Thank God jobs are a “lagging indicator”, right?

Right?

When you look at the U6, make sure you look at the “untampered” (Not Seasonally Adjusted) version as well as the “tampered” (Seasonally Adjusted) version. They “adjusted” the U6 DOWN by .2% when the previous two months they had adjusted the U6 UP by .5%.

Now, I’ll admit that this matches what they’ve done historically, but that doesn’t make it accurate (or right). It’s just a fudging number they use to account for the addition of high school and college summer workers entering the work force during the summer. The thing is, many unemployed folks have already taken the traditional summer jobs so fudging the numbers to make things look more pleasant is uncalled for.

The unadjusted U6 is 16.7%, up from 16.1% last month.

It indicates that many of the people who dropped out of the labor force in June did so because they gave up looking for jobs.

It has been my understanding that the unemployed are tallied via UIB claims, new or ongoing. If not, once one’s unemployment benefit runs out, how are they tracked? Since huge numbers are falling off those rolls without extensions, will they continue to be counted, or will that drop in the numbers be cynically pointed to as justification that unemployment has dropped, and those that ‘gave up’ deserve their fates?

With the increasing number of people in the US without even a HS diploma, what kinds of jobs will be available to them? Assembly line jobs are gone for good. All the former blue collar jobs that did not require much education are gone for good. The Steel mills, the Auto factories where someone who could barely read and write but could make a good living, are gone. Sure there are still auto factories around, but you need a solid education to get a job. I think that my generation was the last one where you could get a good lifetime job with only a HS education.
And yet every year about 30% of the kids who enter HS will drop out. 3 out of 10 will enter the work force every year without even a GED. And do what? Every job that I know of, except one, requires an education.
That 1 job? Stoop labor, or picking crops. And I will guarantee you that americans who drop out of school will never do that kind of job. Because it is hard. I speak from experience, I picked fruit every year from the age of 14 until I went into the AF and when I left the service in 1980 and was unable to get a job I picked fruit again until I found a better job. In what was then a recession I never saw or spoke to anyone who was not a regular migrant picker. Jobs were there but no one would do the work.

The household employment survey is entirely independent from the data on unemployment insurance. In the survey, a scientifically designed sample of households, designed to reflect the population, is called and asked: are they in the labor force, if so, are they employed or unemployed. And a whole bunch of other qs. Here’s a link to the press release, and if you scroll down to the links to the tables beginning with As, you can see what other data are available.

I’m confused. Is the jobs report constructed of smoke or mirrors or both?

That’s funny. I just wrote a post on this topic with that in the title.

http://seminal.firedoglake.com/diary/58008

It is difficult for business to add workers when the current climate in DC is to vilify business and propose all kinds of new ways to make their operations more costly. We are angry at banks, oil companies, insurance companies, developers, coal companies and the like, all of whom employ citizens. Please do not think I am in their corner, but there are always consequences and one of the consequences of bashing business and their profits is that they will not expand the economy at the rates that are required for jobs to return.

The big news is that over 600,000 people gave up looking for work according to government stats. 600,000 people in a single month.

Discouraged workers who are no longer counted in the unemployment stats has tripled in the last year. Does the Obama admin plan on reaching full employment simply by waiting for the unemployed to stop looking for work(and thus fall out of the stats)?

Doesn’t make much difference, customers have empty wallets so why would companies expand? And our big banks are insolvent so who will offer the loans needed for expansion?

Jane has a new post ready: 21 Things You Probably Didn’t Know About Nancy Pelosi’s Fake Budget ‘n Bombs

This month, despite a 190,000 increase in the population, the number of people in the labor force dropped by 652,000.

As I said in my post, this is where the big story is. The employment-population ration is 58.5%. So we could expect an increase of about 111,000 in the size of the workforce this month. Instead we have seen a precipitous decline, almost a million over the last 2 months. The BLS is failing in its analysis because it isn’t tracking the long term unemployed. The unemployment rates, both the U-3 and U-6, are looking better simply because they aren’t looking at the full extent of the problem.

Hey Dave – great to see you posting here.

No. People can’t spend money because they are endebted or are fearful about holding on to their jobs. At the same time, banks are starving small businesses for credit making things even more uncertain. Slamming the crooks in Big Business has very little effect on all this. And if we are to put the economy back on a sound footing, they will have to be dealt with at some point. So the problem with regard to them is not that we are bad mouthing them. It is that that is all we are doing with them.

Once again, capitalists have failed America. The only defense from economic disaster left to us is government spending. We all must be Keynesians now.

I think technology, mechanization, robotics, etc. are replacing many jobs but manufacturing is still a significant force in our economy. Other countries have national industrial/economic policies to help their people and businesses while we do not. We need to come to grips with this, overcome right-wing “free market” ideology and develop our own national strategies. We also need to come to grips with the fact that there is just less work to do because technology is doing more for us,. and restructure our economy to account for this. As long as the benefits of our economy go to fewer and fewer people the problems will only accelerate.

In 45 years in management I never saw or heard of hiring being changed by Washington bashing, or not bashing, business.

Bottom line, and business risk/reward relationships, determine hiring. Currently lower costs from outsourcing is the largest risk – that your competitor will go that route and your doing domestic hiring will not get the transport, quality, and marketing savings of being close to sales point that offset foreign lower wages. There is currently no fear that our corporate controlled Congress will harm those thinking of doing new hiring.

The employment-population ration is 58.5%”

I agree that is the number to focus on.

Clinton had us approaching 67%.

Seems like a long time ago – during Bush we had a large population increase but only 1 million new jobs. Makes one wonder why Clinton economics are not remembered more fondly on FDL. Granted NAFTA followed standard econ theory “lifts all boats” reasoning because Paul Samuelson’s proof that this is wrong had not been written yet – and the left’s concerns about labor and environmental law in low wage countries was ignored – and NAFTA 15 years out was a net zero as to jobs created, with US manufacturing jobs replaced by lower paying non-manufacturing jobs, but 22 million new jobs over 8 years – - 229000 new jobs every month – - would seem like a pleasant memory.

So here you see the benefit to the Rethug/Blue Dog refusal to extend unemployment. By not extending unemployment those people drop off the unemployment listing and THAT means the unemployment numbers improve over what they would otherwise be.

Nice work magically improving the jobs situation without actually DOING anything but kick some po’ folk to cardboard box houses in alleys!

Romer’s being chirpy on Hardball. SHES’S not worried about a double -dip depression. SHE’S happy, she’s got a goddmaned (sic) job

Yes, those are more the true numbers than what makes the headlines. I’ve been trying to think of some way to come up with a roughly accurate number. Something like looking at the 18-65 population participation and subtracting out the number of people incarcerated and in school. Right now I think things are grosslly inaccurate when the numbers now are compared ot Depression numbers because there wasn’t stats then like there are now, so it’s deceptive to hear comparisons of 20% unemployment then versus 10% now. I think for instance there was many people who took low paying temp jobs, which would goose todays unemployment numbers (like what the Census did), but is hardly health employment.

As far as with Clinton being held in low regard, he got rid of Glass-Stegall and in general the Clinton economy was powered by corporatist frauds and bubbles.

corporatist frauds and bubbles -

Well bubbles can be the term applied to every expansion – from WW2, the Military-IndustriaIntel build up of the 50′s, the VietNam War, followed by the no bubble 70′s that had only the two oil price shocks – despite the second one Carter achieved 3% groth albeit with very high inflation from the oil price shock, followed by the military build up under Reagan, then Bush lousy GDP growth, Clinton good growth, and Bush bad growth.

I just don’t know the bubble under Clinton – dot com was not even a major driver of new jobs so its bust is unlikely to be the bubble (Google did not start until 1998) – perhaps generic tech can be called the “bubble” – with the transfer of tech jobs overseas under Bush43 being the busting of the bubble, delayed a few years via the Bush43 housing bubble that was use for the 2004 election.

It is difficult for business to add workers when the current climate in DC is to vilify business and propose all kinds of new ways to make their operations more costly. We are angry at banks, oil companies, insurance companies, developers, coal companies and the like, all of whom employ citizens. Please do not think I am in their corner, but there are always consequences and one of the consequences of bashing business and their profits is that they will not expand the economy at the rates that are required for jobs to return.

Has “Washington” bashed all businesses or just the ones which are trashing America? Has “Washington” done much to really harm the business climate or has it done everything possible to fix the system so it will work properly?

Maybe it’s just that the guilty don’t like being called out in public. Maybe they’re just afraid because Republicans told them there would be a double-dipper. Maybe they feel uncertain about the future.

There are many possibilities and “Washington” ought to ask them face-to-face to clarify the situation.

One big difference between economic expansions pre 1980 vs post 1980: post 1980 the expansions have been based on highly leveraged frauds. The Clinton years were no exception.

The Reagan years were not merely about high military spending, they were also about junk bond kings, leverage buyouts and the Savings&Loan crisis.

The tech expansion became a full blown fraud in Clinton’s 2nd term. Those were the years of the DOT COM IPO’s. Masses of cash were flowing into companies which had absolutely no revenue based business model. This was a huge chaotic misallocation of resources which hurt good tech firms while misdirecting the careers of many tech workers who soon found that thier DOT COM employers had no legitimate future. This was also the era which bred Global Crossing, Enron, Long-Term Capital Management and WorldCom.

As for NAFTA, it’s had horrible long run consequences for both Mexico and the United States but the 1994 GATT treaty was much worse in it’s overall effect.

Financial deregulation, fraud based economics, NAFTA, GATT…. So no, no one should be thrilled with Clinton. The only thing good I’ll say about Clinton is that he spread the wealth around a bit better than Bush and Reagan. Slightly lower income inequality was a good feature of the Clinton years vs the Reagan&Bush years.

I see some post 1980 expansions based on highly leveraged frauds, and other s not – with Clinton’s the “not based primarily on fraud” variation.

While the Reagan years were about high military spending, the junk bond development was a positive for the economy – I wrote a paper I gave Bill French, hean of the NYSE and at the time coming out of Pru as the Chief economist, that showed credit rating differentials in rates were exceedingly excessive – the best approach was buy all B rated bonds and set up loss reserves. It moved Pru down to AA and A purchases but not further. It was not until Milkin’s salesmenship that the rest of the world caught on in the 80′s and good risks with lower ratings could get credit in the US at reasonable rates. That was not a bad thing. The Reagan buddy system with the S&L’s and ignoring the fraud did indeed lead to the Savings&Loan crisis. The leverage buyouts have always been with us – the ability of private banks – hedge funds – to join the game as a bit of democratization from the family trust/hidden billionaire club only rules (in the late 1990′s I was told the count was 13000 families owning 90% of the WORLD’s assets).

The tech expansion did indeed include the crazy DOT COM IPO’s in Clinton’s 2nd term. But that was not a lot of job creation – and was busted before he left office – and we still had 22 million new jobsat that point.

What hurt good tech firms was Microsoft stealing from good tech firms like my sisters – not any new IPOs. Derivative concept in energy was a good idea – but the loophole that allowed ENRON fraud was proposed for closure in 2000 but the GOP protected it and it took until 2008 to close it – we still need better regulation to prevent manipulation. LTC had PHD’s who were not actuaries thinking correlation over a short term was a trade secret that meant million – it was early in Clinton’s term and again 6 years post the LTC collapse we had 22 million new jobs.

As for NAFTA, it’s has had indeed horrible long run consequences for Mexico and the job that replaced the US jobs lost were lower paying. The 1994 GATT treaty was similar standard economics that corporations loved – trade helps all and must not be controlled – Ricardo “proved” this until Samuelson showed it was not always true 6 years post GATT.

There was Financial deregulation, there was fraud based economics, there was NAFTA, and GATT – but folks should be thrilled with Clinton. The dereg – G-S was not the driver of much more than Citi giving Rubin a job – certainly not the driver of the bank crisis except in the minds of Clinton haters. And as you note the slightly lower income inequality was a good feature of the Clinton years vs the Reagan&Bush years was a taste of what could be.

Well, we have had different experiences with the dotcom bubble. Despite having a solid business model and a proven revenue stream, it was difficult to recruite the talent needed to scale up. Too many young engineers with gold fever were sucked into the dotcom mania. And by the end of it, the folks we did get out of university were salty that the party was over. That time period was just one big management headache.

As for the leveraged buyouts, they’ve done a ton of damage to our economy. Primarily since the 1980′s.

And yes, we had a noticeable job increase by the end of the Clinton years. But how much of that was bubble related? How much of it was fueled by people going into credit card debt which they could not afford? Basically, a good chunk of that job growth was going to shrink back away during Bush’s first term unless Bush spent like a mad man. Cheney wasn’t kidding when he said that deficit’s don’t matter, they needed a ton of deficit spending just to keep things alive. They spent the money in rather evil ways but that’s getting off topic.

As for Ricardo, meh, plenty of people have never agreed with him. I could go back as far as Abraham Lincoln’s economic advisor Henry C Carey who made a strong case that Ricardo’s idea’s on trade were absolutely upside down. He made the case that Ricardo’s idea’s on trade enslaved men and nations. Sounds pretty much like where we are headed. And then there’s the WTO protestors throughout the 1990′s, it’s not like the public didn’t think it was a load of crap. Or we could look at Sir James Goldsmith’s warning about GATT on Charlie Rose back in 1994. It’s not like no one knew that Ricardo was wrong till Samuelson proved it to himself. Clinton’s own economic team knew very well what James Goldsmith said because a member of that team(Laura Tyson) was on that very same show debating the issue with Mr Goldsmith.

Anyway, I’m not sure if merely considering Clinton to be less bad(than Bush&Reagan) makes me a Clinton hater but I just do not think his legacy was a positive one.