Sunday, December 31, 2017

Labor Line

April 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 April 7, 2017.

American Job Market The Chronicle

Current Job and Employment Data

Jobs
Total Non-Farm Establishment Jobs up 98,000 to 145,858,000
Total Private Jobs up 89,000 to 123,540,000
Total Government Employment up 9,000 to 22,318,000

Employment Note
Civilian Non-Institutional Population up 168,000 to 254,414,000
Civilian Labor Force up 145,000 to 160,201,000
Employed up 472,000 to 153,000,000
Employed Men down 5,000 to 81,136,000
Employed Women up 475,000 to 71,863,000
Unemployed down 326,000 to 7,202,000
Not in the Labor Force up 23,000 to 94,213,000

Unemployment Rate was down .2 % to 4.5% or 7,202/160,201
Labor Force Participation Rate was up .1% to 63.0%, or 160,201/254,414

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 April CPI report for the 12 months ending with March, shows the

CPI for All Items was up 2.4%
CPI for Food and Beverages was up .6%
CPI for Housing was up 3.1%
CPI for Apparel was up .4%
CPI for Transportation including gasoline was up 4.6%
CPI for Medical Care was up 3.5%
CPI for Recreation was up 1.3%
CPI for Education was up 2.75
CPI for Communication was down .6%

This Month’s Establishment Jobs Press Report

A LULL IN ESTABLISHMENT JOBS

The Bureau of Labor Statistics published its April report for jobs in March. The number employed in the household survey was up 472 thousand primarily because 326 thousand of the unemployed from February found work in March. Both changes helped to reinforce a decline in the unemployment rate by .2 percent to 4.5 percent from 4.7 percent. The participation rate held steady at 63.0 percent.

The seasonally adjusted total of establishment employment was up 98 thousand for March. The increase was a total of 61 thousand more private service sector jobs and 28 thousand more jobs in goods production employment. The 89 thousand private sector jobs total combined with an increase of 9 thousand government service jobs accounts for the total increase.

All three subsectors of goods production had a modest increase in jobs. Natural resources and manufacturing each added 11 thousand jobs. All of the manufacturing increases came in durable goods. Fabricated metal products did the best with 5.5 thousand new jobs. Motor vehicle and parts manufacturing added 3.5 thousand jobs, but five of nine non-durable goods sub sectors lost jobs: food processing down 1.3 thousand jobs with other small job losses in textiles, apparel, and printing among them. Chemical manufacturing added 1.3 thousand jobs, but non-durable sub sector gains were minimal. Natural resources added 11 thousand jobs for a second month of gains with 8.8 thousand of the new jobs in support activities for mining. Coal mining held steady with only 50 thousand jobs nationwide and no increase for decades. Construction jobs improved by 6 thousand for March, not nearly as good as last month but still an increase. Non Residential specialty contractors added 7.3 thousand jobs; heavy and engineering employment added another 4.1 thousand jobs among small losses in other sub sectors.

Government service employment added a net of 9 thousand jobs. The federal government dropped 1 thousand jobs while state government added a thousand and local government added 9 thousand jobs, also the net increase. The public schools added 9.7 thousand jobs to local government payrolls with small losses in other local government jobs and no new jobs in education at the state level. Private education dropped 1.4 thousand jobs, after last months big increase. The net increase for March in public and private education employment came to 8 thousand jobs.

Professional and business services had the biggest increase in service employment again this month with 56 thousand new jobs. The professional and technical service sub sector picked up 22.2 thousand jobs of the total increase, management of companies added 600 jobs with administration and support services including waste management adding a net of 33.4 thousand jobs.

It was the typical trio of job gains among professional and technical services with management and technical consulting adding 8.3 thousand jobs; architectural and engineering services adding 7.3 thousand jobs; computer systems design and related services adding 4.5 thousand jobs. Legal services lost 1.5 thousand jobs for March, a sub sector with 1.1 million jobs but no job growth since 2003. Among administrative and support services, temporary help services added 10.5 thousand jobs; services to buildings and dwellings added 16.8 thousand jobs, a total that includes landscaping services, which typically picks up in the spring. Investigation and security services added 4.3 thousand jobs.

Health Care added only 17 thousand jobs with modest gains in three of four major sub-sectors. Hospital employment did the better than last month with 8.7 thousand new jobs, but the other three sub sectors did poorly. Ambulatory care had only 6.8 thousand jobs. The smallest of the four health care sub sectors in social assistance added 3.2 thousand jobs, but nursing and residential care employment jobs dropped by 2 thousand. The March growth rate in health care employment was only 1.04 percent, well below the fifteen year trend now at 2.36 percent.

Trade, Transportation and Utilities dropped 27 thousand jobs with seasonally adjusted retail trade down 29.7 thousand jobs, a near repeat of last month’s big losses. Wholesale trade lost 400 jobs. There was little help from transportation with a net gain of only 3.5 thousand jobs. Modal transportation had 4.7 thousand new jobs in truck transportation offset by small losses in warehousing and storage. Utilities lost a 700 jobs, a third month of decline.

Leisure and hospitality added a net of 9 thousand jobs for March, a small total increase but restaurant jobs continued to do well with 21.7 thousand new jobs. Accommodations, arts, entertainment and recreation all lost jobs for March, a poor month for the combined sector.

Information services dropped 3 thousand jobs, with a loss of 3.4 thousand jobs in telecommunications. That was offset by small gains in Internet Publishing and Broadcasting and Web Search Portals. Financial activities did a little better than usual with a gain of 9 thousand new jobs mostly due to the banking sub sectors, which added 6.1 thousand jobs. Real estate and rental leasing added just 900 jobs for March.

The category, other services, added only a thousand jobs for March, an off month. Two of three sub sectors added jobs, but only 1.3 thousand jobs in repair and maintenance services, 900 jobs in personal and laundry services. Non-profit organizations were off 1.1 thousand jobs, a little less than last month.

The March establishment employment was up 98 thousand at an annual growth rate of .81 percent, too low to keep up with population growth. Goods production did unusually well accounting for more than a quarter of job growth in March, but service sector employment did worse than usual. Think of it as a lull, but we can know better from next month.

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March Details

Non Farm Total +98
The Bureau of Labor Statistics (BLS) reported Non-Farm employment for establishments increased from February by 98 thousand jobs for a(n) March total of 145.858 million. (Note 1 below) An increase of 98 thousand each month for the next 12 months represents an annual growth rate of 1.48%. The annual growth rate from a year ago beginning March 2016 was +1.52%; the average annual growth rate from 5 years ago beginning March 2012 was +1.75%; from 15 years ago beginning March 2002 it was .73%. 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 +11
Natural Resources jobs including logging and mining were up 11 thousand from February at 695 thousand jobs in March. An increase of 11 thousand jobs each month for the next 12 months would be an annual growth rate of +19.3 percent. Natural resource jobs are up 3 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 +6
Construction jobs were up 6 thousand from February with 6.882 million jobs in March. An increase of 6 thousand jobs each month for the next 12 months would be an annual growth rate of +1.05 percent. Construction jobs are up 177 thousand for the 12 months just ended. The growth rate for the last 5 years is +4.10%. Construction jobs rank 9th among the 12 sectors with 4.6 percent of non-farm employment.

3. Manufacturing +11
Manufacturing jobs were up 11 thousand from February with 12.392 million jobs in March. An increase of 11 thousand jobs each month for the next 12 months would be an annual growth rate of +1.07 percent. Manufacturing jobs were up for the last 12 months by 37 thousand. The growth rate for the last 5 years is +.82%; for the last 15 years by
-1.46%. 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 -27
Trade, both wholesale and retail, transportation and utility employment was down 27 thousand from February at 27,359 million jobs in March. A decrease of 27 thousand each month for the next 12 months would be an annual growth rate of –1.18 percent. Jobs are up by 192 thousand for the last 12 months. Growth rates for the last 5 years are +1.50 percent. Jobs in these sectors rank first as the biggest sectors with combined employment of 18.9 percent of total establishment employment.

5. Information Services -3
Information Services employment were down 3 thousand from February at 2.747 million jobs in March. A decrease of 3 thousand each month for the next 12 months would be an annual growth rate of -1.31 percent. (Note 2 below) Jobs are down by 32 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 creeps up to the 2.75 million range. Information Services is a small sector ranking 11th of 12 with 1.9 percent of establishment jobs.

6. Financial Activities +9
Financial Activities jobs were up 9 thousand from February at 8.409 million in March. An increase of 9 thousand each month for the next 12 months would be an annual growth rate of + 1.29 percent. Jobs are up 178 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 +1.60 percent, and a 15 year growth rate of +.39 percent. Financial activities rank 8 of 12 with 5.8 percent of establishment jobs.

7. Business & Professional Services +56
Business and Professional Service jobs went up 56 thousand from February to 20.567 million in March. An increase of 56 thousand each month for the next 12 months would be an annual growth rate of +3.28 percent. Jobs are up 639 thousand for the last 12 months. Note 4 The annual growth rate for the last 5 years was 2.95 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 14.1 percent of establishment employment.

8. Education including public and private +8
Education jobs went up 8 thousand jobs from February at 14.000 million in March. These include public and private education. An increase of 8 thousand jobs each month for the next 12 months would be an annual growth rate of +.71 percent. Jobs are up 154 thousand for the last 12 months. (note 5) The 15 year growth rate equals +.79 percent, slower than the national average. Education ranks 4th among 12 sectors with 9.6 percent of establishment jobs.

9. Health Care +17
Health care jobs were up 17 thousand from February to 19.346 million in March. An increase of 17 thousand each month for the next 12 months would be an annual growth rate of +1.04 percent. Jobs are up 437 thousand for the last 12 months. (note 6) The current month was below long term trends and less than growth from a year ago when the annual growth rate was +2.31 percent. Health care has been growing at +2.36 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 +9
Leisure and hospitality jobs went up 9 thousand from February to 15.795 million in March. An increase of 9 thousand each month for the next 12 months would be an annual growth rate of +.68 percent. Jobs are up 258 thousand for the last 12 months. (note 7) The 5 year growth rate is 2.88%. 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 10.8 percent of establishment jobs. It moved up from 7th in the 1990’s to 5th in the last few years.

11. Other +1
Other Service jobs, which include repair, maintenance, personal services and non-profit organizations went up 1 thousand from February to 5.724 million jobs in March. An increase of 1 thousand each month for the next 12 months would be an annual growth rate of +.21 percent. Jobs are up 54 thousand for the last 12 months. (note 8) Other services had +1.09 percent growth for the last 5 years. These sectors rank 10th of 12 with 3.9 percent of total non-farm establishment jobs.

12. Government, excluding education -2
Government service employment was down 2 thousand from February to 11.941 million jobs in March. A decrease of 2 thousand each month for the next 12 months would be an annual growth rate of -.17 percent. Jobs are up 87 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 +.20 percent. Government, excluding education, ranks 7th of 12 with 8.2 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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Tuesday, April 25, 2017

Vendetta

James Neff, Vendetta: Bobby Kennedy versus Jimmy Hoffa, (Boston: Little, Brown and Company, 2015), 340 pages $28.00

In Vendetta journalist James Neff narrates the nearly ten year legal battle between Robert F. Kennedy (RFK) and Teamsters union boss James Riddle Hoffa that ended when Hoffa finally went to prison in 1967. Neff’s book retells a story told by many before him, but unsettled controversies allow new evidence and more interpretation of a long running debate. Were Hoffa and the Teamsters union a combination of evil and corruption taken over by gangsters, as Kennedy believed? Or did RFK use government authority to carry on a personal vendetta against Hoffa? Did politics subvert the law?

The book opens with a brief prologue to introduce readers to the two combatants by telling where they were and what they said after hearing the awful news of November 22, 1963. The sixteen chapters and brief epilogue that follow tells the story of RFK interrogating Hoffa as chief counsel of Senator John McClellan’s Select Committee on Improper Activities in the Labor or Management Field – a.k.a. the McClellan Committee or the Rackets Committee - and then the second half of the story as Attorney General Robert Kennedy pursued his suspicion of Hoffa corruption with more indictments and finally two convictions.

Rackets Committee hearings started February 26, 1957 that included close to 300 days of testimony from 1,526 witnesses including repeated Hoffa appearances. RFK resigned from the Rackets Committee in September 1959 to run John Kennedy’s presidential campaign and partly from frustration since Hoffa survived the longest congressional investigation in history with a hundred government lawyers, investigators, accountants, and support staff providing evidence that failed to convict him of separate bribery, perjury and wiretapping charges. After John Kennedy was elected President and RFK became Attorney General, he resumed a relentless pursuit of Hoffa by setting up a special unit known as the “Get Hoffa Squad” intended to prosecute him and send him to prison.

Neff takes readers back and forth between RFK and Hoffa to fill in biographical and background material on union negotiating and politics of the 1950’s, but only as support for the primary narrative and the ethical and constitutional rights conflicts they illustrate. Narrative includes some discussion of Hoffa as a popular labor leader and Teamsters president who cared about his members and negotiated favorable contracts with better pay and benefits. Organized crime is also part of the story, as it has to be with Jimmy Hoffa.

An early one of the numerous conflicts in the Hoffa-Kennedy battles came soon after the Rackets Committee opened hearings, which Neff devotes an entire chapter to covering. Hoffa hired an attorney John Cheasty to spy on the Rackets Committee after getting a job as an investigator for the committee. Cheasty turned informer to Kennedy and then helped to conduct an FBI sting. On March 13, 1957 the FBI filmed Hoffa accepting an envelop of documents in exchange for a wad of cash in front of a Du Pont Circle hotel in Washington. He was arrested and indicted for bribery. In the famous press quote Kennedy told reporters he would jump off the capital if Hoffa was acquitted.
Hoffa’s attorney Edward Bennett Williams learned that RFK shared committee investigation reports with news reporters to help his committee get daily news coverage and advance stories favorable to Kennedy. During the trial Williams questioned how investigative reports given to Hoffa could be confidential if RFK handed them over to favored reporters.

Then Hoffa took the stand in his own defense and admitted he hired Cheasty, but as his lawyer to assist preparing for the committee hearings. Williams asked Hoffa if he knew how Cheasty got the documents. Hoffa testified “I got it from a fellow who is writing an article for the press. … It’s old material and it has been released to the press.”

RFK took a lot of ridicule when Hoffa was acquitted. Edward Bennett William’s complained that RFK turned a case into a personal competition. “He divided everyone up. There were the white hats and the black hats. If you weren’t for him, then you were against him. There was no middle ground.”

Neff covers the hearings and the charges that flowed from them, but Rackets committee evidence did not bring convictions. In March of 1964 after seven years and five trials of hung juries or acquittals it took the authority and unlimited money and power of the Justice Department to get a conviction for jury tampering growing out of petty misdemeanor claims from a conflict of interest violation of the Taft-Hartley Law. Fifteen years before in 1949 Hoffa established a truck leasing business in Nashville, Tennessee, the Test Fleet Corporation. Test Fleet leased trucks to some Teamsters employers. To Hoffa it was like a GM executive investing in a gas station, but RFK was so intent on getting Hoffa convicted of something a trial went forward in Nashville based on conflict of interest. Kennedy’s obsession with Hoffa left him oblivious to the damage he was doing to organized labor.

Evidence that Hoffa, or Teamsters operatives, attempted to bribe jurors in the Test Fleet case brought more serious charges in another trial in Chattanooga. This time Hoffa was convicted of jury tampering. As one attorney summed it up Hoffa turned a misdemeanor charge into a felony conviction.

Neff covers the Test Fleet trials thoroughly and then briefly covers a second indictment and conviction over the misuse of funds from the Teamsters Central States Pension Fund, but Neff ends the story here. He takes a few more pages to wrap up the appeals process, going to prison, the Nixon pardon, Hoffa’s disputes with his successor Frank Fitzsimmons and the Hoffa disappearance on July 30, 1975.

The adversarial nature of some congressional hearings often raises questions of constitutional rights as it does with the Hoffa case. The Rackets Committee claimed the right to interrogate Hoffa and many others on the chance that some of them had committed a crime. Instead constitutional rights suggest there should be probable cause before the government investigates, which should be based on good assurance a crime had already occurred. Americans should not be expected to claim their Fifth Amendment rights without a criminal charge against them.

Vendetta reads easily in journalistic style while avoiding the potential for sanctimonious moralizing. It is well documented and makes reference to the many previous books and articles on Kennedy’s fight with Hoffa. The book has more to say about American criminal law and politics than it does about the two men; the book is not a biography of either one, or both. As with all books on the subject, Vendetta gives a clearer picture of Kennedy overreach than it does for Hoffa. The Mafia presence makes it hard to decide how much Hoffa controlled, or how much the Mafia controlled him. I find the evidence on Hoffa falls short and prevents drawing definitive conclusions about him: the correct mix of bad and good. He disappeared and the story ended and nearly everyone blames the Mafia; they’re not called the underworld for nothing.

Tuesday, April 18, 2017

Retail Retrenchments

Retail Retrenchments

The Washington Post ran a story recently discussing the latest round of retail chain store closings. [For retail, bricks and mortar are crumbling, WP April 6, 2017] Payless Shoe Source has filed for chapter 11 bankruptcy and plans to close 400 stores immediately. Macy’s and Sears will vacate 28 million square feet of retail space. Staples hopes to find itself a buyer. The women’s clothing chain Bebe will close 21 stores. The Limited filed for bankruptcy and closed 250 stores. Ralph Lauren will close its Fifth Avenue Polo Store in New York.

Jobs in retail continue to go up but at a rate of increase so slow that its percentage share of America’s establishment jobs keeps dropping year after year. In 1990 retail trade had 12 percent of America’s establishment jobs; by 2017 it is down to 10.9 percent. That may not sound like much but the job total for 2016 would have 1.55 million more jobs if retail was still 12 percent of establishment employment. The slow increase assures that retail trade cannot be a source of replacement jobs for the roughly five million jobs lost in manufacturing where the percentage share of jobs have dropped from 16.2 percent in 1990 to 8.5 percent in 2017.

The Short Term

Retail jobs did relatively well in 2016 with a monthly average increase of 215.3 thousand new jobs and an average growth rate of 1.38 percent for the year, but still below the 1.74 percent national average for establishment jobs. However, 72 percent of the increase came in just four of twelve sub sectors with the increase among those four sub sectors dominated by new jobs in a few high growth industry groups. Motor vehicle and parts dealers added 52.6 thousand jobs with the highest growth rates for recreational vehicle dealers and used car dealers. Used car dealers had a one year growth rate of 5.54 percent; new cars 3.17 percent.

Building material and garden supply stores added 37.6 thousand jobs with the highest growth rates in nursery garden and farm supply stores and outdoor power equipment stores. Nursery garden and farm supply stores had a one year growth of 5.2 percent.

General merchandise stores picked up 39.5 thousand new jobs because warehouse clubs and super centers added 42.7 thousand jobs while department stores and discount department stores lost jobs. Warehouse clubs and super centers had a one year growth rate of 3.04 percent, more than twice the retail average.

Electronic shopping picked up 25.3 thousand new jobs in 2016. Firms like Amazon and other smaller firms doing electronic shopping had a 12.17 percent annual growth rate for 2016.

The total of 155 thousand new retail jobs in just four industries in 2016 leaves 60.3 thousand new jobs for all other retail trade. These other stores include furniture and home furnishings, electronic and appliances, food and beverages, health and personal care, gasoline stations including those with convenience stores, clothing and clothing accessories, sporting goods hobby book and music, florists, office supplies, stationary and gift stores and a few more. All had low or negative growth rates for 2016.

Long term

Long term growth rates for retail guarantee retail trade will be a declining share of national employment. The long term growth rate of retail employment measured since 1990 is just .7 percent, well below the national average for establishment jobs. Eight of the twelve sub sectors have growth rates less than one percent. Gasoline stations have a long term growth rate of .06 percent.

More ominous, electronic shopping has the highest growth rate for any retail industry over the 26 year period. It is 6.86 percent. Employment has shot up by more than triple since 2000, and more than doubled again after 2010. In spite of the high growth rate Internet shopping remains a small source of employment with 233.5 thousand jobs in 2016 and a .162 percent share of total national employment. The growth of electronic shopping cuts down on retail employment as you undoubtedly suspect.

Even though retail continues to be a large employer a low growth rate assures that new jobs in retail will be a smaller and smaller share of national employment. Electronic shopping only accelerates the decline. Retail trade can not help be a source of replacement jobs in the future.

Friday, March 17, 2017

Doctrinaire Paul Ryan – True Believer

Doctrinaire Paul Ryan – True Believer

A Washington Post editorial of March 16, 2017 quoted House Speaker Paul Ryan discussing the need to end the Affordable Care Act. With health care he said “You need to have an individual market where people care about what things cost, where people have real freedom, where those providers of health-care services, be they insurers, doctors or hospitals and everybody in between, compete against each other for our business based on value, based on price, based on quality, based on outcome.” . . . “We’re going to have a free market, and you buy what you want to buy.”

What Ryan said could be quoted from any college economics text of which I have read many in more than twenty years teaching university economics. Economics in American colleges walks a fine line between education and indoctrination; Mr. Ryan provides a doctrinaire rendition of textbook theory.

The need for health care varies with age, and depends on random risk of illness or injury. The expansion of private health insurance in the 1950’s caused problems with random risk. All free market insurance must have people pay premiums into a risk pool that generates a reserve fund to pay losses. Insurance companies employ mathematicians to analyze actuarial data on mortality: accidents, sickness, disability, retirement and other risks. Actuarial data are necessary to construct probability tables that will determine the premium payments to charge that will generate cash reserves to pay future losses.

Someone who already has heart disease or diabetes when they apply for insurance has a health problem, but they are not insurable in a free market private health care system because they are not a risk, they are a certainty. To use insurance jargon they have a pre-existing condition. In effect, their probability of loss is guaranteed and their premium would have to equal the cost of treatment to avoid draining the reserve fund.

In the early 1950’s insurance companies started marketing group policies in large numbers and defined a risk pool through the work place. People started buying health insurance and hence joining a risk pool through their employer. One trouble with a health care risk pool that depends on jobs comes at retirement, when people lose their employer sponsored health insurance. Age and the likelihood of pre-existing conditions assure it will be difficult or impossible for retirees to re-enter a risk pool and buy insurance.

A second trouble with a health care risk pool that depends on jobs is that not everyone has one, or has one they can keep until age 65 or into retirement. Layoffs and unemployment are not just loss of income, but removal from health insurance and a risk pool they may have entered long ago when they were young and healthy.

If everyone entered a common risk pool at birth and stayed in the same national risk pool until death then all Americans would share in the risks of all our injury and illness over their lifetime. The Affordable Care Act requires insurers to accept a national risk pool by offering at least one policy at a price that reflects a risk pool started after birth and continued to death. Ending the funding for policies under the Affordable Care Act in effect terminates the national risk pool.

It does not matter if Congress leaves the requirement that prevents insurance companies from turning down applicants with preexisting conditions because they remain a certainty of loss, not an insurable risk; charges will have to cover the cost of known treatment.

Others without pre-existing conditions, who are not insured through government assistance or an employer risk pool, apply for insurance at the mercy of an insurance company, which can put them in whatever risk pool they choose and charge any price they want.

Private health insurance companies do not have the ability to define a national risk pool, nor the incentive to use a national risk pool when so much health insurance has tax subsidies available through employer risk pools. Health insurers have the incentive to assemble risk pools with the healthiest people they can find, and avoid the sick, those with pre-existing conditions and those with low wages unable to afford health care. The Republican plan to end the Affordable Care Act has an especially crude and unethical side when millions of Americans enjoy substantial tax subsidies through their employer sponsored health care. However, the 24 million the Congressional Budget Office thinks will lose coverage will still have to pay income taxes that subsidize other people’s health care, including Mr. Ryan.

There is nothing in an economic system of private markets and free competition that will move private health insurance to provide health care insurance for everyone. I cannot tell if Mr. Ryan knows free markets fail in health insurance or if he is a true believer in the capitalist secular religion. I do know leaders in positions of responsibility and power take steps to benefit the larger society. In health care leadership Mr. Ryan and the Republicans fail. So much for Trump helping the down and out in the working class.


Wednesday, February 8, 2017

The Trump Job Fantasies

The Trump Job Fantasies

I notice claims made on various Internet sites that Donald Trump expects to create 25 million jobs. Assuming he means during his period in office over the next four years it is worthwhile explaining why that will not happen: why it is fantasy.

If the adult civilian population over the age of 16 continues to grow at the same annual rate as it has since 1990 America will add a little under 2.5 million people a year to the adult population. If every single one of them enters the labor force and finds a job that will be only 10 million jobs over four years. If people enter the labor force to look for work at the same labor force participation rate as the last eight years and they find jobs, then the increase of new jobs will be 6.6 million: far short of 25 million.

To have 25 million new jobs we need first to have 18.4 million more people enter the labor force in addition to normal population growth. That requires an increase in the labor force participation rate from its current 62.7 to 72.5 percent. My data files go back to 1950 and the labor force participation rate has never been that high. For most of that time it remained below 66 percent and the participation rate continues to decline as it has been for more than a decade.

Even if an unprecedented 25 million people enter the labor force it does not mean they will find jobs. Establishment employment has to grow as well and it will have to grow at rates not recorded since the Bureau of Labor Statistics started producing establishment data in 1939. The highest four year, or 48 month interval, of new jobs for every single month for data from 1939 to the present shows only five times with as many as 13 million new jobs. All five were in President Carters term of office in 1979.

Obama took office during a severe Bush recession but created 11.5 million jobs during his eight years. During the eight years of the Reagan Administration establishment employment increased by 16.1 million jobs; in the first Bush Administration establishment jobs increased by 2.7 million; in the Clinton Administration over eight years the increase was 22.9 million new jobs; in the second Bush administration George left office after eight years with just 1.3 million new jobs. The second Bush years had immense tax cuts that created a bubble of expansion, but accelerated income inequality and ended by hurting production and job growth.

Trump will not create 25 million jobs in four years. Republican threats to health care and education if carried out all but guarantee a failure to create more jobs, much less the fantasy millions Trump talks about.

Saturday, December 10, 2016

Behold Mr. Puzder, Secretary of Labor

I just heard Mr. Trump has nominated a man named Andrew Puzder to be the new Secretary of Labor. He was described in the Washington Post [Labor Department pick is a critic of $15 minimum wage, WP, December 9, 2016] as an executive of two fast food restaurants: Hardee’s and Carl’s Jr. The article called him a supporter for the Trump policy of “lowering taxes for corporations and the wealthy and loosening regulations for businesses can boost job creation” the standard slogan of Republicans for decades.

Several other comments outlined in the article stand out. First, the article said Mr. Pudzer is an “opponent of the Affordable Care Act, claiming higher health premiums have left consumers with less money to spend and hurt the restaurant business.” Apparently Mr. Pudzer prefers to have Americans eat hamburgers and french fries as a substitute for health care coverage since that will increase profits in his fast food empire.

However, Mr. Trump promised to create jobs so Mr. Pudzer might like to know that 28.4 percent of new jobs since 1990 have come in the health care industry. The share of America’s establishment employment in health care as published by the Bureau of Labor Statistics has increased just under 5 percent since 1990 to 13.3 percent of establishment jobs, both percents more than any other industry sector. The fast food industry has 2.9 percent of establishment jobs, up only .67 percent since 1990. If new jobs are the Trump goal, then health care is the best sector, not to mention the higher pay in health care than the low wage fast food industry.

The Washington Post article also quoted a previous comment of Mr. Pudzer that new overtime rules “add to the extensive regulatory maze the Obama Administration has imposed on employers.” The overtime rules are part of administration of the Fair Labor Standards Act. The current rules he ridicules were drafted by the George W. Bush Administration in 2003 specifically to eliminate overtime pay for millions of Americans. President Obama has proposed changing one, and only one, number but nothing else. He wants to raise eligibility for overtime from a salary of $23,660 to $47,776 to make several million people eligible for overtime pay that are denied overtime by people like Mr. Pudzer.

Mr. Pudzer also opposes raising the minimum wage, but that too is part of regulations written for the Fair Labor Standards Act and so the rules he ridicules are the exact rules that allow him to keep wages low and convert costs to profits to put in his pocket. I would say his views show a conflict of interest since he expects to profit from a government policy he intends to control.

Mr. Puzder also invoked a standard corporate threat against higher wages. He said it “encourages automation!” We learn fast food executives are investing in automation and considering machines that could tackle simple tasks such as taking customer orders. “If you’re making labor more expensive and automation less expensive- this is not rocket science.”

Organized labor lost jobs to automation in the 19th century. Over the last thirty years millions have been forced out of jobs from computer automation, but fast food wages are already so low his work force can leave him to be self employed mowing grass or baby sitting compared to the pathetic wages he pays. He ought to remember a bully needs better threats.

A hundred years ago there was no fast food industry but people who worked in low skill, low paid jobs called themselves wage slaves. Apparently the working class voted for Mr. Trump, but Mr. Puzder’s comments give the clearest sign yet the working class will continue to be wage slaves in the Trump Administration.

Saturday, November 5, 2016

History, Politics, the working class, and the vote for 2016

The Sorry State of the working class

On April 13, 2016 the New York Times ran an op-ed piece entitled “Foiling Obama, Congress Made Trump.” Republican successfully blocked every effort Obama made to benefit the working class with constructive proposals: a cut in the payroll tax, an infrastructure bank to create construction jobs, a larger child tax credit, community college investments, an expanded earned income tax credit, making retirement plans portable across employers, tax credits for manufacturing communities, wage insurance.

Presidential election night commentary repeatedly mentioned the angry working class and how they voted for Donald Trump, apparently in large enough numbers to swing a few key states and the election. Many of the Trump voters were characterized as working class whites with a high school education struggling to get by on low paid jobs. A corporate decision to close a factory and move to Mexico or China often figured in their low income and loss of employment. The loss of jobs then figured in the collapse of their local housing market and empty strip malls sprinkled about in cities and towns across the mid western states.

Trump campaigned with many Democratic proposals the Republican establishment hates and blocked during the Obama years. He attacked American business moving jobs overseas during the campaign along with the NAFTA trade agreement. Neither the Republican or Democratic parties or any of its presidents have ever challenged the absolute right of corporate America to shut down plants and operations in the United States and move them to Mexico or China or anywhere they want to go. Neither party does a thing to slow it down, or appears to care about places like Detroit, decimated by autocratic corporate decisions. The best the Democrats have ever done is to offer trade assistance or retraining for those who lose their jobs.

For Trump to keep his promises to the people who elected him he will have to fight the Republican Party establishment and propose more aggressive policies than the modest efforts of the Democrats. The Democrats have already organized an agenda around his campaign pledges in what shapes up into a three cornered discussion, that is if Trump really meant what he said during the campaign.

The Trump and Democratic proposals can help generate new spending which in turn helps create jobs, but they do almost nothing to stem the surplus of labor or fix the policies accepted by both parties. More spending won’t be enough; the supply of labor has to be addressed.

Trump’s proposals include a demand to cut immigration and reduce the supply of professional foreign labor under the H1-b program, but H-1b is only one of several other programs that bring in foreign labor. Otherwise I have heard nothing about changes to the Fair Labor Standards Act. President Obama tried to amend the overtime rules and get more people a chance to earn time and half for work over forty hours, but the Republicans howled against it and filed suits to stop it.

As of now the minimum wage remains at $7.25 an hour for a forty-hour week and anyone earning over $23,660 has no right to overtime if an employer chooses to put them on a salary. Two people working sixty hour weeks equal three people working forty hour weeks. Unpaid overtime helps restrict new jobs and add to the already massive oversupply of labor. Two decades of higher productivity has eliminated millions of jobs and helped generate an even bigger surplus of labor working a forty-hour week. The full time workweek will need to be decreased to 30 hours phased in over several years.

Trump will have to lower federal income taxes on the modest wages and salaries of the low paid working class. In 2015 a single person earning $25,000 had to pay $1,743.75 in federal income tax even though it is not possible to live on such a low salary and that is before social security and state taxes. A couple both earning $25,000 pay $3,487.50 in federal income tax. If their income had been corporate dividends they would have paid nothing, not a cent in federal taxes.

It was the working class that put Trump in office, but it will be easy to tell if they get something for it. They got nothing from Reagan or the two Bush presidents. Republicans are pickpockets, but Trump refuses to sound like a Republican so maybe now will be different. Maybe.