady in the fall to support retailing for holiday shopping.
Randstad USA, another large temp agency, reports that job ap-plications are up in the Tucson area and that the firm is even getting inquires from people who still have jobs.
"In general, a lot of people seem to be insecure about their current jobs even if they are still employed," said Emily Cline, Randstad's area vice president for Tucson.
As reports of layoffs continue to pile up around the country, executives at Randstad said they have noticed a shift in psychology among job seekers.
"Employees are much more willing to work extra hours and to take on additional duties to enhance job security and improve their employability," said Eric Buntin, managing director for marketing and operations at Randstad. "In a changing market, they know that's a valuable resource."
They are also willing to make less money, even as the cost of living goes up. Cline said some call center jobs that were paying $9 an hour in the Tucson area last year are now paying $8.50. "Their option becomes to take the job or not have the job," she said.
With workers losing their leverage to negotiate raises, there could be greater downward pressure on wages, which in turn could drive down overall economic growth. Workers are already having a hard time getting raises; inflation-adjusted pay for non-managerial workers fell 1.9 percent in the year ended in September, according to the Labor Department.
Staff writer Michael A. Fletcher in Cleveland contributed to this report.
The Bad News About Your Job
Why the unemployment rate is artificially low.
Daniel Gross
NEWSWEEK
It's hard to overstate the poor numbers coming out of Wall Street in recent months. But could it be that we're overstating the gravity of the situation? As job losses have mounted and consumer confidence has plunged, policymakers, news organizations, econo-pundits, and even some of my NEWSWEEK and Slate colleagues have noted that the unemployment rate, which rose to 6.1 percent in September, seems to be at a nonrecessionary, noncatastrophic, low level. The un-employment rate is still below where it was in 2003; and between
September 1982 and May 1983, the last very deep recession, it topped 10 percent. (Go here for a chart and historical data).
But maybe the employment data are much worse than they seem. In the past year, the two key measures of employment-the unemployment rate and the payroll jobs figure-have been poor but not awful. The unemployment rate has risen from 4.5 percent a year ago to 6.1 percent. And in the first nine months, 760,000 payroll jobs were
lost. This is unwelcome but not catastrophic. So why do things feel so bad? It's not because, as Phil Gramm suggested, we're a nation of whiners. And it's not a matter of columnists and spin doctors shading the numbers to make things look worse.
Rather, these two figures are undermeasuring the weakness in the labor market. By some measures, in fact, the job situation is worse than it has been at any time since 1994.
Here's why. Back in the 1990s, the Bureau of Labor Statistics recognized that in a changing economy, in which outsourcing, self-employment, and contracting were becoming more commonplace, the traditional methods of measuring unemployment and job growth might not accurately portray the economic situation. And it knew its methodology had some quirks-the unemployment rate doesn't account for people who have given up looking for jobs, or who have taken themselves out of the work force. So since 1994, the BLS has been compiling alternative measures of labor underutilization. There are many different varieties of labor underutilization. There are marginally attached workers: "persons who currently are neither working nor looking for work but indicate that they want and areavailable for a job and have looked for work sometime in the recent past."There are discouraged workers, a subset of the marginally attached crowd, who have "given a job-market related reason for not looking currently for a job."
There are people who work part-time because they can't find-or their employer can't provide-full-time work. There are people who have left the work force entirely. Neither the unemployment rate nor the payroll jobs figure captures the plight of many of these folks.
And the alternative labor underutilization measures show a lot of stress. The data on people not in the work force show the number of people not looking for work because they're discouraged about finding jobs has risen from 276,000 in September 2007 to 467,000 in September 2008-up 70 percent. The percentage of people unemployed for more than 15 weeks stood at 2.3 percent in September 2008, up from 1.6percent in September 2007, a rise of nearly 45 percent. But the most troublesome is the U6. The U6 is sort of the summa of job angst, a shorthand tally for the aggregate of job-related frustration. (Moneybox covered some of this terrain back in 2004 .) To compile the U6, the BLS takes the number of unemployed, plus all marginally attached workers, plus all of those employed part-time for economic reasons, and then calculates that total as a percentage of the sum of the entire civilian labor force plus marginally attached workers.
The U6 in September rose to 11 percent, its highest level since the data series started in 1994 and significantly higher than it was in the last recession, in 2001. The ratio between the U6 and the official un-employment rate has remained relatively steady over the last several years. But that means that as the unemployment rate has risen, so too has the portion of the population suffering from other types of work deficits. Three years ago, when the unemployment rate was 5.1 percent, an additional 3.9 percent of the labor force fell into one of those other underutilized categories. Last month, with the un-employment rate at 6.1 percent, an additional 4.9 percent of the labor force was underutilized. (See charts comparing the unemployment rate and the U6 rate.) Add it up, and more than 10 percent of American workers are essentially not contributing full-time to their families' well-being and to that of the economy at large. The unemployment rate may still be historically low, but the underutilization is historically high.
http://www.newsweek.com/id/165219
If you haven't had enough of this mind numbingly bleak recession and jobs drivel, walk yourself over to Mish Shedlock's Lemonade Stand, where he will pour more citrusy-sweet nectar of glee for your amusement. Here's a blurb, a not-too-pretty picture (notice hellashus spike... spike B-A-D...), and a link:...unlike 2001-2003, the bulk of those financial and auto sector job cuts are never coming back. Lehman and Bear Stearns are both out of business, and now that brokers are under direct Fed regulation leverage will be reduced to 10-1 from a current 30-1 or even 50-1. The Auto sector is about to undergo more consolidation and those jobs too will be gone forever when it happens. I expect the reported unemployment numbers to rise to 7.5% to 8% in 2009 and keep rising into 2010. If so, expect credit card losses, foreclosures, bankruptcies, and corporate bond yields to rise. Expect retail sales, corporate profits, and government bond yields to drop.In regards to government bond yields: Yes, I know all about the massive amount of printing taking place. People send me a chart of it every day. Here it is...
http://globaleconomicanalysis.blogspot.com/2008/10/jobs-losses-mount-as-recession-deepens.html
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