Comments on: The good-news/bad-news employment report http://blogs.reuters.com/felix-salmon/2010/11/05/the-good-newsbad-news-employment-report/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: TFF http://blogs.reuters.com/felix-salmon/2010/11/05/the-good-newsbad-news-employment-report/comment-page-1/#comment-20236 Sat, 06 Nov 2010 16:33:38 +0000 http://blogs.reuters.com/felix-salmon/?p=6002#comment-20236 Another thought…

The unemployment rate has been “stubbornly high”, partly because many employers reduced hours instead of laying off employees. The U6 captures some of this, but I’m not sure it captures all. (For example it might leave out employees who are given “half day” pay on Fridays.)

The 1.8% increase in hours worked is truly an increase in employment. And once the workforce is back to full-time capacity, employers will necessarily increase hiring. I know that my own business has gone from 2/3 capacity last year to full capacity this year. For the first time in three years I am turning away prospective clients (hard to expand capacity in a personal-services business).

So while an increase in hours worked doesn’t immediately help the unemployed, it does suggest the possibility of new hiring in the near future.

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By: TFF http://blogs.reuters.com/felix-salmon/2010/11/05/the-good-newsbad-news-employment-report/comment-page-1/#comment-20234 Sat, 06 Nov 2010 12:22:40 +0000 http://blogs.reuters.com/felix-salmon/?p=6002#comment-20234 Good points, OnTheTimes. If banks already have substantial “excess reserves”, then what good will it do to increase those reserves? (And that, of course, is the point of entry for Fed stimulus.)

Only difference it will make is if the banks know that the “excess” reserves are actually needed to cover unrecognized losses on their books.

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By: OnTheTimes http://blogs.reuters.com/felix-salmon/2010/11/05/the-good-newsbad-news-employment-report/comment-page-1/#comment-20232 Sat, 06 Nov 2010 07:40:01 +0000 http://blogs.reuters.com/felix-salmon/?p=6002#comment-20232 @DanHess, are you saying you see no evidence of the country being reliant on monetary policy? That’s the only active measure being taken, and it isn’t working. At all.

Yes, the government had an enormous stimulus package to stop the free fall it was in. But that was 18 months ago, give or take a month or two, and it worked to some extent. There is no chance of the government doing anything like that now, so the institutions not subject to congressional approval are trying to revive the economy by pouring money into it. This is futile, as there is already enough money in the economy, it’s just that the people who have it (or control it, as it’s not the corporate execs money, it’s their shareholders, and they get to hold onto it or spend it) are choosing not to use it.

This monetary policy that is being called quantitative easing is just another name for supply side economics, which was a giant failure 30 years ago and is still failing today. People won’t invest money just because they have it, nor will they invest tax savings just because they aren’t paying it to the government. What they will do is hoard it, and that is what is going on.

I wasn’t around back in the 20s, but I’m guessing the german currency wasn’t the world’s reserve currency, and that the rest of the world didn’t have trillions of dollars of its wealth tied up in it. And I’m also guessing that each infusion of money into the German economy wasn’t met with countermeasures from every other major economic power that prevented its devaluation. So I’m thinking it’s not fair of you to compare the current situation with Germany almost 90 years ago.

Felix is right in pointing out that monetary policy cannot be used to cause large corrections in the economy (and nobody seems to be happy with small corrections in the economy). That can only happen by policies that actually influence investment and spending, and right now monetary policy is having zero influence in those areas.

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By: TFF http://blogs.reuters.com/felix-salmon/2010/11/05/the-good-newsbad-news-employment-report/comment-page-1/#comment-20227 Fri, 05 Nov 2010 21:57:38 +0000 http://blogs.reuters.com/felix-salmon/?p=6002#comment-20227 Apologies, Felix, but you are going to have to start over on this one…

The Civilian noninstitutional population is given at 238.5M, including octogenarians and toddlers. Thus it shouldn’t be surprising that 85M are not in the labor force. These are mostly children, students, SAHM (and SAHD), and retirees. Just 6M from this category actually WANT a job.

The unemployment rate is 9.0% of the labor force or (including those not in the labor force who want a job) 8.3% of the population. Moreover, while the “seasonally adjusted” figures look bad, the non-seasonally-adjusted figures are improving (holiday hiring?). For some purposes, the non-seasonally-adjusted figures might be better?

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By: employment http://blogs.reuters.com/felix-salmon/2010/11/05/the-good-newsbad-news-employment-report/comment-page-1/#comment-20226 Fri, 05 Nov 2010 21:35:00 +0000 http://blogs.reuters.com/felix-salmon/?p=6002#comment-20226 A couple of minor corrections. You wrote, “just 64.5% of the people in the labor force — a mere 58.3% of the total population — actually have a job. Both of those figures represent a new all-time low.” The 64.5 number is not the % of people in the labor force that have a job — that would be 90.4%. And those numbers are not all time lows. Employment/pop is indeed now 58.3%, but it was almost always below that number until 1977. There were trends in male and female labor force particip. going in opposite directions, and increasing female lfp dominated decreasing male. Where the future lies we do not know, or at least I do not know.

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By: TFF http://blogs.reuters.com/felix-salmon/2010/11/05/the-good-newsbad-news-employment-report/comment-page-1/#comment-20219 Fri, 05 Nov 2010 19:23:25 +0000 http://blogs.reuters.com/felix-salmon/?p=6002#comment-20219 What do you mean by “fiscal policy”? Do you mean deficit spending to distribute wealth and boost consumption? Isn’t that more or less what we are doing?

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By: DanHess http://blogs.reuters.com/felix-salmon/2010/11/05/the-good-newsbad-news-employment-report/comment-page-1/#comment-20213 Fri, 05 Nov 2010 17:48:17 +0000 http://blogs.reuters.com/felix-salmon/?p=6002#comment-20213 Good post, but I wonder about the last line:

“That’s what happens when you’re reliant on monetary policy rather than fiscal policy to boost the economy.”

Where do you come up with that, because I see no evidence of that.

In the monetization in Weimar Germany during the crackup boom, unemployment got down to 1% or less in 1922.
http://cij.inspiriting.com/?p=846

The Great D. featured substantial fiscal effort and outright contraction on the monetary side. It was great for the employed and horrible for the unemployed.

Do you have facts to back up this claim? I know you hate it when reporters make statements without factual support.

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