Monday, September 3, 2012

A Few Labor Day Questions for the President ... How's the Middle Class Doing and How Are the "Good" New Jobs Coming?

This year's Labor Day celebration wasn't a happy one for approximately 23 million people who are currently unemployed or underemployed.

Friday we'll get the employment numbers for the month of August, and they are not expected to create many smiling faces either.

At 8.3% unemployment and with an expected new jobs created number of roughly 125,000 for the month, we're not making any progress whatsoever.

Five Questions About Today's Job Market has the forecast details:

"Q: How are America’s workers doing?

Not good. Over the past decade, over the ups and downs of the economy, taking inflation into account, the compensation of the typical worker — wages and benefits — basically haven’t risen at all. And, more recently, even though the economy has been growing for more than two years, workers still haven’t recovered from the deep recession. The Labor Department recently said that 6.1 million workers in 2009-2011 have lost jobs that they’d had for at least three years. Of those, 45% hadn’t found work as of January 2012. And of those who had found full-time jobs, half had settled for lower wages, a third for wages 20% or more below their old ones.

Federal Reserve Chairman Ben Bernanke said Friday that unemployment is still two percentage points higher than normal — that works out to 3 million workers. “The stagnation of the labor market in particular is a grave concern not only because of the enormous suffering and waste of human talent it entails, but also because persistently high levels of unemployment will wreak structural damage on our economy that could last for many years,” he said at the Fed’s Jackson Hole, Wyo., conference.

Q: What will we learn when the government gives its snapshot of the August job market?

The report for July was a bit encouraging: 163,000 jobs were added. On Friday, the Labor Department revises that number, and tells us how many jobs were added in August. If the July number holds and the August tally comes close to July, that would suggest the pace of hiring is finally picking up. Unfortunately, the analysts who predict these numbers — with varying accuracy — don’t expect that. They say manufacturing probably didn’t add as many jobs in August as it did in July, that state and local governments are still paring payments and that the sectors where hiring has been strong — like health care — aren't growing fast enough to pick up the slack.

Q: Things ARE getting better, though. The U.S. economy is creating jobs, right?

Yes, better but not good. Here’s one way to look at it. Back in December 2007 when the recession began, there were about two jobless workers for every job opening. When the economy touched bottom in mid-2009, there were more than six unemployed for every job. At last count, the BLS says there were 3.4 jobless for every opening. The economy is growing and employers are hiring, but not enough to bring unemployment down from the still very high 8.3%.

Q: How much of this elevated unemployment is because the unemployed just don’t have the skills that employers are looking for right now?

Some. One does hear manufacturers and others complain that they can’t fill openings — at least not at the wages they’re offering. A recent Brookings Institution city-by-city look at job openings found that openings tended to demand more education than the local population has — and that unemployment was higher in metro areas where that gap was larger.

But the bulk of the evidence is a lot of the unemployment really is the old-fashioned kind: the kind that would go away if the economy was growing at a stronger pace. Mr. Bernanke said as much at the Jackson Hole conference and so did Ed Lazear, a Stanford University labor economist who was one of George W. Bush’s economic advisers.

Calculations by New York Federal Reserve economists suggest that at most, one-third of the increase in unemployment can be pinned on this so-called skills mismatch.

Q: To the extent that there is hiring, what kind of jobs ARE being filled?

As we reported in July, before, during and after the recession, demand for one sort of worker has been persistently stronger: personal-servce jobs that involve assisting or caring for other people — from waiters to home-health aides.

These are jobs that aren’t easily automated or outsourced abroad. There’s not yet a robot that can cut hair or hold the hand of an elderly woman with Alzheimer’s or do all the chores that flight attendants do. Demand of the most skilled and educated — from engineers to specialized factory workers — has been relatively strong. Globalization and technology have eroded demand for routine middle-skill, middle-wage jobs: In factories, assembly jobs have been eliminated by automation or moved overseas; in offices, tasks once done by humans are done by computers and voice-response software.

But there’s been a lot of hiring for these personal service jobs. For instance, the Bureau of Labor Statistics says, 545,000 jobs have been added in the past two years in what it quaintly calls “food services and drinking places.” That is about 30% of the net increase in employment (1.84 million) between July 2010 and July 2012."

Summing Up

Thus, it looks like more of the same when the employment report for August is issued Friday morning. And in future months as well.

The President's answer to our economic ills seems to be raising taxes on the rich. I wish he'd explain how doing that will help create jobs for the American people.

I also wish he'd explain why building the Keystone XL pipeline and aggressively drilling for oil wouldn't create any jobs for the American people.

Finally, perhaps the President can tell us why Mitt Romney's proposal to reduce taxes by 20% across the board and allow us to keep more MOM is a bad idea for economic growth.

But my "sure bet" is that he won't attempt to answer any of these questions.

Instead he'll just tell us that he's doing everything possible to help save the middle class. Really?

Thanks. Bob.

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