Employment:

The Unemployment rate remained the same in February at 9.7% from 10.0% in December.   

Nonfarm payroll employment held nearly level (-36,000) in February on the heels of a minor drop in January (-26,000 [revised]).  This followed a big drop in December (-109,000 [revised]), and a boost to prepare for the holiday season in November (+64,000 [revised]). 

The December drop could substantially be the result of seasonal employees let go by retailers.  Previous month changes were October (-224,000 [revised]), September (-225,000 [revised]), August (-211,000 [revised]), July (-344,000 [revised]), June (-504,000), and May (-347,000).  

The quarterly average nonfarm payroll job layoff figures have been improving steadily over the last 9 months.  The three-month averages of February 2010 through December 2009 (-57,000), November through September 2009 (-128,333), and August through June 2009 (-353,000).  In 2009, payroll employment declined by 4.5 million.  

Since the start of the recession in December 2007, payroll employment has decreased by 8.4 million, wiping out all the jobs created in the private sector over the last decade. 

Total unemployment dropped to 14.9 million (9.7%) after rising to 15.7 million (10.1%) in October 2009 from 7.7 million (5.0%) in December 2007 and from 11.6 million (7.6%) in January 2009. 

The numbers still indicate that companies are approaching their maximum “leanness” and sustain perceptions that the economy is approaching employment turnaround.

Unemployment is still the highest since April 1983.  In a healthy economy, around 125,000 jobs a month must be added and filled just to keep the unemployment rate stable.

The current rate is 9.7% and the number unemployed is at 14.9 million. 

This is the seventh consecutive month of unemployment holding steady within 0.3%.

The number of persons working part time for economic reasons (sometimes referred to as involuntary part-time workers) increased to 8.8 million in February.  Previous month part time figures were January (8.3 million), December (9.2 million), November (9.2 million), October (9.3 million), September (9.2 million), August (9.1 million), July (8.8 million) and June (9.0 million).  

These persons had their hours cut back to 34 hours or less or were unable to find full-time jobs.  Since the start of the recession, the number of such workers has increased by 3.7 million, and has remained relatively constant since March 2009. 

About 2.5 million workers are considered marginally attached to the labor force wanted and were available for work, and had looked for work sometime in the last 12 months.  They had not looked for work in the last 4 weeks and so were not considered part of the labor force. 

Among the marginally attached workers, discouraged workers (persons no longer looking for work) rose to 1.2 million in January, up by 473,000 a year ago. 

Long-term unemployed persons (jobless for 27 weeks and more) have tripled since the start of the recession to 6.1 million since December 2007, adding 3.6 million to that number since January 2009.  Four in ten (41.2%) unemployed persons are in this category. 

The average length of unemployment has dropped to 29.7 weeks in February from 30.2 weeks in January after steadily climbing since February 2009.

Ed.Note: The number unemployed (and the unemployment rate) includes only those who looked for work in the last 4 weeks, and changes as the Civilian labor force population varies. 

The number unemployed contrasted with the changes in payroll employment is accounted for by workers no longer looking for work and therefore dropping out of the Civilian labor force. 

As consumer and business confidence improves, more workers will start to look for jobs again, returning to the workforce in anticipation of better employment conditions, which drives the unemployment rate higher.  On the other side, workers drop from the work force for a number of reasons including giving up looking for work.

Industry sectors and historical data

Construction lost 64,000 jobs in February, perhaps due to inclement weather and low temperatures.  Previous month changes were January (-77,000), December (-32,000), November (-15,000), October (-67,000), September (-71,000), August (-64,000), July (-80,000), and June (-91,000), with a total of 1.9 million since December 2007. 

The quarterly average construction job figures have been improving over the last 9 months with three-month averages at: December 2009 through February 2010(-57,667), September through November 2009 (-51,000), and June through August 2009 (-78,333). 

Manufacturing gained 1,000 jobs in February.  Previous month changes were January (+20,000), December (-23,000), November (-25,000), October (-57,000), September (-48,000), August (-57,000), July (-43,000), and June (-129,000) with a widespread job loss total of 2.1 million since December 2007, mostly in the durable goods industry. 

The quarterly average manufacturing job figures have been improving steadily over the last 9 months with three-month averages at: December 2009 through February 2010 (-667), September through November 2009 (-43,333) and June through August 2009 (-76,333). 

Retail trade was unchanged in February.  Previous month changes were January (+42,000), December (-18,000), November (+9,000), October (-63,000), September (-43,000), August (-15,000), July (-53,500), and June (-24,400). 

The quarterly average retail job figures have been improving steadily over the last 9 months with three-month averages at: December 2009 through February 2010 (+8,000), September through November 2009 (-32,333) and June through August 2009 (-30,966). 

Professional Business Services gained 51,000 jobs in February.  Previous month changes were January (+30,000), December (+20,000), November (+109,000), October (+11,000), September (-22,000), August (-34,000), July (-48,000), and June (-132,000). 

The quarterly professional business services job figures have been improving steadily over the last 9 months with three-month averages at: December 2009 through February 2010 (+33,667), September through November 2009 (+32,667) and June through August 2009 (-76,000). 

Education and Health Services gained 32,000 in February.  Previous month changes were January (+16,000), December (+26,000), November (+31,000), October (+35,000), September (+26,000), August (+35,000), July (+21,000), and June (+28,000). 

The quarterly average education and health services job growth figures have been improving steadily over the last 9 months with three-month averages at: December 2009 through February 2010 (+24,667), September through November 2009 (+30,667) and June through August 2009 (+28,000). 

In a nonstop record of job growth, the health care industry has added 322,000 jobs in 2009.

Government employment (federal, state and local) lost 18,000 jobs in February.   Previous month changes were January (+7,000), December (-27,000), November (-11,000), October (+38,000), September (-39,000), August (+4,000), July (-47,000), and June (-52,000). 

The Federal government added 16,000 jobs (15,000 temporary workers for Census 2010).  The U.S. Postal Service lost 9,000 jobs.  Figures will show a net gain of 7,000 jobs, but it is really a net loss of 8,000 permanent jobs. 

State governments added 7,000 education jobs and trimmed 1,000 jobs in other areas.  Local governments lost 24,000 education jobs and trimmed nearly 8,000 jobs in other areas.

The quarterly average government employment (federal, state and local) job figures have been holding steady over the last 9 months with three-month averages at: December 2009 through February 2010 (-12,667), September through November 2009 (-4,000) and June through August 2009 (-31,667). 

Temporary help services added 48,000 jobs in February, a net gain of 284,000 jobs since September 2009.

Unemployment spreads stayed relatively the same with the highest among teenagers (25.0%), followed down by African-Americans, then Hispanics.  The lowest unemployment started with Adult women (8.0%) followed up by Asians (8.4%), Whites then Adult men (10.0%). 

The good news from this data is that the job losses are lessening.  It is perhaps due to fewer jobs available to lose, but the lower figures are an encouraging sign.  We look forward to job gains.   

Average weekly hours and overtime

These figures closely correlate with overall output and when workweek hours increase give clues when firms will start hiring. 

The average manufacturing workweek remained unchanged at 39.4 hours with overtime at 2.6 hours. 

The average manufacturing hourly earnings for production and nonsupervisory employees in February rose by $0.04 to $18.48 for January.  12 months ago the hourly earnings were $18.09 (+2.15%).  

Civilian labor force

The total Civilian labor force remained relatively constant at 153.5 million (up 342,000 from January).  There are a million fewer workers in the work force than in February 2009 (154.4 million).   These are generally workers who have given up looking for work. 

The Civilian labor force usually grows as a recession winds down and optimism about finding work grows.  But as long as Americans remain anxious about their jobs, consumer spending is not expected to grow enough to power an economic rebound. 

The employment population ratio (the proportion of the country’s working-age population that is employed), at 58.5 percent, has declined by 4.2 percent since the recession began in December 2007.

Comparing now with the final month of the last major downturn in November 1982, the total Civilian labor force then stood at 111.1 million.  In that month, there were 11.9 million people unemployed accounting for 10.8% of the available work force (average for the year was 10.6 million unemployed with the rate at 9.7%).  The average for 2009 was 9.3%, increasing from 7.7% in January to 10.0% in December.

Looking at jobs needed to reduce unemployment
with the total Civilian labor force at 153.5 million:

(r)=revised

To restore employment to the 5.5% level of 2008, about 6.5 million people will have to regain their job or start new jobs.  It is a tall mountain to climb. 

**Ed.Note:  Government and economists foretell that the “normal” unemployment rate will move up to 8% from its current 5.5% level.  With the current Civilian labor force, that means that on a permanent basis there will be roughly 12.3 million people unemployed — more than 3.9 million more than at the “normal” level today. 

Fastest growing occupations and Occupations with the largest job growth

It comes as no surprise that the fastest growing occupations 2008 and projected to 2018 are in the fields of network systems and data communication and all aspects of the medical field. 

The largest job growth fields also include office and administrative support jobs, sales and service jobs, as well as teachers and construction and transportation jobs.

Education and salary of course go hand in hand.  

Data collection:

The Census Bureau surveys 60,000 households across the country to insure an accurate demographic survey.  This translates into about 110,000 individuals.  All the counties and county-equivalent cities are grouped into 2,025 geographic sampling units.  824 of these units are selected to accurately represent the entire population of the United States.  For a detailed explanation, see the BLS Handbook of Methods. 

Each month, one-fourth of the interviewed households are rotated out.  They rejoin the sample after eight months, are interviewed for another four months, and then are rotated out forever. 

Each month, 2,200 highly trained Census Bureau employees conduct interviews in the sample households for information on labor force activities (job holding and job seeking) or non-labor force status of household members. 

This sampling method results in a 90+ percent probability that the results will be within 290,000 of the 153.5 million workers in the Civilian labor force.  A monthly total census would be cost-prohibitive. 

Questions are specifically formulated so that neither the interviewer nor the persons interviewed decide their labor force classification.  This prevents the sample from being distorted by respondents providing answers based on their opinion or what a “right” answer should be. 

The basic concepts of employment are: 

The unemployment rates are extrapolated from the survey results. 

The quoted unemployment rate excludes people who have stopped looking for work because they believe no jobs are available (discouraged workers) and others outside the labor force.  They are counted separately. 

Their number has nearly doubled in the previous 12 months.

 Stimulus (Recovery Act):

The president credits his $787 billion stimulus package of tax cuts and increased government spending with improving employment.   He hopes to create about 3.5 million jobs.  Lower estimates put that figure at 2 to 2.5 million jobs by the end of 2010, reducing the unemployment rate to 8+%. 

The Fed’s record-low interest rates, along with other moves to drive down loan rates and stimulate borrowing, have supported the economic rebound.

The White House Council of Economic Advisers released a report showing the plan would save or create 1.5 million jobs by the end of 2009 and 3.5 million by the end of 2010. 

A senior White House official stated that the Obama administration’s fiscal stimulus plan will meet their previous estimates to save 3.5 million U.S. jobs by the end of 2010, but the unemployment rate at that time may be higher due to further deterioration in the economy.  White House officials have been careful to point out that estimated jobs created and saved have merely slowed continued job losses.

The president is now drafting a proposal to try to stimulate more hiring.  Obama plans to send Congress a list of ideas, including new tax breaks for small businesses that hire, some new spending on roads, bridges and other construction and grants to state and local governments to avoid layoffs.  Congress is likely to take up a job-creation package in the New Year.

Stimulus spending by state 

As of March 2, 2010, of the
$295,881,863,670 announced,
$345,928,575,159 (116.9%) has been made available
$194,910,746,023 (65.9%) has been paid out to the states

 Recession histories:

With Nov 1982 unemployment at 10.2%, and the government taking aggressive action, it was still more than five years (April 1988) from the peak before unemployment receded to 5.4%. 

The approach that time, however, was to fix the economy at the expense of the worker.

Some compare the fall in employment to 1974-1975 and 1981-1982. If the comparison is accurate, the peak in unemployment may be reached within the next four to five months (past performance is no guarantee of the future).

Economist William Polley made a chart that includes every recession since World War II.  It makes the chart pretty hard to read, so he simplified it with selected post-WWII recessions.

William Polley’s chart shows how the recovery from the 2001 recession took four years for employment to return to its February 2001 peak. 

Using the Department of Labor unemployment tables of unemployment rates and 5.5% as the “normal” rate of unemployment, I have analyzed things a little differently.  Of course, along the way, the Civilian labor force increases, so the percentages represent ever more workers.

The following table shows unemployment start dates, peaks and returns to the normal rate of 5.5%, Civilian labor force in millions of workers for that year, and the lengths of times from the start date in months:

 Recession peaks 1974-2009 

Note that the unemployment peak period that started in 1974 and ended in 1979 (lasting nearly five years) was followed immediately by another peak period ending nearly nine years later.  By the end of that period, the work force had increased by more than 32%, meaning overall, almost 30 million new jobs had to be created.

 The aggressive increase in the Civilian labor force in that period can likely be attributed to post-World War II babies reaching adulthood, with some entering the labor force after secondary school and the rest entering the workforce after further education.

The periods from 1988 to 1990 and 1995 to 2008 were periods of prosperity, with low unemployment (but a building bubble). Here is the same data in graphic form:

Unemployment rates:
It is interesting to recognize that in most cases, unemployment peaks roughly one-third of the timeline for unemployment to return to its “normal” rate, so we can double the number of months from the Start to the Peak to expect to arrive at an approximate return to “normal.”We live in hope (again, past performance is no guarantee of the future).

In his address, there were many other accusations.  Personally, I prefer government lawmakers who accurately quote facts rather than half-truths, as opposed to working to sway their audience by half-truths and mud slinging that attempt to create fear. 

I respect that both sides have their own agenda and arguments, but I prefer to make up my own mind based on facts and findings.  Politicians rely on people adopting what they tell them without checking anything out, like that TV commercial where the car salesman says, “I have a note from the previous owner that this car runs great!”  

I am independent when it comes to politics, but I took exception to the content of this video.

It should be kept in mind that Senator Coburn manipulates his audience in this speech written for him by his party speechwriters.

It should be noted that Senator Coburn is also a medical doctor. 

A transcript of the address and a link to the video are included at the end of this post.  Make up your own mind. 

Coburn said, “By an overwhelming margin American people are telling us to scrap the current bills …”

“Public opinion on health care reform in the United States is mixed. A majority of Americans express a desire for health care reform because they see it as too expensive and because they perceive that insurance companies avoid meeting health costs through coverage exclusions, caps, and co-pays. They also express concern that the system as a whole does not cover everyone and that many people are under-insured or uninsured. A majority support the creation of a government-run insurance plan to compete with private insurers, known as a public option, and a significant majority support a single-payer health care system.”

2010 polling results: “Rasmussen Reports found Americans opposing the Congressional bills by a 15-point margin, 56% vs. 41%.  According to Rasmussen Reports in January 2010, 10% of the American public have withdrawn their support from leading Congressional proposals since June 2009, with a majority opposing them since November 2009. In June 2009, 50% were in favor vs. 45% opposed, but in January 2010, support had dropped to 40% and opposition had increased to 55%.

Hardly an overwhelming margin, and an unfounded inference that the plans should be scrapped.

Coburn said, “… will lead to a government takeover of Health Care …

This is a scare slogan, a tactic raising specters of communism and socialism and is simply untrue.  However, history has shown us, a lie repeated often enough will eventually be perceived as the truth. 

The legislation under discussion would extend coverage care to tens of millions of uninsured Americans while cracking down on insurance company practices such as denying coverage on the basis of pre-existing medical conditions.  This is what Republican critics attack as a government takeover of health care.  Insuring these “not-so-profitable” peopel will financially hurt their big business sponsors.    

Coburn said, ” … even before the summit took place the majority in Congress signaled its intent to reject our offers to work together.” 

I would be happy to hear what those signals were to make up my own mind.  What I continually hear is the majority asking the Republicans for input and ideas. 

Coburn said, “they want to use procedural tricks and backroom deals to ram through a new bill that combines the worst aspects of the bills the Senate and House passed last year.” 

Here is an introduction to the infamous “they,” meant to suggest the dark forces, linked to the previous specter of communism and socialism. 

Here also is the well-established three-punch rhetoric trick, meant to reinforce the evil things the dark forces will pull; (1) “procedural tricks and backroom deals”, (2) “ram through a bill”, (3) “combines the worst aspects of the bills … passed last year.” 

New York Times columnist Bob Herbert wrote almost the exact phrase. 

There are no procedural tricks in passing a bill according to Senate rules; just wailing from those who don’t get their way.  A procedural trick is a lone Republican, objecting to and stopping the extension of unemployment benefits to thousands, because he doesn’t like what it adds to the deficit.  A wave of procedural tricks are being prepared by Republicans to stop further progress on healthcare.  

As far as passing a bill that “combines the worst aspects of the bills … passed last year,” would it be too much to tell Coburn’s audience what they are?  No, because they are the worst to the Democrats, and perhaps only them.  

Coburn said, “The American people have rejected the majority’s plan for good reason.”

There’s that reinforcing rhetoric reference to the falsehood of the overwhelming rejection again.

 Coburn said, “Their plan includes 1/2 trillion dollars in new tax increases, a 1/2 trillion dollars in cuts to Medicare, job-killing penalties for employers, taxpayer-funded abortion and new boards that will ration care to American citizens.”

A half trillion sounds like much more than 500 billion, and it is meant to.  New taxes?  It depends on which vrsion of the healthcare plan that will be written into law.

The estimated cost over ten years per the Congressional Budget Office (CBO) would be $1,050 billion less $138 billion recovered ($912 billion) for the House plan, and $871 billion less $132 billion recovered ($739 billion) for the Senate plan or a middle figure of $825.5 billion.  Coburn plays on $1 trillion ($1,000 billion), but what’s $175 billion when you are trying to sway people’s opinion.

The several versions of healthcare plans moving around various committees in the House and Senate all have different approaches to pay for healthcare.

In the House version, the tax increases are targeted at the wealthy asessing a surtax on earners making from $280,000 to $800,000 (1 percent) or couples making $350,000 to $1 million (1.5 percent).  Earners making more  than those amounts would have a 5.4 pecent surtax.  Less than 2 percent of the U.S. population falls into those cateories.

This top earner tax is estimated to bring in about $540 billion over 10 years.

There is also expected to be a penalty tax on companies and individuals who refuse to buy government-approved healthcare.  This is to get everyone in the game, since the healthcare numbers work only with large pools of enrollees. 

We can assume that this is the “job-killing” penalties for employers.  The thought is that healthcare costs take away money for jobs.  The alternative might be more jobs without benefits, but it has been repeatedly proven that many people will turn down jobs without benefits. 

Ed.Note:  I am personally against forcing people to have health insurance, but one reeason healthcare costs are so high is that many people don’t take care of their health until they are wheeled into the Emergency Room on a gurney, which is enormously expensive, and costs us all.

The “½ trillion ($500 billion) in cuts to Medicare” are subtly presented as if they were to be cuts in benefits.  This purposely scares seniors by rearranging the words.  In truth, there will be reductions in the future growth of overall Medicare spending, which does not mean cuts in benefit levels or services. 

As far as “taxpayer-funded abortion”, in November 2009, the House passed an amendment to the pending health care bill that prohibits federal funds for abortion services in the public option and in the insurance “exchange” the bill would create.  The Senate bill will allow insurance companies to include abortion coverage, but each state will have the option of preventing federal money from funding abortions.  Senator Coburn is incorrect!

Regarding “new boards that will ration care to American citizens”, we can only guess Senator Coburn is talking about the independent advisory panels which will work to make recommendations on Medicare reforms, including reimbursement to contain the future growth of Medicare.  The Senate bill includes a Medicare Commission which could modify Medicare payments in order to keep down cost growth.

Perhaps he is talking also about “new boards” concerned with halting Medicare fraud.  $60 billion per year are paid out for fraudulent claims by phony companies billing for services never performed on valid Medicare members.  This is another scare tactic, presenting oversight boards as threatening to deny YOUR claim. 

As a side note, containing Medicare fraud for ten years would fund $600 billion of the cost.

According to PolitiFact regarding the rationing of care, “private health insurance companies already ration health care by income, by denying health insurance to those with pre-existing conditions and by caps on health insurance payments. Rationing exists now, and will continue to exist with or without health care reform.” 

David Leonhardt also wrote in the New York Times in June 2009 that rationing is a part of economic reality: “The choice isn’t between rationing and not rationing. It’s between rationing well and rationing badly.

This is another scare tactic, similar to Sarah Palin’s claim that end-of-life choices would be dictated by “death panels” rather than the discussions and planning with your personal physician, as it was written.

Coburn said, “The majority (meaning Democrats) now has a choice. We can continue to make progress like we did at the summit or they can try to ram through a partisan bill that will divide and bankrupt America.” 

Now here are “We,” the white knights again trying to do the right thing, while the evil “they” “try to ram through a partisan bill that will divide and bankrupt America.”

What Senator Coburn does not discuss is that without reform, America is well on its way to bankruptcy now.  But the lack of reform will keep his campaign funders in huge profits, draining the resources of the American people.  Coburn is telling an untruth.

Current spending (2007) on health care in the U.S. is about 16% of its GDP which converts to an estimated $2.26 trillion or $7,439 per person.  With its current upward trend it is expected to reach 19.5% of GDP by 2017 which converts to an estimated $2.75 trillion or $9,066 per person. 

Medical expenditure was a significant contributing factor in 62% of personal bankruptcies in the United States. 

“The Congressional Budget Office (CBO) has argued that the Medicare program as currently structured is unsustainable without significant reform, as tax revenues dedicated to the program are not sufficient to cover its rapidly increasing expenditures. Further, the CBO also projects that “total federal Medicare and Medicaid outlays will rise from 4 percent of GDP in 2007 to 12 percent in 2050.” “According to the Centers for Medicare and Medicaid Services, spending on Medicare will grow from approximately $500 billion during 2009 to $930 billion by 2018.” “And in 2009 the Congressional Budget Office found that the inclusion of a strong public option would lower the cost of health care reform in the U.S. by tens of billions of dollars.” 

Coburn said, “Last year dozens of Democrat-only summits were held in secret behind closed doors and produced many unsavory deals.” 

This is an allegation that requires dates and agendas to avoid people thinking it is simply mud slinging (which it is).  I’m sure Republicans don’t hold their meetings on street corners either, but like to portray Democrats as some sinister secret society.

The question arises, what were the unsavory deals?  Without particulars, this again is unsubstantiated mud slinging.  Coburn is working his audience.

Coburn said, “Had those meetings been open and bipartisan, I believe Congress could have passed a bipartisan health bill months ago. If the president and leaders in Congress are serious about finding common ground they should continue this debate, not cut it off by rushing through a partisan bill the American people have already rejected.” 

There’s that reinforcing rhetoric reference to the falsehood of the overwhelming rejection by the American people again, but he lends it credibility with his “I believe.”

A bipartisan health bill is an impossible goal.  Republicans want to defeat any healthcare bill and discredit the majority party.  The Republicans are in favor of and are funded by big businesses, which want the existing system to continue.  Continuing the debate will delay the action nearer the mid-term elections, when lawmakers who want to be re-elected will move away from a controversial bill.

Coburn said, “If the majority agrees to work together they will find many Republicans ready to help them pursue our common goal of helping all Americans access quality and affordable Health Care for themselves and their families.” 

It is odd that I hear from Washington, nothing except offers from the majority wanting to work together with the Republicans to pursue the common goal.  The difference is that one side wants reform and the other side wants things to stay the same.

The problem big business has with the healthcare plan is that the legislation under discussion would extend coverage care to tens of millions of uninsured Americans while cracking down on insurance company practices such as denying coverage on the basis of pre-existing medical conditions. 

The 46 million without health insurance might be less healthy than the people who work and can afford health insurance, and the people with pre-existing conditions certainly are.  This means that they will probably eat away at the bottom lines of the big business insurance carriers, and they will spend any amount of money buying lawmakers through campaign contributions to defeat it.

While there are two major proposals under consideration in Congress, Democrats have authored and passed both.  Republican Party members in Congress have not come together around a single policy of their own for health care reform other than that of opposing both Democratic bills currently in progress. 

Lawmakers were almost finished merging House and Senate versions of sweeping overhaul legislation when a special election in late 2009 in Massachusetts to fill the late Senator Kennedy’s seat cost Democrats their filibuster-proof Senate supermajority of 60 seats.

Republicans immediately united in opposition to both proposals, casting doubts on the outcome.

Lobbying: America’s health care industry has spent hundreds of millions of dollars in 2009 alone to block the introduction of public medical insurance and stall other reforms proposed by President Obama and by others. There are six registered Health Care  lobbyists for every member of Congress. The campaign against health care system reform has been waged in part through substantial donations to key politicians. The single largest recipient of health industry political donations and chairman of the Senate Committee on Finance that drafted Senate health care legislation is Senator Max Baucus (D-MT).

The clock is ticking toward the mid-term elections in November.  Make no mistake that that election day is the focus of our lawmakers – to continue in their prestigious jobs and build their party’s power base, and they respond without question to the big business campaign fund contributions that can get or keep them there – not the 46 million people without healthcare, and not the 100,000 people who die every year for lack of health insurance. 

It is shameful that our elected officials, and I include all, have forgotten whom they represent. 

Senator Coburn was contacted Friday (Feb 26) by the White House and asked to submit details of suggestions he made to tackle waste and fraud in the medical system, Coburn’s spokesman John Hart said Coburn views Obama’s legislation as a government takeover and would not be able to support it even if it includes some of his proposals.

~~~~~

Listen to the broadcast and make up your own mind.

http://news.yahoo.com/video/us-15749625/18361866

The transcript follows for your convenience. 

“This week I had the opportunity to join President Obama and my Democrat and Republican colleagues for a summit on Health Care.  We had a respectful and constructive discussion.  While we listened to one another, I’m concerned that the majority in Congress is still not listening to the American people on the subject of Health Care reform.  By an overwhelming margin American people are telling us to scrap the current bills, which will lead to a government takeover of Health Care and we should start over.

Unfortunately, even before the summit took place the majority in Congress signaled its intent to reject our offers to work together.  Instead they want to use procedural tricks and backroom deals to ram through a new bill that combines the worst aspects of the bills the senate and house passed last year.

The American people have rejected the majority’s plan for good reason.  Their plan includes 1/2 trillion dollars in new tax increases, a 1/2 trillion dollars in cuts to Medicare, job-killing penalties for employers, taxpayer-funded abortion and new boards that will ration care to American citizens.

The majority now has a choice. We can continue to make progress like we did at the summit or they can try to ram through a partisan bill that will divide and bankrupt America.

I wholeheartedly share President Obama’s desire for more civility and bipartisanship in Washington and I’m proud of the work we did together when he was a member of the Senate.

True civility however is measured by actions not words. I was disappointed the president rejected my suggestion that he host another summit; the president himself proposed that such meetings be televised more than a year ago.

Last year dozens of Democrat-only summits were held in secret behind closed doors and produced many unsavory deals. 

Had those meetings been open and bipartisan, I believe Congress could have passed a bipartisan health bill months ago. If the president and leaders in Congress are serious about finding common ground they should continue this debate, not cut it off by rushing through a partisan bill the American people have already rejected. 

If the majority agrees to work together they will find many Republicans ready to help them pursue our common goal of helping all Americans access quality and affordable Health Care for themselves and their families.”

References:

Health care in the United States
Health care reform in the United States
Health care reform debate in the United States
Public opinion on health care reform in the United States
History of health care reform in the United States

The purpose of the CARD Act is to ensure that borrowers with a poor credit score and a history of late payments get treated as fairly as borrowers who have kept their credit record clean. 

Claims by credit card issuers that changes would lead to higher rates has been fulfilled.  Many issuers raised their interest rates and fees since the President signed the CARD Act on May 22, 2009.

In desperate attempts to take advantage of their customers before the new laws kicked in, credit issuers raised minimum payments and lowered credit limits for customers with bad credit, and closed accounts of customers who do not use their cards often and good payers who pay their entire balance each month.

The act does not limit how high interest rates can go and does not apply to business or corporate credit cards.

The Act was passed to beat several consumer-unfriendly practices, including:

• prohibiting credit issuers from arbitrarily changing the terms of their contract with a cardholder, the practice of “any-time, any-reason repricing.”
• requiring a customer option of a fixed credit limit, and preventing the credit issuer from charging over-the-limit fees.
• requiring 45 days notice before raising a customer’s interest rate.  The customer has three billing cycles to decline the new terms and pay off their balance at the old rate and payment schedule. 
• prohibiting rate increases on existing balances for fixed rate accounts or for universal default, which is a late payment on an unrelated account. 
• requiring the credit issuer to return customer to their previous interest rate after six consecutive months of timely payments.
• requiring a minimum of 21 days from the date the bill is sent out to the due date (increased from 14 days).
• requiring monthly due dates to be the same each month or next business day if a weekend or holiday. 
• requiring payments to be accepted as timely when paid before 5pm EST on the due date or mailed at lest 7 days before the due date. 
• prohibiting the charging of additional fees for payment methods including online, mail, electronic transfer, or telephone.  The exception is an expedited payment to avoid a late fee. 
• requiring payments to be applied to the highest-rate debt on the account. 
• prohibiting the charging of interest for payments made during a grace period.
• requires credit card statements to contain a schedule of time required and interest paid to pay off balance with minimum payments, and how much the payment must be to pay the balance off in three years. 
• requires the customer agree to either a hard credit limit, or approval with an over-the-limit fee applied and limits the number of over-the-limit fees to three.
• requires the up-front payment of all fees, before issuing of subprime cards, where fees will exceed 25 percent of the credit limit.
• Prohibits issuance of credit cards to minors under the age of 21 without a co-signer unless they can prove they are able to repay.  This will stop the issuing of cards to minors where parents are responsible for their debts until age 21. 

Although the idea was to treat poor payers as fairly as good payers, the Act caused credit issuers to treat all borrowers the same.  Credit issuers say they have no way of knowing who will lose their job, get sick or other financial situation that will cause payment default, so they will treat everyone the same.  They believe the past does not guarantee the future.

Credit issuers are continuing their research into ways they can apply fees that are not covered in the CARD Act.  Fixed-rate cards could be switched to variable rates that give the issuer more flexibility.  Card issuers may increase transaction fees to retailers, causing them to stop accepting those cards or raise prices.

Congress is working on more transparency and oversight of the credit issuers, requiring reports on company profits, fees and rates that will be presented to Congress each year. 

Banks are now focusing on increasing profits from debit cards, since credit has now been limited.  The best course is to use cash when possible and ask for a discount equal to the Merchant fee.

Employment:

The Unemployment rate fell in January to 9.7% from 10.0% in December.   

Nonfarm payroll employment held nearly level (-20,000) in January after a big drop in December (-150,000 [revised]), and a boost to prepare for the holiday season in November (+64,000 [revised]).  The December drop could substantially be the result of seasonal employees let go by retailers.  Previous month changes were October (-224,000 [revised]) , September (-225,000 [revised]), August (-211,000 [revised]), July (-344,000 [revised]), June (-504,000), and May (-347,000).  

The monthly average nonfarm payroll job layoff figures have been improving steadily over the last 9 months of January through November (-35,333), October through August (-220,000), and July through May (-398,333). 

In 2009, payroll employment declined by 4.5 million. Over the course of the year, job losses moderated considerably. In the first quarter of 2009, job declines averaged 752,667 per month, compared with 103,000 per month in the last quarter. 

Since the start of the recession in December 2007, payroll employment has decreased by 8.4 million, wiping out all the jobs created in the private sector over the last decade. 

Total unemployment dropped to 14.8 million (9.7%) after rising to 15.7 million (10.1%) in October 2009 from 7.7 million (5.0%) in December 2007 and from 11.6 million (7.6%) in January 2009. 

The numbers still indicate that companies are approaching their maximum “leanness” and sustain perceptions that the economy is approaching employment turnaround.

Unemployment is still the highest since April 1983.  In a healthy economy, around 125,000 jobs a month must be added and filled just to keep the unemployment rate stable.

The current rate is 9.7% and the number unemployed is at 14.8 million. 

This is the third consecutive month of unemployment holding steady.

The number of persons working part time for economic reasons (sometimes referred to as involuntary part-time workers) fell to 8.3 million in January from 9.2 million in December.  Previous month part time figures were November (9.2 million), October (9.3 million), September (9.2 million), August (9.1 million), July (8.8 million) and June (9.0 million).  

These persons had their hours cut back to 34 hours or less or were unable to find full-time jobs.  Since the start of the recession, the number of such workers has increased by 3.7 million, and has remained relatively constant since March 2009. 

January 2010 is the first month this number has declined (-849,000). 

Long-term unemployed persons (jobless for 27 weeks and more) have tripled since the start of the recession to 6.3 million since December 2007, adding 3.6 million to that number since January 2009.  Four in ten (41.2%) unemployed persons are in this category. 

The average length of unemployment has risen to more than 30 weeks, the longest on record since 1948.

Discouraged workers (persons no longer looking for work) rose to 1.1 million in January, up from 929,000 in December, 861,000 in November and 734,000 a year ago.  

This is the first month that number has exceeded 1 million.

Ed.Note: The number unemployed (and the unemployment rate) includes only those who looked for work in the last 4 weeks, and changes as the Civilian labor force population varies. 

The number unemployed contrasted with the changes in payroll employment is accounted for by workers no longer looking for work and therefore dropping out of the Civilian labor force. 

As consumer and business confidence improves, more workers will start to look for jobs again, returning to the workforce in anticipation of better employment conditions, which drives the unemployment rate higher.  On the other side, workers drop from the work force for a number of reasons including giving up looking for work.

Industry sectors and historical data

Construction lost 75,000 jobs in January, perhaps due to inclement weather and low temperatures.  Previous month changes were December (-32,000), November (-15,000), October (-67,000), September (-71,000), August (-64,000), July (-80,000), June (-91,000), and May (-59,000), with a total of 1.9 million since December 2007. 

The monthly average construction job layoff figures have been improving steadily, over the last 9 months of January through November (-40,667), October through August (-67,333) and July through May (-76,667). 

Manufacturing gained 11,000 jobs in January.  Previous month changes were December (-23,000), November (-25,000), October (-57,000), September (-48,000), August (-57,000), July (-43,000), June (-129,000), and May (-152,000) with a widespread job loss total of 2.1 million since December 2007, mostly in the durable goods industry. 

The monthly average manufacturing job layoff figures have been improving steadily over the last 9 months of January through November (-12,333), October through August (-54,000) and July through May (-108,000). 

Retail trade gained 42,000 jobs in January.  Previous month changes were December (-18,000), November (+9,000), October (-63,000), September (-43,000), August (-15,000), July (-53,500), June (-24,400), and May (-22,000). 

The monthly average retail job figures have been improving steadily over the last 9 months of January through November (+11,000), October through August (-40,333) and July through May (-33,300). 

Professional Business Services gained 44,000 jobs in January.  Previous month changes were December (+20,000), November (+109,000), October (+11,000), September (-22,000), August (-34,000), July (-48,000), June (-132,000), and May (-51,000). 

The monthly average retail job figures have been improving steadily over the last 9 months of January through November (+57,667), October through August (-15,000) and July through May (-77,000). 

Education and Health Services gained 16,000 jobs in January.  Previous month changes were December (+26,000), November (+31,000), October (+35,000), September (+26,000), August (+35,000), July (+21,000), June (+28,000), and May (+38,000). 

The monthly average education and health services job growth figures have been steady over the last 9 months of January through November (+24,333), October through August (+32,000) and July through May (+29,000). 

In a nonstop record of job growth, the health care industry has added 322,000 jobs in 2009.

Government employment (federal, state and local) lost 8,000 jobs in January.  Previous month changes were December (-27,000), November (-11,000), October (+38,000), September (-39,000), August (+4,000), July (-47,000), June (-52,000), and May (-13,000). 

The monthly average government employment (federal, state and local) job figures have been steady over the last 9 months of January through November (-10,000), October through August (+1,000) and July through May (-37,333). 

The federal government added 33,000 jobs in January including 9,000 temporary jobs for the 2010 Census and 14,000 jobs for the USPS, offsetting the 19,000 jobs the USPS downsized in December.  Except for education, state (-13,000) and local governments (-12,000) trended down.

Temporary help services added 52,000 jobs in January, adding to the 58,500 jobs in December, a net gain of 247,000 jobs since September 2009.

Unemployment spreads stayed relatively the same with the highest among teenagers (26.4%), followed down by African-Americans, then Hispanics.  The lowest unemployment started with Adult women (7.9%) followed up by Asians (8.4%), Whites then Adult men (10.0%). 

The good news from this data is that the job losses are lessening.  It is perhaps due to fewer jobs available to lose, but the lower figures are an encouraging sign. 

Average weekly hours and overtime

These figures closely correlate with overall output and when workweek hours increase give clues when firms will start hiring. 

The average manufacturing workweek remained unchanged at 39.9 hours with overtime at 2.8 hours. 

The average manufacturing hourly earnings remained steady at $23.19 for January.  Over the past 12 months average hourly earnings have risen 1.8%.  

Civilian labor force

The total Civilian labor force remained constant at 153.1 million (down 661,000 from November).  There are a million fewer workers in the work force than in January 2009 (154.1 million).   These are generally workers who have given up looking for work. 

The Civilian labor force usually grows as a recession winds down and optimism about finding work grows.  But as long as Americans remain anxious about their jobs, consumer spending is not expected to grow enough to power an economic rebound. 

The employment population ratio (the proportion of the country’s working-age population that is employed), at 58.4 percent, has declined by 4.3 percent since the recession began in December 2007.

Comparing now with the final month of the last major downturn in November 1982, the total Civilian labor force then stood at 111.1 million.  In that month, there were 11.9 million people unemployed accounting for 10.8% of the available work force (average for the year was 10.6 million unemployed with the rate at 9.7%). 

Looking at jobs needed to reduce unemployment
with the total Civilian labor force at 153.1 million:

(r)=revised

*To restore employment to the 5.5% level of 2008, about 6.4 million people will have to regain their job or start new jobs.  It is a tall mountain to climb. 

*Ed.Note:  Government and economists foretell that the “normal” unemployment rate will move up to 8% from its current 5.5% level.  With the current Civilian labor force, that means that on a permanent basis there will be roughly 12.2 million people unemployed — more than 5.8 million more than at the “normal” level today. 

Data collection:

The Census Bureau surveys 60,000 households across the country to insure an accurate demographic survey.  This translates into about 110,000 individuals.  All the counties and county-equivalent cities are grouped into 2,025 geographic sampling units.  824 of these units are selected to accurately represent the entire population of the United States.  For a detailed explanation, see the BLS Handbook of Methods. 

Each month, one-fourth of the interviewed households are rotated out.  They rejoin the sample after eight months, are interviewed for another four months, and then are rotated out forever. 

Each month, 2,200 highly trained Census Bureau employees conduct interviews in the sample households for information on labor force activities (job holding and job seeking) or non-labor force status of household members. 

This sampling method results in a 90+ percent probability that the results will be within 290,000 of the 153 million people in the Civilian labor force.  A monthly total census would be cost-prohibitive. 

Questions are specifically formulated so that neither the interviewer nor the persons interviewed decide their labor force classification.  This prevents the sample from being distorted by respondents providing answers based on their opinion or what a “right” answer should be. 

The basic concepts of employment are: 

The unemployment rates are extrapolated from the survey results. 

The quoted unemployment rate excludes people who have stopped looking for work because they believe no jobs are available (discouraged workers) and others outside the labor force.  They are counted separately. 

Their number has nearly doubled in the previous 12 months.

 Stimulus (Recovery Act):

The president credits his $787 billion stimulus package of tax cuts and increased government spending with improving employment.   He hopes to create about 3.5 million jobs.  Lower estimates put that figure at 2 to 2.5 million jobs by the end of 2010, reducing the unemployment rate to 8+%. 

The Fed’s record-low interest rates, along with other moves to drive down loan rates and stimulate borrowing, have supported the economic rebound.

The White House Council of Economic Advisers released a report showing the plan would save or create 1.5 million jobs by the end of 2009 and 3.5 million by the end of 2010. 

A senior White House official stated that the Obama administration’s fiscal stimulus plan will meet their previous estimates to save 3.5 million U.S. jobs by the end of 2010, but the unemployment rate at that time may be higher due to further deterioration in the economy.  White House officials have been careful to point out that estimated jobs created and saved have merely slowed continued job losses.

The president is now drafting a proposal to try to stimulate more hiring.  Obama plans to send Congress a list of ideas, including new tax breaks for small businesses that hire, some new spending on roads, bridges and other construction and grants to state and local governments to avoid layoffs.  Congress is likely to take up a job-creation package in the New Year.

Stimulus spending by state 

As of January 26, 2010, of the
$329,766,478,709 announced,
$332,170,100,278 (100.7%) has been made available
$175,973,271,008 (53.4%) has been paid out to the states

 Recession histories:

With Nov 1982 unemployment at 10.2%, and the government taking aggressive action, it was still more than five years (April 1988) from the peak before unemployment receded to 5.4%. 

The approach that time, however, was to fix the economy at the expense of the worker.

Some compare the fall in employment to 1974-1975 and 1981-1982. If the comparison is accurate, the peak in unemployment may be reached within the next four to five months (past performance is no guarantee of the future).

Economist William Polley made a chart that includes every recession since World War II.  It makes the chart pretty hard to read, so he simplified it with selected post-WWII recessions.

William Polley’s chart shows how the recovery from the 2001 recession took four years for employment to return to its February 2001 peak. 

Using the Department of Labor unemployment tables of unemployment rates and 5.5% as the “normal” rate of unemployment, I have analyzed things a little differently.  Of course, along the way, the Civilian labor force increases, so the percentages represent ever more workers.

The following table shows unemployment start dates, peaks and returns to the normal rate of 5.5%, Civilian labor force in millions of workers for that year, and the lengths of times from the start date in months:

 Recession peaks 1974-2009 

Note that the unemployment peak period that started in 1974 and ended in 1979 (lasting nearly five years) was followed immediately by another peak period ending nearly nine years later.  By the end of that period, the work force had increased by more than 32%, meaning overall, almost 30 million new jobs had to be created.

 The aggressive increase in the Civilian labor force in that period can likely be attributed to post-World War II babies reaching adulthood, with some entering the labor force after secondary school and the rest entering the workforce after further education.

The periods from 1988 to 1990 and 1995 to 2008 were periods of prosperity, with low unemployment (but a building bubble). Here is the same data in graphic form:

Unemployment rates:
It is interesting to recognize that in most cases, unemployment peaks roughly one-third of the timeline for unemployment to return to its “normal” rate, so we can double the number of months from the Start to the Peak to expect to arrive at an approximate return to “normal.”We live in hope (again, past performance is no guarantee of the future).

They saw our two-house legislature as reflecting the will of the people, but with checks and balances to prevent “the tyranny of the majority” (James Madison). 

While the House with its 435 members representing the popular opinion of the nation’s voters, the Senate, with its two members per state, was visualized as a thoughtful and reflective body, like a modern think tank, where heated issues could cool somewhat and consequences could be considered before new laws were enacted. 

The Constitution provides for both houses to pass legislation with a simple majority vote of those present.  To prevent the “tyranny of the majority,” it also provides a method for the minority to delay a majority vote and gather support for its point of view.  That method is called the ‘filibuster.’ 

The Constitution allows each house to set its own rules.  Each piece of legislation allows a debate on the subject.  Senate rules allow a Senator, or series of Senators (each yielding the floor to the next), to speak for as long as they wish on any subject they choose.  The filibuster can be ended by a 3/5 or 60-Senator vote for cloture (end debate). 

The 60-Senator vote is known as a supermajority. 

It is also possible to end debate through a legal maneuver known as the Nuclear Option, where a Senator brings up a point of order, reminding the Senate that its rules are not being followed with the filibuster.  If the presiding officer makes a ruling to uphold the point of order, and if a simple majority of the Senators vote to uphold the ruling, the debate is ended and a vote on the issue is held immediately.   

Without the threat of filibuster, the Senate needs only a simple majority of 51 votes to pass legislation and uphold rulings.  But when filibuster is threatened on major bills and issues, 60 votes are needed to move past debate to the vote. 

The party-line divisiveness of the modern Senate has made almost all legislative issues require a supermajority to pass.  Although the supermajority vote to end debate is not a bad thing, its use as a weapon in the trench warfare between parties has left the voters as victims. 

An additional use of the 60-Senator vote is used to modify budgeting, authorization, as well as appropriation guidelines and restrictions. 

Each year by October 1, Congress must construct a budget it can stick to, considering government income as well as expenses.  It must authorize new and ongoing programs and agencies that come into being as the result of bill passage or already exist, with non-binding recommended spending levels to carry out the program’s policies.  And it must pass appropriation funding bills, providing the legal authority to use funds from the U.S. Treasury.  

The annual Congressional budget is simply an outline of anticipated federal spending for the coming year, setting limits on discretionary spending if everything works out according to plan.  It also allows procedural points of order for bills that exceed their spending caps.   

When a bill, chugging its way through the enactment process, generates a program or agency budget that will violate its Congressional appropriation, a Senator may raise a point of order.  That appropriation point can be waived by a 60-Senator vote. 

On the saving side of the government ledger, the Congressional budget resolution may include a “reconciliation” figure.  This is assigned to a congressional committee with directions to produce legislation that lowers spending by that amount. 

Passage of a reconciliation bill is an express train with a limit of 20 hours of debate and only a majority of Senate votes for enactment. 

We may learn more about reconciliation in the near future, with pressure building in Congress to pass a health reform bill and the recent upset in Massachusetts, where Republican Scott Brown was elected to serve out the remainder of Senator Ted Kennedy’s term, ending in 2012.  Although a proponent of health care reform, Brown has come out against President Obama’s health care plan in its present form as fiscally unsound. 

With the health care reform bill now in the merging process between House and Senate, we can be sure the 60-Senator rule will be in place, and the Democrats are now one Senator short of the necessary 60 votes for their plan.   

Options for passage of the health care reform bill in some form include

• convincing at least one Republican to vote their way
• scaling down or revising the plan to make it more agreeable to opponents
• requesting the House to pass the Senate bill intact
• using the reconciliation process to pass budget item portions of the bill (that will expire in either five or ten years)

As aggravating and as slow as the Senate process is using the 60-Senator hurdle, perhaps James Madison was right.  Perhaps it does protect us.

Employment:

Nonfarm payroll employment restarted its decline (down 85,000) after virtually stopping in its tracks (up 4,000 [revised]) in November.  This December drop could substantially be the result of seasonal employees let go by retailers.  The slowdown trend continued (127,000 [revised] in October, 139,000 [revised] in September, 201,000 in August [revised], 304,000 in July [revised], 467,000 in June, 345,000 in May, 539,000 in April and 633,000 in March).  

Over the 12 months ending in November, hires totaled 49.9 million and separations totaled 54.4 million, yielding a net employment loss of 4.5 million. 

In 2009, payroll employment declined by 4.5 million. Over the course of the year, job losses moderated considerably. In the first quarter of 2009, job declines averaged 691,000 per month, compared with 69,000 per month in the last quarter.

The 3-month average job layoff figures have been improving steadily.  December through October was 69,333 [revised], September through July was 214,667 [revised], and June through April was 450,333. 

Since the start of the recession in December 2007, payroll employment has decreased by 7.3 million, wiping out all the jobs created in the private sector over the last decade.    

Total unemployment has risen to 15.3 million (10.0%) from 7.7 million (5.0%) in December 2007 and from 11.6 million (7.6%) in January 2009. 

The numbers still indicate that companies are approaching their maximum “leanness” and sustain perceptions that the economy is approaching employment recovery.

Unemployment is still the highest since April 1983.  In a healthy economy, around 125,000 jobs a month must be added and filled just to keep the unemployment rate stable.

The current rate is 10.0% and the number unemployed is at 15.3 million. 

This is the second consecutive month of unemployment holding steady.

The number of persons working part time for economic reasons (sometimes referred to as involuntary part-time workers) was unchanged in November at 9.2 million.  Previous month part time figures were November (9.2 million), October (9.3 million), September (9.2 million), August (9.1 million), July (8.8 million) and June (9.0 million).  

These persons had their hours cut back or were unable to find full-time jobs.  Since the start of the recession, the number of such workers has increased by 4.4 million, and has remained relatively constant since March 2009. 

Long-term unemployed persons (jobless for 27 weeks and more) have tripled since the start of the recession to 6.1 million since December 2007, adding 229,000 to that number in November.  Four in ten (39.8%) unemployed persons are in this category. 

The average length of unemployment has risen to more than 29 weeks, the longest on record since 1948.

There were 929,000 discouraged workers in December, up from 861,000 in November and 608,000 a year ago.  Discouraged workers are persons no longer looking for work.

Ed.Note: The number unemployed (and the unemployment rate) includes only those who looked for work in the last 4 weeks, and changes as the Civilian labor force population varies. 

The number unemployed contrasted with the changes in payroll employment is accounted for by workers no longer looking for work and therefore dropping out of the Civilian labor force. 

As consumer and business confidence improves, more workers will start to look for jobs again, returning to the workforce in anticipation of better employment conditions, which drives the unemployment rate higher.  On the other side, workers drop from the work force for a number of reasons including giving up looking for work.

Industry sectors

Construction dropped by 53,000 jobs in December, perhaps due to inclement weather and low temperatures.  Previous month losses were November (27,000), October (62,000), September (64,000), August (65,000), July (76,000), June (79,000), May (59,000), April (110,000), and March (161,000), with a total of 1.6 million since December 2007.  The average for May through October was 63,000 and 117,000 for the six months preceding that.  Total employment in construction has dropped by 1.6 million jobs since the recession began.  

Manufacturing dropped 27,000 jobs in December.  Previous month losses were November (41,000), October (61,000), September (51,000), August (63,000), July (52,000), June (136,000), May (156,000), April (149,000) and March (161,000) with widespread job losses totaling 2.1 million since December 2007, mostly in the durable goods industry.  The average job loss for July through December was 41,000, while January through June was 171,000.

General merchandise store employment dropped 15,000 jobs, as seasonal workers were no longer needed.  Retail added 8,000 department store jobs in November as merchants geared up for the holiday season.  Previous month losses were October (40,000), September (39,000), August (9,600), July (44,000), June (18,000), and April (47,000). 

Education and health services continued to add jobs, with health care payrolls increasing by 22,000 in December.  Positive previous months were November (21,000), October (45,000), September (19,000), August (52,000), and July (21,000).  The health care industry has added 631,000 jobs since December 2007.

Professional and business services added 50,000 jobs in December.  Previous changes were increases in November (86,000), October (18,000) and September (3,000), and losses in August (22,000), July (38,000), June (118,000), May (51,000), April (122,0000), and March (133,000).  

Temporary help services added 47,000 jobs in December, a net gain of 166,000 jobs since the low point in July.

Government employment lost 21,000 jobs in December, mostly USPS employees (12,600).  Previous changes were increases for November (7,000) and October (46,000).  Losses were registered in September (53,000), August (18,000) and July (28,000).

Unemployment spreads stayed relatively the same with the highest among teenagers (27.1%), followed down by African-Americans, then Hispanics.  The lowest unemployment started with Adult women (8.2%) followed up by Asians (8.4%), Whites then Adult men (10.2%). 

The good news from this data is that the job losses are lessening.  It is perhaps due to fewer jobs available to lose, but the lower figures are an encouraging sign. 

The average manufacturing workweek remained unchanged at 40.4 hours with overtime at 3.4 hours.  This figure closely correlates with overall output and gives clues (when workweek hours increase) on when firms will start hiring. 

Average hourly earnings remained at $18.80 for December.  Over the past 12 months average hourly earnings have risen 2.2%.  

Workforce:

The total Civilian labor force stands at 153.0 million (down 661,000 from November).  There are nearly two million fewer workers in the work force than in June 2009 (154.9 million).   These are generally workers who have given up looking for work. 

The Civilian labor force usually grows as a recession winds down and optimism about finding work grows.  But as long as Americans remain anxious about their jobs, consumer spending is not expected to grow enough to power an economic rebound. 

The employment population ratio, at 58.2 percent, has declined by 4.5 percent since the recession began in December 2007.

Comparing now with the final month of the last major downturn in November 1982, the total Civilian labor force then stood at 111.1 million.  In that month, there were 11.9 million people unemployed accounting for 10.8% of the available work force (average for the year was 10.6 million unemployed with the rate at 9.7%). 

Looking at jobs needed to reduce unemployment
with the total Civilian labor force at 153.0 million:

(r)=revised

To restore employment to the 5.5% level of 2008, about 6.8 million people will have to regain their job or start new jobs.  It is a tall mountain to climb. 

Ed.Note:  Government and economists foretell that the “normal” unemployment rate will move up to 8% from its current 5.5% level.  With the current Civilian labor force, that means that on a permanent basis there will be roughly 13 million people unemployed — more than 4.5 million more than at the “normal” level today. 

Data collection:

The Census Bureau surveys 60,000 households across the country to insure an accurate demographic survey.  This translates into about 110,000 individuals.  All the counties and county-equivalent cities are grouped into 2,025 geographic sampling units.  824 of these units are selected to accurately represent the entire population of the United States.  For a detailed explanation, see the BLS Handbook of Methods. 

Each month, one-fourth of the interviewed households are rotated out.  They rejoin the sample after eight months, are interviewed for another four months, and then are rotated out forever. 

Each month, 2,200 highly trained Census Bureau employees conduct interviews in the sample households for information on labor force activities (job holding and job seeking) or non-labor force status of household members. 

This sampling method results in a 90+ percent probability that the results will be within 290,000 of the 153 million people in the Civilian labor force.  A monthly total census would be cost-prohibitive. 

Questions are specifically formulated so that neither the interviewer nor the persons interviewed decide their labor force classification.  This prevents the sample from being distorted by respondents providing answers based on their opinion or what a “right” answer should be. 

The basic concepts of employment are: 

The unemployment rates are extrapolated from the survey results. 

The quoted unemployment rate excludes people who have stopped looking for work because they believe no jobs are available (discouraged workers) and others outside the labor force.  They are counted separately. 

Their number has nearly doubled in the previous 12 months.

 Stimulus (Recovery Act):

The president credits his $787 billion stimulus package of tax cuts and increased government spending with improving employment.   He hopes to create about 3.5 million jobs.  Lower estimates put that figure at 2 to 2.5 million jobs by the end of 2010, reducing the unemployment rate to 8+%. 

The Fed’s record-low interest rates, along with other moves to drive down loan rates and stimulate borrowing, have supported the economic rebound.

The White House Council of Economic Advisers released a report showing the plan would save or create 1.5 million jobs by the end of 2009 and 3.5 million by the end of 2010. 

A senior White House official stated that the Obama administration’s fiscal stimulus plan will meet their previous estimates to save 3.5 million U.S. jobs by the end of 2010, but the unemployment rate at that time may be higher due to further deterioration in the economy.  White House officials have been careful to point out that estimated jobs created and saved have merely slowed continued job losses.

The president is now drafting a proposal to try to stimulate more hiring.  Obama plans to send Congress a list of ideas, including new tax breaks for small businesses that hire, some new spending on roads, bridges and other construction and grants to state and local governments to avoid layoffs.  Congress is likely to take up a job-creation package in the New Year.

***Stimulus spending by state: 

As of January 5, 2010, of the
$328,417,898,346 announced,
$313,900,089,021 (95.6%) has been made available
$164,246,301,846 (50.0%) has been paid out to the states

http://www.recovery.gov/Pages/TextView.aspx?data=homeMap

 Recession histories:

With Nov 1982 unemployment at 10.2%, and the government taking aggressive action, it was still more than five years (April 1988) from the peak before unemployment receded to 5.4%. 

The approach that time, however, was to fix the economy at the expense of the worker.

Some compare the fall in employment to 1974-1975 and 1981-1982. If the comparison is accurate, the peak in unemployment may be reached within the next four to five months (past performance is no guarantee of the future).

Economist William Polley made a chart that includes every recession since World War II.  It makes the chart pretty hard to read, so he simplified it with selected post-WWII recessions.

William Polley’s chart shows how the recovery from the 2001 recession took four years for employment to return to its February 2001 peak. 

Using the Department of Labor unemployment tables of unemployment rates and 5.5% as the “normal” rate of unemployment, I have analyzed things a little differently.  Of course, along the way, the Civilian labor force increases, so the percentages represent ever more workers.

The following table shows unemployment start dates, peaks and returns to the normal rate of 5.5%, Civilian labor force in millions of workers for that year, and the lengths of times from the start date in months:

Recession peaks 1974-2009 

Note that the unemployment peak period that started in 1974 and ended in 1979 (lasting nearly five years) was followed immediately by another peak period ending nearly nine years later.  By the end of that period, the work force had increased by more than 32%, meaning overall, almost 30 million new jobs had to be created.

 The aggressive increase in the Civilian labor force in that period can likely be attributed to post-World War II babies reaching adulthood, with some entering the labor force after secondary school and the rest entering the workforce after further education.

The periods from 1988 to 1990 and 1995 to 2008 were periods of prosperity, with low unemployment (but a building bubble). Here is the same data in graphic form:

Unemployment rates:
It is interesting to recognize that in most cases, unemployment peaks roughly one-third of the timeline for unemployment to return to its “normal” rate, so we can double the number of months from the Start to the Peak to expect to arrive at an approximate return to “normal.”We live in hope (again, past performance is no guarantee of the future).

What ever happened to old-fashion cash?  We remember, those small paper bills with the pictures of notables long past on them.  They used to be green, but are getting more colorful.  The questions is why use cash when we can swipe our credit or debit cards.

Credit cards were started so people could temporarily borrow to purchase expensive goods today on the promise they would repay the lender with interest in the future.  They were for the collection of goods before we could pay for them.  And the key word here is borrow.

It wasn’t long before borrowers discovered that the cards could also be used for inexpensive goods such as newspapers or cups of coffee.  And it wasn’t long before the lenders discovered that the cards provided more interest income than any other investment type. 

And as credit cards were used more and more, people ignored the balances, and simply charged what they wanted.  The system was perfect for the consumer.  Keep buying goods as if they were free with only an easy payment every month. 

Then lenders discovered they could raise interest rates without consequence.  They also discovered that their debtors were having trouble meeting their agreed-upon payments.  And so the late fee was added. 

We are now all forced to be part of the credit card system.  We must have at least one credit card to get a FICO score, necessary for big-ticket items like new cars and mortgages. 

The problem arises when we swipe away, unaware exactly how much credit is outstanding on our account.  When one credit card gets too near the maximum, we just whip out another one. 

We soon find we can only pay the minimum payment on each card each month.  The trap has been sprung.  How does this happen?  How do responsible people like us get into such a fix?

The brain wants what it wants.

In his book,
The Happiness Hypothesis: Finding Modern Truth in Ancient Wisdom
psychology professor Jonathan Haidt compares people’s behavior to a person riding atop an elephant.  The rider represents our rational outlook, newly developed as we became civilized.    The elephant represents our older, primitive attitude.  A complex maneuvering exists between our rational, analytic side and the older, impulsive, primitive side.  When the two sides work together, our brains can accomplish amazing things.  But sometimes, the elephant asserts its dominance and ignores the rider’s rational voice. 

The brain wants what it wants.  And the elephant has learned that wishes do come true as long as the card swipe is approved. 

Payday spending

In today’s recession economy, the credit card bubble is shrinking rather than bursting.  Both lower-price and middle-income major retailers are commenting on the major shift away from credit to cash and debit cards, and the trend toward payday spending.

Interviewed customers reported being unable to purchase even necessities shortly before paydays.  Retailers are reporting spending spurts in the days immediately following normal paydays.   

The last time that happened was around 1991 when the U.S. was entering recession.  In recent years when home prices were soaring, consumers tapped their inflated home equity to fund purchases made with credit cards.  It was a fantasy with no end. 

But it did end with high mortgages and no equity, high credit balances, and in the worst of conditions, no job income to pay off any of it.

Limiting credit 

Facing the decrease in credit card usage, lenders are focusing on monetizing cards to produce the highest income possible for them.  For the many people unable to live without credit, lenders are raising interest rates and late fees as well as other financial trickery to receive the most income from those who have difficulty making their minimum payments on time or at all. 

For consumers who don’t use their cards or pay their full balance every month, lenders are severely cutting credit limits or canceling the account as unprofitable. 

And consumers are receiving fewer credit card offers from all sources. 

The CARD Act

The CARD (Credit Card Accountability, Responsibility and Disclosure) ACT of 2009 taking effect in February 2010, limits lenders from:

• increasing interest rates on existing balances or in the first twelve months of a new account except when the interest is variable, an introductory period ends, or the consumer fails to comply with an agreed-to plan (almost all credit cards have variable rates)
• increasing interest rates based on unrelated account payments (e.g. utilities, other cards)
• failing to review accounts and decrease interest rates to previous levels when reasons for previous increases no longer apply (e.g. creditworthiness)
• mailing monthly statements less than 21 days before the due date
• making significant changes to accounts with less than 45 days notice
• not allowing consumers to ‘opt out’ or freeze the further use of their cards
• double-cycle billing or adjusting finance charges on previous billing cycles
• changing payment dates
• creating late fees if the due date was a weekend or lender changed address within 60 days
• charging fees for consumers to pay by mail, electronic transfer, telephone or other methods
• charging gift card fees such as dormancy fees, inactivity fees or service fees unless fully disclosed prior to purchase or expiring them within 5 years of activation
• charging more than 25 percent of the credit limit in upfront fees for sub-prime cards
• charging over-limit fees without consumer approval to accept the fee in place of credit rejection

Lenders won’t give up

Although the CARD Act attempts to limit lending practices the Federal Reserve labels “unfair or deceptive,” it will not stop lenders from poring over the legislation to find what lawmakers have missed and what is not explicitly prohibited. 

Fees and hidden calculations that are already being applied include:

• charging inactivity fees for card holders who do not use their cards, including those who have been forced to ‘opt out’ and freeze their use by aggressive term changes (they are prevented from activity and charged a fee for inactivity)
• extending the time period from 30 days to 90 days to calculate variable interest rates based on the highest prime rate in the period
• issuing a base or “floor” rate on which the interest rate will be calculated, even if the prime rate goes lower
• raising fees and removing caps on finance charges for cash advances and balance transfers so the card holder pays the higher of either the percentage fee or the minimum finance charge (can be $20 per transaction)
• calculating and charging late fees based on the card balance
• charging expedited payment fees to avoid late payments
• charging foreign transaction fees for any transaction that touches a foreign bank, instead of just currency exchanges (e.g. a foreign bank can change U.S. dollars to U.S. dollars and charge a currency exchange fee) 

CreditCards.com gives more examples of creative charges.

Retail challenge

Stores are also facing financial challenges with the pressure of controlling their credit accounts from defaults and still making customers feel welcome.  They are tightening credit and still trying to boost sales with moves like purchase discounts if a customer just applies for a card, and interest-free financing and delayed payments on secured purchases. 

Debt to Debit

To avoid going further into debt, comsumers are migrating to swiping their debit cards, with the thought that if it comes out of their checking account, it is not debt.  In 2009, membership in debit card programs increased 45% over the previous year.

And lenders are encouraging consumers to do it by offering debit-card reward programs.

Some banks are offering cash incentives to a narrowly focused segment of consumers.  But less than half of consumers who sign up actually qualify for the cash benefit.  The hooks are in the small print, requiring customers to set up direct deposit, maintain a minimum account balance, and swipe their debit card a minimum number of times per month. 

Direct deposit tends to encourage customers to stay with the bank longer because of the perceived bother to change.  Minimum account balances give the bank the use of the depositor’s money, perhaps without interest.  Using a debit card creates cash flow for the bank from interchange fees.   And having our personal checking account information allows the pitching and cross-selling of more products and services. 

Budget Affordability

We all, I’m sure, feel sorry for lenders and retailers and their financial problems, but we are probably more concerned for our own business of family and home.   It may mean hardships for some, giving up the extra expense items and buying only what we can afford, but our grandparents would be proud of us. 

We may still have to swipe on occasion, but we still have choices of how to use the system to our advantage.  The situation arose because we were unable to see our entire financial picture at once, and how much we owed in total.

Knowing that, we can keep a close eye on our statements, what things are costing us, how much per month we are spending and how much we should spend.  We can avoid and negotiate some fees and leave banks that gouge us, perhaps dealing with smaller banks or credit unions where customers are more than just a number. 

We can begin to stop being victims.

Purchasing big-ticket items like a home or a car or home appliances will still require lender dealings, but once our debts are paid down, our bookkeeping ledger will turn from red to black and that will make us feel wealthier. 

This new way of life will be strange to many, and we may have to resort for a time to payday spending, but paying for a product with our current funds, knowing that it is ours, rather than future funds and sharing ownership with the lender will give us a great sense of satisfaction.

This type of commitment requires a budget.  It doesn’t have to be a to-the-penny budget, but we can set affordability targets and limits on how much we will spend for everything from groceries to holiday gifts.  We can also see the total of what we owe in one place, all at once.    

Remember Christmas clubs and layaway plans?  They were methods of putting aside funds for holidays and gifts.  The good news is that the concept can be applied for any purpose with any steady contribution. 

And to really feel in control, we can pay for purchases and put aside funds in good, old-fashioned cash. 

We can do it.

If you would know the value of money, go and try to borrow some.
–Benjamin Franklin

Old-fashioned Cash

Employment:

Nonfarm payroll employment virtually stopped in its tracks (down 11,000) after continuing the slowdown trend (111,000 [revised] in October, 139,000 [revised] in September, 201,000 in August [revised], 304,000 in July [revised], 467,000 in June, 345,000 in May, 539,000 in April and 633,000 in March).  

Since the start of the recession, payroll employment has decreased by 7.2 million, but November is the lowest number of jobs lost since the start of the recession.

The 3-month average job layoff figure has been improving steadily, and November’s figures break the trend.  August through October were 150,333 [revised]; July – September was 256,000; June – August was 324,000; May – July was 372,000; April – June was 450,333; March – May was 505,667.

The numbers still indicate that companies are approaching their maximum “leanness” and sustain perceptions that the economy gradually will swing to employment recovery.

The number of unemployed persons decreased in November by 325,000.  Previous month increases were October (558,000), September (214,000), August (466,000), July (267,000), June (218,000), May (787,000), April (563,000) and March (851,000). 

Total unemployment has risen to 15.4 million from 7.5 million (4.9%) in December 2007 and from 11.6 million (7.6%) in January 2009. 

The economy has lost 7.3 million jobs from December 2007 through September 2009, wiping out all the jobs created in the private sector over the last decade.

Unemployment is the highest since April 1983.  In a healthy economy, around 125,000 jobs a month must be added and filled just to keep the unemployment rate stable.

The current rate is 10.0% and the number unemployed is at 15.4 million. 

The number of persons working part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed in November at 9.2 million.  Previous month part time figures were October (9.3 million), September (9.2 million), August (9.1 million), July (8.8 million) and June (9.0 million).  

These persons had their hours cut back or were unable to find full-time jobs.  Since the start of the recession, the number of such workers has increased by 4.4 million, and has remained relatively constant since March 2009. 

Long-term unemployed persons (jobless for 27 weeks and more) have tripled since the start of the recession to 5.9 million since December 2007, adding 293,0000 to that number in November.  One in three (38.3%) unemployed persons are in this category. 

The average length of unemployment has risen to more than 28 weeks, the longest on record since 1948.

There were 861,000 discouraged workers in November, up from 608,000 a year ago.  Discouraged workers are persons no longer looking for work.

Ed.Note: Note that the number unemployed dropped by 291,000 in November, contrasting with the 11,000-worker drop in payroll employment.  This accounts for workers dropping out of the Civilian labor force.  Coincidentally, this is the exact increase in long-term unemployed persons. 

The number unemployed (and the unemployment rate) includes only those who looked for work in the last 4 weeks, and changes as the Civilian labor force population varies. 

As consumer and business confidence improves, more workers will start to look for jobs again, returning to the workforce in anticipation of better employment conditions, which drives the unemployment rate higher.  On the other side, workers drop from the work force for a number of reasons including giving up looking for work.

Manufacturing jobs dropped 41,000 in November.  Previous month losses were October (61,000), September (51,000), August (63,000), July (52,000), June (136,000), May (156,000), April (149,000) and March (161,000) with widespread job losses totaling 2.1 million since December 2007, mostly in the durable goods industry. 

Construction jobs dropped by 27,000 in November.  Previous month losses were October (62,000), September (64,000), August (65,000), July (76,000), June (79,000), May (59,000), April (110,000), and March (161,000), with a total of 1.6 million since December 2007.  The average for May through October was 63,000 and 117,000 for the six months preceding that.   

Retail trade employment added 8,000 department store jobs as merchants geared up for the holiday season.  Previous month losses were October (40,000), September (39,000), August (9,600), July (44,000), June (18,000), and April (47,000). 

Education and health services continued to add jobs, with health care payrolls increasing by 21,000 in November.  Positive previous months were October (45,000), September (19,000), August (52,000), and July (21,000).  The health care industry has added 613,000 jobs since December 2007.

Professional and business services added 86,000 jobs in November, 52,000 of which were temporary jobs.  Previous changes were increases in October (18,000) and September (3,000), and losses in August (22,000), July (38,000), June (118,000), May (51,000), April (122,0000), and March (133,000). 

Government employment added 7,000 jobs in November, mostly teachers.  Previous changes were adds for October (46,000).  Losses were registered in September (53,000), August (18,000) and July (28,000).

Unemployment spreads stayed relatively the same with the highest among teenagers (26.7%), followed down by African-Americans, then Hispanics.  The lowest unemployment started with Asians (7.3%) followed up by Adult women (7.9%), Whites, then Adult men (10.5%). 

The good news from this data is that the job losses seem to be lessening.  It is perhaps due to fewer jobs available to lose, but the lower figures are an encouraging sign. 

The average manufacturing workweek rose by 0.3 hours to 40.4 hours with overtime rising tro 3.4 hours.  This figure closely correlates with overall output and gives clues (when workweek hours increase) on when firms will start hiring. 

Average hourly earnings (influenced by the recent increase in the legal minimum wage) edged up $0.01 to $18.74 for November, rising for a seventh straight month.  Over the past 12 months average hourly earnings have risen 2.2%.  

Workforce:

The total Civilian labor force stands at 153.9 million (down 98,000 from October).  There are a million fewer workers in the work force than in June (154.9 million).  

The Civilian labor force usually grows as a recession winds down and optimism about finding work grows.  But as long as Americans remain anxious about their jobs, consumer spending is not expected to grow enough to power an economic rebound. 

The employment population ratio, at 58.5 percent, has declined by 4.2 percent since the recession began in December 2007.

Comparing now with the final month of the last major downturn in November 1982, the total Civilian labor force then stood at 111.1 million.  In that month, there were 11.9 million people unemployed accounting for 10.8% of the available work force (average for the year was 10.6 million unemployed with the rate at 9.7%). 

Looking at jobs needed to reduce unemployment
with the total Civilian labor force at 153.9 million:

.
To restore employment to the 5.5% level of 2008, about 6.9 million people will have to regain their job or start new jobs.  It is a tall mountain to climb. 

Ed.Note:  Government and economists foretell that the “normal” unemployment rate will move up to 8% from its current 5.5% level.  With the current Civilian labor force, that means that on a permanent basis there will be roughly 12.5 million people unemployed — more than 4 million more than at the “normal” level today. 

Data collection:

The Census Bureau surveys 60,000 households across the country to insure an accurate demographic survey.  This translates into about 110,000 individuals.  All the counties and county-equivalent cities are grouped into 2,025 geographic sampling units.  824 of these units are selected to accurately represent the entire population of the United States.  For a detailed explanation, see the BLS Handbook of Methods. 

Each month, one-fourth of the interviewed households are rotated out.  They rejoin the sample after eight months, are interviewed for another four months, and then are rotated out forever. 

Each month, 2,200 highly trained Census Bureau employees conduct interviews in the sample households for information on labor force activities (job holding and job seeking) or non-labor force status of household members. 

This sampling method results in a 90+ percent probability that the results will be within 290,000 of the 160 million people in the Civilian labor force.  A monthly total census would be cost-prohibitive. 

Questions are specifically formulated so that neither the interviewer nor the persons interviewed decide their labor force classification.  This prevents the sample from being distorted by respondents providing answers based on their opinion or what a “right” answer should be. 

The basic concepts of employment are: 
1.      People with jobs are employed
2.      People who are jobless, looking for jobs and available for work are unemployed. 
3.      The sum of people employed or unemployed constitute the Civilian labor force. 
4.      People who are neither employed nor unemployed are not in the Civilian labor force. 
5.      People who are either institutionalized in a facility (correctional, residential nursing or mental health) or on active duty with the Armed Forces are not counted. 

The unemployment rates are extrapolated from the survey results. 

The quoted unemployment rate excludes people who have stopped looking for work because they believe no jobs are available (discouraged workers) and others outside the labor force.  They are counted separately. 

Their number has nearly doubled in the previous 12 months.

 Stimulus (Recovery Act):

The president credits his $787 billion stimulus package of tax cuts and increased government spending with improving employment.   He hopes to create about 3.5 million jobs.  Lower estimates put that figure at 2 to 2.5 million jobs by the end of 2010, reducing the unemployment rate to 8+%. 

The Fed’s record-low interest rates, along with other moves to drive down loan rates and stimulate borrowing, have supported the economic rebound.

The White House Council of Economic Advisers released a report showing the plan would save or create 1.5 million jobs by the end of 2009 and 3.5 million by the end of 2010. 

A senior White House official stated that the Obama administration’s fiscal stimulus plan will meet their previous estimates to save 3.5 million U.S. jobs by the end of 2010, but the unemployment rate at that time may be higher due to further deterioration in the economy.  White House officials have been careful to point out that estimated jobs created and saved have merely slowed continued job losses.

The president is now drafting a proposal to try to stimulate more hiring.  Obama plans to send Congress a list of ideas, including new tax breaks for small businesses that hire, some new spending on roads, bridges and other construction and grants to state and local governments to avoid layoffs.  Congress is not likely to take up a job-creation package until after New Year’s.

***Stimulus spending by state: 

As of December 1, 2009, of the
$326,663,100,776 announced
$300,523,356,139 (92.0%) has been made available
$145,134,241,664 (44.43%) has been paid out to the states

http://www.recovery.gov/Pages/TextView.aspx?data=homeMap

 Recession histories:

With Nov 1982 unemployment at 10.2%, and the government taking aggressive action, it was still more than five years (April 1988) from the peak before unemployment receded to 5.4%. 

The approach that time, however, was to fix the economy at the expense of the worker.

Some compare the fall in employment to 1974-1975 and 1981-1982. If the comparison is accurate, the peak in unemployment may be reached within the next four to five months (past performance is no guarantee of the future).

Economist William Polley made a chart that included every recession since World War II.  It makes the chart pretty hard to read, so he simplified it with selected post-WWII recessions.

William Polley’s chart shows how the recovery from the 2001 recession took four years for employment to return to its February 2001 peak. 

Using the Department of Labor unemployment tables of unemployment rates and 5.5% as the “normal” rate of unemployment, I have analyzed things a little differently.  Of course, along the way, the Civilian labor force increases, so the percentages represent ever more workers.

The following table shows unemployment start dates, peaks and returns to the normal rate of 5.5%, Civilian labor force in millions of workers for that year, and the lengths of times from the start date in months:

 Recession peaks 1974-2009 

Note that the unemployment peak period that started in 1974 and ended in 1979 (lasting nearly five years) was followed immediately by another peak period ending nearly nine years later.  By the end of that period, the work force had increased by more than 32%, meaning overall, almost 30 million new jobs had to be created.

 The aggressive increase in the Civilian labor force in that period can likely be attributed to post-World War II babies reaching adulthood, with some entering the labor force after secondary school and the rest entering the workforce after further education.

The periods from 1988 to 1990 and 1995 to 2008 were periods of prosperity, with low unemployment (but a building bubble). Here is the same data in graphic form:

Unemployment rates:

It is interesting to recognize that in most cases, unemployment peaks roughly one-third of the timeline for unemployment to return to its “normal” rate, so we can double the number of months from the Start to the Peak to expect to arrive at an approximate return to “normal.”We live in hope (again, past performance is no guarantee of the future).

At the outset, people traded down to necessities and cheaper brands.  As people settled in to the recession mindset, they realized they could fill a few needs above the bare necessities, but price was still the major determination.  

Habits die hard, and people wanted the brands they had always used, or something at least above generic, and that’s where the coupon came into its own. 

A coupon narrowed the price gap and allowed the consumer to justify the more expensive brand.  The “name” brand was also justified when the generic brand just “didn’t do the job” or the consumer was pre-disposed that the name brand was the only one that could. 

To captivate more customers, generic brands were raised in quality and more attractive packaging.  That increased their prices, but they were still well below name brand prices. 

Generic brands are generally store label brands, and although they are contracted from major manufacturers under the store label, this put the stores in direct competition with the manufacturers, some of whom resorted to TV ads to keep sales up.

Although the innovative pricing is most apparent in the food stores, other retail stores are offering deals, bargains and discounts to get the consumer into the store.  Restaurants are offering coupons and deals on the second meal, just to keep their doors open. 

We, as consumers, should realize if these manufacturers, restaurants and stores are making profit taking less of our money today, they were formerly over-charging to the maximum their customers would allow.

The consumer’s current resourceful behavior has been the engine of change in the business model of manufacturers and the stores that sell their products.  Price is still king, and as the recession goes through its cycle, people are satisfying more needs beyond necessities, but they are insisting on quality, reputation and customer service, and are still very careful with their money. 

We hope that this is the new standard.

Employment:

Nonfarm payroll employment continued to trend down this month (down 190,000 in October) but restarting a slowdown trend that was interrupted by a jump last month (263,000 in September, 201,000 in August (revised), 304,000 in July (revised), 467,000 in June, 345,000 in May, 539,000 in April and 633,000 in March). 

The 3-month average job layoff figure has been dropping steadily.  August through October was 232,000; July – September was 256,000; June – August was 324,000; May – July was 372,000; April – June was 450,333; March – May was 505,667.

The numbers still indicate that companies are approaching their maximum “leanness” and sustain perceptions that the economy gradually will swing to employment recovery.

The number of unemployed persons increased in October by 558,000.  Previous month increases were September (214,000), August (466,000), July (267,000), June (218,000), May (787,000), April (563,000) and March (851,000). 

Total unemployment has risen from 11.6 million (7.6%) in January to its current rate representing and additional 8.2 million workers unemployed since December 2007.  Unemployment is the highest since April 1983.  In a healthy economy, around 125,000 jobs a month must be added and filled just to keep the unemployment rate stable.

The current rate is 10.2% and the number unemployed is at 15.7 million. 

The number of persons working part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed in October at 9.3 million.  Previous month part time figures were September (9.2 million), August (9.1 million), July (8.8 million) and June (9.0 million).   These persons had their hours cut back or were unable to find full-time jobs.  Since the start of the recession, the number of such workers has increased by 4.4 million, and has remained relatively constant since March 2009. 

Long-term unemployed persons (jobless for 27 weeks and more) has tripled since the start of the recession to 5.6 million since December 2007, adding 156,0000 to that number in October.  One in three (35.6%) unemployed persons are in this category. 

Ed.Note: It is possible that as consumer and business confidence is improving, more workers are starting to look for jobs again, returning to the workforce in anticipation of better employment conditions.  This drives the unemployment rate higher.

Construction job losses led the month, down 62,000 in October.  Previous month losses were September (64,000), August (65,000), July (76,000), June (79,000), May (59,000), April (110,000), and March (161,000), with a total of 1.6 million since December 2007. 

Manufacturing was a close second, down 61,000 in October.  Previous month losses were September (51,000), August (63,000), July (52,000), June (136,000), May (156,000), April (149,000) and March (161,000) with widespread job losses totaling 2.1 million since December 2007. 

Retail trade employment dropped by 40,000 in October.  Previous month losses were September (39,000), August (9,600), July (44,000), June (18,000), and April (47,000). 

Education and health services continued to add jobs, with payrolls increasing by 45,000 in October.  Previous month adds were September (19,000), August (52,000), July (21,000). 

Professional and business services added 18,000 jobs.  Previous changes were September (add 3,000), and losses in August (22,000),  July (38,000), June (118,000), May (51,000), April (122,0000), and March (133,000). 

Government employment stayed even for October.  Previous losses were September (53,000), August (18,000) and July (28,000).

Unemployment spreads stayed relatively the same with the highest among teenagers (27.6%), followed down by African-Americans, then Hispanics.  The lowest unemployment started with Asians (7.5%) followed up by Adult women (8.1%), Whites, then Adult men (10.7%). 

The good news from this data, is that the job losses seem to be lessening.  It is perhaps due to fewer jobs available to lose, but the lower figures are an encouraging sign. 

The average workweek remained constant after edging down by 0.1 to 33.0 hours in August.  This figure closely correlates with overall output and gives clues (when workweek hours increase) on when firms will start hiring. 

Average hourly earnings (reflecting the recent increase in the legal minimum wage) edged up $0.05 to $18.72 for October, rising for a sixth straight month.  

 Workforce:

The total Civilian labor force stands at 153.9 million (down 31,000 from September).  There are nearly a million fewer workers in the work force than in June (154.9 million).  

The Civilian labor force usually grows as a recession winds down and optimism about finding work grows.  But as long as Americans remain anxious about their jobs, consumer spending is not expected to grow enough to power an economic rebound. 

The employment population ratio, at 58.5 percent, has declined by 4.2 percent since the recession began in December 2007.

Comparing now with the final month of the last major downturn in November 1982, the total Civilian labor force then stood at 111.1 million.  In that month, there were 11.9 million people unemployed accounting for 10.8% of the available work force (average for the year was 10.6 million unemployed with the rate at 9.7%). 

Looking at jobs needed to reduce unemployment
with the total Civilian labor force at 153.9 million:

.

To restore employment to the 5.5% level of 2008, about 7.2 million people will have to regain their job or start new jobs.  It is a tall mountain to climb. 

Ed.Note:  Government and economists foretell that the “normal” unemployment rate will move up to 8% from its current 5.5% level.  With the current Civilian labor force, that means that on a permanent basis there will be roughly 12.5 million people unemployed — more than 4 million more than at the “normal” level today. 

Data collection:

The Census Bureau surveys 60,000 households across the country to insure an accurate demographic survey.  The unemployment rates are extrapolated from the survey results. 

The quoted unemployment rate excludes people who have stopped looking for work because they believe no jobs are available (discouraged workers) and others outside the labor force.  They are counted separately.  Their number has nearly doubled in the previous 12 months.

 Stimulus (Recovery Act):

The president’s $787 billion stimulus bill signed into law hopes to create about 3.5 million jobs.  Lower estimates put that figure at 2 to 2.5 million jobs by the end of 2010, reducing the unemployment rate to 8+%. 

The White House Council of Economic Advisers released a report showing the plan would save or create 1.5 million jobs by the end of 2009 and 3.5 million by the end of 2010. 

A senior White House official stated that the Obama administration’s fiscal stimulus plan will meet their previous estimates to save 3.5 million U.S. jobs by the end of 2010, but the unemployment rate at that time may be higher due to further deterioration in the economy.  White House officials have been careful to point out that estimated jobs created and saved have merely slowed continued job losses.

 Stimulus spending by state: 

As of October 27, 2009, of the
$314,699,919,456 announced
$291,221,961,803 (92.5%) has been made available
$123,525,097,127 (39.25%) has been paid out to the states

http://www.recovery.gov/Pages/TextView.aspx?data=homeMap

 Recession histories:

With Nov 1982 unemployment at 10.2%, and the government taking aggressive action, it was still more than five years (April 1988) from the peak before unemployment receded to 5.4%. 

The approach that time, however, was to fix the economy at the expense of the worker.

Some compare the fall in employment to 1974-1975 and 1981-1982. If the comparison is accurate, the peak in unemployment may be reached within the next four to five months (past performance is no guarantee of the future).

Economist William Polley made a chart  that includes every recession since World War II.  It makes the chart pretty hard to read, so he simplified it with selected post-WWII recessions.

William Polley’s chart shows how the recovery from the 2001 recession took four years for employment to return to its February 2001 peak. 

Using the Department of Labor unemployment tables of unemployment rates and 5.5% as the “normal” rate of unemployment, I have analyzed things a little differently.  Of course, along the way, the Civilian labor force increases, so the percentages represent ever more workers.

The following table shows unemployment start dates, peaks and returns to the normal rate of 5.5%, Civilian labor force in millions of workers for that year, and the lengths of times from the start date in months:

 Recession peaks 1974-2009 

 Note that the unemployment peak period that started in 1974 and ended in 1979 (lasting nearly five years) was followed immediately by another peak period ending nearly nine years later.  By the end of that period, the work force had increased by more than 32%, meaning overall, almost 30 million new jobs had to be created.

 The aggressive increase in the Civilian labor force in that period can likely be attributed to post-World War II babies reaching adulthood, with some entering the labor force after secondary school and the rest entering the workforce after further education.

The periods from 1988 to 1990 and 1995 to 2008 were periods of prosperity, with low unemployment (but a building bubble). Here is the same data in graphic form:

Unemployment rates:

It is interesting to recognize that in most cases, unemployment peaks roughly one-third of the timeline for unemployment to return to its “normal” rate, so we can double the number of months from the Start to the Peak to expect to arrive at an approximate return to “normal.”

We live in hope (again, past performance is no guarantee of the future).