Bad Employment News in March

Employment Situation Summary: -80,000 in March according to the establishment survey.

I will be very interested to see how labor productivity holds up during this recession-like period. Will this see labor hoarding or labor shedding?

And, of course, the thing to stress is not that a recession has come but that the policies of the Bushies have done so much to make the previous expansion weaker and fighting this recessionary period harder than it had to be.

Comments

[anne]

Notice that there has been an ominous decline in job turnover, suggesting lost jobs will not readily be replaced; likely also suggesting that productivity gains will continue. We have however gone from 225,000 jobs create each month for 96 months of the Clinton Administration to 160,000 jobs created each month is the finest 52 months of the Bush Administration.

A war economy, replete with tax cuts especially for the wealthiest and social spending cuts, has been an economic failure beyond the tragedy of an immoral war.

[Neal]

Who is surprised by this?

From my day to day experience-hoarding of labor has been happening from last fall and labor shedding will now happen.

Business has seen the slowdown coming. However, people have been retained until now in hopes that the propaganda of a quick turnaround from the media and government was correct. This will not be true any longer-businesses are beginning to see that this will be deeper and longer than has been discussed up to this point. Look for bigger and bigger labor shedding from this point on. Sentiment has changed and fear is setting in.

By the way, productivity improvements may continue to to off-shoring of more jobs to reduce costs.

By the way, we should be thankful that the Bush administration did not make the expansion stronger. Please examine the previous "expansion" for viability as a long term economic model. The "expansion" that occurred was due to real-estate inflation and "financial innovation", with a generous helping of defense spending thrown in. It was entirely and predictably unsustainable. The negative consequences of a stronger dose of this would be unbelievably bad.

Like on most issues, the Bush administration has been unerring in their ability to miss windows of opportunities for positive change. In this instance, the real problems of the economic competitiveness and sustainability of the US were not addressed by the Bush administration because the "good times" via inflation and innovation allowed them to pretend everything was OK. This is what papered over the problems of the US economy in the last few years with no forward planning of transitioning to a durable model. I can't believe that the main thrust of reaction to the current problem is trying to find a way to reignite the fires of real-estate inflation and financial innovation.

The hard work of re-tooling America for the new world economy still needs to be done. Expensive houses, funny mortgages, and opaque financial instruments will not substitute for that work.

[anne]

What is important to remember, beyond the moral mandate for universal health care insurance is that as a recession support such provision is especially important. We need univeral health care insurance just at this time more than ever. There is a critical economic support, especially critical for a society that would consider middle clas well-being at all important.

[anne]

http://www.nytimes.com/2008/04/04/opinion/04krugman.html

April 4, 2008

Voodoo Health Economics
By PAUL KRUGMAN

Elizabeth Edwards has cancer. John McCain has had cancer in the past. Last weekend, Mrs. Edwards bluntly pointed out that neither of them would be able to get insurance under Mr. McCain's health care plan.

It's about time someone said that and, more generally, made the case that Mr. McCain's approach to health care is based on voodoo economics — not the supply-side voodoo that claims that cutting taxes increases revenues (though Mr. McCain says that, too), but the equally foolish claim, refuted by all available evidence, that the magic of the marketplace can produce cheap health care for everyone.

As Mrs. Edwards pointed out, the McCain health plan would do nothing to prevent insurance companies from denying coverage to those, like her and Mr. McCain, who have pre-existing medical conditions.

The McCain campaign's response was condescending and dismissive — a statement that Mrs. Edwards doesn't understand the comprehensive nature of the senator's approach, which would harness "the power of competition to produce greater coverage for Americans," reducing costs so that even people with pre-existing conditions could afford care.

This is nonsense on multiple levels.

For one thing, even if you buy the premise that competition would reduce health care costs, the idea that it could cut costs enough to make insurance affordable for Americans with a history of cancer or other major diseases is sheer fantasy.

Beyond that, there's no reason to believe in these alleged cost reductions. Insurance companies do try to hold down "medical losses" — the industry's term for what happens when an insurer actually ends up having to honor its promises by paying a client's medical bills. But they don't do this by promoting cost-effective medical care.

Instead, they hold down costs by only covering healthy people, screening out those who need coverage the most — which was exactly the point Mrs. Edwards was making. They also deny as many claims as possible, forcing doctors and hospitals to spend large sums fighting to get paid.

And the international evidence on health care costs is overwhelming: the United States has the most privatized system, with the most market competition — and it also has by far the highest health care costs in the world.

Yet the McCain health plan — actually a set of bullet points on the campaign's Web site — is entirely based on blind faith that competition among private insurers will solve all problems.

I'd like to single out one of these bullet points in particular — the first substantive proposal Mr. McCain offers (the preceding entries are nothing but feel-good boilerplate).

As I've mentioned in past columns, the Veterans Health Administration is one of the few clear American success stories in the struggle to contain health care costs. Since it was reformed during the Clinton years, the V.A. has used the fact that it's an integrated system — a system that takes long-term responsibility for its clients' health — to deliver an impressive combination of high-quality care and low costs. It has also taken the lead in the use of information technology, which has both saved money and reduced medical errors.

Sure enough, Mr. McCain wants to privatize and, in effect, dismantle the V.A. Naturally, this destructive agenda comes wrapped in the flag: "America's veterans have fought for our freedom," says the McCain Web site. "We should give them freedom to choose to carry their V.A. dollars to a provider that gives them the timely care at high quality and in the best location." ...

[anon]

downward shift in demand for investments and\or saving

America's Money: In their own words
Everyday folks tell their stories about hard economic times. Check back frequently for new stories.

http://money.cnn.com/galleries/2008/news/0803/gallery.real_stories/

Excerpt:
I feel like I may be going into a downward spiral, beginning with the distribution of my 401(k).

[Jessica]

"the thing to stress is not that a recession has come but that the policies of the Bushies have done so much to make the previous expansion weaker and fighting this recessionary period harder than it had to be."

If I may be permitted to take this one step farther and say that the thing to stress is that the damage the Bushies have done means that the way out of this mess requires fundamental change from their way of doing things.

[Bruce Wilder]

We might mention in passing the leadership that Bush showed in euthanizing the regulatory system, so that the banking system could self-immolate in an orgy of predatory lending and fraud.

You can depend on the Bush Administration to promote corruption in the public and private sectors alike.

[Bruce Wilder]

And, yes, I enjoyed mixing metaphors with abandon.

[anne]

http://www.epi.org/printer.cfm?id=2943&content_type=1&nice_name=webfeatures_econindicators_jobspict_20080404

April 4, 2008

Recession Takes Hold in the Job Market
By Jared Bernstein with research assistance from James Lin

The nation's job market appears solidly in recession, as payrolls contracted for the third month in a row, and unemployment jumped up from 4.8% to 5.1%, the highest jobless rate since September 2005, according to the report released today by the Bureau of Labor Statistics. Payrolls were down by 80,000 in March, the largest loss in five years, while January and February's initially reported losses were revised downward by an additional 67,000 jobs.

Since employment peaked in December, payrolls have contracted by 232,000. Private sector payrolls were down 98,000 last month and 109,000 in February. Since hiring in the government sector is less susceptible to cyclical swings in the overall economy, private sector job patterns provide a clearer signal of the weakening labor market. Private sector jobs are down 300,000 from their peak in November.

Officials often date a recession as beginning at or near the payroll employment peak. Thus, there is a good chance that the recession will ultimately be recognized to have begun in December or January.

The increase in the unemployment rate is also important, particularly as regards the trend in labor force participation....

[anne]

So we have lost 230,000 jobs so far this year, when we should have created 450,000 with just moderate growth. But here we are with tax cuts especially for the wealthiest and wild deficit building military spending at the expense of social spending, and no sensible policy possible from this compassionlessly conservative Administration.

[anon]

harvard and others picked a nice time to make it more affordable for middle-class people to attend school.

[anon]

Student Lenders Stifled by Auction-Rate Bond Failures (Update1)
By Jeremy R. Cooke
April 4 (Bloomberg)

http://www.bloomberg.com/apps/news?pid=20601103&sid=a8p51DTC.Pzk&refer=us

Excerpt:
No municipal bonds backed by student loans were sold in the first quarter, the first time that happened in almost 40 years, according to Thomson Financial. The inability to obtain financing differs from states, cities, schools and hospitals, which sold $82 billion of bonds to fund public works and replace failed auction debt that stuck them with penalty rates as high as 20 percent.

[kf]

Mr. DeLong, your comment is a perfect example of the disconnect between liberal academics and the working class. Unemployment is not 'interesting'. Mortgage foreclosures are not 'interesting', either. To the people that go through them, they're horribly painful. You, and most other liberal academics, are able to treat these statistics lightly because you have no idea what either are like. You have never experienced either one, and you never will. In fact, very few of your friends and colleagues have or will, either. So be careful with your comments about how interested you are in labor-shedding during this recession. They may be just numbers to you, but to thousands of real people in this world, these things entail hardship that you cannot understand. And, when you create this gap between liberals and the working class, you make liberal politicians and policies less popular.