South By North Strategies, Ltd.

An All-Too-Familiar Jobs Report

CHAPEL HILL (August 6, 2010) – The national employment report for July showed little deviation from recent trends. Last month, employers eliminated 131,000 more payroll positions than they added. An expected fall in temporary census employment drove that decline; after accounting for it, the economy netted 12,000 positions, a level grossly insufficient to either keep pace with workforce growth or re-absorb jobless individuals.

“Fundamental employment dynamics were little changed in July,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Payroll employment fell due to the ending of temporary census positions. When those jobs are excluded, the nation netted just 12,000 payroll positions, all of which were in the private sector.”

In July, the nation’s employers shed 131,000 more payroll positions than they added. Losses occurred primarily in the public sector due to the elimination of 143,000 temporary census jobs coupled with the loss of another 59,000 federal, state, and local positions. When census reductions are excluded, the economy netted just 12,000 positions. And payroll employment levels for June were revised sharply downward: after adjusting for cuts in census employment, the economy added just 27,000 payroll positions in June.

The largest private-sector gains in July occurred in manufacturing (+36,000) and education and health services (+27,800). Finance payrolls fell by 17,000 positions. All other major industry groups posted little or no change. Meanwhile, the public sector slashed 59,000 positions in addition to temporary census ones; local government accounted for the bulk of that decline.

“The July employment report illustrates just how weak the economy is without policy supports,” noted Quinterno. “The private-sector is proving unable to offset the drop in temporary census employment. So far in 2010, the private sector has added an average of just 90,000 jobs per month. That is an insufficient level of job creation.”

Weak job prospects are reflected in the July household survey. Last month, 14.6 million Americans – 9.5 percent of the labor force – were jobless and actively seeking work. Proportionally more adult male workers were unemployed than female ones (9.7 percent vs. 7.9 percent). Similarly, unemployment rates were higher among Black (15.6 percent) and Hispanic workers (12.1 percent) than among White ones (8.6 percent). The unemployment rate among teenagers was 26.1 percent.

Furthermore, newly available data show that 8.4 percent of all veterans were unemployed in July; the rate among veterans who had served since September 2001 was 11.8 percent.

“In developments inconsistent with a recovery, 181,000 individuals left the labor force in July, and the share of the adult population engaged in economically productive activities fell,” added Quinterno. “Compared to a year ago, the labor force is smaller, fewer people are employed, and the unemployment rate essentially is unchanged.”

Job remained hard to find in July. Last month, 44.9 percent of unemployed workers had been jobless for at least six months with the average spell of unemployment lasting for 34.2 weeks. Many other individuals stopped looking, and counting those individuals and those working part-time on an involuntary basis brings the underemployment rate to 16.5 percent.

“The reduction in temporary census hiring in July exposed just how weak the labor market really is,” observed Quinterno. “The job market appears unable to stand without the crutch provided by policy actions, and jobless individuals across the country simply are abandoning the labor market.”

Triangle Gives Back

Earlier this week,  Triangle Gives Back, an initiative of the Triangle Community Foundation in North Carolina, unveiled a new Web site.

The purpose of Triangle Gives Back.org is to promote philanthropic activity — defined in terms of time, talent, and treasure — in the Research Triangle region. The new Web site serves as a networking portal through which individuals looking to join with local nonprofit organizations and those agencies can connect.

The new Web site allows individuals and nonprofit organizations to create profiles and match each other based on shared interests and values. Additionally, the site offers multimedia content, social networking connections, research data, and community news.

Click here to visit the site and, for residents of the Triangle, create a profile.

Around The Dial – August 5

Economic policy reports, blog postings, and media stories of interest:

• Nassim Nicholas Taleb discusses America’s peculiar ethics of regulation.
• TaxVox asks “what we know” about the Bush tax cuts and small businesses.
• Daniel Gross worries that corporate 401(k) matches won’t return.
• N.C. will expand its foreclosure prevention program.

NC Unemployment Claims: Week of 7/17

Understanding The Consequences

In a recent column, economist James Galbraith laid out the consequences of  “the conventional wisdom” calling for reductions to Social Security and Medicare benefits and argues instead for expanding these social insurance programs.

Medicare pays doctors’ bills for the old. It pays out at lower rates than does private insurance for working people. Cutting Medicare would mean two things: less health care for the elderly, and therefore more financial stress on their families. And more health care costs overall, as people substitute with private insurance for the public cuts. Both of these are very bad ideas.
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Social Security pays to keep working people (and their dependents and survivors) out of poverty when they are old. It spreads its benefits to all who have worked, whether they have children who would otherwise support them or not. The payroll tax spreads the burden to all working people, whether they would otherwise be supporting elderly parents or not. Both of these transfers are fair, modest, and sustainable. Cutting Social Security would simply create more poor elderly—those who could not turn to their children—and more stressed working families—those with parents in need. Both of these are very also bad ideas.

Galbraith continues:

In fact, the right response to the crisis is to expand, not cut, both Social Security and Medicare.
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The reality is, we are never going to make up good new jobs for everyone who has been hit…. So let’s face reality, and make some tough decisions about who we want to be jobless: the relatively old or the very young. Seen this way, it’s an easy choice.

In the end, he argues,the choice comes down to a question of values.

Encouraging early retirements would mean that young people—just out of school, with fresh skills, good health, and high energy—would get the jobs they need now. They would not be stuck waiting, or spinning their wheels in school, for years and years. Meanwhile, the retirees, supported by Social Security and Medicare, would provide a continuing stable support to total demand, creating jobs for others as they get older.
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This is the way the economy should work. When we have older people, we must care for them, and the best way to do that is to give them the resources to support themselves. There is no “burden problem” as our economy is plenty productive for the working population to support the elderly in modest comfort, particularly if we include some of our truly wealthy in the tax base.