Gov. Walker's victory dance misses the beat

Last week Governor Walker claimed that Wisconsin was responsible for half the nation’s monthly job growth.

Republican Party politicians and operatives have run with Walker’s numbers, arguing they prove that his program of corporate and investor tax cuts and reduced regulation is working.

Let’s put Walker’s jobs victory dance iin perspective.

Several states; Texas (+32,000), California (+28,800), Michigan (+18,000), Minnesota (+13,200) and Massachusetts (10,400) had more job growth than Wisconsin. 

Using the Bureau of Labor Statistics data Walker touted, Texas was responsible for almost 200% of net job growth in June, California 150%, Michigan 100%, Minnesota 65% and Massachusetts slightly more than 50% .Nor was Wisconsin’s monthly percentage increase among the nation’s largest. Alaska experienced the largest over-the-month percentage increase in employment (+1.7 percent), followed by North Dakota (+1.2 percent), Vermont (+0.9 percent), and South Dakota (+0.8 percent).

In fact, Wisconsin was one of only 9 states that reported statistically significant over-the-month unemployment rate increases in June.

South Carolina experienced the largest increase (+0.5 percentage point), followed by Alabama, Arkansas, and Illinois (+0.3 point each) and Maryland, Montana, North Carolina, Texas, and Wisconsin (+0.2 point each). The unemployment rate did not increase in 41 states.

 Wisconsin lost nearly 171,000 jobs during the Great recession. It has gained back 50,000 over the last year and a half, about 30%.

These numbers illustrate what a useless, misleading and politically motivated statistic Governor Walker and DWD used in claiming half the nation’s job growth.

It is useless, misleading and politically motivated because it creates a distorted perception of the state’s job creation record for overtly political purposes-promoting Walker and his economic program.

More importantly, there is ZERO evidence that Wisconsin’s June job growth has anything to do with anything that Governor Walker or the current legislature has done. Economists recognize that there are lags between the adoption of economic policy, its implementation and the policy’s impact. Given the reality of policy lags, there has simply not been enough time for Walker’s initiatives to have had the impact that the Walker administration claims.

The creation of 9,500 jobs is a positive development. But it hardly justifies the Governor’s jobs victory dance.

Investment banks recover but not American workers!

The nation lost another 85,000 jobs in December.

15.3 million Americans are unemployed, up from 7.7 million when the Great Recession began in December 2007.

The unemployment rate remained at 10% only because 661,000 workers dropped out of the labor market altogether and are no longer considered unemployed. If they had continued looking for work the unemployment rate would be 10.4%

Equally disturbing 40% of the unemployed have been unemployed for two years or more.

There are now 6.4 job seekers for every available job.

If discouraged workers and those working part time who want full time work are included 27 million workers (17.3%) are either unemployed or underemployed, twice as many as when the recession began. While white underemployment has more than doubled over the course of the recession to 14.6%, underemployment is now 24.3% for black workers and 25.1% for Hispanic workers: A staggering one in four minority workers cannot find the amount of work they want.

The high rates of unemployment are effecting those left on the job. Real (inflation adjusted) wages fell by 1.6% last year-the largest drop since 1990. Inflation adjusted pay has now declined in five of the past seven years.

But don't worry. On Friday JPMorgan Chase announced that it earned $11.7 billion last year, $3.3 billion in the last quarter alone. The firm has earmarked a whooping $26.9 billion for employee bonuses. Next week the nation's largest banks such as Goldman Sachs, Bank of America and Citigroup will dole out six, seven and even eight figure bonuses.

The investment banks and bankers have recovered even if the American people have not!

As John Stewart wryly noted: "The only people who have recovered from the financial meltdown are the ones who caused the financial meltdown!"

Losing 11,000 jobs is nothing to cheer about!

Last week the Bureau Labor Statistics reported that the nation lost 11,000 jobs in November.

Most of the coverage was like the of the over the top Milwaukee Journal Sentinel headine which declared: "Optimism returns as unemployment rate dips to 10%."

Not so quick.

As Nobel Prize winning economist Paul Krugman points out:

I don’t think many people grasp just how much job creation we need to climb out of the hole we’re in. You can’t just look at the eight million jobs that America has lost since the recession began, because the nation needs to keep adding jobs — more than 100,000 a month — to keep up with a growing population. And that means that we need really big job gains, month after month, if we want to see America return to anything that feels like full employment.

...we need to add around 18 million jobs over the next five years, or 300,000 jobs a month. This puts last week’s employment report, which showed job losses of “only” 11,000 in November, in perspective. It was basically a terrible report, which was reported as good news only because we’ve been down so long that it looks like up to the financial press.

So if we’re going to have any real good news, someone has to take responsibility for creating a lot of additional jobs. And at this point, that someone almost has to be the Federal Reserve.

I don’t mean to absolve the Obama administration of all responsibility. Clearly, the administration proposed a stimulus package that was too small to begin with and was whittled down further by “centrists” in the Senate. And the measures President Obama proposed earlier this week, while they would create a significant number of additional jobs, fall far short of what the economy needs.

But while economic analysis says that we should have a large second stimulus, the political reality is that the president — faced with total obstruction from Republicans, while receiving only lukewarm support from some in his own party — probably can’t get enough votes in Congress to do more than tinker at the edges of the employment problem.

The Fed, however, can do more.

The entire column is linked.

A jobless recovery is an oxymoron

If you are looking for an economic recovery you can believe in, the October employment report is not for you.

After contracting for a year and a half, the economy grew in the quarter that ended in September, driven largely by federal stimulus. But government spending, as large and as necessary as it has been, has not been enough to revive hiring.

Unemployment surged from 9.8 percent in September to 10.2 percent last month, its highest level since 1983. At the same time, the economy lost 190,000 more jobs. That means employers have eliminated 7.3 million positions since the recession began in December 2007.

As dreadful as they are, the headline numbers understate the severity of the problem. They also obscure an even grimmer fact: Unless there is more government support, it will take several years of robust economic growth — by no means a sure thing — to recoup the jobs that have been lost.

The unemployment rate includes only jobless people who have looked for work in the past four weeks. The underemployment rate — which also includes jobless workers who have not recently looked for work and part-timers who need full-time work — reached 17.5 percent in October. And the long-term unemployment rate — the share of the unemployed population out of work for more than six months — also continues to set records. It is now 35.6 percent.

The official job-loss data also fail to take note of 2.8 million additional jobs needed to absorb new workers who have joined the labor force during the recession. When those missing jobs are added to the official total, the economy comes up short by 10.1 million jobs.

Taken together, the numbers paint this stark picture: At no time in post-World War II America has it been more difficult to find a job, to plan for the future, or — for tens of millions of Americans — to merely get by.

At a recent meeting at the White House to discuss job creation, President Obama said that “bold, innovative action,” would be needed — from the administration, Congress and the private sector — to undo the devastation in the labor market. Americans are waiting for Mr. Obama to lead the way.

There were good ideas floated at the White House meeting, including bolstered federal support for efforts to retrofit and weatherize homes and public buildings. There was also talk of using government money to establishing a so-called infrastructure bank that would issue bonds to help finance big construction projects.

The country also needs a program that would create jobs for teenagers — ages 16 to 19 — whose unemployment rate is currently a record 27.6 percent. Deep and prolonged unemployment among the young is especially worrisome. It means they do not have a chance, and may never get the chance, to acquire needed skills, permanently hobbling their earnings potential.

We know that more stimulus spending and government programs are a fraught topic. But they are exactly what the country needs. It may be the only way to prevent a renewed downturn.

And the only way to create the jobs needed to put Americans back to work. Those are the essential — and missing — ingredients of a sustained recovery.

New York Times, November 8, 2009

Job loss dominates political landscape

On Friday the Department of Labor reported that the unemployment rate had climbed to 10.2%, its highest rate since April 1983.

Nearly 16 million people cannot find work.

The underemployment rate which includes discouraged workers who have given up looking for jobs and those working part-time because they cannot find full time employment hit 17.5%

Economic insecurity and jobs have become the the nation's dominant political issue.

New York Times columnist Charles Blow writes:

This is now Obama’s crisis, and it carries political consequences. During Tuesday’s gubernatorial races in New Jersey and Virginia, nearly 9 in 10 voters said that they were worried about the direction of the nation’s economy in the next year. And the majority of those who held that view voted for the Republican candidates. This could portend a flashback to 1994.

It isn’t President Obama’s fault that he inherited this mess, but it is his to fix, and he must make haste. To paraphrase his Toledo prelection: you need to do it not five years from now, not next year, you need to do it right now. J-O-B-S.

Unemployment soars. Will Madison and DC politicans respond?

In another sign that the Great Recession is far from over, the Bureau of Labor Statistics reported this morning that the nation lost 263,000 jobs last month, far more than predicted. As a result the official unemployment rate increased to 9.8 percent.

The largest job losses were in construction (64,000), manufacturing (51,000), retail trade (39,000) , and government (53,000).

The nation has lost 2.1 million manufacturing jobs and 1.5 million construction jobs since the onset of the recession in December 2007. Unemployment has surged from 7.6 million to 15.1 million, and the unemployment rate has doubled to 9.8 percent.

Unemployment rates for the major worker groups--adult men (10.3 percent),adult women (7.8 percent), teenagers (25.9 percent), whites (9.0 percent),blacks (15.4 percent), and Hispanics (12.7 percent)--are much higher than at the start of the recession.

The actual rate of unemployment is significantly higher than the 9.8% figure. The U-6 rate, which includes discouraged workers (those who have given up looking for work) and the involuntary part time (those who want full time work, but cannot find it) jumped to a Great Depression level 17%.

The number of long-term unemployed (those jobless for 27 weeks and over) rose by 450,000 to 5.4 million. In September, 35.6 percent of unemployed persons were job-less for 27 weeks or more.

In another ominous sign, the Labor Department's reported earlier this week that there there are only 2.4 million full-time permanent jobs available. Yet there are 15.1 million people officially unemployed. That's one job opening for every six people looking for work, the worst ratio since the government began tracking open positions in 2000.

During the last recession in 2001, the number of jobless people reached little more than double the number of full-time job openings. By the beginning of this year, job seekers outnumbered jobs by four-to-one, with the ratio growing ever more lopsided in recent months.

The four county Milwaukee area lost 50,400 jobs over the last twelve month, the largest annual decline since 1967.

Midwest Airlines, Badger Meter, GE Medical, Harley Davidson, GM, Quad Graphics and Delphi have shed thousands of workers. The Department of Labor reports that Wisconsin was one of eight states to reach a record high in average weekly new unemployment claims in August.


The city of Milwaukee has been especially hard hit. The number of employed residents in the city fell by 18,333 between August 2008 and August 2009 in what the UWM Center on Economic Development calls "a stunning decline of 7.03 percent."

This is the largest “over-the-year” employment decline in Milwaukee in any month since the Great Recession officially began in December 2007 and the second worst in the nation. Only perpetually distressed Detroit, the epicenter of the auto industry collapse-- suffered a larger employment decline. African American male unemployment remained at almost 50%.

Milwaukee, like the state and the nation, is mired in an employment crisis. Ivory tower discussions about lagging indicators, the economy's green shoots, and market corrections ring hollow as jobs continue to hemorrhage and lives are uprooted. The unemployed are losing their homes, their health insurance and their hopes..

The employment crisis demands action.

Democrats who claim to care about working people control the levers of power and the public purse in Madison and Washington D C. They certainly didn't create this employment crisis. But they are in charge now.

The federal stimulus plan, the American Recovery and Reinvestment Act of 2009, watered down by Republican demands for less stimulus spending (demand) and more ineffective tax cuts, helped keep the economy from collapsing. It has slowed, but not stopped the loss of jobs, Nor has it revived the economy.

The employment crisis demands decisive action at the state and federal level.

Where is the Obama administration's plan to put people back to work?

Where is the planto provide aid to states and local governments so they don't add to the nation's unemployment rolls by laying off even more people.

Where is the Wisconsin plan for jobs and training?

If policymakers in Washington and Madison don't move quickly to address the employment crisis, they will likely find their own jobs are in danger come November 2010.

539,000 jobs lost in April-furloughs and layoffs undermine stimulus spending

The Bureau of Labor Statistics announced this morning that the nation lost another 539,000 jobs in April increasing the unemployment rate to 8.9%, its highest rate since the early 1980s

It is a reflection of how bad the labor market is that some commentators are interpreting the loss of half a million jobs as a positive development.

The nation has lost 5.7 million jobs since the recession began in December 2007, with most of those coming in the last five months. The figure for March was revised upward Friday to 699,000, from 663,000.

Unemployment rates rose in April for adult men (9.4 percent) and blacks(15.0 percent). The jobless rates for adult women (7.1 percent), teenagers(21.5 percent), whites (8.0 percent), and Hispanics (11.3 percent) were little changed over the month.

In sign of continued labor market weakness, the number of long-term unemployed (those jobless for 27 weeks or more) increased by 498,000 to 3.7 million over the month and has risen by 2.4 million since the start of the recession in December 2007.

The number of persons working part time for economic reasons referred to as involuntary part-time workers was essentially unchanged at 8.9 million; however, the number of such workers has risen by 3.7 million over the past 12 months.

The ranks of discouraged workers (workers who have given up looking for work) rose to 740,000 in April, more than double the 328,000 from a year earlier.

When discouraged workers, those who are part time for economic reasons, and the marginally attached are added to the officially unemployed, the unemployment/underemployment rate soars to 15.8%.

Those who see a silver lining in these numbers point to the decline in the rate of job loss and to the potential impact of federal stimulus dollars that are beginning to wash through the economy.

Losing half a million jobs hardly qualifies as good news. And the federal stimulus package was designed to save or create only 2.5 to 3 million jobs, about half of what the nation has lost since the Great Recession began.

Permanent layoffs like those at Chrysler's Kenosha engine plant and furloughs of state and city employees will undermine the impact of federal stimulus spending in Wisconsin.

Of equal concern - real hourly wages are falling. The economy cannot recovery unless there is increased demand for good and services. While stimulus spending will certainly slow the rate of decline in the next quarter, unless there is an additional stimulus bill it is hard to identify a source of demand that will lead to sustainable growth and an economic recovery.

World unemployment greatest threat to U.S. security

The New York times reports that unemployment is soaring worldwide.

• Worldwide job losses could hit 50 million by the end of 2009


• Even highly skilled, white collar workers are being laid off


• The International Monetary Fund expects global economic growth to reach its lowest point since the Great Depression


• High unemployment rates have already led to protests in Latvia, Chile, Greece, Bulgaria and Finland and strikes in Britain and France.


• The United States Director of Intelligence, Dennis C. Blair, informed Congress that the instability caused by the global recession has become the nation's biggest security threat, outpacing terrorism.

Yet, none of the House Republicans and only three Republican Senators voted for the $787 billion stimulus package designed to stop or at least slow the job loss and stimulate economic growth. And the price of those votes was reducing the size of the package and cutting needed aid to the states and to public schools, two-year colleges and universities.

It's hard to take the Republicans' new found fiscal conservatism seriously since the 2001 tax cuts they enacted cost $1.3 trillion and the preemptive war they unanimously supported is projected to cost $3 trillion, significantly more the stimulus package.

In 2003 anyone who opposed the invasion of Iraq was accused of being unpatriotic.

What does this say about those who voted against the stimulus package now that the greatest threat to U.S. security is rising unemployment?

Extend Unemployment Benefits

The nation lost an additional 20,000 thousand jobs in April.

Most industries shed jobs last month, as has been the case since last November..

Notably, construction losses have spread from residential housing—reflecting the deep weakness in that sector—to non-residential building, which is also now on a consistent downtrend. Since the peak in construction employment in September 2006, the sector has shed almost 460,000 jobs.

Factory employment continues to slide, despite the export-boosting effect of the weaker dollar. In fact, the decline of 43,000 jobs in durable manufacturing (heavy industry) last month was the largest monthly loss since July 2003.

Almost 3 million unemployed workers have exhausted their benefits.

Another 5.2 million are employed part-time because they cannot find full time work, an increase of 850,000 from a year ago.

Wisconsin recorded the 3rd highest number of mass layoffs over the past year. And that was before Harley Davidson, General Motors/Janesville and Midwest Express announced layoffs.

When the original stimulus package was passed, President Bush refused to support extending unemployment benefits because his domestic policy agenda is limited to tax cuts, tax cuts, tax cuts.

Recall Mr. Bush originally campaigned that upper income tax cuts were justified by the nation's projected $5.2 trillion surplus.

When the recession began in March, 2001, shortly after he took office, the diagnosis had changed, but not Dr. Bush's medicine. Again the solution was high end tax cuts. The eventual $1.3 trillion tax cut was arrived at by taking 25% of the projected surplus despite the fact that it was disappearing in a sea of red ink.

As late as May of that year, when gas prices began to rise, President Bush's only solution was, you guessed it, upper income tax cuts.

Now unemployed workers are being held hostage to the President's supply side ideology.

In an editorial today the New York Times writes: "What is needed — now — is for Congress to extend jobless benefits for people who exhaust their initial 26 weeks of payments. Research is unequivocal that bolstered jobless benefits are more effective stimulus than tax rebates. They also have the advantage of being targeted to people in need...

Congress erred by not extending unemployment benefits in last February’s stimulus package. Lawmakers and Mr. Bush now have a second chance to fix that mistake. They must not squander it."

Congress must act now.

Official unemployment rate masks the real rate of unemployment

David Leonhardt, a New York Times economics writer, explains in his column that the official unemployment rate hides the much higher "real" rate of unemployment.

Thirteen percent of prime-age males in the U.S. are not working, a post-World War II high that acts as an anchor on hourly wages and compensation.

"...the average unemployment rate in this decade, just above 5 percent, has been lower than in any decade since the 1960s. Yet the percentage of prime-age men (those 25 to 54 years old) who are not working has been higher than in any decade since World War II. In January, almost 13 percent of prime-age men did not hold a job, up from 11 percent in 1998, 11 percent in 1988, 9 percent in 1978 and just 6 percent in 1968.

Even prime-age women, who flooded into the work force in the 1970s and 1980s, aren’t working at quite the same rate they were when this decade began. About 27 percent of them don’t hold a job today, up from 25 percent in early 2000.

There are only two possible explanations for this bizarre combination of a falling employment rate and a falling unemployment rate. The first is that there has been a big increase in the number of people not working purely by their own choice. You can think of them as the self-unemployed. They include retirees, as well as stay-at-home parents, people caring for aging parents and others doing unpaid work.

If growth in this group were the reason for the confusing statistics, we wouldn’t need to worry. It would be perfectly fair to say that unemployment was historically low.

The second possible explanation — a jump in the number of people who aren’t working, who aren’t actively looking but who would, in fact, like to find a good job — is less comforting. It also appears to be the more accurate explanation.

Various studies have shown that the new nonemployed are not mainly dot-com millionaires or stay-at-home dads. (Men who have dropped out of the labor force actually do less housework on average than working women, according to Harley Frazis and Jay Stewart of the Bureau of Labor Statistics.)

Instead, these nonemployed workers tend to be those who have been left behind by the economic changes of the last generation. Their jobs have been replaced by technology or have gone overseas, and they can no longer find work that pays as well. West Virginia, a mining state, is a great example. It may have a record-low unemployment rate, but it has also had an enormous rise in the number of out-of-work men.

These nonemployed remain a distinct minority of the population. But the growth in their numbers is one reason that overall wage growth has been so weak lately. With such a large pool of people who aren’t employed — but willing to work for the right price — those who do have jobs find themselves with less bargaining power. Since 2003, total compensation, including the value of health insurance and other benefits, has failed to keep pace with inflation for most workers, according to Jared Bernstein of the Economic Policy Institute.

Latest job report indicates need to extend unemployment benefits

The number of jobs in the nation fell last month for the first time in almost five years according to the Labor Department's latest employment report.

17,000 jobs were lost, led by losses in construction, manufacturing, good producing industries and state government.

Today’s report is the clearest signal yet that the economy has entered a recession and that Congress needs to include a temporary extension of unemployment insurance benefits in its fiscal stimulus package.

Averaging over the past three months, payrolls grew by a scant 42,000 jobs per month, compared to 169,000 a month over the comparable period one year ago.

The Labor Department also sharply lowered its estimates for employment in 2007 as a whole.

In November, for example, the government had said 115,000 jobs were created. That number was reduced to 60,000 in the latest report, far short of the 150,000 jobs that are required to absorb new workers entering the workforce.

Long-term unemployment—the share of workers jobless for at least half-a-year—jumped to 18.3%, compared to 16.2% one year ago. At the start of the last recession in March 2001, in contrast, the long-term unemployed made up only 11.1 percent of all unemployed workers.

The number of long-term unemployed is higher today (1.38 million) than it was in March 2002 (1.33 million), when Congress first enacted extended unemployment compensation after the 2001 recession. Unemployment benefits are cut off after 26 weeks in most states.

Another important indicator of slack in the job market was the increase in the share of involuntary part-time workers, a change that is also evident in the increase in the under-employment rate, the BLS's most comprehensive measure of under-utilization. At 9.0% last month, the underemployment rate was at its highest level in over two years and significantly above its year-ago level of 8.3%.

Workers’ salaries have also fallen in the last 12 months. The average hourly wage for rank-and-file workers — about 80 percent of the total work force — rose 3.7 percent since last January, below the pace of inflation.

These developments are a source of concern not only for these families but for the economy as a whole. They are a clear sign that extending unemployment benefits must be part of any fiscal stimulus package.

A temporary extension of unemployment insurance benefits would help the people hardest hit by the weakening economy and would boost the economy with one of the fastest acting and most effective forms of stimulus available. Unlike tax rebates, which can’t begin to go out until mid-May, extended unemployment benefits could start reaching workers and boosting consumption within 30 days.

The Senate has included extending unemployment benefits in its stimulus package. It is important for American workers and the economy that it be included in the final stimulus legislation.