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While everyone obsesses over the monthly payrolls report, which on a trailing 12 month basis is once indicating the creation of roughly 2 million jobs each year, or roughly where it was before the crisis (red line chart below), one aspect that is largely ignored is the amount of hiring.
Why is hiring important?
Because that is the actual process by which those without a job end up with a job. And as we just learned today after the latest JOLTS release, which showed that there were over 4 million job openings (4,001 to be precisely) for the first time since 2008, a far more important number is the update on Hires which at 4.5 million barely changed from last month, but more importantly, is barely a fraction of where it should be based on the number of job gains reported by the BLS monthly. The chart below confirms this stunning discrepancy: a surge in jobs with barely half the pre-recession hiring?
How does one explain this discrepancy in which the US economy supposedly is growing at its historic peak pace while hiring is at half the peak pace? Simple: the gains in nonfarm payrolls are due a decline in layoffs and other separations, not an increase in hirings: i.e., normal labor demand driven growth.
Which means that anyone hoping for a brisk increase in wages, i.e. worker leverage, is in for a prolonged shock.
The chart above simply shows that the leverage is and continues to be with the employers – instead of letting people go (or workers quitting at their volition) at anything close to a traditional pace, employers have a huge bargaining chip – a job. Because if a worker does not want to perform a job, tough: there are about 3 people willing to fight for every job opening. It also means that those who lose their job will find it doubly more difficult time to reenter the workforce as there simply is not enough hiring.
Which means that wage deflation, at least among prevailing jobs, will continue leading to declining real disposable income, a declining in personal savings and the continued use of “student loans” (since credit card deleveraging continues) to fund everyday lifestyles, at least until such time as the hiring trend has normalized.
The really bad news: while such a normalization will eventually happen, according to our back of the envelope calculations, it will take place some time in… 2020.
Canada Job Grant ad 0:34
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The federal government blanketed the internet with ads and bought pricey TV spots during playoff hockey as part a $2.5-million publicity blitz to promote a skills training program that doesn’t yet exist, CBC News has learned.
TV commercials for the Canada Job Grant often ran twice per game last May during the widely watched Hockey Night in Canada NHL playoff broadcasts on CBC. There were ads on radio, as well.
“The Canada Job Grant will result in one important thing – a new or better job,” said the reassuring voice-over in the TV ads.
The problem: The program was never launched and is still on hold. The job grants were announced in the 2013 federal budget, but it called for an agreement with the provinces, which have so far refused to buy in.
Employment and Social Development Canada spent between $2.5 million and $2.6 million on the ad campaign. That figure excludes radio ads funded by the Finance Department.
“Spending millions of dollars to advertise a program that doesn’t even exist is like flushing tax dollars down the toilet,” Liberal finance critic Scott Brison said.
$11-million publicity push
CBC News has also learned that that advertising cash came from an $11-million fund set aside last year for Employment and Social Development Canada to promote the government as a job creator.
Before the Canada Job Grant TV ad went to air, the government paidEnvironics Research Group almost $70,000 to conduct market research. Focus groups saw a near-final version of the commercial.
Environics concluded: “The main message was consistently seen as positive and one that inspired hope…. In light of seeing the new ad for the Canada Job Grant, most now believe the Government of Canada is on the right track regarding skills training and the job market in Canada.”
- Government ad spending on economy balloons under Tories
- Oil and gas ad campaign cost feds $40M at home and abroad
- Conservatives overspent government ad budgets by 37%
“Their own research suggests that people get a positive impression of the ads,” Queens University political science professor, Jonathan Rose said. “Whether that means they convey accurate information is another story.”
A government commissioned survey done post-campaign showed only two per cent of the 292 people polled who saw or heard the ad also caught the disclaimer that the program didn’t yet exist. It also found only 18 per cent of viewers understood tax dollars paid for the advertising.
Ads ruled misleading
After receiving numerous viewer complaints, Advertising Standards Canada, the advertising industry’s self-regulating body, ruled the TV commercial was misleading because the job grant program hadn’t been approved.
“The commercial omitted relevant information,” ASC concluded in a report. The report didn’t name the government because the ad campaign was already over.
The proposed job grants would give workers $15,000 each for training, with the provinces kicking in one-third of the cost. But provinces have yet to sign on, complaining the proposed program claws back $300 million in federal funds now used to help disadvantaged workers.
“We do not believe, the way the program is designed, that it will work,” Ontario’s Kathleen Wynne said at a premiers meeting last July.
Quebec threatened to opt out. There’s no word yet on when an agreement might be reached.
Asked to comment on the ad campaign, a spokesperson for Employment and Social Development Canada said, “The government of Canada’s top priorities are creating jobs, economic growth and long-term prosperity.”
Harper blasted Liberals over ads
In his first question as opposition leader, in 2002, Stephen Harper took the then Liberal government to task over their advertising spending and the emerging sponsorship scandal.
“Will the prime minister stop the waste and abuse right now and order a freeze of all discretionary government advertising?” he asked in the House of Commons on May 21, 2002.
During its peak, the Liberal government spent $111 million on advertising, in 2002-2003. Harper’s current Conservatives doled out $136.3 million in 2009-2010, their biggest advertising budget yet on record.
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A commonly held opinion is that older workers who stay on the job past the usual retirement dates and baby boomers just hanging on to their jobs are somehow denying young people entry to the workforce. But researchers say that’s not true.
U.S. research economist April Yanyuan Wu says there’s no evidence to support the view that retaining older workers hurts younger ones by reducing the number of jobs, and she co-authored a paper on the subject last year.
Wu, with the Center for Retirement Research at Boston, challenges the co-called “lump labour” theory, which can be traced to Henry Mayhew’s 1851 London Labour and the London Poor collection of research material.
The Victorian-era social researcher and journalist argued that cutting the number of hours employees worked would reduce unemployment.
Taking inspiration from this long-held simple premise that there are a fixed number of jobs available, some policy makers in North America and Europe have used this theory to argue in favour of curbing immigration and validating early retirement programs.
But most economists tend to frown on what they call the labour lump fallacy.
Wu points to what was happening in the 1960s and ’70s when women entered the workforce in greater numbers. There weren’t fewer jobs for men. The economy simply expanded.
Canadian labour force researcher Rosemary Venne says career patterns have changed dramatically since the post-Second World War era and the birth of the baby boom generation.
Venne, who has written papers on demographic effects on the labour force and careers with Canadian economist and demographer David Foot, says young people of today are taking “longer to launch into adulthood,” but it’s not simply a numbers game of pitting one generation against another.
Always higher youth unemployment
“I don’t see it,” she says. “One of the reasons why youth are having trouble getting established — and they always have trouble; there’s always higher youth unemployment — is they’re not as job ready as young people were maybe 20 or 30 years ago, because career patterns have changed, organizational hierarchies have changed, they’ve flattened. There are not as many entry level positions.
- Can’t find a job? Then make one, youth told
- Don Pittis on self-employment, the cash-starved Canadian Dream
- Millennials describe job-market challenges
- Canadian job gains in May 2013 best since 2002
- Canada loses nearly 46,000 jobs in December 2013
“So the fixed career ladder of the 1950s and ’60s has really given way to more varied career patterns where people don’t stay in a workplace.”
Organizations don’t hire the army of entry-level labour they use to and have fewer layers in the corporate hierarchy, says Venne, who teaches at the University of Saskatchewan’s Edwards School of Business. More companies are using technology, direct data entry and robotics.
Period of youth a ‘complex life stage’
“The stage of youth has become a more complex life stage. It used to be a stage that you were job-ready after high school. You jumped into a job and you left home pretty young,” Venne says, but home-leaving ages have really increased over the years.
Here are a couple of Canadian “launch” stats:
- In 2006, 60 per cent of young people from the ages of 20 to 24 were still living at home.
- In 1986, that figure was less than 50 per cent (49.3 per cent).
Clearly, 15- to 24-year-olds in Western society face different challenges than their parents at that age.
In 2010, Venne released her paper titled “Longer to launch: Demographic changes in life-course transitions.” In it, she writes that many stages of life are lengthening, including the period when young people are dependent on parents.
“They’ve got a lot choices in education, and jumping into that is going to delay the launch into a career,” she says. “It’s a reflection of new realities, changing career patterns, longer life expectancy. You just need flexibility.”
She says, in some ways, parents are providing that by supporting adult children still living at home, “and sometimes paying for their education.”
Their children are not only staying in the nest and starting jobs later, but also marrying and having a family of their own later, so it’s a given that they’re relying on their parents a little bit longer.
No Jobs For Americans
Paul Craig Roberts
The alleged recovery took a direct hit from Friday’s payroll jobs report. The Bureau of Labor Statistics reported that the economy created 74,000 net new jobs in December.
Wholesale and retail trade accounted for 70,700 of these jobs or 95.5%. It is likely that the December wholesale and retail hires were temporary for the Christmas shopping season, which doesn’t seem to have been very exuberant, especially in light of Macy’s decision to close five stores and lay off 2,500 employees. It is a good bet that these December hires have already been laid off.
A job gain of 74,000, even if it is real, is about half of what is needed to keep the unemployment rate even with population growth. Yet the Bureau of Labor Statistics reports that the unemployment rate fell from 7.0% to 6.7%. Clearly, this decline in unemployment was not caused by the reported 74,000 jobs gain. The unemployment rate fell, because Americans unable to find jobs ceased looking for employment and, thereby, ceased to be counted as unemployed.
In America the unemployment rate is a deception just like everything else. The rate of American unemployment fell, because people can’t find jobs. The fewer the jobs, the lower the unemployment rate.
I noticed today that the financial media presstitutes were a bit hesitant to hype the drop in the rate of unemployment when there was no jobs growth to account for it. The Wall Street and bank economists did their best to disbelieve the jobs report as did some of the bought-and-paid-for academic economists. Too many interests have a stake in the non-existent recovery declared 4.5 years ago to be able to admit that it is not really there.
I have been examining the monthly jobs reports for a decade or longer. I must say that I am struck by the December report. Normally, a mainstay of jobs gain is the category “education and health services,” with “ambulatory health care services” adding thousands of jobs. In December the net contribution of “education and health services” was zero, with “ambulatory health care services” losing 4,100 jobs and health care losing 6,000 jobs. If memory serves, this is a first. Perhaps it reflects adverse impacts of the ripoff known as Obamacare, possibly the worst piece of domestic legislation passed in decades.
I was also struck by the report that the gain in employment of waitresses and bartenders, normally a large percentage of the job gain, was down to 9,400 jobs, which were offset by declines elsewhere, such as the layoff of local school teachers.
Aren’t Washington’s priorities wonderful? $1,000 billion per year in Quantitative Easing, essentially subsidies for 6 banks “too big to fail,” and nothing for school teachers. It should warm every Republican’s heart.
A tiny bright spot in the payroll jobs report is 9,000 new manufacturing jobs. The US manufacturing workforce has declined so dramatically since jobs offshoring became the policy of American corporations that 9,000 jobs hardly register on the scale. Fabricated metal products, which I think is roofing metal, accounted for 56% of the manufacturing jobs. Roofing metal is not an export. Employment in the production of manufactured products that could be exported, such as “computer and electronic equipment,” and “electronic instruments” declined by 2,400 and 3,500 respectively.
Clearly, this is not a payroll jobs report that provides cover for the looting of the prospects of ordinary Americans by the financial and offshoring elites. One can wonder how the BLS civil servants who produced it can avoid retribution. It will be interesting to see what occurs in the January payroll jobs report.