Growth in U.S. Employment Slowing

April 2, 2010

As a matter of follow-up to this morning’s post about the March employment report, in which the addition of 162,000 jobs was hailed as a turning point for the economy in spite of unemployment holding steady at 9.7%, there’s a darker side buried in the report that has received short shrift. 

After falling to a low of 137,792,000 in December, the employment level in the U.S. has now risen for three straight months.  That’s good news, but there’s a trend developing that suggests that the news may be short-lived.  The following is the month-by-month growth in the empl0yment level since December:

  • January – 541,000
  • February – 308,000
  • March – 264,000

And, again, 48,000 of those jobs in March were Census jobs that will be eliminated in June.  After making a nice pop in January, the rise in employment level is petering out.  If this trend persists, we could see the employment level resume its decline as early as June. 

Those who are counting on a brightening jobs picture to stoke the economy might want to hold off on popping the champagne corks just a little longer.

(Here’s the data:)

Unemployment Calculation

U.S. Unemployment Falls to 11.4% in March

April 2, 2010

The Bureau of Labor Statistics (BLS) reported this morning that the economy added 162,000 jobs in March and that unemployment held steady at 9.7%.  (See the above link to the BLS report.)

However, since the onset of the Great Recession, the government steadily removed workers from the work force, “banking” them in an unemployment la-la land, with the explanation that they simply dropped out of the labor force.   More recently, in the last three months, they’ve begun the process of adding them back in.  By doing so, the BLS effectively put a lid on unemployment at 10%.  This is why Treasury Secretary Tim Geithner has been saying that unemployment will remain unacceptably high for a long time.  Even though the economy may be adding jobs now, they have a lot of “banked” workers that they need to re-add to the calculation. 

In fact, I had to laugh when I saw the BLS’s calculation of the unemployment rate this month.  (The following is a spreadsheet that presents the actual figures used to calculate unemployment, together with my own figures which are based on the assumption that the work force remains a constant percentage of the total population.):

Unemployment Calculation

If you’ll look at the March figure for “Civilian Labor Force” – 153,910 (thousands) – you’ll see that it yields an unemployment rate of 9.749%, one one-thousandth of a percent below the level where rounding to one decimal point would have made the figure 9.8%.  If the March figure for the civilian labor force was increased by only 505 workers to 153,910.505 (thousands), the report would have shown a jump in unemployment from 9.7% to 9.8%, something that would have turned an otherwise positive report into a negative.  Now tell me that the BLS isn’t manipulating this figure and reintroducing “banked” workers at a measured pace!

A much more accurate accounting holds the number of workers at a fixed percentage of the total population.  By that measure, unemployment now stands at 11.4%, a reduction of 0.1% from February. 

Interestingly, U6 unemployment, the broader measure that includes part-time and discouraged workers, actually rose in March to 16.9%, the second increase in a row. 

See the following charts for a more complete graphical depiction of what’s happening in the labor market:

Unemployment Chart     Labor Force & Employment Level     Unemployed Americans

The BLS breaks down the growth in jobs in March (162,000) as follows:

  • Census Workers – 48,000
  • Temp Services – 40,000
  • Health Care – 27,000
  • Manufacturing – 17,000
  • Construction – 15,000
  • Mining – 8,000
  • Transportation & Warehousing – no change
  • Leisure & Hospitality – no change
  • Retail Trade – no change
  • Wholesale Trade – no change
  • Financial Activities – (21,000 jobs lost)
  • Information Industry – (12,000 jobs lost)

(The figures don’t add up to 162,000 jobs.  The BLS report is just highlighting the most significant changes.) 

The bad news here is that all of the people hired in the first category will be laid off again in June.  Take away that category and the growth in jobs is insufficient to prevent unemployment from rising, given the rate of increase in the labor force and the population in general.  And the second category is temp, part-time work. 

We’re sure to see the jump in hiring in the health care field continue, following passage of the health care plan, which expands health coverage to an additional 30 million people.  It will be interesting to see at what point policy-makers reconcile an explosion in employment in the health care field with the need to reduce health care costs.  Something will have to give. 

Rising employment in manufacturing is good news and corroborates other measures that have shown manufacturing on the rise for the past few months.  But will it continue once inventories have been rebuilt?  And will the balance of trade improve as the president has vowed, or will it worsen and shoot manufacturing in the head?  Count me as a skeptic, since nothing concrete has been done to slow the pace of imports. 

There are those – free trade policy advocates, primarily – who say that we can forget about manufacturing, that America has transitioned to a services and information economy.  If so, the declines in employment in financial services and in the information industry don’t bode well. 

The problem with all of this is that employment has been propped up by the Economic Recovery Act, and the spending under that program will be nearly finished by the end of this year.  In fact, it can be argued that with a GDP of about $14 trillion and a federal budget deficit of $1.5 trillion, over 10% of our economy is the result of deficit spending.  What will happen when the Economic Recovery Act (otherwise known as the “stimulus plan”) ends and as lawmakers come under intense pressure to reduce the federal deficit?  The whole employment situation could quickly turn quite ugly again. 

But, for the next few months, we’re sure to get a rosy picture and the administration will be encouraging us to let the good times roll.

Progress in the Church’s Oppostion to Contraception?

April 1, 2010

As a Catholic myself, it pains me that the Church is so incredibly backward when it comes to its stance on the use of contraception, and that it uses such twisted logic to defend it.  So it was with some hope that I read this Reuters article (link above), reporting on comments by the Archbishop of Westminster, leader of the Catholic Church in England. 

“I think when it comes to Third World poverty, and the great pressure into which many women are put by men, I can see the arguments why, in the short-term, means that give women protection are attractive,” Nichols said in extracts of an interview released by BBC Radio WM before broadcast on Friday.

But then, apparently not wanting to get carried away and seem too wild and crazy, the archbishop tempered his remarks with the usual nonsense:

“The use of condoms doesn’t lack for champions; there are plenty of champions around giving and distributing condoms. I don’t think it’s the Church’s role simply to add its voice to that but rather, in contrast, to keep saying, “If we solve the poverty then consistently we know the birth rate comes down’.”

Tell me, Archbishop Nichols, after looking at a graph of world population for the past 2,000 years, how is that whole “solve poverty” thing working for us?  Since the industrial revolution began, poverty has been virtually wiped out in the Americas, in Europe and in parts of Asia.  But the result for the world’s population has been an explosion from less than one billion people 200 years ago to 6.8 billion people today – a much higher rate of population growth than at any other time in human history. 

Development isn’t the solution to an exploding population, it’s the cause.  Everyplace where even the most basic measures are introduced into an undeveloped region – things like simple sanitation and basic medicine – the death rate is driven down rapidly and a once-stable population suddenly explodes.  Eventually, over a long period of time, birth rates slowly follow the decline in the death rate, and populations stabilize once again, but only after many decades of explosive growth.  The end result is a population many times larger.  To then look at the situation and conclude that “solving poverty” was the solution to overpopulation is absolutely idiotic.  I want to scream every time I hear someone repeat this myth.

And then the article repeats the standard, goofy logic used to defend the Church’s opposition to contraception:

The Catholic Church opposes contraception saying it denies the divine gift of life.

Oh, really?  What about the divine gift of intelligence which actually makes us human, distinguishing us from the rest of the animal kingdom?  Though our Creator endowed us with the reproductive capacity to assure the survival of our species early in our history, when life expectancy was about 30 years of age, He also blessed us with the intellectual capacity needed to improve our lives and to rein in that reproductive capacity once it was no longer needed. 

If using our intellects to rein in our reproductive capacity is somehow meddling with His will, then isn’t it also logical that the application of that intellect to conquer diseases and extend our lives is also meddling with His will?  Isn’t the use of fertility methods like invitro fertilization  also contradictory to His will to deny the gift of life to some people?  How can any of us even know His will in these matters to begin with? 

If the archbishop’s comments on contraception are a sign of progress in  the softening of the Church’s stance against contraception, all I can say is that it’s a good thing that “progress” by the sciences didn’t occur at the same pace.  If it had, right at this moment, one of us cave men might be poking a stick through a hole in a round rock and celebrating the invention of the wheel.

Foreign-Born Population Declining in California and U.S.

April 1, 2010

The above-linked report from the USC School of Policy, Planning and Development observes the end of a trend of an increasing percentage of foreign-born people in both the California population and the U.S. population as a whole.  The percent of foreign-born in California peaked at an astounding 27.4% in 2007.

California is widely known for its large foreign-born population.  Among the state’s 33,871,648 residents in the 2000 census, 26.2% were foreign-born, the highest share of any foreign born of any state in the nation, more than twice the U.S. foreign-born share of 11.1%, and a higher share than any major nation, including Australia and Canada.  That share had soared markedly in recent decades, nearly doubling from 15.1% in 1980.  However, our California Demographic Futures projections issued in 2001 and 2005 anticipated that the foreign-born share would grow much more slowly after 2000 and level off below 30% by 2020. 

The report goes on to note that the leveling-off of this figure has occurred much more quickly than anticipated, declining in 2008 and falling to 25.7% in 2010.  It attributes it to a decline in immigration and an acceleration in emigration that accompanied the “Great Recession.”  But it seems clear to me that this leveling process began before the recession took hold and can likely be attributed to successes by the Bush administration in tightening border security and increasing work place enforcement of immigration laws.  The Obama administration would be wise to build on this success.

The good news is that the percent of foreign-born has leveled off and is even declining slightly.  The bad news is that it’s still far higher than the level needed to attain population stability.  For the U.S. as a whole, it needs to fall from its current level of 12.2 % to less than 1%. 

But there’s also some good news in the “Implications and Conclusions” section at the end of the report.  Instead of bemoaning this downward tick in the foreign-born percentage of the population, the authors draw the following conclusion:

The growing California homegrown majority represents the future of the state, no matter what their parents’ origins.  They are the future workers, taxpayers, and homebuyers.

… Perhaps the wake-up message will come from the surprising news that the foreign-born population has leveled off, that immigration is no longer accelerating and threatening to fill up the state.  With immigration abating, fears should subside, and cooler heads can plan how best to build a better California. 

There is a danger that those charged with immigration enforcement and policy-setting will be lulled into complacency by this tiny bit of encouraging news.  But it’s also possible that this may signal a change in attitudes toward the use of immigration and population growth as an engine for driving economic growth.  It’s encouraging to see that the authors of this report seem ready to bid farewell to the immigration paradigm and move on.