The story on unemployment

Adam and I were talking about this yesterday, about how real unemployement isn't being reported in most news outlets. The most-quoted figure I've seen is the 9.5% seasonally adjusted U-3, and when a number is that qualified you know it's not quite natural. I just looked up the U-6 measure (the most inclusive measurement) in the current statistics. The percentage of all employable people not working full-time jobs is 16.8%. The U-6 includes part-timers who are looking for full-time work as part of the figure, which is reasonable because a lot of them are part-time because of the economy. The number being reported in the news is the 9.7% U-3, which as you can see is a much more limited measurement.

Now, one thing to note is that the difference between June '08 and June '09 using these two indices tell two different stories. From June '08 to June '09, the U-3 went from 5.7% to 9.7%, a 4% change. The U-6 changed from 10.3% to 16.8%, a change of 6.5%. So the net change in employment is also worse than is being reported. Some of this is people being shunted into part-time jobs, but the U-1 is a measure of how many people have been unemployed more than 15 weeks or longer, and that has risen from 1.8% to 4.8%. Jobs have really just vanished.

The question is, even when the economy starts growing again, how many full-time jobs are going to come back for people? Even when the economy was supposedly so great back in the Bush years (coming off the Clinton high, that is), people were struggling. Just read Nickel and Dimed by Barbara Ehrenreich. Actually I think I've blogged on that subject plenty of times. We keep hearing about how the recession is supposed to end this year or that we may already be at the tail and the economy is starting to recover; we hear that jobs lag behind the economy in general. Either of these things may be true; neither of them means that Americans will be getting well-paid full-time jobs with benefits. Is there any way to change that?

I don't know the answer to that, but it lies in what industries are going to make the biggest turnaround. I honestly don't think that even if the automakers come around and turn profitable, they'll end up re-hiring a lot of people. They're cutting back as much as possible and if their salvation lies in competing with the foreign auto makers, they're going to be making more of fewer kinds of vehicles, which means less workers. America needs growth industries that we can take the lead in. We need to invest in an infrastructure to produce new kinds of goods and services that other countries can't compete with. Things like clean energy, health care and medicine, or eco-science, that the world needs but which can also be profitable industries. It's time to do something new.

Update: Xanthippas just let me know about this article, pointing out estimates of the real number of unemployed, which is well above even the U-6. Read the article for an explanation of how these numbers are arrived at:

By adding these folks back in, William's SGS-Alternate Unemployment Measure rose to a jaw-dropping 20.6%. Separately, the Center for Labor Market Studies in Boston puts U.S. unemployment at 18.2%. Any way you cut the numbers, the situation is very bad. According to David Rosenberg, one-in-three among the unemployed have been looking for a job for more than six months and still can't find one.

That's about 1 in 5 employable people either unemployed or underemployed. This recession is far from over.

Morning Links

Stuff you should be reading this morning:

1. Iraq: another article on the gradual upswing in attacks, and the largely unabated violence in one of the last bastion's of the insurgency, Diyala Province.

2. Congressional watchdogs lament the lack of transparency and oversight regarding the handout of TARP funds. Economist Joseph Stiglitz condemn's the Obama administration's approach to the crisis on Wall Street, characterizing it as "ersatz capitalism, the privatizing of gains and the socializing of losses." Paul Krugman's saying the same, of course.

3. In a surprise move, AG Holder dismiss the Stevens indictment and says there will be no new trial. The Stevens conviction has fallen apart in the face of allegations of prosecutorial misconduct.

4. The World Health Organization warns of an impending "explosion" in cases of drug-resistant tuberculosis.

5. Michael Gerson at the Washington Post says Obama is losing Catholics over the issue of abortion, but unsurprisingly fails to note that American Catholics are as divided on the issue of abortion as non-catholics. As is typical among media pundits (especially those of the conservative ilk) an entire group is said to be represented by it's conservative members.

6. ADP, a payroll processor, reports that 724,000 jobs were lost in March.

7. The Economist opens it's new theme park, Econoland (h/t Josh Berthume.) All the horror of the modern world, only funnier.

8. In honor of the day, the top 10 greatest April Fools pranks in modern history.

9. The tabletop wargame Battletech celebrates it's 25th anniversary. Not that that's anything special to us, ahem.

A Helping Hand

In case you've got a business you're looking to start up, Mark Cuban might be willing to help you out...if you follow his rules.

Also, DART is hosting a job fair for Native Americans on Thursday. In the interest of spreading the word, full details are pasted below:

Dallas Area Rapid Transit (DART) and Urban INter-Tribal Center of Texas/Employhment & Training
Hosting a Career Fair for Native Americans
Thursday, February 12, 2009
5 p.m. - 8 p.m. at
Urban Inter-Tribal Center
209 East Jefferson Boulevard
Dallas, Tx 75203

Bring several copies of resumes. Dress for interview.
On-site testing/interviews will be available for essential positions.

5:00 p.m. - Dinner Served (Free Indian Tacos served on a first come first serve basis)
5:30 p.m. - Presentations DART/UITCT/American Indian Community Leaders

For further information, contact Donya Battiest 214-749-3304; contact Stephanie Villanueva 214-941-1050, x208

Jobless Rate Ticks Up

Another month, another several hundred thousand jobs evaporate:

More Americans lost jobs in January than in any month in the past 34 years, adding to the nation's strained unemployment rolls as the Obama administration tries to pull the economy out of a tailspin.

The Labor Department said employers slashed 598,000 jobs in January, the deepest cut in payrolls since December 1974, pushing the unemployment rate up to 7.6 percent. The latest figures, which follow a revised 577,000 losses for December, were even worse than economists had forecast. The consensus had predicted a 7.5 percent rate.

Well, they were pretty close.

Victim

The greatest fear of the credit crisis, and the one that spurred the Treasury to act last month, is the fear that the unwillingness of banks to extend credit would lead to companies being driven out of business, impacting the real economy as a whole. The Treasury announced last week a plan to buy commercial paper debt in an effort to spur banks to lend again, but that announcement came too late for one retailer, Linens 'n Things. The company had been teetering on the edge of insolvency for some time, but the credit crisis has dried up the short-term money that insolvent companies nonetheless rely on to survive a restructuring under Chapter 11. Without that money, Linens 'n Things had no choice but liquidate its assets and shut its doors for good. With the continued reluctance of banks to loan to companies whose future is uncertain, it's only a matter of time before we see more businesses meet the fate of Linens 'n Things.

Having trouble getting hired?

It might be because a potential employer's background check is returning false information about you. According to this BusinessWeek Online article, companies like ChoicePoint go to great lengths to learn all about you, even if it's not true:

Theron Carter, a 61-year-old unemployed truck driver in Middleville, Mich., is waiting for his name to be cleared in a database used widely in the transportation business. In May, 2006, a U.S. Labor Dept. administrative law judge ruled that Carter was wrongly terminated by Marten Transport (MRTN) for making legitimate complaints about the safety of his 18-wheel truck. He had hauled loads for the Mondovi (Wis.) company for only two weeks before being fired in June, 2005. The judge awarded him more than $31,000 in damages and back pay and ordered Marten Transport to delete "any unfavorable work record information" in a report compiled by USIS, a large screening company in Falls Church, Va.

Despite his legal victory, Carter's DAC report still says Marten Transport dismissed him for "excessive complaints" and a "company policy violation." "No one will hire me," says Carter, who withdrew $50,000 from retirement savings to support his wife and himself. Trucking company J.B. Hunt Transport Services (JBHT) "told me I had excessive complaints and wouldn't hire me. I told them I won my case." Hunt declines to comment.

You might be wondering what kind of assurances there are that people aren't deliberately putting false information out about you. Well, there are none.

Kristen Turley, director of market development and communications at USIS' commercial-services unit in Tulsa, concedes that no system is immune to mistakes and misuse. "There is a chance somebody who holds a grudge will put negative information in the database," she says. "We are not trying to blackball drivers or ruin their chance to get a job." When a driver disputes a background report, USIS asks its sources for proof supporting negative comments, she says. USIS doesn't seek such evidence up front. "Ideally that would be a good solution," Turley says, but it could dissuade past employers from submitting information in the first place.

What about federal oversight and accountability? Well, no luck there either.

The federal Fair Credit Reporting Act covers background screeners, but it hasn't been aggressively enforced. The law says screeners must use "reasonable procedures" to ensure "maximum possible accuracy." It also requires employers to give a copy of background reports to rejected applicants. An applicant can dispute the information, but the Federal Trade Commission has said employers must wait only five business days before hiring someone else, meaning that objections frequently become moot. Lately the agency has focused more on identity theft than on screening, Rebecca Kuehn, assistant director for privacy and identity protection, says.

The ACLU isn't very impressed with ChoicePoint, among others.

First, these companies have gone into the business of compiling detailed information on you without your knowledge or permission, and then spreading around to others. This behavior, which according to most Americans' lights qualifies as rude and wrong, at a minimum imposes a responsibility on these companies to treat that information about people's lives with care. Yet these companies have long been known to be extremely careless and sloppy with the facts of individuals' lives - doing unmeasured harm to uncounted individuals. Individuals who have obtained their ChoicePoint records have found them to be riddled with wild inaccuracies - including children that were never born, marriages that never took place, addresses where they never lived, neighbors they never had - and crimes they never committed.

Well, this is one of those situations where there is very little you can do for yourself unless you happen to have access to a lawyer. ChoicePoint, even when they find out information is wrong, has little or no incentive to change it. Their customers are the businesses who use the information, not the people who they are reporting on. The gathering of information is as unbalanced as it can be, as it comes from sources that may be openly hostile to you. I'd hate to think what would happen if you had gotten your boss in trouble for doing something wrong and ChoicePoint called them about you later. Well, actually based on the story of Theron Carter I guess we do know what would happen.

Somehow, legislators have missed the fact that personal information has become increasingly valuable as it is increasingly available. Your credit record not only determines interest on loans you may get in the future or the rent you get on an apartment or the terms you're offered on a car, employers look at that stuff now to determine if you're a worthy investment. And yet most of us have a few dings on our credit reports. We don't need the hindrance of false or misleading information on personal background reports. Not only is it plainly irresponsible of these companies to gather such information without fact-checking first, it should be illegal for employers to acquire any information about you not directly related to your employment. We all agree that child molesters shouldn't work with children, but your credit report shouldn't be a determining factor in your employment. And any negative information should only be passed on if there is indisputable proof to back it up. Sadly, we won't be seeing any restraints put on these companies any time soon.

The Economy is so confusing

From Business Week Online:

No, it's not just you—the U.S. economy really is bewildering. The government says gross domestic product expanded at an annual rate of nearly 4% in the third quarter, the fastest pace in a year and a half. The stock market is still up by 4% for this year, despite a sharp 3% drop on Nov. 7. On the other hand, growth in consumer borrowing slowed unexpectedly in September. Some economists argue that the U.S. is teetering on the brink of a recession, if it isn't in one already.

Well, you do have to consider that American's real incomes are down. This is from a slightly older article from the Christian Science Monitor, but it's still applicable:

Income fell 8 percent, adjusted for inflation, for those under 35 and 9 percent for those aged 35 to 44. The numbers add new weight to longstanding concerns about whether younger generations of Americans will achieve living standards that are better - or at least equal to - those of their parents.

Although this is quite old now, this blog post on The Big Picture from 2004 still manages to give some idea about why the economy overall can be booming yet doing nothing for for the average American.

The bulk of the tax cuts were for the investor class (ie, the top 10%); As you can see, it had the expected response - it stimulated investment in the market. To stimulate the economy, you cut taxes for the spending classes - the middle class. They typically spend most of their discretionary income. That in turn stimulates manufactured goods and service consumption, which should lead to additional hiring. The trade off is less of a fund flow driven rally, and more of a better set of employment numbers.

All told, I don't believe that's the most effective way to spend a trillion dollars. As the President often says, "if you want more of something, tax it less." So, on top of middle class tax cuts, if you want to increase hiring, give companies a tax credit for new hires or health care costs or just cut the payroll tax. It's really not that complicated - when you increase your domestic headcount over a previous percentage - i.e., 2001's high number, the firm gets a tax credit. Note that overseas outsourcing or reducing US headcount will not qualify you for the cuts."

He also talks about underemployment which really hurts a lot of people. And people who like to point out how well the economy is doing simply like to point out how many people are employed rather than how muchthe employed people are making.

Anyway, there's little in the way of analysis I can offer, but if it's not clear, the point is that for individuals, the picture still isn't that great whereas most businesses are still seeing decent prosperity.