Sunday, December 31, 2017

Labor Line

December 2017___________________________________

Labor line has job news and commentary with a one stop short cut for America's job markets and job related data including the latest data from the Bureau of Labor Statistics.

This month's job and employment summary data are below. This month's inflation data is below.

The Establishment Job Report and Establishment Job Details for data released December 8, 2017.

American Job Market The Chronicle

Current Job and Employment Data

Total Non-Farm Establishment Jobs up 228,000 to 147,240,000
Total Private Jobs up 221,000 to 124,900,000
Total Government Employment down 7,000 to 22,341,000

Employment Note
Civilian Non-Institutional Population up 183,000 to 255,949,000
Civilian Labor Force up 148,000 to 160,529,000
Employed up 57,000 to 153,918,000
Employed Men down 29,000 to 81,630,000
Employed Women up 87,000 to 72,289
Unemployed up 90,000 to 6,610,000
Not in the Labor Force up 35,000 to 95,420,000

Unemployment Rate stayed the same at 4.1% or 6,610/160,529
Labor Force Participation Rate stayed the same at 62.7%, or 160,529/255,949

Prices and inflation measured by the Consumer Price Index (CPI) for all Urban Consumers was up by a monthly average of 1.26 percent for 2016.

The November CPI report for the 12 months ending with October, shows the

CPI for All Items was up 2.0%
CPI for Food and Beverages was up 1.3%
CPI for Housing was up 2.8%
CPI for Apparel was down .6%
CPI for Transportation including gasoline was up 3.2%
CPI for Medical Care was up 1.7%
CPI for Recreation was up 1.7%
CPI for Education was up 2.1%
CPI for Communication was down 5.1%

This Month's Establishment Jobs Press Report


The Bureau of Labor Statistics published its December report for jobs in November. The labor force was up 148 thousand, which was a 57 thousand increase in the employed and a 90 thousand increase in the unemployed; 35 thousand of the monthly growth in the adult population did not enter the labor force. The increase in the employed was enough to offset the jump in the unemployed to keep the unemployment rate steady at 4.1 per cent. The labor force participation rate also held steady at 62.7 percent for November, following last month's big increase.

The seasonally adjusted total of establishment employment was up 228 thousand for November. The increase was 159 thousand more jobs in the private service sector combined with a 62 thousand increase in jobs from goods production. The total of 221 thousand more private sector jobs combined with an increase of 7 thousand government service jobs accounts for the total increase.

All three good production sub sectors had more jobs for November in an unusually good month for goods production. Natural resources had 7 thousand more jobs when jobs here usually decrease. The new jobs included 4.1 thousand more jobs in mining support employment, but few new jobs in mining or oil extraction. Construction added 24 thousand jobs with gains primarily in specialty contracting with 22.6 thousand more jobs. Building construction added some more jobs offset by a loss of 7.8 thousand jobs in heavy and engineering construction.

Manufacturing dominated goods production gains for November with 31 thousand more jobs distributed between 27 thousand new durable goods jobs and only 4 thousand more jobs in non-durable goods. Among durable goods, machinery added 8.3 thousand jobs, fabricated metal products added 7.4 thousand jobs and computer and electronic products, especially computer and peripheral equipment, added 3.8 thousand jobs. Among non-durable, food manufacturing and plastics had small gains offset by losses in other industries.

Government service employment was up a combined 7 thousand seasonally adjusted jobs for November. The federal government dropped 3 thousand jobs while combined state and local government picked up 10 thousand new jobs, which includes 7.3 thousand new jobs in public education. Private education was up again with 13.1 thousand jobs, making the combined increase in education employment 20.4 thousand new jobs for November.

Professional and business services had the largest increase for the month with 46 thousand more jobs, but still within a normal range for these three sub sectors. The professional and technical service sub sector picked up 23.5 thousand jobs of the total increase while management of companies was off 800 jobs; administration and support services including waste management had a net increase of 23.1 thousand jobs.

Among professional and technical services, management and technical consulting contributed another month of gain with 7.2 thousand jobs. Accounting and bookkeeping services added 4 thousand new jobs; computer design and related services another 3.8 thousand. Legal services picked up 600 jobs, but remains with a total of 1.3 million jobs, about the same employment as the last 15 years.

Among administrative and support services, temporary help services had the entire total of employment services, which was 18.3 thousand new jobs. Business support services added 3.1 thousand jobs, but all other sub sectors remained about the same.

Health Care had a slightly better than normal month with 41 thousand new jobs. All health care sub sectors had job gains, although hospitals, nursing and residential care had only small gains while ambulatory care added 25.3 thousand jobs and social assistance another 11 thousand jobs, a little above normal for social services. The November growth rate in health care employment was 2.48 percent, more than November a year ago and a little better than the 15 year trend of 2.31 percent. Health continues to be a larger share of national employment month by month, now at 13.3 percent.

Trade, transportation and utilities had an average month for jobs with 32 thousand new jobs, an increase about equal to the five-year growth trend. Transportation did well with 10.5 thousand new jobs, but like last month the gains came from warehousing and storage, 8.1 thousand new jobs, and for couriers and messengers, 2.2 thousand new jobs. Modal transportation including airlines had small losses. Wholesale traded added 3.4 thousand new jobs while retail added another of 18.7 thousand.

Leisure and hospitality had an off month with only a net of 14 thousand new jobs. The arts, entertainment and recreation sub sector had job losses of 7 thousand jobs with the amusements, gambling and recreation part of that leading the way downward with a loss of 5.8 thousand jobs. Performing arts and spectator sports also had small losses.. Accommodations added 2.3 thousand jobs; food services added 18.9 thousand jobs, less than expected given long term trends.

Information services dropped a net of 4 thousand jobs, a fourth month in a row of job losses. Motion picture and sound recording, broadcasting except the Internet and telecommunications all lost jobs offset by small gains in data processing and Internet services. Financial activities added a net of 8 thousand jobs, but both finance and insurance lost jobs. Like last month it was real estate and rental and leasing services that added jobs: 8.3 thousand, a little less than last month. The category, other services added 9 thousand jobs with all three sub sectors reporting gains. Personal and laundry services added 2.6 thousand jobs, an unusually large gain. Repair and maintenance services added another 3.5 thousand jobs; non-profit associations picked up 2.5 thousand jobs.

Establishment employment was up 228 thousand in November to 147.241 million jobs, a little lower gain than last month but an encouraging annual growth rate of 1.86 percent. To date there are no significant changes in government spending or taxation during the Trump period and the Federal Reserve Bank has controlled the money supply and interest rates in a reasonable and prudent manner. At least a decade of economic inertia continues to move the economy along. If the two tax bills passed by the House and Senate go into effect it will pull billions of dollars in transactions out of the spending stream and depress the economy. We will just have to wait and see the final result.


November Details

Non Farm Total +228
The Bureau of Labor Statistics (BLS) reported Non-Farm employment for establishments increased from October by 228 thousand jobs for a(n) November total of 147.010 million. (Note 1 below) An increase of 228 thousand each month for the next 12 months represents an annual growth rate of +1.86%. The annual growth rate from a year ago beginning November 2016 was +1.43%; the average annual growth rate from 5 years ago beginning November 2012 was +1.78%; from 15 years ago beginning November 2002 it was .80%. America needs growth around 1.5 percent a year to keep itself employed.


Sector breakdown for 12 Sectors in 000's of jobs

1. Natural Resources +7
Natural Resources jobs including logging and mining were up 7 thousand from October at 730 thousand jobs in November. An increase of 7 thousand jobs each month for the next 12 months would be a growth rate of +11.62 percent. Natural resource jobs are up 64 thousand for the 12 months just ended. Jobs in the 1990's totaled around 770 thousand. Job growth here will be small compared to America's job needs. This is the smallest of 12 major sectors of the economy with .5 percent of establishment jobs.

2. Construction +24
Construction jobs were up 24 thousand from October with 6.955 million jobs in November. An increase of 24 thousand jobs each month for the next 12 months would be an annual growth rate of +4.16 percent. Construction jobs are up 184 thousand for the 12 months just ended. The growth rate for the last 5 years is +4.13%. Construction jobs rank 9th among the 12 sectors with 4.7 percent of non-farm employment.

3. Manufacturing +31
Manufacturing jobs were up 31 thousand from October with 12.514 million jobs in November. An increase of 31 thousand jobs each month for the next 12 months would be an annual growth rate of +2.98 percent. Manufacturing jobs were up for the last 12 months by 189 thousand. The growth rate for the last 5 years is +.93%; for the last 15 years by -1.20%. In 1994, manufacturing ranked 2nd but now ranks 6th among 12 major sectors in the economy with 8.5 percent of establishment jobs.

4. Trade, Transportation & Utility +32
Trade, both wholesale and retail, transportation and utility employment was up 32 thousand from October at 27.470 million jobs in November. An increase of 32 thousand each month for the next 12 months would be an annual growth rate of +1.40 percent. Jobs are up by 124 thousand for the last 12 months. Growth rates for the last 5 years are +1.39 percent. Jobs in these sectors rank first as the biggest sectors with combined employment of 18.7 percent of total establishment employment.

5. Information Services -4
Information Services employment was down 4 thousand from October at 2.703 million jobs in November. A decrease of 4 thousand each month for the next 12 months would be an annual growth rate of -1.77 percent. (Note 2 below) Jobs are down by 65 thousand for the last 12 months. Information jobs reached 3.7 million at the end of 2000, but started dropping, reaching 3 million by 2004, but now holds in the 2.7 million range. Information Services is a small sector ranking 11th of 12 with 1.9 percent of establishment jobs.

6. Financial Activities +8
Financial Activities jobs were up 8 thousand from October at 8.492 million in November. An increase of 8 thousand each month for the next 12 months would be an annual growth rate of + 1.13 percent. Jobs are up 150 thousand for the last 12 months. (Note 3 below)This sector also includes real estate as well as real estate lending. Financial Services has been growing slowly with many months of negative growth. The long term growth rates are now at a 5 year growth rate of +1.68 percent, and a 15 year growth rate of +.40 percent. Financial activities rank 8 of 12 with 5.8 percent of establishment jobs.

7. Business & Professional Services +46
Business and Professional Service jobs went up 46 thousand from October to 20.928 million in November. An increase of 46 thousand each month for the next 12 months would be an annual growth rate of +2.64 percent. Jobs are up 548 thousand for the last 12 months. Note 4 The annual growth rate for the last 5 years was 2.92 percent. It ranks as 2nd among the 12 sectors now. It was third in May 1993, when manufacturing was bigger and second rank now with 14.2 percent of establishment employment.

8. Education including public and private +20
Education jobs went up 20 thousand jobs from October at 14.082 million in November. These include public and private education. An increase of 20 thousand jobs each month for the next 12 months would be an annual growth rate of+1.74 percent. Jobs are up 145 thousand for the last 12 months. (note 5) The 15 year growth rate equals +.74 percent, slower than the national average. Education ranks 4th among 12 sectors with 9.6 percent of establishment jobs.

9. Health Care +41
Health care jobs were up 41 thousand from October to 19.616 million in November. An increase of 41 thousand each month for the next 12 months would be an annual growth rate of +2.48 percent. Jobs are up 388 thousand for the last 12 months. (note 6) The current month was above long term trends and greater than growth from a year ago when the annual growth rate was +2.02 percent. Health care has been growing at +2.31 percent annual rate for the last 15 years, a rate greater than the national rate. Health care ranks 3rd of 12 with 13.3 percent of establishment jobs.

10. Leisure and hospitality +14
Leisure and hospitality jobs went up 14 thousand from October to 16.018 million in November. An increase of 14 thousand each month for the next 12 months would be an annual growth rate of +1.05 percent. Jobs are up 279 thousand for the last 12 months. (note 7) The 5 year growth rate is 2.86%. More than 80 percent of leisure and hospitality are accommodations and restaurants assuring that most of the new jobs are in restaurants. Leisure and hospitality ranks 4th of 12 with 10.9 percent of establishment jobs. It moved up from 7th in the 1990's to 5th in the last few years.

11. Other +9
Other Service jobs, which include repair, maintenance, personal services and non-profit organizations went up 9 thousand from October to 5.798 million jobs in November. An increase of 9 thousand each month for the next 12 months would be an annual growth rate of +1.87 percent. Jobs are up 80 thousand for the last 12 months. (note 8) Other services had +.47 percent growth for the last 15 years. These sectors rank 10th of 12 with 3.9 percent of total non-farm establishment jobs.

12. Government, excluding education +1
Government service employment was up 1 thousand from October to 11.944 million jobs in November. An increase of 1 thousand each month for the next 12 months would be an annual growth rate of +.05 percent. Jobs are down 14 thousand for the last 12 months. (note 9) Government jobs excluding education tend to increase slowly but surely with a 15 year growth rate of +.16 percent. Government, excluding education, ranks 7th of 12 with 8.1 percent of total non-farm establishment jobs.


Sector Notes___________________________

(1) The total cited above is non-farm establishment employment that counts jobs and not people. If one person has two jobs then two jobs are counted. It excludes agricultural employment and the self employed. Out of a total of people employed agricultural employment typically has about 1.5 percent, the self employed about 6.8 percent, the rest make up wage and salary employment. Jobs and people employed are close to the same, but not identical numbers because jobs are not the same as people employed: some hold two jobs. Remember all these totals are jobs. back

(2) Information Services is part of the new North American Industry Classification System(NAICS). It includes firms or establishments in publishing, motion picture & sound recording, broadcasting, Internet publishing and broadcasting, telecommunications, ISPs, web search portals, data processing, libraries, archives and a few others.back

(3) Financial Activities includes deposit and non-deposit credit firms, most of which are still known as banks, savings and loan and credit unions, but also real estate firms and general and commercial rental and leasing.back

(4) Business and Professional services includes the professional areas such as legal services, architecture, engineering, computing, advertising and supporting services including office services, facilities support, services to buildings, security services, employment agencies and so on.back

(5) Education includes private and public education. Therefore education job totals include public schools and colleges as well as private schools and colleges. back

(6) Health care includes ambulatory care, private hospitals, nursing and residential care, and social services including child care. back

(7) Leisure and hospitality has establishment with arts, entertainment and recreation which has performing arts, spectator sports, gambling, fitness centers and others, which are the leisure part. The hospitality part has accommodations, motels, hotels, RV parks, and full service and fast food restaurants. back

(8) Other is a smorgasbord of repair and maintenance services, especially car repair, personal services and non-profit services of organizations like foundations, social advocacy and civic groups, and business, professional, labor unions, political groups and political parties. back

(9) Government job totals include federal, state, and local government administrative work but without education jobs. back



Jobs are not the same as employment because jobs are counted once but one person could have two jobs adding one to employment but two to jobs. Also the employment numbers include agricultural workers, the self employed, unpaid family workers, household workers and those on unpaid leave. Jobs are establishment jobs and non-other. back


Monday, December 4, 2017

A Tax Bill to Depress the Economy

A Tax Bill to Depress the Economy

The so-called tax bills just passed by the House and Senate will depress the economy, which is easy to understand.

Governments rapidly return all of their tax money to the economy for salaries, schools, health care, defense contractors, road building and plenty more. They tend to put tax money into the spending stream as it arrives generating spending for, and income to, millions of people widely dispersed in all the states. Federal tax money tends to be spent in the United States and therefore supports the domestic economy.

To cut taxes by billions and billions to enrich a small number of people and corporations with no need to return that buying power to the spending stream guarantees a slowdown. A look at annual Corporate 10K reports often finds billions sitting as cash in liquid accounts. Corporations are slow to return revenues and profits to the spending stream and they have no obligation to spend in the United States. Tax money that once supported our domestic economy will end up going abroad.

The rich speculate in stocks and real estate and trendy collectibles and bid up the price of things that already exist, all of which creates nothing much for employment or the economy. Recall the Credit Default Swaps and Collateralized Debt Obligations after the Bush era tax cuts, and the depression that followed.

Claims that tax breaks to the rich creates a bigger supply of capital to finance investments ignores the need for demand and the mass buying power that cannot exist in a country with the crude and extreme inequality of the United States and tax bills to make it worse.

The bloated and privileged rich can do nothing to benefit the country or the economy buying the Congress and helping themselves to the country’s buying power. Some of us think the wealthy and the Congress have a responsibility to support the welfare of the larger society. Instead they act like marauders and midnight looters, pillaging and laying to waste.

Saturday, November 25, 2017

Job Rights and Sexual Harassment

Job Rights and Sexual Harassment

The recent spate of sexual harassment charges against a growing number of men by a growing number of women derives directly from the U.S. history of labor relations. Notice the majority of charges occur as part of employment and while on the job. The harassers tend to be past middle aged white men accustomed to giving authoritarian orders to people who have no job rights.

As I recall from my high school history, it was all white men who wrote our constitution. In spite of the “all men are created equal” stuff in the Declaration of Independence, their constitution left women out entirely and then created a whole under class of people with no rights at all; slaves they were called. We did have a great civil war to end slavery, but authoritarian white male privilege and notions derived in part from dictatorial authority over slave women, who I have read, were subjected to some grimy and disgusting sexual abuse. Unlike slaves you can quit your job, but in the United States employees work at will; anyone can be dismissed at any time and without cause or explanation. If you dare to study closely your job rights under U.S. state and federal law be sure to compare them with slavery.

Privileged white men of authority hate any communitarian self help efforts like labor unions and they have successfully neutralized those efforts since 1789. Remember Trump bragged about groping married women before the election. Sexual harassment will continue unabated in the current environment of labor law. Well defined job rights remain as an essential precursor to ending, or even reducing, sexual harassment.

Monday, October 16, 2017

Trump and NAFTA

Trump and NAFTA

Trump will have to fight the most powerful interests of corporate America to end NAFTA, which he now threatens to do. Any study of NAFTA since its inception in 1993 finds direct benefits to the growth of U.S. Domestic Production(GDP), not to mention the benefits to Canada and Mexico. It is unnecessary to cite studies since there are many and they all find benefits.

In the initial years NAFTA eliminated thousands of jobs. The U.S. textile industry nearly disappeared after NAFTA. In North Carolina, for example, there were 288 thousand jobs in 1990 in textile mills and apparel manufacturing. By the end of 2016 it was 42 thousand. Across the country these same industries had 1.629 million jobs in 1990; by 2016 it was 359 thousand. In the cut and sew industry alone jobs dropped from 749 thousand in 1990 to only 105.8 thousand by 2016.

Much of the NAFTA related job loss occurred before NAFTA generated a significant increase in trade along with new production and investment. Over the 24 years of NAFTA new trade related production expanded U.S. GDP and generated replacement jobs. Whether the new jobs generated because of NAFTA are more than jobs lost because of NAFTA is irrelevant to the current Trump demand. Current NAFTA trading does support U.S. establishment employment in 2017, which guarantees killing NAFTA will cut jobs and do noticeable harm to employment.

Corporate America will not be happy to see an end to NAFTA, but the job loss will be a minimal concern in NAFTA matters. They have always had the money and clout to get their way, but corporate nerves do get frayed with Trump bluster. If Trump cared about the working class and acted as a leader, he would ignore the NAFTA fight and work to change the horrendous federal personal income tax that bores down so heavily on wage earners. He would work to revise and enforce the Fair Labor Standards Act to raise the minimum wage and guarantee overtime pay for all and a few more.

If corporate America cared about the working class and acted as leaders who cared about Americans, they would acknowledge Congress and President Clinton did them a favor with NAFTA back in 1993 and then support sharing some of the benefits with the working class.

By now, the end of 2017, Trump policies all demand and intend to destroy something - Obama Care, climate accords, Iran nuclear deals, TPP, NAFTA, – except taxing, spending and Federal Reserve policy keep going on as before. He hasn’t destroyed the economy … yet.

Wednesday, October 11, 2017

Minimum Wages in Seattle

Minimum Wage Increases, Wages, and Low-Wage Employment: Evidence from Seattle.” Ekaterina Jardim, Mark C. Long, Robert Plotnick, Emma van Inwegen, Jacob Vigdor, Hilary Wething, National Bureau of Economic Research, June 2017

In yet another study of the minimum wage six authors tell readers they intend to evaluate the wage, employment and hours effects of a first and second phase in of the Seattle Minimum wage ordinance. The first phase raised the minimum wage from $9.47 an hour to $11.00 an hour on April 1, 2015. The second phase raised the wage from $11.00 an hour to $13.00 an hour on January 1, 2016. They analyze “employment in all sectors paying below a specified real hourly rate.”

The paper’s opening sentence starts with the standard obsessions economists always cite against minimum wages: “Economic theory suggests that binding price floor policies, including minimum wages, should lead to a disequilibrium marked by excess supply and diminished demand.” Economists predict a raise in the minimum wage will reduce employment of those earning a wage lower than the minimum wage. The see cause and effect as part of their doctrine.

They conclude the first phase effect was smaller than the second phase, which second phase caused a decrease in hours worked in low wage employment by 9 percent while the wage of low-wage workers’ was about 3 percent so that the cost of this wage hike outweighed its benefits for these workers. They conclude the minimum wage hurts low wage labor because hours lost makes a loss bigger than the gain from higher wages.

People leave jobs and lose jobs for many reasons, especially in low wage employment where turnover rates can be high. If the Seattle minimum wage causes employers to decrease employment, it could be useful to go out and ask these low wage employers if they recently off employees and was that because of the higher minimum wage. Typically Economists resort to analysis using large data sets filled with severe shortcomings like the Seattle study I review here.

Their data set comes from Washington’s Employment Security Division, which is produced as part of national Unemployment Insurance(UI) system administered by each state. Old timers refer to it as ES 202 data, or just “the 202” data. It is compiled and used by the Bureau of Labor Statistics in their benchmark revision of the Current Employment Survey.

ES 202 data is reported by single or multi establishment within county and Metropolitan Statistical areas coded by industry using the governments North American Industry Classification System(NAICS). Public reports of the data have monthly employment and payroll totals, but there are no occupations reported and names of employers or employees remain suppressed and confidential.

The authors inform readers that the Employment Security Division provided them the total hours worked in addition to the employment and payroll totals. Further the Employment Security Division partitioned the Seattle-Bellevue-Evertt Washington Metropolitan Division data to break out Seattle as a special and private favor to them, perhaps from their connection with the University of Washington. Because their data is a special favor and confidential the authors were required to sign a document promising not to release the data under threat of legal action against them. Therefore no one else gets to look at the data; they provide only a summary of aggregated data by quarter in their Table 3 on page 45.

They state “This unique data set allows us to measure the AVERAGE wage paid to each worker in each quarter. We compute an hourly wage rate as total quarterly payroll divided by quarterly hours worked, which corresponds to average hourly earnings. They call these numbers a realized hourly wage rate. Therefore they use an average wage of thousands of employees, an amount no one actually earns. Actual wages paid to employees will be above and below the average.

In addition their data excludes those working at establishments with more than one location. These include a variety of chain stores and franchise restaurants in Seattle and the surrounding county and metropolitan areas. Seattle’s minimum wage for a business with 500 or more employees such as McDonald’s or Costco was $13.50 an hour during the time when smaller single establishment business had an $11 an hour minimum wage. The employees included in the study had a strong incentive to move out of small business and into the large businesses excluded from the study.

In addition they define low skill employment as those working with an average hourly wage rate of $19 an hour or less. While they give an excuse for doing this, they do so without knowledge of the occupations of the employees included in the sample or the skills, experience or education needed in the unknown occupations that justify such a decision. An establishment with an average wage of $19 an hour will have many earning wages above $19 an hour, which could be occupations that need college degree skills.

In their methodology at page 16 the authors admit the hazards of their partition at $19. They write “The proxy for low-skilled employment will produce accurate estimates of the impact of minimum wage increases to the extent that a wage threshold accurately partitions the labor market into affected and unaffected components.” Their partition comes at an AVERAGE wage causing some who work with an actual wage above $19 an hour to be included in the below $19 partition while others will be in the below $19 partition who have wages above the $19 partition. There can be no assurance the 9 percent decline in total hours they cite ever worked an hours below the minimum wage or lost their job because of it.

Further they state “[The threshold wage] will overstate employment reductions if the threshold is set low enough that the minimum wage increase causes pay for some work to rise above it. This concern is particularly relevant given previous evidence of "cascading" impacts of minimum wage increases on slightly higher-paying jobs.” The previous evidence of “cascading impacts” comes from several Neumark and Wascher studies and a book, one of which is reviewed on this link at The cascading impact terminology refers to people who lose their below minimum wage job, but rather than be out of work they apply for and find work at a higher wage.

As I have suggested before people who lose their minimum wage job do not disappear, but begin looking for other jobs in other occupations with wages higher in the wage distribution. Forced to leave a sub-minimum wage job the newly unemployed increase the supply of labor in other occupations where they moderate wages in higher wage occupations and add to employment. The authors might recognize the millions of opportunities to move from low wage to higher wage employment by looking at wage distributions by occupation reported by the U. S. Bureau of Labor Statistics in their Occupational Employment Survey.

Their Summary of data in Table 3 supports this view. The table has three columns for total jobs, total hours and total payroll and a fourth column has computed average wages. The rows are for each quarter from the second quarter of 2014 to third quarter of 2016. The first column of each category has only those employers with employees that have an average monthly wage of $13 an hour or less. The second has only those employers with employees that have an average monthly wage of $19 an hour or less. The third set has an average monthly wage for all employers and employees.

These partitions allow a further partition into two additional columns through subtracting the less than $13 column from the less than $19 column, which leaves only those establishment employers with an average wage greater than $13 an hour and less than $19 an hour. Further subtraction leaves another column of only those employers with an average wage of $19 or more. Every employee and his or her employer is part of one and only one mutually exclusive column of the data.

These columns have the “cascading effects” but they show the benefit of the Seattle Minimum wage. In the second quarter of 2014 those working at establishments with an average wage less than $13 an hour total 39,807. By the third quarter of 2016 the total falls to 23,232, a loss of 16,575 working at establishments with an average wage less than $13 an hour.

Over that two year and one quarter period a low inflation rate combined with the higher minimum wage would tend to reduce people working at establishments that have an average wage below $13 an hour. Economists like to suggest that is a bad result caused by the minimum wage, but during the same period those working at establishments with an average wage above $13 and below $19 increased from 53,152 to 63,610, a gain of 10,548 jobs at above the minimum wage. Those working at establishments with an average wage above $19 increases from 199,681 to 249,675, a gain of 49,994 jobs. These are exactly what to expect if the minimum wage benefits low wage workers. In Seattle wage workers seek employment in other establishments in occupations that pay above the minimum wage.

In their 2008 book Neumark and Wascher Minimum Wages, cited by the authors in their Seattle study write on page 116, “. . . as we emphasized earlier in this chapter the potential for minimum wage increases to affect wages higher in the wage distribution is also important in assessing the effects of minimum wage policy.” It is. That is where the benefits of the minimum wage will be and that is where they are in Seattle.

This paper has no right to be a part of the public debate on minimum wages because it makes no attempt to persuade a general audience and cannot be read except by those with experience in the specialized terminology of the economics fraternity. It uses suppressed data and undefined insider terms from other studies such as region fixed effect, period fixed effect, treatment effect, idiosyncratic shock among other terms.

Business predictably opposes an increase in the minimum wage. It raises costs for businesses that depend on low wage employment and thereby pressures owners and managers to experiment with prices, jobs and work schedules. It might in some situations reduce long term profits, but that does not mean a higher minimum has no benefits to labor or the larger economy from those who will have more buying power.

Academic economists work under pressure to confirm market theory. When they do what is good for their career, the news media and the public seize on the conclusions and nothing else. They evaluate the conclusions based on academic credentials not the credibility of the work.

In Seattle I read the mayor and city council ignored the hecklers and went ahead with the next phase of their minimum wage program; they raised the minimum wage to $15 an hour. If I could get the suppressed employment data I could determine the benefits to labor and the economy I predict will continue.

Friday, September 8, 2017

Insulting Labor

Insulting Labor

The current United States Secretary of Labor, Alexander Acosta, has proposed putting former President Ronald Reagan in the Department’s Labor Hall of Honor. Ronald Reagan became president in January 1981 and so it was still early in his first term when the strike of the nation’s air traffic controllers union, PATCO, started August 3, 1981. The strike ended abruptly two days later when President Ronald Reagan fired 11,345 air traffic controllers. The firing ended, or busted, the union, which was decertified with little delay.

Many cite the failed PATCO strike as the date of an abrupt degeneration in U.S. labor relations. Reagan era strikes brought similar strikes with union defeats and failures at Phelps-Dodge in Arizona, to airline pilots, to Yale University support staff, at Hormel, at International Paper and others. Bush era strikes at Pittston Coal Co, A.E. Staley, Caterpillar and Bridgestone-Firestone were all defeats for organized labor.

It does not matter which side anyone takes in these disputes or that Reagan was the innocuous head of the Screen Actors Guild. Putting a management figure who crudely busted a union into a Labor Hall of Honor amounts to be a deliberate Trump style insult that ridicules and debases organized labor. Ronald Reagan was rigid and sanctimonious through the whole episode but I doubt even he would choose to show such contempt for the others in a labor hall of honor.

Wednesday, August 9, 2017

West Virginia Jobs 2016

West Virginia Jobs 2016

West Virginia lost 11 thousand jobs during the recession that ran from the fall of 2008 until spring of 2010, but recovered those losses by 2012 when statewide employment reached its high of 765.2 thousand jobs. However, since 2012 statewide employment has declined by 17.4 thousand jobs to 747.8 thousand jobs in 2016. Even though jobs recovered to their pre-recession totals, the recent decline leaves West Virginia with a 2.3 percent loss of statewide employment. That makes West Virginia one of nine states with a loss of jobs since the 2008-2010 recession. Only two states had a bigger percentage loss of jobs than West Virginia. Those losses came even though national employment increased from 132 million to just under 138 million jobs during the same years.

After reaching a statewide high in 2012, West Virginia had a decrease in jobs in the lumber and mining industries, construction, manufacturing, wholesale-retail trade, financial activities, and a combination of repair and maintenance services, personal services, and non-profit associations. By 2016 the combined loss in these sectors was 26.3 thousand jobs.

Health Care, Government, and private education offset some of the losses with 6.9 thousand new jobs. An additional 700 hundred jobs in transportation and warehousing, a hundred jobs in information services, 800 jobs in business and professional services, mostly support services, and 400 jobs in restaurants bring the total job gains to 8.9 thousand jobs for those industries with any new jobs. Combining the gains of 8.9 thousand with the losses 26.3 thousand accounts for the net loss of 17.4 thousand jobs.

The prospects for job growth remain poor.

Back in 1990 West Virginia had 34 thousand jobs in lumber and mining, mostly coal mining, which was 5.4 percent of statewide employment. It was still 34 thousand in 2012 but the total was down to 4.4 percent of statewide jobs. By 2016 only 20 thousand jobs remained with a 2.7 percent share of statewide employment. Almost all of the job loss in lumber and mining came in the last four years. The sudden loss of jobs makes the decline more noticeable, but a 2.7 percent share for lumber and mining keeps West Virginia well above the national percentage of 1.7 percent for these jobs. There are only 50.3 thousand coal mining jobs left in the entire United States and they continue to fall month to month. West Virginia will not be able to hold onto its current coal jobs, much less increase them.

West Virginia has a smaller share of statewide employment than the national economy in all but three industry sub-sectors: health care, government service for the federal, state, and local government, and repair, maintenance, and personal services. Combined these three industries have 43.8 percent of West Virginia employment. Combined health care and government service had a 1.5 percent increase in the share of statewide jobs from 2012 to 2016. Only three other sub sectors had any percentage increase – business support services, private education, restaurants – and their total increase was .7 percent less than half of the health care and government increase.

West Virginia continues to lose jobs in all the same sectors as the national economy, but does not generate more jobs in the sectors doing well in the national economy. For example, professional and technical services have 6.2 percent of national jobs, but only 3.3 percent in West Virginia. In the national economy professional and technical services provide a major source of new jobs adding 30 to 60 thousand jobs a month, but in West Virginia the total has remained at or below 25 thousand jobs for over a decade with no growth.

In the national economy leisure and hospitality, especially restaurants, provide a major source of new jobs. They are often low paid jobs, but the West Virginia economy has not been generating many low paid jobs. Leisure and hospitality have only 9.9 percent of statewide employment, a percent below the national average. Worse their 2016 employment in this sector has not budged above 74 thousand jobs in the last four years.

In the national economy administrative support services provide a major source of new jobs. Administrative support services have 6.3 percent of jobs in the national economy but only 4.6 percent in West Virginia. These are jobs at employment services, telemarketing bureaus, security and armored car services, janitorial services, landscaping and a few more. They were 32.4 thousand in 2012 that reached their statewide high in 2016, but still only 34 thousand jobs.

In the national economy government services have 15.4 percent of national employment, but 20.9 percent of statewide West Virginia employment. All three levels of government employment – federal, state, local – have higher shares in West Virginia than the national economy. In the national economy health care has 13.2 percent of national employment, but 15.4 percent of West Virginia jobs. With so many industries in decline new jobs in health care and government services elevate their relative importance to new heights.

Between 2012 and 2016 the Bureau of the Census reports West Virginia had a drop in statewide population of 25.5 thousand. Given the prospects for jobs, we might consider them the smart ones; they left. In a recent news story the Governor of West Virginia announced he was leaving the Democratic Party to join the Republicans. Soon after Trump came to cheer him on with a rant through his well worn list of personal grudges. He did not tell the crowd their only hope for new jobs and a better economy lies with health care and government service. A good policy for jobs would tax the rich to pay for infra structure construction and generate government service jobs, especially social services. Wild, miserable West Virginia.