Help Is Wanted (It's officially no longer a jobless recovery)

The Wall Street Journal ^ | Monday, May 10, 2004

[presidio9]

With all the attention on Iraq, the blowout April jobs report barely made the front pages on the weekend. So allow us to mark the news as the official death of the "jobless recovery."

The allegedly "sluggish" economy has now created 867,000 new jobs since the beginning of 2004, 1.1 million since August. Jobs are coming back even in manufacturing, to the tune of 30,000 in the last two months. The civilian unemployment rate fell again to 5.6%, down from the June 2003 peak of 6.3% -- which is below the peak of 7.5% during the recession in the early 1990s, and below the 9.7% peak of the recession in the early 1980s.

These numbers are especially notable given the continuing increase in productivity. For months productivity gains were seen as a business substitute for new hiring, but not anymore. Overall business productivity climbed 4.5% in the first quarter, and by a whopping 5.9% in durable goods manufacturing.

If they follow their usual pattern, pessimists and partisans will now drop the "jobless recovery" line in favor of the "hamburger flipper" assertion. That is, they'll claim these new service" jobs aren't nearly as good as the old jobs in manufacturing that have gone to Mexico or China. Ergo, the middle-class is "vanishing."

Sorry, that's also phony spin. Economist David Malpass at Bear Stearns calculates that average hourly earnings in manufacturing in April were $15.24, or $16.08 with overtime. Average hourly earnings in all service jobs were a comparable $15.17. If you exclude the retail and leisure sectors, service jobs paid $17.25 on average. The better-paying categories -- in finance, information, professional services, education and health care -- have produced most of the new service jobs (574,000) in the past six months. To put it another way, those productivity gains are gradually making their way as pay increases into worker pocketbooks.

[Skooz]

Okay, someone post the Daschle picture.

[RonF]

Damned if I see any of these jobs in my area. My company's laying off, my wife's company is warning about layoffs, Bank of American laid off 12,500. None of the guys that I know that were laid off are having any easy time getting new jobs. And these are skilled people, not lazy bums.

[presidio9]

[lelio]

Average hourly earnings in all service jobs were a comparable $15.17.

And what about benefits in comparing service jobs to manufacturing ones? And what about rising employee paid health care costs? Ie a 5 cent an hour raise doesn't mean much if the person pays an extra $10 a month in medical insurance.

Yeah yeah, I'm a Kerry Lover. I just want to see apples compared to apples. Just throwing out hourly earnings without giving the whole picture of earnings plus benefits is sloppy and can be refuted by a 3rd grader.

[presidio9]

The people you speak of: Are they in IT?

[Zeppo]

Bank of America is not laying off thousands due to a bad economy - they are laying off people due to their merger with Fleet Bank, which leaves the combined company with redundant jobs.

[presidio9]

If Kerry wants to make the economy an election issue, President Bush ought to tell him to BRING IT ON!

[Phantom Lord]

Sun Trust is aquiring National Commerce Financial (NCF). Look for some layoffs because of redundancy caused by this merger.

[Cobra64]

Tom Daschle: "I am saddened. Deeply saddened."

[m1911]

LOL. A net $2/month loss. Horrors, the sky is falling.

[trebb]

Where is your area? My daughter is moving out of NY to get into a better job market - she's coming to S. Mississippi as there are lots of opportunities in the area. Of course, MS doesn't tax businesses to death, so that may part of the problem/answer. I would imagine that there is a fair disparity on the job situation that is fairly closely related to the "tax environment" and the power of "liberals" in the government...

[TXBSAFH]

Same here. It is still jobless until you and yours are working.

[RonF]

If they follow their usual pattern, pessimists and partisans will now drop the "jobless recovery" line in favor of the "hamburger flipper" assertion. That is, they'll claim these new service" jobs aren't nearly as good as the old jobs in manufacturing that have gone to Mexico or China. Ergo, the middle-class is "vanishing."

That's right, that's what they'll say.

Sorry, that's also phony spin. Economist David Malpass at Bear Stearns calculates that average hourly earnings in manufacturing in April were $15.24, or $16.08 with overtime. Average hourly earnings in all service jobs were a comparable $15.17. If you exclude the retail and leisure sectors, service jobs paid $17.25 on average. The better-paying categories -- in finance, information, professional services, education and health care -- have produced most of the new service jobs (574,000) in the past six months. To put it another way, those productivity gains are gradually making their way as pay increases into worker pocketbooks.

Sounds good. But hold on: the "hamburger flipper" argument is based on someone who lost a $20.00 or $25.00/hour job in manufacturing having to take a $10.00/hour job in a service industry. The numbers above for the "average" manufacturing job, then, don't argue against the "hamburger flipper" concept, since most people who are losing manufacturing jobs aren't getting new manufacturing jobs. Additionally, the average numbers are just that; a mathematical average. Do they include the CEO of the manufacturing company, whose $2,000,000 annual salary works out to $1000/hour, and who's getting massive raises and rewards for moving half of production to Mexico? That'll skew the curve a bit.

But even if it doesn't, the point is that the guy who just lost the $20-$25/hr manufacturing job isn't getting the "average" service industry job; he's getting the entry-level service industry job, the one that pays $10/hr or less. That's the "hamburger flipper" job that's being talked about. The climb in the average in manufacturing is supported by the people who didn't lose their jobs and are still getting raises.

[RonF]

10-4!

[RonF]

Maybe so, but they still add up to lost jobs. I keep seeing references to the number of jobs being created, but my personal experience is of people losing jobs and finding themselves in a tough job market when they look for new ones. I see these claims that the job market is expanding and I start to wonder if the books are being cooked.

[RonF]

Chicago area. Lots of companies out here, but not a lot of hiring.

[Skooz]

Thanks.

Good news for America is bad news for the Dims.

If it were not for the manufactured "scandal" in Iraq, most of them would be on suicide watch by now.

[presidio9]

Technology jobs are by definition subject to obsolescence. There is no political way to protect them short of destroying our economy. That is one of the reasons why they intitially tend to be overcompensated.

[presidio9]

When was the last time you heard ANY Democrat complain about the economy? They are a bit slow on the uptake, but they have begun to realize that dog won't hunt.