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Posts Tagged ‘Jobs’

April’s Employment Numbers Miserable, Yet Unemployment Rate Drops

Posted by Steve Markowitz on June 4, 2016

The April jobs report has been released by the US Department of Labor and it is not pretty.  According to CCNMoney, a mere 38,000 jobs were created in the US, the lowest monthly rate in six years. To put this into perspective, in the past two years the monthly increased averaged about 200,000 new jobs and the number required just to keep up with new entrants into the job market is in excess of 200,000 monthly.

Commenting on the job’s number, Curt Long, chief economist at the National Association of Federal Credit Unions, correctly said, “It’s a pretty gloomy report, hard to find a silver lining in this one“.  Contrast this realistic assessment with the Department of Labor’s unemployment number released indicating that the unemployment rate dropped to 4.7%, the lowest level in 9 years.  How does the Labor Department come up with such rubbish?  They merely stop counting those Americans who have given up the job search for lack of success.  Now that’s banjo accounting!

There are many reasons behind the US economy’s poor performance with government being a major factor.  Included in this list is the government’s willingness to create false reports to further its own political and bureaucratic agendas that often in conflict with those of the American people.


Posted in Unemployment | Tagged: , , , | Leave a Comment »

Increasing Minimum Wage Killing Jobs

Posted by Steve Markowitz on May 17, 2016

Discussions relating to raising the minimum wage inevitably include to the issue of “fairness”.  Those in favor of raising it point out that the minimum wage is not a “fair wage”.  Once this emotional claim is made, those who oppose increasing in the minimum wage are pegged as unenlightened and against allowing the lowest wage earners the opportunity to make a reasonable living.  Economic realities tell a different story.

Wendy’s is a large fast food chain with approximately 6,000 restaurants nationwide.  They have historically started employees at the minimum wage.  They recently announced steps to offset the cost increase due to the increased minimum wage and it is not good for workers.

According to Investors Business Daily, Wendy’s is replacing many of its order takers with an automatic kiosk system.  This action should surprise no one with a basic understanding of economics.  Not only does the new minimum wage increase the cost the labor, but with government inflicted artificially low interest rates, the cost of capital has decreased.  This decreases the cost of capital equipment at the same time the new minimum wage will increase the cost the labor.  Wendy’s response to the increased minimum wage will be duplicated by many in the service industry across the Country.

The political elitists who are behind the increased minimum wage will not be negatively impacted by the coming loss of lower paid jobs in America.  Their political positions could even improve with the additional votes they likely will receive from those who believe the increased minimum wage helps the working poor.  Further, with more Americans being unemployed these same political elitists can then offer handouts in exchange for future votes.  It’s a nice, but unholy, gig if you can get it.

There is another group of crony capitalists who will benefit from the increased minimum wage.   Large corporations who do not employee lower paid American workers will benefit by the increased wage pressures placed on upstart competitors who might try to make a better mousetrap.

Posted in economics | Tagged: , , , | Leave a Comment »

MSNBC’s Andrea Mitchell Chastises Obama on Jobs

Posted by Steve Markowitz on October 15, 2014

It seems everyone, including his previous buddies in the mainstream media, is piling on President Obama.  This week MSNBC’s Andrea Mitchell went on the attack during a recent interview with Obama associate and former advisor David Axelrod.  When discussing the jobs picture in the United States, Mitchell said:

“If you look at the Wall Street Journal, the Washington Post, the New York Times, the Financial Times, all the reporting on the job data from Friday, reported that participation rate is at historic lows, decades lows, 59% are involved in the labor force.  That’s just not a sustainable recovery.  We have two Americas, we really do.”

Mitchell is correct that the percentage of the population of working age Americans that are employed is at a 40 year low.  This is in stark contrast with the President recently touting the improved unemployment figure that is now 5.9%.  This contrast not only brings into question the President’s understanding of the current economic situation in the United States, but also the government’s fudging of the unemployment figures to suit its own narrative.  It is no wonder that the American people have lost faith in their government.

Posted in Unemployment | Tagged: , , , , | Leave a Comment »

Low Interest Rate Policies do not Increase Employment

Posted by Steve Markowitz on April 10, 2014

Labor Force Paticipation ChartWilliam Galston wrote an op-ed for the Wall Street Journal titled Soaring Profits but Too Few Jobs that helps demonstrate the failure of governmental economic policies and interventions that have attempted to address the nation’s employment issues.  Galston points out that it has been 57 months since the great recession ended and 32 months since the country’s GDP surpassed previous highs.  However, today fewer Americans have jobs than when the recession began in 2007.  The labor participation chart tells only part of this story.  For example, prior to the recession the average duration of unemployment was 16 weeks.  Today it stands at over double that.

Galston shares other figures that demonstrate how dismal this recovery has been for employment.

  • 60% of jobs lost during the recession occurred for those paid between the $14 and $21 per hour, with only 20% of the losses from jobs paying less than about $14 per hour.  However, the recovery has only created 22% of the new jobs at the $14 and $21 rate, while 58% of the created jobs were at lower rates.
  • Median household income is nearly 4.5% lower today than it was when the recession officially ended.

While the employment figures are anemic, wealth has been created for wealthier Americans.  For example, after tax corporate profits for Q4 2013 increased to an annual amount of $1.9 trillion or over 11% of GDP, a seven decade high.  Meanwhile, total workers’ compensation, wages and benefits, fell to its lowest share of GDP during the same period.

After the Great Recession (meltdown), the government, first under George W. Bush and then Barack Obama, enacted the most massive interventions in the economy since the Great Depression.  These policies included huge bailouts of banks, companies and individuals, as well as historically low interest rates that were justified by promising to keep the economy from dropping into the abyss.  It is not possible to determine whether the economy would have dropped off the cliff without these policies.  However, evidence indicates that they have not benefited the bulk of Americans, but instead increased the income disparity in the country.

Share of Aggragate Income CHartWealthier Americans own a greater percentage of equities.  The government’s interventions have helped increased values with US stocks increasing a whopping 30% during 2013 alone and over 170% since their March 2009 lows. The growing income disparity is clear when charted over time.  This begs the question as to who actually benefited from the governmental interventions.  The evidence clearly points to wealthier Americans.

Banks, some whose policies helped create the 2008 2008, have fared well with the government interventions and Fed policies.  For example, bank equity values have increased by 250% since their 2009 lows.

How do President Obama and his Progressive allies respond the growing economic inequity and failed policies that have helped fuel it?  Incredibly, they advocate of the same policies with still more government interventions.  In addition, the President calls for an increase in the minimum wage from $7.25 to $10.10 per hour.  While this policy is politically expedient, it has a proven track record of failure.

  • Since the first minimum wage of 1938, it has been increased 30 times with the latest one in 2009.  Why should we expect this 31st increase to be any more successful than the previous 30 in curing the growing income disparity?
  • If increasing the minimum wage is a good thing, why stop at $10.10 an hour?  Why not go for $20 an hour?  The answer is obvious.
  • The nonpartisan Congressional Budget Office (CBO) has estimated that President Obama’s proposed minimum wage increase will result in the loss of 500,000 jobs.  It does not take a rocket scientist to understand what income group will be most hurt by these job losses.

In addition to the downward pressure on employment and increased minimum wage will have, the CBO also determined that Obamacare will dampen employment estimating that this program will reduce the working hours for Americans by an equivalent of 2.5 million jobs by 2024.  The CBO basis this conclusion on its belief that people will decrease their incomes in order to be eligible for subsidies under Obamacare.

The interventionist policies of President Obama and the Federal Reserve (Fed) are a continuation of the slippery slope started under the presidency of Franklin Delano Roosevelt during the Great Depression.  While many of FDR’s policies can be justified due to the worldwide depression, they opened the door for more interventions under less dire economic circumstances going forward.  Such interventions increased dramatically during the presidency of Lyndon Johnson and his Great Society programs.  The trend has continued under administrations since for varying reasons (excuses).  The overall effect on the US economy and society demonstrates the consequences of these interventions.

The charting America’s GDP growth during the economic expansions since 1950 shows an unmistakable trend.  There is been continually decreasing recovery rates with the current one being the weakest since World War II.  While government policies are not the only reasons for this trend, they have significant culpability.

GDP Expansions

At the same time GDP growth has been slowing, America’s consumer debt has been expanding, fostered by Governmental policies.  For example, student debt is now larger than overall credit card debt with the included chart showing its dramatic growth.  Governmental policies have promoted this debt growth by not only offering artificially low interest rates, but by also back–stopping the debt for lenders thereby facilitating loans to people who do not have the means to repay them.  In addition, this growing debt has created bubbles within the educational industry, increasing their “profits”.  Finally, the huge debt placed on young people will inhabit that generations economic growth and wealth creation long into the future resulting in still more negative macroeconomic consequences

Student Loans

Governmental policies have also increased overall household debt as indicated in the next chart.  Subsidizing mortgages, low interest rate Fed policies, as well as the government forcing banks to give mortgages to those that cannot repay them to promote progressive social policy, have played a large role in this debt growth.  Absence a bubble in the housing market, those with these mortgages, especially at lower income levels, will have their economic well-being hindered in the future, again causing long-term negative economic consequences.

Household Debt

The low interest rate policies promoted by the Fed have caused other economic distortions including:

  • They have lowered the income on safe investments for people on fixed incomes, especially for older Americans.  This inhibits their spending hurting industries that serve this demographic.
  • Low return on safe investments cajoled people into more risky investments.  When the next downturn occurs, these investors will suffer significantly more losses than under a more normal interest environment.
  • Companies have been able to refinance their debt at artificially low interest rates.  This has given them a short-term boost in profits, which has inflated equity values.  When interest rates return to more normal levels, the negative impact will be amplified.
  • With historically low interest rates, the cost of investing in capital equipment versus the cost of labor has been distorted, offering incentive for companies to invest in capital equipment for efficiencies before adding jobs.

The Right often blames Democrats for the overuse of debt and economic interventions in the economy.  While correct to appoint, it is a distortion.  Both political parties have been responsible handing out “goodies” to their political constituents financed by debt in the desire to maintain power.  Politicians do not get elected by sharing difficult news or promoting policies that could include pain for voters.  Instead, they promise pain-free solutions that only kick the can down the road.  This reality means that the markets will ultimately have to be the mechanism for corrective action.  While this has always been the case, the amount of pain involved with such corrections is amplified by distortions in the law of supply and demand caused by the interventions.

Posted in economics | Tagged: , , , , , , , , , , , | Leave a Comment »

Joe Biden Calls Job Losses from Obamacare’s a Good Thing

Posted by Steve Markowitz on March 2, 2014

The Congressional Budget Office (CBO) released a report last week estimating that Obamacare (Affordable Healthcare Act) will result in approximately 2,000,000 jobs lost in the United States.  VP Joe Biden recently on The View was asked about this consequence of the Act and his incredible answer was: “Look, this is a really good report.”  Yikes!

In justifying his response, Biden turned the discussion into a gender warfare issue indicating that women, who currently need to work to have healthcare coverage, will no longer need to do so.  That will supposedly allow them, to spend more time with their children.

For years those with basic economic understanding and common sense have expressed concern about the slippery slope that entitlements take the country.  As more sugar is handed out by the government, motivation to work decreases along with the structural unemployment.  Liberals have historically argued against this rationale, ignoring basic factors of human nature and greed.  Leave it to Joe Biden to finally speak the truth about these governmental programs and their actual intent; make people dependent on government.

Posted in Joe Biden, Obamacare | Tagged: , , , , , | Leave a Comment »

Congresswoman Maxine Waters Claims 170 Million Jobs Will Be Lost Through Sequestration

Posted by Steve Markowitz on March 2, 2013

Congresswoman Maxine Waters, Democrat from California, spoke for a group of congressional women on sequestration.  It was a sad example of just how ignorant our Washington politicians are.

Typical of the Left’s sky is falling claims concerning sequestration, she ran off a litany of negative consequences, especially focused on women, single mothers and the poor.  For this group, she said: “All of the gains we have made will be lost through sequestration.”  Well Ms. Waters, given the sad plight single mothers and the poor in this country, with friends like you who needs enemies.

In a demonstration of Ms. Waters’ ignorance and how bogus the Left’s claims are she said in the video below: “If sequestration takes place, that’s going to be a great setback.  We don’t need to be having something like sequestration that’s going to cause these job losses — over 170 million jobs that could be lost”.  This is a remarkable claim given that there are only about 130 million working people in the United States.  Even scarier, Waters is the ranking Democrat on the House Financial Services Committee.  Just imagine if Sarah Palin or any woman on the Right had made such a stupid statement.

Sequestration involves only $85 billion in cuts for a federal budget that is over $3 trillion.  Give such a trivial requirement to anyone who has run a business and the problem would be resolved in a matter of hours.  The fact that in over a year the government has not been able to reach a resolution is proof of just how dysfunctional it is.  Given their inability to govern, radical actions to attack Washington’s spending problem including sequestration are required.

Posted in Politics | Tagged: , , , , | Leave a Comment »

Economic Reality Check for Younger Americans

Posted by Steve Markowitz on September 2, 2012

Most Americans do not require more economic data to realize the economy is weak five years after the economic meltdown.  At the same time certain granular data offers a broader context for of the long-term implications of the economy’s challenges.

Economists John Mauldin posted an article titled Boomers are Breaking the Deal that offers interesting data on how different segments of society had been affected by the downturn.

  • According to the Associated Press 54% of bachelor degreed Americans under the age of 25 are either unemployed or underemployed.  It is also projected that by 2020 that the majority of largest job opening occupations will not require college degrees.  This will be caused by ongoing computerization that is eliminating the need for highly trained professionals in many jobs.
  • While President Obama promotes class warfare, the real growth in societal inequities is age-based.  The Baby Boomer generation is taking a greater share of wealth through entitlements like Social Security and Medicare.  They now also take a greater bite of the job market.  The chart below shows the employment level of those 55 years and older since 2007, which has continued to rise at a steady pace.  At the same time, the total employed in the United States has dropped by 4 million, as indicated by the red line showing that Baby Boomers are taking a larger percentage of available jobs.
  • As of June, 2012, the total civilian labor force in the United States was 155 million with 111 million being in the private workforce.  There are approximately 56,000,000 Americans either on Social Security or disability benefits equaling a staggering 50% of the private workforce.
  • One in eight households receive food stamps and over 50% a government check of some form.  It doesn’t take a PhD in economics to understand this trend is a train wreck.

While the above are unsustainable, they continue only because of United States ability to borrow and print money.  Believing that this Ponzi scheme can continue is akin to believing in alchemy.

It is remarkable that younger Americans have failed to understand the implications of the massive entitlements going to Baby Boomers.  The government uses handouts, such as subsidized college loans, to keep mollify them.  This sleight-of-hand is running out of steam as young Americans find it increasingly difficult to find jobs.  When they wake up to reality of their plight they will become a powerful political force that will likely be adversarial to the interests of the Baby Boomers.

Posted in Baby Boomers, Entitlements | Tagged: , , , , , | Leave a Comment »

$9 Billion of ‘Stimulus’ Funds Blown on Green Energy Projects

Posted by Steve Markowitz on June 26, 2012

CNSNews.com reported on one boondoggle that came from President Obama’s Stimulus spending program.  According to the article that analyzed statistics from the US Department of Energy’s National Renewable Energy Laboratory, $9 billion of the Stimulus funds were spent on solar and wind projects from 2009 through 2011.

The Stimulus spending program was falsely promoted to the American people as a jobs bill meant to offset the negative effects on the economy of the recession.  In fact, as the green energy spending demonstrates, it was really used as a program to give the President and Democratic Congress the authority to spend money on pet projects.  As a jobs bill the Stimulus program was a failure.

According to the CNSNews.com report, the $9 billion of Stimulus spending on green energy projects created only 910 direct jobs.  In addition, the spending created 4,600 indirect and temporary jobs for building infrastructure and similar items.  Dividing the $9 billion by the 5,510total jobs created results in a cost per job of just over $1.6 million.  Not impressive especially since green energy is not economically viable.

President Obama’s response to the above?  Incredibly he proposes even more spending on similar boondoggles.  Yikes.

Posted in Government Waste, Stimulus Package | Tagged: , , | 1 Comment »

Employment Numbers Dismal

Posted by Steve Markowitz on June 1, 2012

The US Labor Department released the May jobs report and it was ugly.  While economists expected about 150,000 jobs to be created in the month, nonfarm jobs grew by only 69,000 pushing the unemployment rate up from 8.1% to 8.2%.  While only a small percentage, this was the first uptick in a year.

In addition, the government revised downward the non-farm payrolls for March by 11,000 and April by 38,000 jobs.  It is evident that the government is having difficulty maintaining the ginned-up figures of the past.

The latest employment numbers are yet another indication that the government’s policy of stimulus, bailouts and interventions have failed.  Governments cannot and do not create long-term jobs or economic growth.  Starting with the Bush Administration and redoubled by President Obama, all that has been accomplished is the creation of significantly more public debt.  But this will not stop the Progressives in Washington from trying more of the same failed policies.  Expect the President suggests more stimulus spending and the Fed to offer more Quantitative Easing, i.e. print money.  Sooner or later even these incompetent knuckleheads will succeed in creating inflation.

Posted in Unemployment | Tagged: , , , , , | 1 Comment »

Employment Figures are Disappointing

Posted by Steve Markowitz on April 6, 2012

The US Labor Department released the Country’s March employment figures, which were not encouraging.  While 120,000 jobs were added during the month, that was only about half of the number of jobs added in February and the first time since November of last year that less than 200,000 jobs were added.

While the Country’s unemployment rate dropped one tenth of a percent to 8.2%, this was merely due to the shrinking total US workforce.  While the population of the United States continues to grow, the geniuses in Washington do not count those Americans that are out of work so long that they stop looking for a job.  That type of accounting would make Bernie Madoff proud.

The government’s “fixing” of the employment numbers has been the subject of this Blog’s postings in the past including one on December 3, 2011 titled Unemployment Numbers Don’t Add Up.  These fake numbers serve no purpose other than to create make-work for government workers and to be used by politicians to further political goals.  They are presented to the People monthly only because the mainstream media and the public at large allows this sleight-of-hand to continue.

Posted in economy, Government Ineptness | Tagged: , , , , | 1 Comment »