America’s jobs report: Treading water

Sep 2nd 2011, 15:04 by G.I. | WASHINGTON

IT’S hard to imagine a more toxic economic brew than what America had to swallow in August: stock prices plunged, Europe’s debt crisis deepened, Congress took America to the brink of default and Standard & Poor’s responded by cutting its credit rating. It should not surprise anyone that employers decided it was a lousy time to hire.

Even so, this morning’s numbers from the Labour Department were a shock. Non-farm payroll employment was exactly unchanged in August from July, and total employment was revised down by 57,000 over the previous two months.

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Jobs figures: a gentle tailwind

Employment is moving, ever so slowly, in Barack Obama’s direction

Apr 7th 2011 | WASHINGTON, DC | from the print edition

[Greg Ip]

ON APRIL 4th Barack Obama announced, to no one’s surprise, that he would seek a second term in 2012. The timing was auspicious. Three days earlier the job market, a key determinant of his re-election chances, took a turn for the better. On that day the government reported that non-farm payrolls rose a hefty 216,000, or 0.2%, in March, led by manufacturers, hotels, restaurants and temporary staffing agencies. Strapped state and local governments trimmed their payrolls for the fifth month in a row. But private payrolls, a better indicator of the economy’s animal spirits, have posted their biggest two-month advance since 2006, at 470,000.

Meanwhile, the unemployment rate fell to 8.8% from 8.9%. It has now plummeted a full percentage point in four months, a feat unmatched since early 1984 and a fact Mr Obama made sure to point out. No doubt he hopes it augurs for him what it did for Ronald Reagan in 1984. Like Mr Obama, Mr Reagan endured a savage recession early in his first term that crushed his approval ratings and cost his party seats in the mid-terms. But by 1984 job creation was on a roll and Mr Reagan romped to re-election.

The jobs market: Where are the Workers?

Feb 10th 2011 | WASHINGTON, DC | from the print edition

[Greg Ip] WHEN America’s job market isn’t disappointing, it’s perplexing. Take the month of January, when a net figure of just 36,000 non-farm jobs was created. Even by the miserly standards of the current recovery, that was low.

But in the same month the unemployment rate tumbled to a 21-month low of 9% from 9.4% in December. Its drop since November, when it was 9.8%, is the largest over two months since the prosperous days of 1958. Which of these bits of news gives the truer picture?

One reason that America’s jobs figures often send mixed signals is that they are drawn from two separate surveys. In this case, the survey of employer payrolls was almost certainly affected by snowstorms that ravaged much of the east of the country and which economists estimate may have kept 60,000 to 150,000 people away from work.

The survey of households, from which the unemployment rate is derived, tells a far more optimistic story. It finds that employment has surged by 882,000, or 0.6%, in the past two months, after adjusting for new estimates of America’s population. This is more in keeping with other data, such as car sales and GDP, which suggest that the recovery is picking up steam.

Yet for several reasons the fall in unemployment should not be taken as evidence of a job market on a roll.

Skilled immigration: Green-card blues

A backlash against foreign workers dims business hopes for immigration reform

Oct 28th 2010 | WASHINGTON, DC

[Greg Ip] BAD as relations are between business and the Democrats, immigration was supposed to be an exception. On that topic the two have long had a marriage of convenience, with business backing comprehensive reform in order to obtain more skilled foreign workers.

That, at least, was what was meant to happen. In March Chuck Schumer, a Democratic senator, and Lindsey Graham, a Republican, proposed a multi-faceted reform that would toughen border controls and create a path to citizenship for illegal immigrants while granting two longstanding goals of business: automatic green cards (that is, permanent residence) for students who earned advanced degrees in science, technology, engineering or maths in America, and an elimination of country quotas on green cards. The quotas bear no relationship to demand, leaving backlogs of eight to ten years for applicants from China and India. Barack Obama immediately announced his support.

But the proposal never became a bill, much less law. Mr Graham developed cold feet and withdrew his support; he was concerned that the Democrats were moving too quickly, as the economic misery that has turned Americans against foreign trade spread to dislike of foreign workers.

The entire article is linked here.

The economy: It’s all up to the Fed

The Fed will try to force the economy into orbit with more bond purchases

Oct 14th 2010 | Washington, dc

[Greg Ip] ROCKET science may be out of fashion on Wall Street, but it still has a following at the Federal Reserve. All year long officials there have looked for signs that the economy has reached “escape velocity”: growth that is strong enough to bring down unemployment once the propellants of government stimulus and inventory replenishment are spent.

Such signs remain maddeningly elusive.

The entire  article is linked here.

Economics Focus: Hoard instinct

The nature of the recession, not government schemes, may explain why some countries lost so few jobs

Jul 8th 2010

 [Greg Ip] GERMANY’S gross domestic product fell by 4% in the two years to the end of 2009, twice as much as in America. Yet its employment rose by 0.7% while America’s plunged by 5.5% (see left-hand chart). When German politicians contemplate why a gruelling recession produced almost no increase in unemployment, they usually have a one-word answer: Kurzarbeit. “It is only thanks to Kurzarbeit that more jobs were not lost,” Angela Merkel, the chancellor, told Germany’s parliament in November.

Unemployment insurance: Extension deficit disorder

The pros and cons of longer-lasting unemployment benefits

Jun 10th 2010 | WASHINGTON, DC

 

[Greg Ip] FACES seldom fall when employment shows its biggest gain for a decade. But the vast majority of the 431,000 non-farm jobs created in May were temporary hires for the ten-yearly census. Private employment rose a meagre 41,000, an anticlimax after other signs that America’s recovery was gathering steam. True, the unemployment rate dropped to 9.7% from 9.9%, but this was mostly because many job-seekers had given up the hunt and were no longer counted as unemployed. Those still counted as jobless have been so, on average, for a post-war record of 34 weeks.

 

One of a few small mercies was that Congress had allowed them to collect unemployment insurance (UI) payments for much longer than usual. But on June 2nd even that concession expired.

Jobs and businesses: The perils of being small

May 13th 2010 | WASHINGTON, DC
From The Economist print edition

New data confirm that small firms are dragging on the job market

Correction to this article

[Greg Ip] EVEN as they heap scorn on big business, Americans and their congressmen retain a place in their hearts for small business. Which is fortunate, since small business need a little sympathy these days. Their travails, however, go some way towards explaining the puzzling weakness of job creation since the recession ended last year.

America’s economy: Time to rebalance.

A special report on America’s economy

Time to rebalance America’s economy is set to shift away from consumption and debt and towards exports and saving. It will be its biggest transformation in decades, says Greg Ip

Note: This is a nine-part, 14 page report. You can read the entire thing at this blog post or on The Economist’s web site here.

Mar 31st 2010 | From The Economist print edition 

STEVE HILTON remembers months of despair after the collapse of Lehman Brothers in 2008. Customers rushed to the sales offices of Meritage Homes, the property firm Mr Hilton runs, not to buy houses but to cancel contracts they had already signed. “I thought for a moment the world was coming to an end,” he recalls. 

In the following months Mr Hilton stepped up efforts to save his company. He gave up options to buy thousands of lots that the firm had snapped up across Arizona, Florida, Nevada and California during the boom, taking massive losses. He eventually laid off three-quarters of its 2,300 employees. He also had its houses completely redesigned to cut construction cost almost in half: simpler roofs, standardised window sizes, fewer options. Gone were the 12-foot ceilings, sweeping staircases and granite countertops everyone wanted when money was free. Meritage is now catering to the only customers able to get credit: first-time buyers with federally guaranteed loans. It is clawing its way back to health as a leaner, humbler company. 

The same could be said for America. Virtually every industry has shed jobs in the past two years, but those that cater mostly to consumers have suffered most. Employment in residential construction and carmaking is down by almost a third, in retailing and banking by 8%. As the economy recovers, some of those jobs will come back, but many of them will not, because this was no ordinary recession. The bubbly asset prices, ever easier credit and cheap oil that fuelled America’s age of consumerism are not about to return. 

Instead, America’s economy will undergo one of its biggest transformations in decades. This macroeconomic shift from debt and consumption to saving and exports will bring microeconomic changes too: different lifestyles, and different jobs in different places. This special report will describe that transformation, and explain why it will be tricky. 

Obama and the unions: Love of Labour

Oct 29th 2009 | WASHINGTON, DC
From The Economist print edition

Unions are winning again in Washington, but the big fights are still ahead

Getty Images

 

[Greg Ip] THREE years ago, when negotiations with the union representing air-traffic controllers reached an impasse, the administration of George Bush simply imposed a deal that froze salaries, slashed entry-level pay and even set a dress code. Barack Obama, then a senator, sponsored a bill to send the parties to arbitration, without success at the time. As president, Mr Obama ordered talks to resume. In late September, with the help of the arbitrators, the union got its new contract: 3% annual pay increases, higher starting pay and the right, once again, to wear jeans.

Ronald Reagan’s mass firing of illegally striking controllers in 1981 came to signify a turning-point in the fortunes of organised labour, whose share of private-sector workers has fallen to a new low of 7.3% so far this year (see chart). It is tempting to see the controllers’ new deal as marking a turning-point in the other direction.