Many 2010 year end employment stories focused on job creation and how jobless claims are less now than at the end of 2009. In reality, job creation is still meager considering we are supposedly rapidly recovering from the Great Recession. But without seeing the real jobs picture, it's impossible for legislators, corporations, small businesses, entrepreneurs and citizens to address what needs to be done to assist job creation going forward. There are many instances where employment reports are skewed by using selected "good" numbers while ignoring the "real" numbers. What follows is a top 10 of 2010 "Good" Numbers v. "Real" Numbers comparison of employment.
1. One of the most abused employment numbers is the jobs creation figure touted by many current federal appointees and politicos. From January through November, the entire US economy created 951,000 jobs. Sounds good, doesn't it? Unfortunately, that monthly average of 86,000 jobs a month is 39,000 jobs a month short of simply filling the 125,000 jobs needed for NEW entrants to the workforce. That's 429,000 fewer jobs than needed to break even during the January through November period.
While it could take more than six years to replace jobs lost during the recession, it will take much longer when considering the new jobs needed to keep up with new entrants to the workforce, but that fact is seldom mentioned.
2. The government has spent hundreds of billions of dollars on business tax breaks and received fewer jobs than then were outsourced by those same businesses.
The Economic Policy Institute, a Washington think tank, says American companies have created 1.4 million jobs overseas this year, compared with less than 1 million in the U.S. The additional 1.4 million jobs would have lowered the U.S. unemployment rate to 8.9 percent, says Robert Scott, the institute's senior international economist.
3. The 2009, 800 billion stimulus bill was deemed a massive jobs creator, but what did those jobs cost? According to Recovery.gov, the money spent has created or saved 3.2 million jobs, or about 250,000 per job. While much of the stimulus funds went to various tax breaks for individuals, it's helpful to look at the bigger picture to see the total cost per job.
How will those jobs be saved when stimulus funds slow and eventually end? Will the private sector come in and take on that responsibility? Not likely. And with Republicans taking control of the House with ill-conceived spending destruction schemes, the end of stimulus funds could come sooner than predicted.
4. The job openings picture, while improving, is not to a point where it is able to make a dent in the unemployment/underemployment rate. The latest Job Openings and Labor Turnover Survey (JOLTS) report shows 3.4 million job openings on the last business day of October 2010. There are 15 million unemployed, 2.5 million marginally attached workers (not in the labor force, wanted and were available for work) and another 9 million underemployed seeking full-time work. As a result, there are 26.5 million unemployed/underemployed and 3.4 million job openings, or nearly 8 workers for each advertised job opening. Unfortunately, those job openings contain part-time, seasonal, contract and temporary jobs, which make the number look better than it is actually.
5. How many part-time jobs are being created compared to full-time jobs? It's an important distinction since businesses hire full-time people when they are confident of improving business conditions. Full-time jobs also offer better pay, benefits and more security, generally.
ZeroHedge; In a nutshell: in December 2007 there were 121.7 million full time jobs, while 24.8 million Americans were part-time workers for economic reasons; fast forward to November 2010 where we find that 111.1 million employees are now full time, while the rank of the part-times have increased to 27.6 million. And it is not rocket science, that converting a population to part-time workers has a disastrous impact on wealth. Yet more and more people are forced to work part-time, even as full time working Americans are now at their lowest since February 2010. But for some odd reason the market remains transfixed that 39k very much adjusted and completely unrealistic people may have found a job on private payrolls in November, even as full time jobs dropped by 478k.
6. The number of people who were too discouraged to look for work was higher in November 2010 than in October 2010, or November 2009. These unemployed are no longer eligible for unemployment benefits, since you have to be looking for work to collect benefits.
About 2.5 million persons were marginally attached to the labor force in November, up from 2.3 million a year earlier. Among the marginally attached, there were 1.3 million discouraged workers in November, an increase of 421,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available.
7. Then there's the observation that the US is short 9 million jobs from population growth during the past decade.
According to the Economic Populist: A Decade of Job Stagnation In 2000, 135 million citizens were employed. In 2010 there were 139 million Americans employed. Given the 9.7 percent increase in population since 2000, we would expect to see at least 148 million citizens with jobs.
Where are those jobs?
8. Looking ahead, there seems to be a belief that jobs will be created by the millions and all will be well.
Baumohl and some other economists forecast between 2.5 million and 3 million jobs being added to U.S. payrolls in 2011, about triple the gains likely to be recorded in 2010 and what would be the best one-year jump since the white hot labor market of 1999.
These so called experts fail to see some very important factors. Even if 3 million jobs are created, it takes 125,000 jobs a month to break even with new workforce entrants. 1.5 million jobs must be created to keep the unemployment rate steady. The remaining 1.5 million new jobs will be available to the other 25 million unemployed/underemployed seeking full-time work. Not as pretty a picture as it seems.
9. There have been many stories and reports stating that unemployment benefits lead to the unemployed not looking for work. That misconception is often brought up when discussing the extension of unemployment benefits. According to the Federal Reserve Bank of San Francisco: Extended Unemployment and UI Benefits
Although economists have shown that extended availability of UI benefits will increase unemployment duration, the effect in the latest downturn appears quite small compared with other determinants of the unemployment rate. Our analysis suggests that extended UI benefits account for about 0.4 percentage point of the nearly 6 percentage point increase in the national unemployment rate over the past few years. It is not surprising that the disincentive effects of UI would loom small in the midst of the most severe labor market downturn since the Great Depression.
10. The final reality of the 2010 jobs picture is that there are between 3-5 million unemployed workers who have exhausted all unemployment benefits, the 99ers. These 99ers and their families are suffering mightily through this jobless recession yet they are ignored by the president, scorned by congressional Republicans, and used by congressional Democrats who feign concern.
As 2011 moves forward, the ranks of 99ers will grow substantially. Someone who is laid off in 2011, will likely stand no chance of collecting 99 weeks of benefits. The new long-term unemployed will become 60ers and in some cases 46ers by the end of 2011. Congress passed a 13-month extension of eligibility and those extended benefits will end during the spring of 2012. Now that Republicans and Tea Partiers are in control of the House, it's highly unlikely that benefits will again be extended and a Tier 5 of benefits for 99ers will be considered.
The U.S. is still in the midst of a jobs shortage and unless millions of jobs are created quickly, millions of people who want to work will be left behind.
It is a new year and it's important to be positive about the future, but it's also important to be realistic. While 2011 brings new hope for millions of unemployed, that hope will be dashed if jobs are not available. What then? We'll soon find out.
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