THE EMPLOYMENT SITUATION - APRIL 2012

The number of long-term unemployed (those jobless for 27 weeks and over) was little changed at 5.1 million in April. These individuals made up 41.3 percent of the unemployed. Over the year, the number of long-term unemployed has fallen by 759,000.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged in April at 7.9 million. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

Among the marginally attached, there were 968,000 discouraged workers in April, about the same as a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.4 million persons marginally attached to the labor force in April had not searched for work in the four weeks preceding the survey for reasons such as school attendance or family responsibilities.

http://www.bls.gov/news.release/pdf/empsit.pdf

U.S. unemployment eases amid tepid job growth

On May 4, 2012 Mark Harden, New Media Editor, Denver Business Journal, commented on April 2012’s unemployment.

The U.S. economy added 115,000 payroll jobs in April, fewer than many economists had expected, and unemployment eased a notch to 8.1 percent, the U.S. Labor Department. The jobless rate was 8.2 percent in March. The pace of U.S. payroll job growth in April was much slower than the average monthly gain of 252,000 jobs seen in January and February. Job gains in March and April have averaged 134,500 a month, according to a broad government poll of employers known as the establishment survey.

Also worrying were the results of the separate household survey -- the poll used to calculate the unemployment rate. It showed that overall U.S. employment fell by 169,000 in April from March. The household survey counts job categories that the establishment survey leaves out, like the self employed and farm workers.

The report had some analysts warning that the nation may be in the same slowdown in new hiring that it saw last spring and summer after a more robust winter. 

"At its best, job creation is falling well short of what is needed to make a substantial dent in unemployment," said John Challenger, CEO of outplacement firm Challenger, Gray & Christmas Inc. "While some would like to attribute the lack of hiring to uncertainty and regulatory roadblocks, the fact is that demand for goods and services simply has not reached a level that warrants accelerated hiring."

The household survey showed that there are 12.5 million unemployed Americans -- defined by the government as jobless people who say they are actively seeking work. Of that number, 5.1 million have been without work for 27 weeks or more. Another 7.9 million people are working part time because they can't find full-time jobs, and 2.4 million are "marginally attached to the labor force," meaning they lack jobs and have looked for one in the past year, but not in the last month.

http://www.bizjournals.com/denver/news/2012/05/04/us-unemployment-eases-amid-tepid-job.html?ana=e_pft

Slower consumer spending may reflect anxiety over pay. Modest gain after robust 1st quarter

American increased their spending more slowly in March, suggesting some are worried their paychecks aren't growing quickly enough. Consumer spending increased .3% in March.

Real incomes need to grow at a faster rate to prevent consumption growth from slowing down. The overall economy grew at an annual rate of 2.2% in the January-March quarter, down 3% from the October-December 2011 period. The weakness reflected government budget-cutting and weaker business investment.

Martin Crutsinger, Associated Press, The Boston Globe, May 1, 2012

Polarized job market hurting those in the middle, study says.

American at the top and the bottom of the income scale are benefiting from the jobs recovery, while those in the middle are being left behind. Professions in the middle, such as financial services and specialty construction, aren’t faring well since the jobs recovery began in February 2010.

Such a shortfall helps explain why income levels have yet to return to levels seen before the recession began and why consumer spending over the past two years has grown at the slowest pace in the post-World War II era. It also suggests a pool of unemployed American will prevent wage increases from fueling inflation. It is hard to imagine how we can have a self-sustaining economic recovery when you’re not creating jobs for the middle.

Alex Kowalski, The Boston Globe, April 12, 2012

What recession?

Contradictions abound.
Google Images

http://ieatmediaforbreakfast.blogspot.com/2011_08_01_archive.html

More Contradictory headlines

Weighty Pay Scales: The stock market is improving. Corporate profits are up dramatically. But workers’ wages don’t seem to be rising, a study finds vs. CEO compensation continued on an upward trajectory in ’11

Workers’ salaries and wages are generally stagnant mid high unemployment – even while the economy slowly generates new jobs, stock markets rebound, average worker productivity increases and corporate profits soar.

The biggest pay packages seem to keep getting bigger at major US public companies. Timothy Cook, CEO of Apple Inc. earned $378 million in total compensation in 2011. The package is a dramatic illustration of how CEO pay continues to edge upward as the stock market soars and the economy regains it footing.

Nearly 90% of the economy’s real income growth during the current recovery has gone into corporate profits, after companies slashed payrolls, kept wages down, and squeezed productivity out of existing employees. The average American worker has gotten virtually nothing in their paychecks from this recovery, even though jobs are slowly coming back and profits are up.

Corporate profits have increased 93% before taxes from the fourth quarter of 2008 through the fourth quarter of 2011. The Dow Jones Average has risen by 35%. But mean wages have risen only .4% over the past three years and weekly wages have actually fallen by .1%.

Jay Fitzgerald and Todd Wallack, The Boston Globe, April 8, 2012

Boston Fed chief says economy improving

Eric S. Rosengren, president of the Federal Reserve Bank of Boston, state the nation’s economic recovery is moving forward, but not so fast the Federal Reserve should abandon policies aimed at stimulating growth.

Positive economic signs: strong stock market performance; a falling unemployment rate; and job gains.

Negative economic signs: consumer spending remains subdued; weak housing market; cutbacks in state and local government spending; and the European debt crisis.

The U.S. economy will grow at 2.5% in 2012, a pace that will only modestly lower the national unemployment rate. Nearly 14 million Americans remain unemployed. There is a need to continue using Fed policies to bolster the nation’s economic recovery or risk a backslide.

Erin Ailworth, The Boston Globe, March 2, 2012

Recession is over?

Contradictory headlines

Profits up at health insurers vs. More Mass. Homes face foreclosure in Jan. vs. Signs point to bumps in the recovery

Capitalizing on fewer people seeking medical care and submitting claims, Massachusetts four biggest commercial health insurers posted sharply higher earnings for 2011 while their executives collected more pay. Leading the pack was Blue Cross Blue Shield of Massachusetts which earned a net income more than 10 times the $13.4 million it earned in 2010.

In January, 1,333 homeowners, or 68% more than during January 2011, received notice from lenders that were going into foreclosure. The rise in foreclosures comes despite a drop in the number of delinquent mortgages and a slowly improving economy. “There’s still no real remedy for the fact that a lot of people have lost income and don’t have the means to keep up, lenders really doesn’t want to help.”

Steady declines in applications for unemployment aid, American’s after-tax income fell, a fourth straight month of weak consumer spending, manufacturing growth slowed, construction spending dipped, consumers hit with higher gas prices and the building industry cooled off after five months of gains.

Three articles from The Boston Globe, March 2, 2012

Income for elderly falls short, study finds. Massachusetts seniors face the largest gap in the U. S.

The elderly in Massachusetts struggle with the nation’s largest shortfall between income and costs, with the age group’s median income covering only about 60% of basic living expenses. Five of the six New England states were represented in the top ten in a joint study for the Wider Opportunities for Women and University of Massachusetts.

 The study aims to underscore the importance of entitlement programs – Social Security and Medicare – that support the elderly and face potential cuts as Congress grapples with long-term deficits.

Gail Waterhouse, The Boston Globe, March 1, 2012

Mass Underemployment

Hidden behind Massachusetts’s relatively good unemployment rate of 6.8%, economists say underemployment is a big problem. One analysis finds Massachusetts is the worst in the nation, with 8.9% of currently employed people with bachelor degrees or higher now working in jobs at least one educational level below where they should be.

A non-scientific poll of 995 people in Massachusetts confirmed that 40% of workers over 50 years old were not working at their peak capacity.

Don Seiffert, Boston Business Journal, February 24 – March 1, 2012

Can you find the missing workers?

Chicago, view from the Hancock Tower

Missing: 5.4 million workers

Millions of Americans vanished from the U.S. labor force in the past three years, many of them do discouraged by long, fruitless job searches that thy have given up looking for work, convinced that no employer wants them.

The “hidden unemployed” are not counted in the official jobless rate, tracked by the Center for Labor Market Studies at Northeastern University. They estimate the number to be 5.4 million people, with over 120,000 in Massachusetts. Half of the missing workers are under the age of 35.

Among the missing are teenagers and laid off 60-year-olds. Some are in college or training programs. Many have ended up homeless. Although the official unemployment rate slipped to 8.3% in January, when the labor force dropouts and the underemployed – those working part-time because they can’t find full-time jobs – are included, the rate doubles to 17%.

Katie Johnston, The Boston Globe, February 1, 2012

Confidence retreats in January

Consumer confidence fell in January after two straight months of gains as Americans become more worried about their incomes, rising gas prices, how hard it is to find a job, and overall business conditions. Things haven’t gotten much better in 2012. 

Americans have reasons to be cautious in their optimism as the jobless rate is still high at 8.5% although it is at the lowest level in nearly three years. Consumers are worried about a weak housing market, inflation and that incomes are not keeping pace with inflation, causing shoppers cut back on big purchases. 

Associated Press, The Boston Globe, February 1, 2012

Nearly one-third of middle class suffer downward mobility

Tami Luhby of CNNMoney.com wrote in January 12, 2012:

Nearly one third of Americans who were raised in the middle class dropped down the economic ladder as adults -- and that's before the Great Recession hit. Pew looked at children born in the early- to mid-1960s and assessed their economic status roughly 40 years later.

Being middle class in the parents' generation meant a household income of roughly $33,000 to $64,000 in 1979. But their children had to earn between $54,000 and $111,000 to maintain their relative standing in society in the mid-2000s. (These figures are adjusted for inflation.)

The middle class is defined as those between the 30th and 70th income percentile.

Things have only gotten worse in recent years. The Great Recession has likely made it harder for many people to remain in the middle class, experts said.

Long-term unemployment has devastated the ranks of the middle class, with many people losing their homes and forced to turn to food banks and government aid after they run through their savings. It takes nearly 41 weeks, on average, for the jobless to find new work. Also, the steep decline in home values has hurt many in the middle class.

Young adults may find it particularly difficult to hold onto their parents' middle class status. That's because they are having a much harder time landing jobs, particularly well-paying positions in their field. The unemployment rate for 20- to 24-year-olds was 14.4% in December, compared to the national 8.5% rate.

This could hurt their earning potential for decades to come, which has earned them the nickname "The Lost Generation."

http://money.cnn.com/2012/01/11/news/economy/middle_class_mobility/index.htm

Where is the American Dream today?

On November 16, 2011, Tiziana Dearing, CEO of Boston Rising, questions whether or not the American Dream is still alive.

Post-recovery is taking longer than the past. From 1945 to 1990 it took on average six months for jobs to return to their pre-recession levels. In the recession of the early 1990s, it took fifteen months. In the early 2000s, it took 39 months. Today we are on track for jobs to come back 60 months (five years) after the economy has recovered.

According to the Brookings Institute, the poor in the U.S. grew to an historic high of 46.2 million, and in extreme-poverty neighborhoods, where at least 40% of individuals live below the poverty line, the population rose by one-third from 2000 to 2005-09. The American Dream is receding. Americans are no longer dreaming the same Dream.

http://www.huffingtonpost.com/tiziana-dearing/us-wealth-gap_b_1093582.html

Amid unemployment and inequality, is the American Dream at risk?

On October 26, 2011, Zachary Ross, The Lookout, wrote about the economic results of the Great Recession on the Future of the American Dream. Zachary writes:

For well over a century, the American Dream has acted as a beacon of hope to people around the world: the notion that by working hard and playing by the rules, anyone can build a secure, comfortable life for themselves and a bright future for their kids. But as the country struggles to shake off the Great Recession, amid persistent joblessness and growing inequality, is that idea at risk?

In May, a Pew poll found that just 47 percent of Americans think their kids will enjoy a higher standard of living as adults than they themselves do. As recently as 2009--the height of the economic downturn--that number was 62 percent.

This growing pessimism isn't hard to explain. Fourteen million Americans are officially unemployed, and the number spikes to around 26 million if you count people who have grown discouraged and given up looking for work. The average duration of joblessness is now at a record nine months. Meanwhile, GDP growth has been limping along since the official end of the recession over two years ago.

The young have been especially hard hit. Unemployment for Americans in their 20s has skyrocketed in recent years. And a growing number are moving in with their parents as they struggle to make ends meet.

At the same time, Americans have also been debating the thorny question of inequality--an issue spotlighted lately by the Occupy movement. A CBO report released Tuesday--just the latest in a series of studies to confirm the massive rich-poor gap--found that income for the wealthiest one percent of Americans had exploded since 1979, by a whopping 275 percent. Meanwhile, income for the poorest 20 percent grew by just 18 percent in the same period.

But the heart of the American Dream has always been about mobility. As long as people feel they have a fair shot at building a better life, they've usually been able to put up with periods of economic turmoil, even with relatively high levels of inequality.

Of course, concerns about the flickering of the American Dream are hardly new. Back in the recession of the early 90s, Generation Xers graduating from college were told they'd struggle to do better than their parents had--a prediction that wasn't borne out.

But this time may be different. Economists say that even once growth gets back to normal--whenever that may be--employment will likely come back lower than we've grown used to, thanks in part to increasing offshoring of jobs and automation. And our political system appears even more dysfunctional than it did even back then.

"It's time to reclaim the American Dream," then-Sen. Barack Obama declared back in 2007. At this point, it looks like we've got a long way to go.

http://news.yahoo.com/blogs/lookout/amid-unemployment-inequality-american-dream-risk-200141836.html

2011 - 2012

It’s been awhile since I updated the latest economic news. The Great Recession ended over two years ago, yet the economy is only slowly coming back. Let’s look at a few headlines and stories.

Scituate Harbor in winter

Mister Kitty Stretches

What is some advice for the younger generations?

Plan for the long run. Save money while you are young. Teach yourself the discipline to save 5% of your salary toward the long term. You may think your earnings will continue on an upwards trend. In reality, your earning potential will peak and begin to decline after you turn 45, unless you are really fortunate.

Use more technology and be current in your skills. Constantly update your skills – don’t wait for a job or your boss to plan your professional development or update your skills. Stay current and learn new things.

Make the effort to connect with people regularly and have conversations in your chosen career and industry, and also in other industries where you have interests. Keep building your network. Leverage social media through LinkedIn, Facebook and Twitter.  

Create a new American Dream for yourself. Recessions and depressions will happen again. It’s very cyclical. Look at the other decades. Life is important, build relationships where people reach out and really help each other. Stay in touch with your network. Pay it forward and help someone.

Count on the need for a rainy day fund and build one. Be careful with spending frivolously and understand financial risks. Don’t want too much “stuff” and don’t overspend your lifestyle.

And remember, your identity is not your job, your identity is you.

How will we view our career, retirement and professional development post-Great Recession?

There is no fast money. You need to chart your own career. There is a long-term impact to your decisions. Understand the long-term fit and chart how your career progresses. Don’t wait for someone else to build your career.

In J’s case, retirement is ten years away. There is no financial security to carry through his retirement years. He needs to build a new nest egg since he spent most of his long-term savings on survival and conducting an extended job search. Even with retirement in ten years, J has no desire to stay at home. He’ll continue working part-time to use his brain power.

It’s now about personal brand image vs. company loyalty. It’s what we offer the company vs. what they offer us. With the significant economic impact of the Great Recession and many companies downsizing, we need to focus on “my brand” and think of it first. With current technology, you can find out about people instantaneously. There are serious ramifications to your self-image, and you need to mange that image.

You need to stay loyal to yourself, not your company, and have an ongoing and continuous job search. Watch the signals for job changing needs and planned staff reductions. It can happen to you at any time. Define yourself, your personal skill set, and work for yourself vs. the institution.

Continue to redefine yourself. We all need to work until 80 now, not 65. Can we afford to dream? Dreams we had at the start of our career have disappeared.