Posts tagged ‘jobs’
Today we had another poor Employment Report for the month of June. While the 80,000 jobs which were created was a small improvement over May’s 69,000, these numbers are obviously far short of the 200,000 we need to create monthly just to keep even with the number of net new workers entering the job market.
The Administration, which is the architect of our stagnant employment situation and an unemployment rate of 8.2%, had it’s usual response that we should not be too concerned with any one month’s data. I agree with that statement. There are variations which can be due to any number of external factors in any given month (although I would exclude President Bush from the list).
At the bottom of this post I have listed the White House’s official response to 30 months of Employment Reports as can be found on its website. I particularly enjoyed the post of July, 2010 which was as devoid of substance as one might expect from this Administration.
Perhaps, my readers will ask themselves the same question I did:
“Is it real or is it Memorex?”
June 2012: “Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.” (LINK: http://www.whitehouse.gov/blog/2012/07/06/employment-situation-june)
May 2012: “Therefore, it is important not to read too much into any one monthly report and it is helpful to consider each report in the context of other data that are becoming available.” (LINK: http://www.whitehouse.gov/blog/2012/06/01/employment-situation-may)
April 2012: “Therefore, it is important not to read too much into any one monthly report and it is helpful to consider each report in the context of other data that are becoming available.” (LINK: http://www.whitehouse.gov/blog/2012/05/04/employment-situation-april)
March 2012: “Therefore, it is important not to read too much into any one monthly report, and it is helpful to consider each report in the context of other data that are becoming available.” (LINK: http://www.whitehouse.gov/blog/2012/04/06/employment-situation-march)
February 2012: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report; nevertheless, the trend in job market indicators over recent months is an encouraging sign.” (LINK: http://www.whitehouse.gov/blog/2012/03/09/employment-situation-february)
January 2012: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report; nevertheless, the trend in job market indicators over recent months is an encouraging sign.” (LINK: http://www.whitehouse.gov/blog/2012/02/03/employment-situation-january)
December 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2012/01/06/employment-situation-december)
November 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2011/12/02/employment-situation-november)
October 2011: “The monthly employment and unemployment numbers are volatile and employment estimates are subject to substantial revision. There is no better example than August’s jobs figure, which was initially reported at zero and in the latest revision increased to 104,000. This illustrates why the Administration always stresses it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2011/11/04/employment-situation-october)
September 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2011/10/07/employment-situation-september)
August 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2011/09/02/employment-situation-august)
July 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2011/08/05/employment-situation-july)
June 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2011/07/08/employment-situation-june)
May 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2011/06/03/employment-situation-may)
April 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2011/05/06/employment-situation-april)
March 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2011/04/01/employment-situation-march)
February 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2011/03/04/employment-situation-february)
January 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2011/02/04/employment-situation-january)
December 2010: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2011/01/07/employment-situation-december)
November 2010: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2010/12/03/employment-situation-november)
October 2010: “Given the volatility in monthly employment and unemployment data, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2010/11/05/employment-situation-october)
September 2010: “Given the volatility in the monthly employment and unemployment data, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2010/10/08/employment-situation-september)
July 2010: “Therefore, it is important not to read too much into any one monthly report, positive or negative. It is essential that we continue our efforts to move in the right direction and replace job losses with robust job gains.” (LINK: http://www.whitehouse.gov/blog/2010/08/06/employment-situation-july)
August 2010: “Therefore, it is important not to read too much into any one monthly report, positive or negative.” (LINK: http://www.whitehouse.gov/blog/2010/09/03/employment-situation-august)
June 2010: “As always, it is important not to read too much into any one monthly report, positive or negative.” (LINK: http://www.whitehouse.gov/blog/2010/07/02/employment-situation-june)
May 2010: “As always, it is important not to read too much into any one monthly report, positive or negative.” (LINK: http://www.whitehouse.gov/blog/2010/06/04/employment-situation-may)
April 2010: “Therefore, it is important not to read too much into any one monthly report, positive or negative.” (LINK: http://www.whitehouse.gov/blog/2010/05/07/employment-situation-april)
March 2010: “Therefore, it is important not to read too much into any one monthly report, positive or negative.” (LINK: http://www.whitehouse.gov/blog/2010/04/02/employment-situation-march)
January 2010: “Therefore, it is important not to read too much into any one monthly report, positive or negative.” (LINK: http://www.whitehouse.gov/blog/2010/02/05/employment-situation-january)
November 2009: “Therefore, it is important not to read too much into any one monthly report, positive or negative.” (LINK: http://www.whitehouse.gov/blog/2009/12/04/employment-situation-november)
When we hear the word outsourcing (and the rhetoric over that is sure to increase as the Presidential campaign heats up), most of us tend to think that it means taking American jobs and shipping them overseas. That is one, but not the only aspect of this business practice. This post will attempt to explain both the process and the reasons that companies outsource certain internal procedures.
If you were the Managing Partner of a successful CPA firm and had guided your partnership’s growth over the years, one of the aspects of your business which you would have to manage was records destruction. Destroying records containing sensitive client information, Name, Address, SSN, DOB, income might easily have been accomplished as a firm with a small practice with a simple paper shredder. But because of the volume of client documents what was once a simple task that took one of your employees a few hours now has grown to a monumental job.
Solution: Outsource this to a firm that is bonded, specializes in the destruction of sensitive records and has the most sophisticated equipment to make sure that they accomplish their job in a secure manner. You have just outsourced this aspect of your business – although in this case you have done so with an American company. No loss of American jobs here – merely a transfer of who is paying the individuals performing the task.
The reason companies do this is that it makes for a more efficient operation. Someone using the most advanced equipment and whose sole job is to destroy records, as in the case above, is going to provide a better product and do so in less time. I doubt the critics of outsourcing as a practice have a problem with the example I have given.
Nor are they likely to have a problem with another aspect of outsourcing – engaging temporary personnel to work on a specific project – rather than hire a full-time employee.
I think most of us would agree that it is more efficient to hire a person from a temporary agency for a project which is expected to last only a few weeks or a few months, rather than hire a person to work full time until the project is completed and then lay that person off. Again, we have another example of how outsourcing can be an effective, if not the only, logical strategy in certain business situations.
The rhetoric surrounding outsourcing does not concern itself with either of the two examples I have cited. It specifically refers to taking jobs which formerly were done by Americans and shipping those to other countries. There is no doubt that much of that has occurred. The question is, if this is a “bad” thing, who is at the root cause of it and who should shoulder the blame?
There is one party to whom I would point: The American consumer.
The American consumer’s spending comprises two-thirds of our Gross Domestic Product. You and I collectively are the single largest driving force behind our economy – or it’s greatest nemesis. We want more, we buy more, we spend more – or we still want but we cannot afford to buy and as a result we spend less. When we spend less, the economy suffers. And our economy is suffering.
It would be untruthful not to admit that many products which were once made in the United States are now manufactured abroad. The American dominance in the automobile and steel industry have long since waned from their days of glory. And the reason – the American consumer.
Absorbed with our desire to buy we naturally want what we want at the lowest price. And the lowest price is a direct function of the lowest material and labor cost. A car which can be assembled in Germany or Japan for one half the cost in terms of labor will be sold in the showroom at a lower price than a comparable American product. Look in your garage and check out the make of the vehicle that you are driving. Does it have “Made in America” stamped on it?
The largest tech company, Apple, Inc. does not have a single product in its line which is manufactured in the United States. The glass on your iPhone and the engine on the iPhone and iPad are made in the U. S. – and are then shipped to China and other Asian countries where these units are assembled – together with all the rest of the parts that are manufactured in those countries.
Why does Apple pursue this manufacturing strategy? CEO, Tim Cook responded to that question by saying, “Cost and facilities.”
If an iPad sells quickly at $499 the question is would one that was manufactured in the U.S.A. sell as well at $999? Would the lines at the Apple store be as long and would the company move as much product if they decided to bring the manufacturing process home? Probably not. And so each of us who purchases their products provides positive reinforcement for Apple’s strategy of outsourcing.
I do not mean to sound as though I am picking on Apple. Countless other examples could be cited ranging from appliances to food products. I now find it nearly impossible to buy dog treats that don’t have “Made in China” stamped somewhere surreptitiously on the packaging. And if I purchase those products, I am contributing to the wave of outsourcing in which we find ourselves. And if you buy them, so are you.
There are many who will argue that outsourcing is anti-American, a disgrace and a shameful practice. Perhaps their assessment is correct. But at the heart of the practice is our insatiable desire to acquire more and more, the latest and greatest – and to pay the lowest price for it.
That’s something of which we should all be mindful the next time we pull out our credit card to make a purchase for a product that doesn’t say, “Made in America.” That is, if you can find one.
Recently an ad has been playing which discusses President Obama’s “Job Creation” record. At one point in the commercial the President says that, “In the last 27 months we have created 4.3 Million jobs. But more needs to be done.”
Two points of importance. A few years’ ago, the administration came up with monthly figures on the number of jobs that had been created or “saved”. I guess it would be fair to say that any American who still had a job had a job that was “saved”. Talk about voodoo economic triple talk. I am glad that the President has dropped that tag line.
And the President is right. More needs to be done. Economists whether they subscribe to the thought of John Maynard Keynes or the Austrian school of economics, whether right or left, Republican or Democrat agree that we need to create 200,000 jobs per month.
In other words, we have been running about 40,700 jobs short monthly during the period that the President cites in his commercial. That is just to stay even with the net number of people entering and retiring from the workforce. Still more jobs are needed if we are to reduce the rate of unemployment.
The President’s spokesperson goes on to say that the way to get more people working is to pass “the President’s Jobs Plan – but Congress is holding it up.” Again, I give some credit to the message. Congress is apparently holding up everything so they can get themselves re-elected. There’s a lot of that going around – in fact, far too much.
The Republican-controlled House has taken up portions of the President’s Jobs Bill and passed them but much of the bill goes unheard and would never gain enough votes to pass if it were considered. For the Senate’s part, that Democrat-controlled body refuses to take up a budget and has not done so for three years. Any realistic budget would be “politically embarrassing” this close to a General Election.
I do want to offer a positive comment on this particular commercial. While I believe that it fails in the category of complete truthfulness, it is a relatively middle-of-the-road production. If we could continue political commercials and conversations on this level instead of slinging mud, it would do much to promote an improved level of civility which mars most campaigns. Here’s hoping.
When I say that the commercial is less than completely honest it is because “The President’s Jobs Plan” could have been proposed during President Obama’s first two years in office when the Democrats had an iron-clad majority in both houses. Had the President advanced his ideas then, this whole issue might be moot. Instead he turned his attention to other matters which have probably aggravated the slowness of job creation.
It appears that President Obama is making a bet on selling his job’s record as a positive in his efforts for re-election. Apparently he understands that it really is all about the economy for most of us. I think it’s a gutsy call on his part – probably the gutsiest thing he has done during his term in office.
We’ll see how that works for him.
When I was in grammar school, high school and college I always held part-time jobs. Of course, these were hourly positions – in other words, I traded my services to my employer in exchange for an agreed upon rate they paid me per hour. I’m sure everyone is familiar with this arrangement.
What I never understood was the concept of being paid at an “overtime rate”. Yes, I knew that it was Federal law. The last time I looked, employers were required to pay overtime (generally one and one half time the normal hourly wage, but it could be as high as twice or three times as much) if an employee worked more than eight hours in one day or forty hours in one week.
I guess the “logic” behind this is that if an employer asked one of his workers to spend that much time on the job, he was penalizing that person from spending time with his family and this was a way of compensating for it. On one level it does make some sense.
I was never in a position where I worked enough to earn overtime in these part-time jobs so in essence the point was moot to me. But I do remember a full-time co-worker clucking about the size of her check one week because she had nine hours of overtime pay on it. Even as a youngster this caused me to think about the concept.
I knew from my experience that when I started work on a given day I was fresh, rested and ready to get the job done. Generally, I only worked a few hours so nothing really changed for me in terms of my level of energy or focus. But I also noticed that my full-time counterparts would start yawning as the afternoon progressed. They had been at work all day and were simply getting tired. Of course, if they had to work beyond their normal schedule – into “overtime territory” -they would continue to tire further.
I don’t think that it’s an earth shattering statement to say that if you’re tired and less alert the quality of what you do, whether it’s work, sports, driving or any other activity is probably poorer than when you’re awake and more alert. This was why I never understood the concept of overtime.
What overtime does is reward a person with a premium wage for an inferior work product.
Please understand that I’m not trying to overturn the payment of overtime – merely point out one of its inherent flaws. But I do know that if I purchased a garment and in the shirt pocket I found one of those little stickers that says “Inspected by No. 4 During Overtime Hours,” I’d probably take it back to the store and exchange it for one that was inspected during that employee’s regular work schedule.
This brings me to a news item that comes from my original home state, New York. Apparently, PAPD, the Port Authority Police Department is not clear on the value of the services they receive when they pay their employees overtime.
One of the supervising policemen, Edwin Rivera earned in excess of $166,000 in overtime pay in 2011. This is in addition to his base salary of $108,000 per year. Not too shabby. Apparently this gentleman’s services are so invaluable that he has earned over $200,000 per year for each of the last three years. That’s not too bad for someone who is directing traffic – or more correctly, directing people who are directing traffic.
By contrast, although his base salary is less than theirs, Officer Rivera is reporting more income on his Form 1040 than either New York’s Governor or a member of the New York State Supreme Court. If you’ve ever been tied up in a traffic jam in New York City you certainly appreciate how annoying that can be. So I guess directing it is a pretty important job too.
Well, this led me to a thought. If you accept my premise that overtime pay rewards poorer performance with more money; if you believe the government statistics that our unemployment rate is 8.2% (and who doesn’t believe the government), then there may be a way to get more productivity out of our workforce and at a lower cost, lowering the unemployment rate in the process.
Let’s take a mid-sized company that runs 1000 hours of overtime per week among its clerical staff. I’m using a figure of $10 per hour as an average in this example. I think if anything that’s probably low since I just met a young man the other day who was hired by a Strip property to switch out their one and one half million light bulbs for LED’s at a wage of $16.50 per hour.
Since we know that overtime is paid at a minimum rate of one and one half times the base wage, that employer is spending five dollars per hour times 1000 hours per week – a total for the year of nearly $300,000 when you include FICA and Medicare, etc. Assuming a 40 hour work week, those overtime hours would allow that employer to add 12 full time people – or 25 part time people each working 20 hours per week – and get a better work product.
One of the frustrations that the OWS movement’s members have expressed is that they can’t find a job – despite having spent years getting an education. I understand that sense of frustration. And while doing clerical work may not be their life’s ambition, at least it would provide them with some income until things improve and a position opens up in their chosen field of endeavor.
The employer benefits by getting an improved work product at no additional cost. Any training of the new staff should be minimal since I suspect anyone with a college degree knows how to type and file.
The new employees obviously benefit because they are now earning an income and paying their own way.
The country benefits because we would reduce the rate of unemployment thus alleviating the strain placed on the Unemployment Insurance system at both the Federal and State level.
Of course, this idea is intended solely for use in the private sector. I suspect that if government tried to implement it, by the time all the supernumeraries were added to oversee the project, we would be further in the hole.
I wrote this post late last night after a long day taking care of things that needed to be done. In addition, the temperature got up to 106 degrees – and I wilt rather quickly at those levels. Heat seems to wreak havoc on the few remaining brain cells I have left.
I try in these posts to be creative and thoughtful. Sometimes I succeed more than at other times. So if this post is less than up to the standards I try to set for myself, I apologize to my readers.
Please understand, I wrote it on overtime.
As most of you who have been following for any amount of time realize, I have a low opinion of the laws which are typically enacted in Washington. But in 1974 Congress passed a statute which was actually needed.
Its acronym, ERISA stands for the Employees Retirement Insurance Security Act. It was an effective measure which made significant and positive changes in how the workers of this country were treated under their company-sponsored retirement plans. It also provided for the establishment of IRA’s.
Prior to the date of the enactment of this legislation, most people in the labor force were dependent on two sources of retirement income. The first was their employer’s defined- benefit plan (pension) and Social Security. For the first of these, their employer was responsible for fully funding the expected pension benefit. We all are familiar with how Social Security works.
A typical pension plan called for an employee to work for his company for either a twenty-five year period (to receive a reduced benefit) or to work for thirty years to receive the full retirement benefit. (This is not unlike the formula used by those in government service, the military or the formula that Social Security has adopted).
There was, however, a problem which the Congress unearthed and was the fundamental reason that ERISA came into existence. There were a number of companies which (to use a legalistic phrase) had a “pattern and practice” of terminating employees a year or two before they were qualified to receive their pension benefits. In those days, a person was not “vested” until he had fulfilled the number of years of service to reach at least his early retirement benefit.
So let’s take the case of an individual who began working for his company fresh out of high school at age eighteen. He puts in twenty-four years with his company and is now age forty-two. Suddenly, his supervisor starts writing him up for infractions against company policy. (Strange because this employee has an exemplary record of service and has never before been cited for any violations).
The number of infractions mount and finally the company has “cause” for his dismissal. And so he is fired and has no retirement benefit at all and at age forty-two has to find another position. Even assuming that he is able to secure employment with another company he will have to work until at least age sixty-seven to qualify for a pension with his new employer – assuming that company even has a plan.
There is no question that a significant number of companies “manufactured” reasons to terminate long-term employees. The reason can best be described by the terms greed and heartlessness.
ERISA provided the American worker with a greater degree of security by providing that, after certain numbers of years of employment, he was entitled to receive at least a partial vesting in his or her pension plan. The employee no longer had to wait twenty-five or thirty years to receive a benefit.
One of the most egregious of these offenders prior to the enactment of ERISA was a client of mine. The people with whom I dealt were not the decision makers who constructed the unwritten policy to fabricate grounds for these early terminations. They were hard working people who did their jobs and were as upset as I to learn that their company regularly engaged in these unwarranted firings.
At the time I learned they were abusing their employees in this way, my business had few clients. Every month with us was touch. We needed every client and every dollar of income that we could find. But given their corporate culture, I explained that we could no longer do business. I couldn’t conscientiously recommend any of our job applicants to work for them.
We have a natural tendency to categorize things in groups. It simplifies our way of looking at life. Some believe that businesses are the ultimate good – others that they epitomize the root of all evil. In fairness, probably neither view is completely informed or realistic.
We all know people who are kind and giving and others who are hateful and selfish. Businesses are nothing more than a collection of people. There is not a company in America or throughout the world which doesn’t employ both kinds of these people. But when those who set policy are solely fixated on bank balances to the exclusion of human capital, then it is just to describe their organization as “bad company.”
Only those who are sadistic in nature could possibly take pleasure in the suffering of others. When I was a child, I did know one little boy who enjoyed pulling the wings off flies. But he subsequently went to reform school and I don’t think I’ve encountered anyone else with his mindset since then.
Of course, the newspapers are filled with accounts of people who commit atrocities against animals, children, and other adults. Sometimes we call these activities crimes – other times we call them wars. Once we called it 9/11. That many of us are violent, unfeeling and uncaring is unfortunately quite clear.
Much of the protest movement is focused on the “evildoers” who are business leaders. I spoke with one of the participants in a local “occupy rally” which occurred several months ago. This individual cited the business community’s opposition to yet another extension of Unemployment Benefits as an example of the pervasiveness of greed and lack of feeling on the part of business leaders.
As she put it, “I paid into this. I can’t get a job. Why shouldn’t I be able to collect?”
Although I’m sure she didn’t believe me, I explained to her that, contrary to her opinion, one shared by many – she never paid a cent into Unemployment Insurance. It is a contribution borne solely by her employer. Many in the work force believe that their FICA contribution is used to pay unemployment benefits. It isn’t.
Each employer makes two separate contributions to the Unemployment Fund – one to the state in which the worker lives (UIC) and one to the Federal Government (FUTA). If payments to the state are made in a timely manner, then the company receives a credit on their Federal return – but there is still always an additional contribution due.
The rate paid to each state is determined by the employer’s “experience rating” within that state. This is a ratio of the amount of claims (those workers who were on the employer’s payroll and are receiving benefits) versus the total amount of payroll that the company reported for all its covered workers. The higher the amount of the claims, the higher the rate of contribution that a company is required to pay.
When I was an employer, I always fought fraudulent unemployment claims when a former employee filed – and I always allowed those who had a legitimate claim to move forward so that employee could collect the benefit. Although fighting a claim was a laborious process – usually requiring my attendance at a hearing – I did so for two reasons.
The first was that I didn’t believe people who had exhibited bad behavior when they were in my employment should be rewarded for that by “the system.” The second was that if people received benefits who weren’t entitled to them, there would be less available in the fund for those who were legitimately due those benefits.
During many years in business I attended over one hundred such hearings and only lost two of them. Despite the fact that the Unemployment Insurance Department seemed more disposed to side with the terminated employee, I was able to provide sufficient documentation to win these disputes.
There was one event, early on in my business career which caused me to formulate my approach to Unemployment Insurance. It was a bus ride.
When I first started out, it was too expensive for me to park downtown so I took the bus to work. It was only about a twenty minute ride and I rather enjoyed not having to compete with traffic. In addition, the bus left me off about a mile from the office so it provided me with a little exercise.
One evening as I was returning home, I boarded the Jeffrey Express as usual. I found a window seat behind two young ladies and the bus began on its route down State Street before turning on to Lake Shore Drive.
The young woman in the aisle seat asked her friend if she could read the street number on one of the businesses we were passing. Her friend told her the number and the first young woman wrote it down on a form she was completing. Her companion in the window seat asked her what she was doing.
“I’m filling out my Unemployment Form. They make you do this every two weeks or you don’t get any more checks. So I write down these businesses and their address and say that I interviewed there but they didn’t have any work. When I get home I look their number up in the phone book and then call to find out who the manager is so I can write down their name on the form. Unemployment never checks this out.”
There may be some few people reading this who think that the Unemployment Insurance Department’s requirement that this woman fill out a form was an invasion of her privacy. They probably think that we should just hand over the money – no questions asked. For the rest of the 99% of us, I believe it fair to say that we would consider her actions as fraudulent.
There is a legitimate debate which has been raised regarding unemployment compensation and its continuing extensions. Are we actually helping those who are unemployed in finding work by continuing these benefits? Or are we providing a dis-incentive by continuing them – thus deferring their motivation in seeking new jobs?
To be honest, I don’t know the answer to that question. But I do know that until we get serious job creation programs out of either the Congress or White House and not the fluff and nonsense that has been proposed, that question will be one that is ongoing.
There is one thing that I do know. I would like to see “The Unemployment Bus” retired from service.