Wednesday, December 31, 2014

Labor Line

December 2014___________________________________

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 5, 2014.

American Job Market The Chronicle

Current Job and Employment Data

Jobs
Total Non-Farm Establishment Jobs up 321,000 to 140,045,000
Total Private Jobs up 314,000 to 118,112,000
Total Government Employment up 7,000 to 21,933,000

Employment Note
Civilian Non-Institutional Population up 187,000 to 248,844,000
Civilian Labor Force up 119,000 to 156,397,000
Employed up 4,000 to 147,287,000
Employed Men down 268,000 to 78,053,000
Employed Women up 272,000 to 69,234,000
Unemployed up 115,000 to 9,110,000
Not in the Labor Force up 69,000 to 92,447,000

Unemployment Rate stayed the same at 5.8%, or 9,110/156,397
Labor Force Participation Rate stayed the same at 62.8%, or 156,397/248,844

Prices and inflation measured by the Consumer Price Index (CPI) for all Urban Consumers was down 1.46 percent for 2013.

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

CPI for All Items was up 1.7%
CPI for Food and Beverages was up 3.0%
CPI for Housing was up 2.7%
CPI for Apparel was up .2%
CPI for Transportation including gasoline was down 1.1%
CPI for Medical Care was up 2.1%
CPI for Recreation was up .2%
CPI for Education was up 3.4%
CPI for Communication was down 1.3%

This Month's Establishment Jobs Press Report

A REALLY GOOD MONTH

The Bureau of Labor Statistics published its December report of jobs in November. The labor force was up a modest 119 thousand, which was split between a 4 thousand increase in the employed and a 115 thousand increase in the unemployed. Employed women were up 272 thousand while employed men were down 268 thousand. The relatively small changes in the employed and unemployed kept the unemployment rate at 5.8 percent for November. The labor force participation rate also held at 62.8 percent.

The seasonally adjusted total of establishment jobs was up 321 thousand for November. The increase was 266 thousand more private sector service jobs combined with an increase of 48 thousand goods production jobs and 7 thousand more government service jobs.

The goods production sector had double their five year growth rate for November. It was 3 percent for the 12 months just ended. Natural resources remained the same, but construction did well with a November increase of 20 thousand jobs. Manufacturing also did better than last month with 28 thousand new jobs at an annual growth rate of 2.76 percent. Durable goods had 17 thousand of the new jobs. Motor vehicle and parts manufacturing, machinery and fabricated metal products dominated durable goods employment as they usually do. Plastics and rubber products and food processing had the big gains in non-durable goods.

For government service employment the federal government was up 5 thousand seasonally adjusted jobs with 4 thousand of them at the Post Office. State government, excluding education was down 2.4 thousand jobs, but local government jobs excluding education were up 2.2 thousand. Public education was the reverse. State education jobs were up 5.4 thousand and offset a decline of 2.5 thousand local public school jobs. Private education went up just 600 jobs after last month's large increase for a small net gain in education.

Professional and business services added 86 thousand new jobs to take first place for private service sector job gains in November. The annual growth rate of 5.31 percent is more than double the rate for non-farm employment and higher than recent monthly growth rates for professional and business services. Professional and technical services had 37.5 thousand of the new jobs with accounting and bookkeeping services in the lead with 16.4 thousand new jobs, a much larger increase than typical. Architectural and engineering services, computer design and related services and management and technical consulting all had significant gains. Only legal services did poorly with no new jobs. The management of companies and enterprises sub sector added another 6.8 thousand new jobs, a higher than usual total.

Administrative and support service sub sectors added an additional 41.7 thousand jobs. Employment services had 28.4 thousand of these new jobs. Building support services was a loser for the second month, dropping 2.4 thousand jobs.

Trade, transportation and utilities employment had 71 thousand new jobs for November with job gains in all four sub-sectors for the second month in a row. Wholesale and retail trade were both up with 52.7 thousand new jobs, 50.2 thousand in retail trade. Transportation did better than usual with 16.7 thousand new jobs. Only trucking did well among modal transportation adding 3 thousand new jobs. However, there were 4.7 thousand new jobs in courier and messenger services, 2.7 thousand jobs in support activities for terminals and warehouses and 1.8 thousand new jobs in warehousing and storage.

Health care had a more normal increase of 37 thousand jobs with the majority of jobs coming in ambulatory care that had 24.3 thousand of the total health care gain. Hospital jobs were up 4.3 thousand but nursing care facilities were down 1.3 thousand jobs. This month's health employment growth rate of 2.45 percent almost matches the long term trend growth rate of 2.44 percent.

Leisure and hospitality service had 32 thousand new jobs for November, less than last month. Among arts, entertainment and recreation, the amusements, gambling and recreation sub sector did well with an increase of 6.9 thousand jobs, but it was food services, mostly restaurants, that picked up most of the gains, 26.5 thousand new jobs. Accommodation had a small increase of 800 jobs.

Information services was up 4 thousand jobs, more than usual. The motion picture and sound recording industry dropped 5 thousand jobs, but everything else gained, although they were modest gains. Publishing, telecommunications, broadcasting, data processing, hosting and related services had gains of 1 to 2 thousand jobs.

Financial activities added an unusually large number of jobs: 20 thousand. It is the biggest increase in 32 months. The November gains came in the insurance industry with 10.1 thousand new jobs and with more jobs in real estate that picked up 5.6 thousand jobs. Even commercial banking added 3.4 thousand new jobs, an unusual increase.

Other services also had an unusually large increase with 15 thousand new jobs, more jobs in all three sub sectors. Repair and maintenance services added 6 thousand jobs; personal services added another 5.3 thousand jobs; non-profit associations added 3.4 thousand new jobs for November. Their combined increase is the biggest in 40 months.

The November increase of 321 thousand jobs in non-farm establishment employment is the biggest combined monthly gain in 34 months. It is bigger than the average monthly gain of 224 thousand jobs from the last 12 months. It represents an annual growth rate of 2.76 percent. I predicted last month's smaller increase was big enough to expect a continuation of upward trends, which did prove correct for November. The big increases in professional employment are encouraging as these sectors employ many with college degree skills. Health care also returned to a normal increase. Manufacturing gains are also encouraging. Overall a good month for jobs.

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November Details

Non Farm Total +321
The Bureau of Labor Statistics (BLS) reported Non-Farm employment for establishments increased from October by 321 thousand jobs for a(n) November total of 140.045 million. (Note 1 below) An increase of 321 thousand each month for the next 12 months represents an annual growth rate of 2.76%. The annual growth rate from a year ago beginning November 2013 was +1.99%; the average annual growth rate from 5 years ago beginning November 2009 was +1.50%; from 15 years ago beginning November 1999 it was .47%. America needs growth around 1.5 percent a year to keep itself employed.

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Sector breakdown for 12 Sectors in 000's of jobs

1. Natural Resources +0
Natural Resources including logging and mining stayed the same from October at 926 thousand jobs in November. Natural resource jobs are up 44 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 .7 percent of establishment jobs.

2. Construction +20
Construction jobs were up 20 thousand from October at 6.109 million jobs in November. An increase of 20 thousand jobs each month for the next 12 months would be an annual growth rate of +3.94 percent. Construction jobs are up 213 thousand for the last 12 months. The growth rate for the last 5 years is +1.41%. Construction jobs rank 9th among the 12 sectors with 4.4 percent of non farm employment.

3. Manufacturing +28
Manufacturing jobs were up 28 thousand from October at 12.217 million jobs in November. An increase of 28 thousand jobs each month for the next 12 months would be an annual growth rate of +2.76 percent. Manufacturing jobs were up for the last 12 months by 171 thousand. The growth rate for the last 5 years is +1.20%. In 1994, manufacturing ranked 2nd but now ranks 6th among 12 major sectors in the economy with 8.7 percent of establishment jobs.

4. Trade, Transportation & Utility +71
Trade, both wholesale and retail, transportation and utility employment was up by 71 thousand jobs from October to 26.633 million jobs in November. These jobs tend to increase at a slower rate than the total of non-farm jobs, but an increase of 71 thousand each month for the next 12 months would be an annual growth rate of +3.21 percent. Jobs are up by 543 thousand for the last 12 months. Growth rates for the last 5 years are +1.61 percent. Jobs in these sectors rank first as the biggest sectors with combined employment of 19.0 percent of total establishment employment.

5. Information Services +4
Information Services employment were up by 4 from October to 2.691 million jobs in November. An increase of 4 thousand each month for the next 12 months would be an annual growth rate of +1.79 percent. (Note 2 below) Jobs are up by 2 thousand for the last 12 months. Monthly employment in information services gyrates month to month and has been doing so for over a decade. Information jobs reached 3.7 million at the end of 2000, but started dropping, reaching 3 million by 2004 and continues below 2.7 million now. Information Services is a small sector ranking 11th of 12 with 1.9 percent of establishment jobs.

6. Financial Activities +20
Financial Activities were up 20 thousand jobs from October to 8.013 million in November. An increase of 20 thousand each month for the next 12 months would be an annual growth rate of +3.00 percent. Jobs are up 114 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 declining with negative annual growth rates, a 5 year growth rate of +.65 percent, and a 15 year growth rate of
+.20 percent. Financial activities rank 8 of 12 with 5.7 percent of establishment jobs.

7. Business & Professional Services +86
Business and Professional Service jobs went up 86 thousand from October to 19.522 million in November. An increase of 86 thousand each month for the next 12 months would be an annual growth rate of +5.31 percent. Jobs are up 696 thousand for the last 12 months. Note 4 The annual growth rate for the last 5 years was 3.45 percent. It ranks as 2nd among the 12 sectors. It was third in May 1993, when manufacturing was bigger and second rank now with 13.9 percent of establishment employment.

8. Education including public and private +4
Education jobs went up 4 thousand jobs from October at 13.664 million in November. These include public and private education. An increase of 4 thousand each month for the next 12 months would be an annual growth rate of +.91 percent. Jobs are up 118 thousand for the last 12 months. (note 5) The 15 year growth rate equals 1.11 percent, faster than the national average. Education ranks 4th among 12 sectors with 9.8 percent of establishment jobs.

9. Health Care +37
Health care jobs were up 37 thousand from October to 18.239 million in November. An increase of 37 thousand each month for the next 12 months would be an annual growth rate of +2.45 percent. Jobs are up 365 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 +2.04 percent. Health care has been growing at +2.44 percent annual growth rate for 15 years, a rate not quite double the national rate. Health care ranks 3rd of 12 with 13.0 percent of establishment jobs.

10. Leisure and hospitality +32
Leisure and hospitality jobs went up 32 thousand from October to 14.794 million in November. An increase of 32 thousand each month for the next 12 months would be an annual growth rate of +2.60 percent. Jobs are up 377 thousand for the last 12 months. (note 7) The 5 year growth rate is 2.64%. 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 10.6 percent of establishment jobs. It moved up from 7th in the 1990's to 5th in the last few years.

11. Other +15
Other Service jobs, which include repair, maintenance, personal services and non-profit organizations went up 15 thousand from October to 5.541 million jobs in November. An increase of 15 thousand each month for the next 12 months would be an annual growth rate of +3.26 percent. Jobs are up 68 thousand for the last 12 months. (note 8) Other services had +.80 percent growth for the last 5 years. These sectors rank 10th of 12 with 4.0 percent of total non-farm establishment jobs.

12. Government, excluding education +5
Government service employment was up 5 thousand jobs from October to 11.696 million in November. An increase of 5 thousand each month for the next 12 months would be an annual growth rate of +.49 percent. Jobs are up 26 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 .25 percent. Government, excluding education, ranks 7th of 12 with 8.4 percent of total non-farm establishment jobs.

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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

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Notes

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

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Thursday, December 11, 2014

Be a Millionaire

I was speaking with a financial advisor but not at his office. It was at a party where there was lots of informal chit-chat over a nip of the grape. One thing he said to me and some others standing close by was meant as humor, a joke. It was “People sometimes ask me, How did you accumulate your first million? I tell them my simple strategy. Don’t buy anything.”

It got a laugh and it was funny the way he told it, his voice and exaggeration. Then he went on to tell about a personal choice he made back in the 1980’s after finishing college. The car he had was a used Chevrolet with no cachet, but it ran well and was reliable. The fancier car he wanted to buy at the time he said was $9,100. Of course he didn’t have the money, but he recalled the deal he got to buy it was $2,000 down and a three year loan at 7 percent for the rest. He didn’t buy the car but decided to take advantage of pension rules that allow savings to go untaxed in the stock market for decades. He claimed his “not buy a car” investment was worth around $100,000 dollars now.

Not buying a car put him 10 percent of the way to retiring a millionaire, but there are other goods and services that are relatively easy to do without or to substitute something much cheaper. Regular or monthly service charges for cable TV, storage lockers, gym memberships, newspaper, magazine and Internet subscriptions, cleaning services, yard services, and life insurance come to mind quickly.

Decisions not to buy deluxe cars, electronics and appliances over the budget models, or replace them early for the newer models can generate thousands of dollars at retirement. Even essential services like phone, heating and air conditioning allow more saving opportunities to become a millionaire.

How much buying to avoid and things to cut back to reach a million dollars depends on time and interest rates as it does in all financial accumulations. Assuming work starts between the ages of 18 and 22 and continues to the Social Security retirement age makes it reasonable to use forty years of work life to save for retirement. The many stock index funds give a comparable measure of expected returns for a retirement account. The Standard and Poors 500 index earned a 7.2 percent return for the decade ending 2014 assuming dividends were reinvested. For the past twenty-five years the Standard and Poors Index had a 9.4 percent return.

Using an 8 percent return rate and Microsoft Excel spreadsheet functions computes to $284.56 a month of consumer goods and services not purchased will be a million dollars at retirement in 40 years. Lets start by eliminating new cars and then cable television, storage lockers, gym memberships, and newspaper, magazine or Internet subscriptions, all of which have cheap and available substitutes.

In today’s economy a $20,000 new car is common. Put $2,000 down and finance the rest on a 60 month self amortizing loan at 4 percent interest and monthly payments will be $331.50. If a new college graduate invested the $2,000 down payment for 40 years and invested the $331.40 each month for 5 years and then invested that five year total for the next 35 years, the total comes to $428,604.33, assuming the stock market return rates of the past continue in the future.

Few people want to acknowledge the place of a car in their personal finances. Today’s cars can and do go 200 thousand miles. Compare two people who keep a car for 10 years and drive it 10 thousand miles a year. Over forty years the one who buys and drives that car for the last 10 years and the last 100 thousand miles can expect to retire a millionaire on the invested savings.

Many people worry about the age of their car and forget that most of the wearing out and many of the costs of ownership - tires, brakes, oil changes - depend on mileage, not age. Worry that an old car will break down and strand you in the middle of no-where and therefore you need a new one, turns into an expensive worry.

Moving on I found a variety of cable television packages on the Internet that ranged from $44.24 a month up to premium services of $112.94. A typical 5 by 5 storage locker will go for $49 a month. Bigger 10 by 10 lockers go for up to $89 a month. Gym memberships vary but range up to $36 a month. I found magazine, newspaper and Internet subscriptions from $1.00 a month up to $2.95 a month.

Home ownership allows opportunities to choose do it yourself work that renters have to cover in their monthly rent. Still many homeowners hire home cleaning services and yard services. I found a typical home cleaning services at $90 for three hours of cleaning once a month. I found basic yard services at $49 a mow up to $85 for premium services.

For phone service I found phone and Internets services for $39 a month instead of unlimited nationwide talk and text cell charges at $59.95 a month, plus $30.00 more for a two gig data package. Many run over the data limits and add more charges. Phone bills now routinely run over a $100 a month for many.

There are people and families without enough discretionary income to buy any of these services. Those who have discretionary income could be millionaires with a little planning. Drop the $44.95 of cable television expense and use an aerial. Drop the $49 storage locker and store your own junk, or get rid of it. Drop the $36 a month gym membership and do your own exercise for free. Give up ten magazine, newspaper and Internet subscriptions and save $10 a month. Drop the maid service and save $90 a month. Get a $39 dollar a month phone and Internet package and save at least $60 on the fancy cell and data service packages. The total monthly savings is $289.95 a month, even without saving on a car.

Will you suffer doing without these services? I can’t answer that for you, but I am gonna be millionaire.

Thursday, December 4, 2014

Needless Markup

Needless Markup

I have a friend who calls Neiman Marcus, Needless Markup, although probably lots of people do that. She still shops there but complains about the prices. I couldn’t resist the opportunity to report a modest but pleasing savings I made just three days before on a pair of $175 Nunn-Bush shoes. I got them for $7.99 at a Goodwill thrift shop. Better yet they were absolutely 100 percent new; not a scratch, not a scuff, on the tops, on the soles, anywhere.

Finding a brand new pair of shoes at Goodwill is lucky, but there is more to it than luck. Savings at thrift stores comes with strategy and patience. Never shop at a thrift store if you need something right away. If it’s Friday afternoon and you have to get new and respectable shoes for your sister’s wedding, then it’s not the time to go to Goodwill or any thrift.

Savings at thrift stores is a long term thing requiring regular, but short visits. At Goodwill stores and Salvation Army stores, especially in big metropolitan areas, the good stuff turns over very fast. That is important because infrequent visits mean lots of good stuff will come and go and you’ll never see it.

Frequent visits make it easier to spot the good stuff. Plan to stay twenty minutes to a half an hour, but never longer. Have a departmental route: pants, shirts, shoes, furniture, electronics, sporting goods, books and so on. Don’t linger. If the bargain is there, you will see it. If you stay too long you’ll get depressed looking at worn out stuff and begin thinking thrift shops are hopeless when they are not.

Thrift shops are a special preserve for those who like a challenge, but they pay off, especially when you find something you might not buy otherwise. The above mentioned shoes are only one of many fun buys. Include new to nearly new Ralph Lauren, Tommy Hilfiger, Bill Blass and Brooks Brothers shirts, Jos. A Banks pants, 3 all leather belts, New & Lingwood sweaters, a Harris Tweed sports coat, all bought for a song. Take that Needless Markup.

Friday, October 24, 2014

Jobs for Software Developers

Software Developers

Software Developers have two occupations

Standard Occupational Classification #15-1132 Software Developers, Applications
Standard Occupational Classification #15-1133 Software Developers, Systems Software

SOC Definition for #15-1132 -- Develop, create, and modify general computer applications software or specialized utility programs. Analyze user needs and develop software solutions. Design software or customize software for client use with the aim of optimizing operational efficiency. May analyze and design databases within an application area, working individually or coordinating database development as part of a team. Excludes "Computer Hardware Engineers" (17-2061).

Examples of other common names in use -- Applications Developer; Programmer Analyst; Software Designer

SOC Definition for #15-1133 -- Research, design, develop, and test operating systems-level software, compilers, and network distribution software for medical, industrial, military, communications, aerospace, business, scientific, and general computing applications. Set operational specifications and formulate and analyze software requirements. May design embedded systems software. Apply principles and techniques of computer science, engineering, and mathematical analysis.

Examples of other common names in use--Developer, Infrastructure Engineer, Network Engineer, Publishing Systems Analyst, Senior Software Engineer, Software Architect, Software Developer, Software Engineer, Systems Coordinator, Systems Engineer

National 2013 employment as Software Developers was 1,017,340, 643,830 for software developers, applications, and 373,510 for software developers, system software.
Software Developers for Applications have some jobs in nearly every sector of the economy so anyone with these skills should expect to work in every sector of the economy. Job concentrations occur in professional and business services with 45 percent of the jobs that include 35 percent of the jobs in the computer systems design and related activities industry. Publishing including software publishers has 10 percent of jobs; finance and insurance has 9 percent of jobs. Manufacturing firms employ 8.5 percent of Software Developers for Applications spread among all manufacturing sub sectors with 5 percent in computer and electronic products manufacturing.

Software Developers, System Software have job concentrations in professional and business services with 47 percent of the jobs. Computer and electronic product manufacturing has 14 percent of jobs with another 5 percent scattered in other areas of manufacturing. Publishing has 5 percent, telecommunications and data processing, hosting and related services another 5 percent, with finance and insurance also at 5 percent.

The individual growth rate of new jobs per year since 2000 varies widely for the two occupations. Software developer for applications had a steady growth of 4.25 percent a year that averaged 20.7 thousand new jobs a year, triple job growth for the economy. The Bureau of Labor Statistics is forecasting modest job growth of 14.0 thousand per year through 2022 at 2.08 percent a year

Software developers for system software had a steady increase of 2.69 percent a year that averaged 8.4 thousand new jobs a year since 2000, still rapid growth above the national average. The combined increase equals 29.1 thousand new jobs a year. The Bureau of Labor Statistics is forecasting modest job growth of 8.3 thousand per year through 2022 at 1.88 percent a year.

Job growth is not the only measure of new hiring. Job openings equal job growth and the number of net replacements. Net replacements are people who permanently leave an occupation for another occupation or retirement and must be replaced before there can be any job growth. Job openings for software developers, for applications are forecast to be 21,850 a year through 2022. Job openings for software developers, system software are forecast to be 13,470 a year through 2022.

The recently updated BLS Education and Training Classification assignment lists BA degree skills as necessary for entry into both software developers for applications and system software. Previous work experience of 1 to 5 years is listed as an entry level requirement for the system software occupation, but not for applications. On-the-job training are not important factors in hiring for either.

New BA degrees in computing are part of 10 different Computer and Information Sciences and Support Services specialties and those 10 are part of 26 degree programs in Computer and Information Sciences and Support Services. BA degrees in Computer Science programs totaled 47,384 for the year ending 2012. The latest total is up from 47,299 degrees in 2001 but also down from 59,488 in 2004. The biggest share of these degrees are general survey courses in information systems and computer science and not specifically for software development. There were also 20,917 masters degrees and 1,698 doctorates in the computer science programs. Totals for computer degree programs have remained stable for over a decade but show no sign of increasing in spite of the excellent job prospects.

The ratio of relevant BA degrees to software developer openings equals 1.34, or 47,384/35,320. However, he total of computer graduates lags behind the number of job openings for the eleven computer occupations defined in the Standard Occupational Classification that use BA degree skills. There are 99.5 thousand job openings for the eleven BA degree occupations compared to 47,384 total computer BA degree candidates. To the extent that computer degree holders can find computing jobs from a variety of degree programs, there ratio of BA relevant BA degrees to job openings is .48, indicating a shortage of computer degrees from U.S. colleges.

The entry wage for software developers for applications is reported as $55,770 in 2013, which is also the 10th percentile wage. The median wage is $92,660, and the 90th percentile wage is $143,540. The wages of software developers for applications have kept up with inflation in recent years. For example, to have the buying power of the 2006 median wage of $79 780, in 2013, the software developer for application wage would need to be $92,189. Instead it was $92,660, a .51 percent increase in the real wage for those seven years.

The entry wage for software developers, systems software is reported as $63,140 in 2013, which is also the 10th percentile wage. The median wage is $101,410, and the 90th percentile wage is $150,760. The wages of software developers, systems software have kept up with inflation in recent years. For example, to have the buying power of the 2006 median wage of $85,370, in 2013, the software developer for application wage would need to be $98,648.98. Instead it was $101,410, a 2.8 percent increase in the real wage for those seven years. The 90th percentile wage is 2.6 times the entry level wage, or 10th percentile wage, which implies there is opportunity for advancement.



Wednesday, October 8, 2014

Jobs for Librarians

Librarians and Library Technicians

Standard Occupational Classification #25-4021 Librarians
Standard Occupational Classification #25-4031 Library Technicians

SOC Definition - Librarians #25-4021 – Administer libraries and perform related library services. Work in a variety of settings, including public libraries, schools, colleges and universities, museums, corporations, government agencies, law firms, non-profit organizations, and healthcare providers. Tasks may include selecting, acquiring, cataloguing, classifying, circulating, and maintaining library materials; and furnishing reference, bibliographical, and readers' advisory services. May perform in-depth, strategic research, and synthesize, analyze, edit, and filter information. May set up or work with databases and information systems to catalogue and access information.
Examples of other common names in use: School Library Media Specialist; Circulation Manager

SOC Definition - Library Technicians #25-4031 -- Assist librarians by helping readers in the use of library catalogs, databases, and indexes to locate books and other materials; and by answering questions that require only brief consultation of standard reference. Compile records; sort and shelve books; remove or repair damaged books; register patrons; check materials in and out of the circulation process. Replace materials in shelving area (stacks) or files. Include bookmobile drivers who operate bookmobiles or light trucks that pull trailers to specific locations on a predetermined schedule and assist with providing services in mobile libraries. Examples of other common names in use: Assistant Librarian, Bookmobile Driver.

America employs 136.5 thousand librarians and 96 thousand library technicians. Roughly 58 percent of librarians are employed in schools and colleges, 5 percent in independent libraries and archives, 32 percent in government excluding education and another percent or two scattered at law firms, research or professional associations. Library Technicians have 37 percent employed in schools and colleges, 6 percent in independent libraries and archives, 54 percent in government excluding education and the rest scattered in other industries.

Librarians need a master’s degree in library science to be considered; library technicians need some vocational training, work experience, or associates degree training with an emphasis on computers. Both librarians and library technicians need to be able to work in schools as well as public libraries.

Jobs as librarians have slowly declined for more than a decade. Jobs for librarians declined an average 227 a year from 2000 at an annual growth rate of -.16 percent. Jobs as library technicians also have slowly declined since 2000 with an average decrease of 362 a year at an annual growth rate of -.37 percent. In spite of the recent decline the Bureau of Labor Statistics has forecasted a small increase of both occupations through 2022. It is 1.1 thousand a year for librarians and 900 a year for library technicians.

Job openings make a better measure of new hiring than job growth. Job openings are job growth and the number of net replacements. Net replacements are people who permanently leave an occupation for another occupation or retirement and must be replaced before there can be job growth. Job openings for librarians are forecast to be 4,440 a year through 2022. Job openings for library technicians are forecast to be 6,630 a year through 2022.

The recently updated BLS Education and Training Classification assignments lists MA degree skills as necessary for entry into jobs as librarians and training in a post-secondary program for library technicians. Previous work experience and on-the-job training are not important factors in hiring. However, percentages from survey data are published for library and library technicians that show an educational distribution where 58.7 percent of librarians have a master’s degree, 36 percent have some college up to a BA degree and almost 5 percent have a doctorate in some related field. Library technicians show an educational distribution where 38.6 percent have a high school or less than high school education, 48.3 percent have some college up to a BA degree and only 11.3 percent have a master’s degree.

The National Center for Education Statistics reports degree data for America’s colleges and universities that can be compared with job growth and openings. New master’s degrees in library science for the year ending June 2011 were 7,441, which is up from 2010 when the total was 7,727. Because the master’s degree is the entry level degree only a hand full of BA degree programs in library science exist at America’s colleges and universities. There are virtually no BA degrees in library science. Computer science is a good undergraduate degree before entering a library science master’s program.

The ratio of relevant MA degrees to librarian openings equals 1.68, or 7,441/4,440, assuring more than enough qualified candidates to fill job openings. Openings minus entry degrees are 7,441 – 4,440 = 3,001 degrees over openings indicating some surplus of qualified applicants.

The basic wage data from the BLS occupational employment survey includes a wage distribution. Averages are not used much in wage data. A few high wages pull up the average and make it unrepresentative. Instead a distribution range of wages is published with the 10th, 25th, median, 75th, and 90th percentiles of wages. A 10th percentile wage means 10 percent working in this job have wages equal to or less than the 10th percentile wage and so on. Annual wages are converted to hourly wages by dividing annual wages by 2080.

The entry wage for the national market in the 10th percentile for librarians is reported as $33,380 in 2013. The 25th percentile wage equals $43,890. The median wage is $55,690, the 75th percentile wage equals $70,010 and the 90th percentile wage is $86,360.

The wages of Librarians have not kept up with inflation in recent years. For example, to have the buying power of the 2006 median wage of $49,060 in 2013, the librarian wage would need to be $56,690.80. In stead it was $55,690, a 1.77 percent decrease in the real wage for those seven years.

The entry wage for the national market in the 10th percentile for library technicians is reported as $18,820 in 2013. The 25th percentile wage equals $23,740. The median wage is $31,280, the 75th percentile wage equals $40,320 and the 90th percentile wage is $49,650.

The wages of library technicians have kept up with inflation in recent years. For example, to have the buying power of the 2006 median wage of $26 560, in 2013, the library technician wage would need to be $30.691.15. Instead it was $31,280, a 1.92 percent increase in the real wage for those seven years.

Thursday, August 14, 2014

Capital in the Twenty First Century

Thomas Piketty, translated from French by Arthur Goldhammer, Capital in the Twenty-First Century, (Cambridge, MA: Belknap Press of Harvard University Press, 2014) 577 pages, $39.95.

Capital in the Twenty-First Century by French economist Thomas Piketty studies and examines the only controversial question in economics: the distribution of income and wealth. It studies distribution between capital and labor, among wage earners, among capital owners, between countries and over several hundred years.

Few authors of economics books more than 500 pages with analytical foundations and a reflective data driven discussion attract attention in the popular media as Piketty has done. Paul Krugman comes to mind, but his notoriety comes in small doses from his New York Times editorials more than his books. None of Krugman’s books resemble Piketty’s except they both challenge the status quo and say things America’s wealthy like suppressed.

The book has four parts divided into sixteen chapters and subchapters that builds an economic framework and applies it to data from national income accounts. Data and discussion applies to France, Great Britain, Germany and the United States and a few more countries where data is available. Piketty develops his arguments after an expansive and rambling thirty-eight page introduction that has nearly as much to say about Piketty and the economics fraternity as it does about capital in the twenty first century.

The two part I chapters define terms from National Income Accounts: national income, capital, wealth, the capital to income ratio and growth of output, population, and per capita output. Piketty applies these terms in his first fundamental law of capitalism, which is the accounting identity α = r x β, where alpha(α) equals capital’s share of national income or the capital-labor split, r is the percentage rate of return on capital and Beta(β) is a ratio equal to the value of capital necessary to generate a years worth of national income.

The part II chapters develop an expanded discussion of Beta(β), the capital-income ratio already introduced. Here he applies his second fundamental law of capitalism: Beta(β) = s/g, where s is the percentage of net private saving and g is a percentage growth in national income. Economist readers will recognize this second fundamental law as a clever adaptation of market growth theory. Long ago economists theorized growth of national income depended on the saving rate multiplied by the ratio of income to capital, or g = s x (1/ β). Using the rules of algebra Piketty converted the equation to make the capital to income ratio depend on the ratio s/g. The conversion gives him a second way to study inequality.

Piketty builds his inequality discussion around these two fundamental laws. Several chapter five tables give example growth rates and saving rates in eight rich countries including the United States for the years 1970 to 2010. Both fundamental laws generate ratios to allow inter-country and inter-temporal comparisons of inequality. The data suggest the richer countries can expect s greater than g and r greater than g over long periods that can generate an ever higher capital to income ratio. If r = 5% and g = 1% then the wealthy have to consume at least 80 percent of their high incomes or capital will grow faster than national income and inequality will get worse.

Part II chapters report, chart and discuss the results for national economies where Piketty concludes that inequality does not necessarily diminish from market forces and can get much worse over time. This main or primary conclusion is also summarized in the introduction and again in the brief conclusion. Readers can get the main point with just the introduction and conclusion as I have heard people say they did, but only by missing extensive historical discussion and the much more detailed breakdown of inequality that comes in the part III material.

Keep in mind that Piketty has spent countless hours mastering the intricacies of national income accounting in a way that few American economists do. Our Federal government produces fine data for the U.S. economy but American economists still prefer theorizing while Piketty has built and maintains massive multi-country data files to test if its all true, or needs a few adjustments.

Part III makes extensive use of these data files in discussions that use forty percent of the book to cover inequality for combined capital and labor income, for labor income, for capital income, for inheritance and for wealth. The first of the six chapters in the structure of inequality section gives an introductory warm up to the others.

Piketty begins his warm up chapter with a plot summary from the Honore de Balzac novel, Pere Goriot. Occasional allusions to literature and history give a nice break to otherwise continuous technical material. The plot and characters in Pere Goriot contrast the inequality of class and culture from France around 1835, but you too may feel the parallel to the fading meritocracy of 2014. Then he summarizes and defines terms for the low, medium and high inequality he describes in more detail in the chapters that follow.

These remaining part III chapters build discussion from numerous charts that measure inequality of income and wealth for different countries over time, mostly 1910 to 2010 for income inequality and 1810-2010 for wealth inequality. Most charts plot the share of the top 10 percent of income, the decile, or 1 percent of income, the centile, against time, and similarly for wealth.

In the United States of the late 1920’s the top 10 percent had almost 50 percent of national income. That share declined in the depression and stayed 32 to 35 percent until 1980, but climbed back to 50 percent by 2010.

Wealth distributions generate greater inequality than income because the bottom half of a country’s population typically has no wealth at all. The U.S. share of the top 10 percent of wealth reached a high of 80 per cent in 1910. It dropped to 65 percent by 1950, before beginning a slow by steady climb to 70 percent in 2010.

One of many Piketty interpretations included “. . . there is absolutely no doubt that the increase of inequality in the United States contributed to the nation’s financial instability. The reason is simple: one consequence of increasing inequality was virtual stagnation of the purchasing power of the lower and middle classes in the United States . . .”

Part IV has four chapters in a hundred page discussion of policy that repeatedly returns to the need for progressive taxation to correct for inequality. At page 497 he writes “The progressive tax is indispensable for making sure that everyone benefits from globalization, and the increasingly glaring absence of progressive taxation may ultimately undermine support for a globalized economy.”

He argues in favor of a progressive capital tax, but he offers support for, and historical discussion of, progressive income and inheritance taxes. He warns the rich progressive taxes offer a way to correct for inequality without undermining private property and the forces of competition.

The book is unnecessarily long in part because Piketty, or his editor, adopted conventions common to college textbooks. These are repeated plan of the book sections that give a roadmap of material yet to come and excessive introduction and summary. “I want to tell you about something important, but I can’t do that until I tell you about this, and then this, and then I will get back to that.” Textbook editors love this stuff but it is hard to follow or understand what you will read about later. I think of it as surplus.

More pages are added with material intended only for economists. Non-economists should notice in the introduction where he tells readers he was hired to teach at a university near Boston after finishing graduate school. He left off the name, MIT. After three years he went back to France. Then he writes “the discipline of economics has yet to get over its childish passion for mathematics and for purely theoretical and often highly ideological speculation, at the expense of historical research and collaboration with the other social sciences.”

Piketty learned at MIT that economics education at American colleges walks a fine line between education and indoctrination. American economists are expected to conform and confirm that capitalism and free enterprise bring ideal results. They theorize in ever more complex ways because they have nothing else to do. They avoid data that contradicts theory or career opportunities decline, or disappear.

His experience at MIT clearly left him with the urge to take a few pokes at American economists. After page 200 he brings in the Cobb-Douglas Production function, the elasticity of substitution, the Roy Harrod, Evsey Domar and Robert Solow growth theories, marginal productivity theory, Franco Modigliani’s Life Cycle theory and a few more; all standard fare in economics graduate programs at American Colleges. He can’t resist reporting his data contradict these long established market theories, but non-economists can skip this insider stuff.

Still there are many things to admire about this book that I can recommend it to non-economists. Non-economists can follow the principal arguments if they read carefully, study the charts, and doggedly keep in mind the difference between stocks and flows after he defines them in Part I and gives examples.

Piketty has attracted attention in the United States similar to British economist John Maynard Keynes after he published his General Theory of Employment, Interest and Money way back in 1936. The General Theory is not a general theory at all, but an abstract discussion of special cases in which Keynes describes conditions where markets and the economy break down and need an active policy of correction, even, god forbid, a policy of government spending.

Politicians and the Chamber of Commerce still attack and condemn Keynes after 78 years, but only a few of them care enough to read or study what he wrote; they just dislike his conclusions. It is early in the Piketty discussion but there are plenty of wealthy and well to do ready to condemn his conclusions without reading what he wrote. Keynes wrote only for economists while Piketty tries, somewhat erratically, for a broader audience. With some extra effort you can decide for yourself. It will be slow going, but forge ahead and the like.

Tuesday, July 22, 2014

The Declining Returns to College Education


A good financial return for a college education should not be assumed as it once was. Chances remain high that college will pay, but changes in tuition and labor markets are lowering the return and raising the risk it might not pay for all graduates. Higher and higher tuition, delays finding jobs and the course of study head a list of trouble spots to consider when making a college investment.

Tuition

All the states have one and usually two public universities that offer the best opportunity to measure tuition inflation. Private colleges tend to have higher tuition than public colleges, but they are more likely to offer discounts to attract good students away from the less expensive public colleges. Competition for good students means the posted tuition at private colleges may not be a good measure of actual tuition paid, or its rate of increase. Public colleges are less likely to discount tuition than private colleges, which makes them a better measure of tuition increases.

Compare the 2002 tuition for the two largest state universities in each of the fifty states with the tuition of 2013. Some like the University of Arizona have tuition increases at rates that range up to five times the rate of inflation. For example, if the 2002 tuition of $2,490 at the University of Arizona increased by the rate of inflation until 2013, it would be $3,224.80. Instead it is $10,391, an increase of 317.31 percent, which is an annual compounded increase of 13.87 percent when the general inflation rate was 2.38 percent in the same years. (1)

The high percentage increase at the University of Arizona results partly from its relatively low 2002 tuition. The lower 2002 tuition exaggerates the percentage increase over the period but I can find 31 state colleges out of the hundred that have higher tuition than the University of Arizona. Take the University of Vermont. If its 2002 tuition of $8,994 increased by the rate of inflation until 2013, it would be $11,648.13. Instead it is $15,718, an increase of 74.76 percent, which is a annual compounded percent increase of 5.21 percent, one of the lower rates of increase of tuition for the 100 colleges reviewed.

All of the hundred colleges mentioned above had tuition increases higher than the 2.38 percent increase in the Consumer Price Index. All but seven had increases at least twice the rate of inflation; forty-nine had tuition increases at least three times the rate of inflation.

Wages

Wage for jobs that need BA degree skills need to go up as fast as tuition to avoid lowering the rate of return on a college education. The Bureau of Labor Statistics (BLS) identifies occupations and careers that need BA degree skills. (2)

In 2013, the Bureau of Labor Statistics reported 169 occupations that require BA degree skills with a combined 20.5 million jobs. The total includes 93 occupations with 10 million jobs that had a median wage increase above the inflation rate of 2.38 percent from 2002 to 2013. The median increase of the median wage for the 93 occupations was 2.9 percent. There were 32 occupations with 6.8 million jobs that had a median wage increase less than the inflation rate. The median increase of the median wage for the 32 occupations was 2.0 percent.

The remaining 44 occupations of the 169 do not have corresponding median wage data for 2013 because some occupations were defined in broader categories in 2002. For example, a nurse in 2002 was broken into four occupations in 2013: Registered Nurse, Nurse Anesthetists, Nurse Midwives, and Nurse Practitioners. Hence wage data is not reported for both years for 44 occupations that have 3.7 million jobs.

In sum, only three of the hundred colleges reviewed had tuition increases less than 4 percent a year, while only seven occupations of the 125 with data had median wage increases as high as four percent, and four of the seven were management occupations. The combination of tuition and wage changes over time assures a general decline in the rate of return on a BA degree.

Measuring the Decline

A few calculations help measure the decline. Someone entering the University of Arizona in 2002 had to pay $2,490 for a year’s tuition. At the time student loan interest was set at 4.06 percent. Using the 4.06 interest rate the total four-year investment would be $11,012.82 assuming tuition is paid in the fall and compounded once a year. [Computations are courtesy of the Excel FV spreadsheet function. Entries for the $11,012.82 are FV(.0406/1, 4, -$2,409, 0 ,1). ]

Someone graduating at age 22 in 2006 has 44 years to work and earn a return on the investment. If the $11,012.82 was invested in stocks and bonds and earned a 4.06 percent return over the 44 years it would be $65,525.86. To have the equivalent $65,525.86 because of a better job requiring college degree skills, it will be necessary to earn an extra $44.64 a month for the same 44 years. [Excel entries for the $65,525.86 are FV(.0406/12, 528, 0, -$11,012.82 ,1) and so on.]

Any amount above $44.64 and the return is above 4.06 percent. If the amount was $100 a month for 44 years the return would be 10.9 percent, a return higher than most long term stock returns or student loans.

However, compare that to what happens to someone entering the University of Arizona in 2013 when a year’s tuition jumped to $10,391. In the time between 2002 and 2013 the interest on college student loans has gyrated from a low of 3.4 to a high of 6.8 percent, but it was set at 3.86 percent for the 2013-2014 academic year. Using a 3.86 interest rate the total four-year investment will be $45,732.76, again assuming tuition is paid in the fall and compounded once a year.

If the $45,732.76 was invested in stocks and bonds and earned a 3.86 percent return over 44 years, as above, it would be $249,258.16. To have the equivalent $249,258.16 because of a better job requiring college degree skills, it will be necessary to earn an extra $179.58 a month for 44 years, a little over four times $44.64.

Any amount above $179.58 and the return will be greater than 3.86 percent, but any amount below $179.58 and the return is lower. If the amount was $100 as it was above the return drops to a paltry .67 percent.

Risk

Rapidly rising tuition during a period of stagnant wages has not slowed the tied of graduates. The number of working age adults with BA degrees keeps growing because current graduates are more than double the graduates from the 1970’s who are reaching retirement age. BA degree graduates total 48.7 million from June 1971 until the end of the academic year in 2012. If the two years yet to be reported have at least the same number as 2012, as seems likely, then 52.3 million working age adults have BA degrees. (3)

Some of the 52.3 million with BA degrees went on to get master’s degrees, doctorates and professional degrees. Subtracting the graduate and professional degrees from the total still leaves 28.2 million working age adults with BA degrees to fill the 20.5 million jobs in 2013 that need BA degree skills.

The growing number of people with BA degree skills raises the risk of delay to find higher wage career employment. Compare what happens with 10 years of delay. If the tuition was invested in stocks and bonds and earned 3.86 percent for 10 more years it would grow to $67,235.10. If the $67,235.10 was invested in stocks and bonds and earned a 3.86 percent return over 34 years, it would also be $249,258.16 as above. To have the equivalent $249,258.16 because of a better job for 34 years, it will be necessary to earn an extra $295.21 a month, more than six times the $44.64 from above. An additional $100 a month would be a negative return that would not earn the initial investment.

The chances remain good that college will pay, but individual decisions matter more than ever. I can find 65 occupations in the Occupational Employment Survey requiring no more than high school skills with employment just over 11 million people that have a median wage greater than $50,000. I expect some of the people in those jobs have college degrees, but it is likely their tuition money would be earning a higher return in the stock market. Allow me to repeat, a good financial return for a college education should not be assumed.

Notes
1) Tuition data is from the College Board
2) Occupational Employment Survey, BLS
3) Degree data from the Center for Education Statistics, US Department of Education