Tags: Jobs

Under the Good Jobs-Report Hood


Good news for the American worker: Employment in June surged 288,000, with a 262,000 gain in the private sector, easily beating the consensus forecast of 215,000 new payrolls. This marks the fifth consecutive monthly increase of 200,000 or more jobs, the best five-month stretch since early 2006. As for the unemployment rate, it dropped from 6.3 to 6.1 percent.

But there were some important glitches in this good-news report.

Read my full column here.

Tags: Jobs

What the ‘Pre-Recession Peak’ Job Numbers Really Mean


By now you’ve probably begun your weekend-long bender in celebration of the news that the U.S. economy (which, in a market version of Zeno’s paradox of Achilles and the turtle, just keeps getting better but somehow never reaches the level of not-half-bad) has now created a level of “payroll employment” that is “back to pre-recession levels.”

I hate to kill the buzz, but this is the kind of good news where what you see is, literally, what you get: We are exactly back to the number of jobs that existed in early 2008. Unfortunately, the U.S. population, and the available workforce, have continued to grow, at a fast enough rate that the anemic level of job creation in the post-recession era still hasn’t been enough to keep pace. As a function of people who can and arguably should be working, job creation is still so weak that it will probably be at least four more years before the jobs recession can truly be called over. 

“We’re probably still about seven million jobs below trend,” George Washington University economics professor Tara Sinclair tells NRO. ”We’re just excited because we’ve been at fewer jobs than January 2008 for such a long time.”

Sinclair notes that the news, while underwhelming, is good. The May job creation rate of 217,000 is substantially higher than the 180,000-or-so-per-month rate that has been the average since President Barack Obama took office. And the non-adjusted return to pre-recession peak is being widely celebrated. Even Bill McBride, who runs the essential Calculated Risk blog, has announced that he will probably be retiring his “scariest chart ever,” which compares peak-to-peak job losses and recoveries since the end of World War II.

But this is a symbolic victory at best. According to the Hamilton Center’s jobs gap calculator, a rate of 217,000 jobs per month, if it could be maintained indefinitely (and there are no guarantees on that), would put us back to the previous peak in May 2018. Hiding the denominator is one of the oldest tricks in politics. What matters isn’t the total number of jobs but the total number of jobs relative to the working-age population. In other words, when will we see a reverse in the nearly 15-year-decline in the labor-force participation rate?

“That’s the million dollar question,” Sinclair says. “We saw a huge drop in unemployment last month, but that was people leaving the labor force. . . . I would not be terribly distressed by an unemployment rate that goes up for a few months, because it would mean more people were reentering the labor force.”

In the meantime, let the Fifth Annual Summer of Recovery begin. Or not.

Tags: Economic Collapse , Jobs , Recession

Game-Changer Jobs Report?


Even with all the political slicing and dicing that accompany these big reports, the April employment survey was a lot stronger than virtually anyone expected. But Democrats should stop jumping in the air and clicking their heels. There are too many part-time workers, long-term unemployed, and labor-market dropouts to validate the significance of a 6.3 percent unemployment rate. The newspaper headlines tout falling unemployment, but ordinary folks on Main Street don’t really feel it.

Read my full column here.

Tags: Jobs

Abby McCloskey on this Morning’s Jobs Report


Hey, how about those new jobs numbers, huh? The dawn of our economic utopia is upon us!

Okay, no, it was another “meh at best” jobs report in our “meh at best” economy. Abby McCloskey, program director of economic policy at the American Enterprise Institute, joins NRO at CPAC to make sense of the latest jobs report and what we really need to return to prosperity.

Tags: Jobs

How Do You Become One of the Richest 1 Percent?


Doug Ross, among others, had thoughts on this section of yesterday’s Jolt — although I must strongly disagree with his characterization of Ana Marie Cox as inane and dimwitted . . . 

Let’s Get Real About the ‘One Percent’ and How They Got There

There’s a lot to disagree with in Ana Marie Cox’s piece contending the richest one percent are fighting class warfare against the rest of us. Perhaps no argument sticks out more than this point:

Both [billionaire Tom] Perkins and [economist Greg] Mankiw seem to think that the poor (or just the not-rich!) resent the wealthy simply because they have so much. They think we resent the number of zeros in their paychecks. Of course not. We resent that those zeros come out of ours.

Do the “zeros in their paychecks” come out of “our” paychecks?

Earlier this week, James Piereson, a senior fellow at the Manhattan Institute, examined who makes up America’s richest “one percent” in the Wall Street Journal:

In 2010, the latest year for which we have complete data, roughly 119 million households filed tax returns with the IRS, leaving about 1.1 million households in the top 1% of the income distribution. A taxpayer needed a taxable income of $307,000 to enter the top 1% . . . 

According to research on individual tax returns in 2004 and 2005 by Jon Bakija of Williams College, Adam Cole of the Treasury Department and Bradley T. Heim of Indiana University, the top 1% consists primarily of salaried executives at nonfinancial businesses (30%) and secondarily of doctors (14%), people working in finance (13%) and lawyers (8%).

The lawyers among the super-rich get their money from their clients; their clients are always free to choose a cheaper lawyer. Those cheaper lawyers may not be as good, of course.

The doctors among the super-rich get their money from hospitals, patients, and insurers. No one seems to complain about rich doctors, though; when you’ve developed the skill to, say, reach into a person’s skull and brain and cut out tumors without cutting away anything they need, people generally think you’ve earned that big paycheck.

The richest professional athletes, musicians, and actors get their money from teams and tournaments, studios and television networks, record sales and DVD sales and apparel sales and all that. Again, everyone chooses to buy those products.

(Every product purchased in America is freely chosen, with one glaring exception: Health insurance now must be purchased to avoid paying the special taxes under Obamacare.)

There’s an argument to be made about CEO pay and golden parachutes, and how gargantuan pay packages and golden parachutes have pulled away and separated from a company’s performance. This has been a longtime bipartisan gripe; back in 2007 Robert Samuelson, no corporation-hating lefty, said the “the public pounding of CEOs for their lavish pay packages is amply justified.” Debra Saunders called it “the welfare state for CEOs.” In a time when the Great Recession plods on and on and much of the reduction in the unemployment rate is driven by people leaving the workforce, it’s not surprising that a perennial outrage would become more incendiary.

But even here, the outrage is strangely focused on particular figures.

The New York Times’s Steven Davidoff notes that Google chairman Eric Schmidt recently enjoyed a $100 million payday of restricted stock, with few cries or objections, compared to JP Morgan Chase’s Jamie Dimon’s $20 million payday. He notes, “Schmidt, by the way, was reported by Business Insider to have a “fabulous life” with a Gulfstream V, a 195-foot yacht and multiple homes across the country including a new $22 million Hollywood mansion.”

I don’t think the 11,500 employees at Gulfstream, the 338,526 workers in the boating industry, or the home builders of that Hollywood mansion are all that bothered by how Schmidt spends his money in his “fabulous life.” Even the greediest CEO helps create jobs in the industries that care to those wishes we find so ostentatious and absurd. To create more jobs, we actually need more conspicuous consumption, not less.

Cox gets closer to the real issue with this question:

The question on most people’s minds is simpler still, and yet somehow too difficult for the CEOs and their enablers to comprehend: Am I so expendable as to be worth such a small paycheck . . . or no paycheck at all?

The short, sad, hard and terrifying answer is basically, yes. More specifically, you are worth a paycheck that someone else is willing to pay, based upon what you do. If you can remove spleens, people will pay you more than if you paint, unless you’re one of those rare painters who creates works that lots of people want to buy. Notice this has little to with whether or not the painting is “good.” The question is whether someone will reach into their pocket and pull out money to buy it. If you accidentally spill paint on a canvas, it may resemble Jackson Pollack’s No. 5, 1948. That painting reportedly sold for $140 million; yours probably won’t.

I’ll make you a good copy for $10,000.

You are worth what someone is willing to pay you. All the protests in the world won’t change that basic fact, and a minimum-wage hike is a minuscule mitigation of that fact. A minimum-wage hike is the government requiring someone to pay you more as a form of building popularity. Your work has not actually increased in value to your employer, which is really how you earn more.

Something — be it an object or a service, such as a certain amount of time or labor — is worth what someone is willing to pay for it. This is a very hard lesson, and one that people will embrace considerable mental gymnastics to avoid learning.

We bought our house in 2007, as the housing bubble was bursting, and encountered quite a few people who claimed to want to sell their house, but only at that fantastically high number that had given them. Of course, that number was based upon the peak prices of the bubble. Nobody was willing to pay that price, but the alleged sellers weren’t willing to come to terms with that fact. That’s how you see properties on the market for months and months, punctuated by a price reduction of $5,000 or $10,000, followed by more months of no offers.

But for all of my bone-picking, Ana Marie Cox hits on something with this sentence:

Because the wealth of the super-rich is just so damn far away, without any rungs in the ladder between, no assistance for that leap of faith that allows those who struggle to hope their struggles can cease.

This puts the finger on the real problem: a lack of opportunity for advancement to higher levels of income in our modern economy. People don’t worry about how much the rich guy has if they think they can be the rich guy some day. Sadly, way too many Americans look at their current prospects and think the only way they’ll ever enjoy a better life is to win the lottery.

You’ve heard the argument that the lottery is a tax on the stupid, correct? Elsewhere at the Guardian, a columnist argues that the poor play “the lotto because it is one of the only legal opportunities available to them to become rich.” To get rich quickly, yes. But most of America’s rich did not get rich quickly.

How can you become rich in this country? Three avenues are the most common*: have exceptional talent in one of those avenues of the performing arts or athletics, start a business that succeeds wildly, or become skilled in medicine, law, or finance.

Go back to that list of top professions in the richest one percent – business owners, doctors, lawyers, and executives. Those require medical school, law school, and in many cases, an MBA. That’s a commitment of several years, hard work, and additional costs of education. If you don’t study hard, you flunk the medical boards or the bar exam. If you don’t work hard, you don’t get the billable hours and make partner or succeed in your residency. When you see someone wealthy in their 30s and 40s, it’s largely a result of the decisions they made in their teens and 20s.

In short, the folks making those one percent salaries put in more work to get there. And once they’re in the top one percent, they don’t slack off much. This study by the New York Times, from 2012, found that the richest one percent work longer hours, being three times more likely than the 99 percent to work more than 50 hours a week, and are more likely to be self-employed.

Yes, the richest one percent have some genetic advantages in terms of intelligence. Yes, luck can be a factor. Yes, it helps to have connections. But the portion of the one percent who didn’t work hard to get there is fairly small and unrepresentative. (In 2007, wealth transfers (mainly inheritances, but also including gifts) made up, on average, 14.7 percent of the total wealth of the 1 percent.)

* Separate from the path to becoming super-rich, there are a lot of professions that make a pretty good annual salary, according to the Bureau of Labor Statistics. In 2012, air-traffic controllers had a mean (average) annual wage of $118,430. Other average wages from the BLS data:

Petroleum engineers: $147,470

Actuaries: $106,680

Aerospace engineers: $104,810

Midwives: $91,070

Sales representatives for technical and scientific products: $85,690

Elevator installer or repairman: $74,140

Dental Hygienists: $70,700

Boilermakers: $55,830

Plumbers: $52,950

The key is that all of these professions require years of study to become qualified to do that work.

Tags: Economics , Jobs , Income Inequality

Washington Suddenly Notices the Economy Still Stinks for Most People


President Obama pivots to the economy . . . arguably for the second time this month. The RNC collected these “pivots” for a while, until they became as numerous as his statement expiration dates.

Sure, the unemployment rate is down to 7.6 percent, after peaking at 10.1 percent; of course, that’s a slow decline since the beginning of 2012 (8.3 percent). This is still high by historical standards (the unemployment rate was below 7 percent from June 1993 to December 2008) and the unemployment rate’s drop is fueled in part by a steep decline in the labor-force participation rate, from 66 percent of all Americans over age 16 to close to 63 percent.

If you’ve got money in the stock market, you’re enjoying a bullish run. About 30 percent of American households have $10,000 or more in stocks. But for most of the folks who suffered the biggest fall in the Great Recession’s start, back in autumn 2008, economic security is hard to find. Wages are stagnant, and actually slightly less than at the end of 2009.

Asked about the issues that will dominate the 2014 races, the heads of the NRCC and DCCC tell Chuck Todd the economy first, before Obamacare and immigration (admittedly related to the state of the economy), gun control, social issues, etc. The issue of our continuing economic troubles never went away; it’s just that the narrative-setters lost interest. To the political class of both parties, the pain is far away (Washington’s economy is comparatively thriving, even in the Age of Sequester) and their preferred options are blocked by the opposition’s role in government.

White House senior adviser Dan Pfeiffer assures us, “Over the next several weeks, the President will deliver speeches that touch on the cornerstones of what it means to be middle class in America: job security, a good education, a home to call your own, affordable health care when you get sick, and the chance to save for a secure, dignified retirement.”

What holds back the economy?

These problems are not likely to be solved by another big-spending “jobs” bill; some of them are probably beyond the capacity of Washington to solve. But the president needs to say something about it — so he will give more speeches, and assure his followers that “if those mean House Republicans would just pass another version of the stimulus I passed in 2009, everything would be fine.”

Tags: Economy , Barack Obama , Taxes , Jobs , Stimulus , Green Jobs

Understaffed America


The final Morning Jolt of the week offers a look at what Republicans can learn from Rand Paul, the comedic horror that is our half-baked “Dudes” idea, and then this reflection of a troubled economy:

Understaffed America

One of the first victims of the Great Recession was service. I don’t know about you, but with disturbing regularity I get seated in restaurants . . . and we sit there . . . waiting for someone to greet us, bring menus, ask if we want anything to drink . . . and we’re left waiting for a seemingly interminable time. It’s as if our waiter suddenly retired. Or, you know, it’s like we’re in Europe.

Peggy Noonan is noticing the same thing.

It’s not a debt and deficit crisis, it’s a jobs crisis. The debt and the deficit are part of it, part of the general fear that we’re on a long slide and can’t turn it around. The federal tax code is part of it — it’s a drag on everything, a killer of the spirit of guts and endeavor. Federal regulations are part of it. The administration’s inability to see the stunning and historic gift of the energy revolution is part of it.

But it’s a jobs crisis that’s the central thing. And you see it everywhere you look.

I’m in Pittsburgh, making my way to the airport hotel. The people movers are broken and we pull our bags along the dingy carpet. There’s an increasing sense in America now that the facades are intact but the machinery inside is broken.

The hotel has entrances on two floors. I search for the lobby, find it. Travelers are milling about, but there’s no information desk, no doorman, no bellman or concierge, just two harried-looking workers at a front desk on the second level. The man who checked me in put his phones on hold when I asked for someone to accompany me upstairs . . .

Things are getting pretty bare-bones in America. Doormen, security, bellmen, people working the floor — that’s maybe a dozen jobs that should have been filled, at one little hotel on one day in one town. Everyone’s keeping costs down, not hiring.

What that hotel looked like is America without its muscle, its efficiency, its old confidence.

There are a lot of reasons for this . . . but we’ve added one more reason for a company to try to hobble along with fewer workers than they normally would:

Under ObamaCare, employers with 50 or more full-time workers must provide health insurance for all their workers, paying at least 65% of the cost of a family policy or 85% of the cost of an individual plan. Moreover, the insurance must meet the federal government’s requirements in terms of what benefits are included, meaning that many businesses that offer insurance to their workers today will have to change to new, more expensive plans.

ObamaCare’s rules make expansion expensive, particularly for the 500,000 US businesses that have fewer than 100 employees.

Suppose that a firm with 49 employees does not provide health benefits. Hiring one more worker will trigger the mandate. The company would now have to provide insurance coverage to all 50 workers or pay a tax penalty.

. . . Under the circumstances, how likely is the company to hire that 50th worker? Or, if a company already has 50 workers, isn’t the company likely to lay off one employee? Or cut hours and make some employees part time, thus getting under the 50 employee cap? Indeed, a study by Mercer found that 18% of companies were likely to do exactly that. It’s worth noting that in France, another country where numerous government regulations kick in at 50 workers, there are 1,500 companies with 48 employees and 1,600 with 49 employees, but just 660 with 50 and only 500 with 51.

If service industries cut the staff any deeper, it’s going to start looking like the sets of The Walking Dead in this country.

Tags: Barack Obama , Economy , Jobs , Obamacare

The Ugly Truth About Our Economy


Of course there’s State of the Union reaction and Rubio-mania in the Morning Jolt, but also an examination of the economic truths you didn’t hear last night, and probably won’t hear from an elected official for a while:

The Ugly Truths About the American Economy Since 2009

Okay, forget what the president said. Why has hiring been so sluggish since the Great Recession began?

I’m going to look at a post from Zero Hedge, an economics-minded blog that is always interesting and sometimes understandable. Charles Hugh-Smith argues:

Those who have spent their careers in government or academia have little idea what it takes to hire more people. Number one is a business with strong demand for one’s products or services. In a developed world with too much of everything except energy, that is no small challenge: the world is awash in over-capacity in every field except niche industries such as deepwater oil rigs.

Second, you need a process that generates so much value (specifically surplus value) that you will generate immediate profits by hiring more people.

If the value added by additional labor is low, then you have no reason to hire more employees, even if Ben Bernanke personally knocked on your door begging you to borrow a couple million dollars at low rates of interest.

If an additional unskilled worker will cost $10 an hour and might generate $100 a day in additional gross revenues, that is $20 in gross profit. But the overhead costs of operating a business are rising faster than inflation: junk fees imposed by cities, counties and states, workers compensation and disability premiums, healthcare costs (if you hire full-time workers), energy costs, and so on.

For most businesses, overhead costs 50% to 100% of total employee compensation–wages plus benefits and payroll taxes. So adding another employee to gross 20% more doesn’t make it worthwhile–it actually generates a loss once overhead costs are paid.

The only time it makes sense to hire another worker is if that worker will create 100% or more surplus value from their labor. For example, a worker paid $200 a day in total compensation generates $400 more in gross revenues–enough to not only support the added overhead but net the business a profit.

In short, the unemployed, the departed-the-workforce, the just-entered-the-workforce and soon-to-enter-the-workforce cannot be sufficiently productive to justify the expense of hiring them. And we know this pretty much has to be true, because corporations are sitting on roughly $1.7 trillion in cash right now. It’s not that they don’t have the money to hire people. They just don’t think that hiring people would generate more money than having it just sit there in their accounts, which is a phenomenally depressing conclusion.

Speaking of those about to enter the workforce, isn’t perhaps one of the fundamental problems facing our economy that we have a lot of English majors and not enough folks who can or are willing to work in fracking? What I mean is, how many of our economic doldrums stem from a fundamental mismatch between the skills of the soon-to-be-working and new workers and the actual work that needs to be done?

Allow me to set your blood to simmer, by pointing to this November Salon article:

In the John Waters-esque sector of northwest Baltimore — equal parts kitschy, sketchy, artsy and weird — Gerry Mak and Sarah Magida sauntered through a small ethnic market stocked with Japanese eggplant, mint chutney and fresh turmeric. After gathering ingredients for that evening’s dinner, they walked to the cash register and awaited their moments of truth.

“I have $80 bucks left!” Magida said. “I’m so happy!”

“I have $12,” Mak said with a frown.

The two friends weren’t tabulating the cash in their wallets but what remained of the monthly allotment on their Supplemental Nutrition Assistance Program debit cards, the official new term for what are still known colloquially as food stamps.

Magida, a 30-year-old art school graduate, had been installing museum exhibits for a living until the recession caused arts funding — and her usual gigs — to dry up. She applied for food stamps last summer, and since then she’s used her $150 in monthly benefits for things like fresh produce, raw honey and fresh-squeezed juices from markets near her house in the neighborhood of Hampden, and soy meat alternatives and gourmet ice cream from a Whole Foods a few miles away.

“I’m eating better than I ever have before,” she told me. “Even with food stamps, it’s not like I’m living large, but it helps.”

Mak, 31, grew up in Westchester, graduated from the University of Chicago and toiled in publishing in New York during his 20s before moving to Baltimore last year with a meager part-time blogging job and prospects for little else. About half of his friends in Baltimore have been getting food stamps since the economy toppled, so he decided to give it a try; to his delight, he qualified for $200 a month.

Title of that article? “Hipsters on Food Stamps.”

Folks, the art world and publishing world are fiercely competitive even in the very best of times, so you’re going to need a backup career just in case things don’t work out. This also applies to those who aspire to fame and fortune in journalism, professional athletics, the music industry, most of the entertainment industry, and most of the jobs that the world covets. You’ve got to be really talented, and really hard-working. And yes, lucky. I realize I’m very, very, very, very lucky to have a job that I (usually) enjoy and that allows me to make a living. Of course, I suspect those outside those fields overestimate the role of luck. My buddy Cam — now on the Sportsman Channel — will periodically hear from someone, “boy, you’re really lucky to find a job where you get to host a radio show!” and he has to bite his tongue and refrain from mentioning all the years he worked as reporter and assistant news director, driving all over the state of Oklahoma on any assignment he could get, long hours, lousy pay, and so on.

Nobody just hands you a plum job in journalism. Okay, unless you’re Chelsea Clinton, nobody just hands you a plum job in journalism.

Perhaps most unnervingly, perhaps a significant chunk of our younger workforce isn’t really well-prepared to do much of anything. As the intriguing, rarely updated blog The Last Psychiatrist suggested:

It’s hard to accept that the University of Chicago grad described in the article isn’t employable, that the economy doesn’t need him, but it is absolutely true, but my point here is that not only is he not contributing, the economy doesn’t need him to contribute. Which is good, because there’s nothing he can do for it. 1. Anything requiring science is out. 2. “He can work manual labor!” I love how people assume economics doesn’t apply to construction. The demand for those jobs is very high AND hipsters suck at them. At any wage, Gerry the hipster will always be outworked by Vinnie the son of a longshoreman, who will always be outworked by a Mexican illegal, i.e. the system will always be able to find someone who can do the job better AND with lower labor costs . . . 3. Hipsters are not good at retail or sales unless detached irony is required, which it is not, which is why they’re on food stamps.

Of course, we won’t hear many comments in this vein from our policymakers, because it would be perceived as blaming the unemployed for their grim circumstances.

Tags: Economic Collapse , Economy , Jobs

Will We Ever See 65 Percent Workforce Participation Again?


Another “meh” jobs report from the Bureau of Labor Statistics this morning, with the unemployment rate at 7.8 percent.

The workforce participation rate among those age 16 and older was 65.7 percent in January 2009, when President Obama took office. Now it is 63.6 percent.

The highest level in the past ten years was 66.8 percent in February 2002 (and it remained between that and 65.8 for the entirety of the Bush years); its peak since Obama took office was in 65.8 percent in February 2009; its lowest point was in August of last year, when it hit 63.5 percent. It has not been 64 percent since 2011.

Some of that figure represents the retiring aging baby boomers, but a large portion of it represents folks who have simply dropped out of the workforce — not employed, and no longer looking.

Tags: Jobs , Unemployment Rate

Mitt Romney Just Helped Create 52,000 Jobs


I’d never heard the name Max Kohl until a few hours ago. But I like the guy.

Kohl’s, the department store he founded, is looking to hire some 52,000 or so people in the coming months — good news for job-seekers across the country. The downside is that these are seasonal jobs for the holidays, but the more interesting fact is that the number of seasonal employees the store is seeking is up 10 percent over last year, a very good indicator of the firm’s expectations for the all-important holiday retailing season, and a good indicator in general.

But expanding operations is not easy. It requires, in a word, capital. Lots of it. Tons of it. Where did Kohl’s get the capital to do this? As it turns out, Mitt Romney had something to do with it.

Kohl’s is a typical American success story: Max Kohl, a Jew born in Poland in 1901, decides that there’s a richer future for him in the United States than in Poland. He ends up in Milwaukee. He starts a grocery store. He does this in 1929, incidentally — not the best year in American history to launch a new business. But he weathers the Depression, adds a store, then another, and by the 1960s he’s the owner of the state’s largest grocery-store chain, employing more than 5,000 people. He then does the same thing all over again with a chain of department stores. And if you’re building department stores, why not build the shopping centers they’re located in? So he does that, too, and pretty soon he has so much real estate that he has to start a real-estate company to keep up with things. On top of having more real estate than he can keep up with, he has more money than he can keep up with, so he gives wagon-trains of it to Brandeis University, the Jewish National Fund, and a bunch of local charities and religious groups. By the time of his death at 80 he had, like so many immigrants, made more of the opportunities afforded to Americans than most sons of the soil do. Well done, Max Kohl.

His businesses lived on. The department-store chain went through a couple of ownership changes, first being acquired by BATUS (a division of British American Tobacco), which ultimately decided that Kohl’s didn’t fit in well with the rest of its portfolio, namely such high-end properties as Saks Fifth Avenue. Kohl’s managers thought that they could do a better job with the chain than their smoky corporate overlords, and so they — irrationally optimistic capitalists that they were — bought the company, now comprising 40 stores, and took it private. The managers changed the merchandise mix and implemented forward-looking retail practices such as digital inventory management. Kohl’s wasn’t a market revolutionary like Walmart, but it was smart and careful, staking out turf between the low-end discounters and the higher-end department stores. Kohl’s prospered to such an extent that it caught the attention of a major investor, the Morgan Stanley Leveraged Equity Fund, which bought the company in 1988 with the intention of taking it public. Aggressive expansion ensued, and sales nearly trebled in the next four years, when the company went public. More innovative management practices were introduced, and an enormous distribution center was constructed. By 1999 there were 259 Kohl’s stores, and revenues were more than $4.5 billion. All this from Max Kohl’s little grocery and the villainous leveraged-buyout artists.

Around the turn of the century, Kohl’s ran into a little trouble, with declining sales and profit. Max Kohl said he attributed his success to selling good stuff and being nice to his customers. Kohl’s doesn’t put it that way, but that is essentially what they were failing to do at the time, making some bad decisions about inventory and allowing their stores, now in numbering in the hundreds, to fall into disarray. Investors were not happy. Heads rolled. Kohl’s recovered and began to grow again. Today it operates 1,100 stores and employs about 140,000 people, more than the population of Alexandria, Va., or Savannah, Ga. It makes a lot of money and wins praise for its environmental practices. That’s what happens when Max Kohl’s plan to run a better grocery store collides with the free market, including the critically important capital market.

The list of the firm’s top shareholders is heavy with big hitters: T. Rowe Price, State Street, Vanguard, BlackRock, Morgan. And a bit down the list you’ll find Brookside Capital, a hedge-fund operator and subsidiary of Romney’s firm, Bain Capital, which as of June had a position of about $100 million in Kohl’s, up significantly from the March reporting period. Because Kohl’s is now a $12 billion firm, Brookside is not a particularly big investor, and Kohl’s isn’t an especially big part of Brookside’s portfolio, which is heavy on Apple, DirecTV, Anheuser-Busch, El Paso Corp., Google, Kinder Morgan, and less cutting-edge firms, such as Macy’s.

Forget every stupid thing you’ve ever heard a politician say about “job creation” — this is what it really looks like. Entrepreneurs have ideas, management teams seek incremental improvements, and investors invest. Sometimes it works out, sometimes it doesn’t. There’s nothing dramatic about it, no great speeches, no grand plan to create 140,000 jobs at a single firm. It just happens. Sometimes a company makes a big bet on a promising firm, like Bain with Staples or Morgan with Kohl’s. Sometimes it is a quiet, conservative bet, like Brookside with Kohl’s. Both are necessary in the marketplace, and that is where the money comes from to make a couple of stores into a national retail powerhouse that sometimes needs an extra 52,000 employees to see it through the busy season. Maybe a part-time job at Kohl’s is not what you’re looking for, but those jobs at Apple and Kinder Morgan are a result of the same process. They sure as hell aren’t the result of politics. In the world of politics, one guy — the president — has an outsized role in everything. In the real world, lots of people play lots of small roles in making big things happen. 

That Mitt Romney has allowed himself to be put on the defensive over his role in this business says something about him, but it says more about the American electorate. Barack Obama gives speeches about job creation. But this is how it’s done. Obama’s demonization of investors and Romney’s unwillingness to offer a compelling defense suggests that both sides are betting that the American people are too stupid to understand what makes their economy work.

Tags: Jobs , Mitt Romney

‘Even these minimum-wage jobs in this economy can be pretty tough to find.’


In an article about the allegedly horrific scandal of South Carolina Gov. Nikki Haley’s 14-year-old daughter working in the gift shop of the South Carolina state house, there’s an inadvertently damning indictment of our current economy:

Even these minimum-wage jobs in this economy can be pretty tough to find,” said Meredith McGehee, policy director for the Washington, D.C.,-based Campaign Legal Center, a nonpartisan think tank on government issues, including ethics. “While this is probably a small-potatoes case, it creates the appearance of a conflict of interest and strikes me as a politically tone-deaf decision.”

A half-dozen ethics experts and legislators declined to comment on whether the job constituted nepotism when contacted by The State. Most said they did not want to comment because of the involvement of Haley’s child.

For those who care, the governor’s daughter makes $8 per hour, and works 20 to 25 hours per week cleaning and stocking shelves.

So which is the bigger scandal and concern – that the governor’s daughter works part-time in a state job that pays 75 cents per hour above South Carolina’s minimum wage, or the fact that about three years after the recession allegedly ended, minimum wage jobs are tough to find?

Tags: Economy , Jobs , Nikki Haley

President Obama’s Perpetual Pivot


In the final days of the 2008 campaign, the conservative press/blogosphere were buzzing about Jeremiah Wright/Bill Ayers/Bernardine Dohrn and other signs of a radical past of then-Senator Obama, while the John McCain campaign was running “dedicated to a cause bigger than my own” biographical ads and the RNC was running fairly generic “Obama is inexperienced” ads.

There were times when the Venn diagram of the conservative grassroots and the GOP establishment overlapped more, but for much of that cycle, the two groups were singing from a different songbook.

In 2012, you’re seeing much greater message alignment between the conservative press/blogosphere and the campaigns and committees.

For example, among conservative blogs, the term “the Obama administration is pivoting to jobs” spurs eye-rolls and snickers. Last year I wrote:

Pivoting: A Form of Rotation Similar to Tilting at a Windmill

Ben Smith of Politico contemplates the Obama administration’s perennial pivot: “Mike Allen’s note this morning that ‘Dems plan pivot to jobs’ sounded awfully familiar to me, as it apparently did to the Republican National Committee, which promptly turned out a list of 15 occasions on which the White House had allegedly announced a similar pivot. That number is, shockingly, a bit inflated, but the underlying truth of the presidency is that through a mixture of choice — health care — and circumstance — the Arab Spring, the Japan earthquake — Obama has spent very little of his presidency publicly driving a conversation about jobs. By far the most serious jobs legislation he passes was the stimulus, but over-optimistic forecasts and implacable Republican opposition put the White House sharply on defense about it almost from the start. And the story of the Administration is, in no small part, one of a constant attempt to pivot formally to jobs. Emily and I identified what seem like six really attempts at it, with the seventh starting now . . .”

Keep in mind that inherent in the pivot-point talking point is an inherent excuse: The reason the administration hasn’t seen much success in bringing down the unemployment rate, or is perceived to be useless in bringing down the unemployment rate, or hasn’t communicated its message about its efforts, is always a lack of time and focus. I think most of us would argue the problem isn’t really an administrative attention deficit disorder or chronic focus on other issues; the problem is the policies stink.

Too much of the stimulus money got spent on crap. It allowed states to put off fiscal reckoning between runaway expenditures and vastly overestimated tax revenues. Trade deals have collected dust for years while Obama’s team tries to find ways to placate unions. Fancy regulation-reduction panels are announced while the Federal Register grows thicker and thicker. Obamacare adds a whole new complicating variable into employer health-care plans.

“All right, now we’re really going to pivot to jobs, just you wait and see” sounds like the oft-heard pledges of dieting and exercise and saving money and cleaning out the basement and flossing; the idea that all it’s going to take is a bit more attention to the problem and it’s going to be solved. I don’t doubt that a lot of folks in the White House are worried about the unemployment rate. I just don’t have any faith that they have any real ideas to improve the situation.

This morning, the RNC unveils this ad:

Hard to imagine the Romney campaign wouldn’t hit the president on this point, as well.

Tags: Barack Obama , Jobs , The Economy

I Like the Title of This New Romney Web Video


The newest Mitt Romney campaign web video is entitled, “Jolt.” As the man who writes the Morning Jolt, I’m Jim Geraghty, and I approve this title.

Meanwhile, in today’s Morning Jolt:

ABC News: ‘Assumptions Based on Four Years Ago Seem Worthless.’

ABC News’ coverage of the Obama campaign sure feels . . . different from 2008, doesn’t it?

The first week of June began with a monthly jobs report that solidified a sense of an anemic economic recovery. Then a Democratic loss in Wisconsin, coupled with staggering Romney campaign fundraising figures, revealed the strength of political organization on the right.

The week was punctuated by the most prominent voice in the party short of the president himself undercutting key Obama campaign messaging. To round out the rough patch, the president tried to turn the story lines around, but wound up delivering the kind of line that’s tailor-made for his opponents to make famous.

“The private sector is doing fine,” President Obama said Friday, at a press conference organized because it most certainly isn’t, at least in the minds of most Americans.

The president clarified himself within hours, saying that “it’s absolutely clear the economy is not doing fine.” Top Obama advisers surely want the episode to go away quickly, and are eager to point out that a bad June is better than a bad October.

“I suspect much of this will be of little consequence,” David Axelrod said today on ABC’s “This Week with George Stephanopoulos.”

But this was about more than losing a few news cycles, or inspiring a few Web videos.

Taken together, the beginning of June 2012 may be remembered as a time period that shook the pillars of the Obama reelection effort. If nothing else, it’s shown the 2012 landscape to be so different from 2008 as to make assumptions based on four years ago seem worthless.

Hot Air’s Ed Morrissey wonders precisely how “one comes away thinking that ‘the private sector is doing fine’ when its only adding jobs at an 86,300-per-month pace over the recovery, with its latest report a +69,000, numbers well under the 125K-150K pace needed to keep up with population growth.”

Whether or not the public sees Obama’s statement as “there is no Soviet domination of Eastern Europe” / “I actually voted for the $87 billion, before I voted against it” / “The fundamentals of our economy are strong,” the Romney campaign will do its darnedest to make sure it is treated that way.

Tags: Barack Obama , Jobs , Mitt Romney

A Plurality Think the Last Jobs Report Was ‘Mixed’ News?


This polling result, spotlighted by Allahpundit, is pretty amazing:

One more data set for you on jobs, which might help explain why Obama and Romney are neck and neck on who’ll do better to create them. This comes from Gallup. Never forget, my friends: There are an awful lot of low-information voters out there.

Column three is the killer, of course. Overall, a plurality actually rates last Friday’s jobs-report stinkbomb as having been “mixed,” “somewhat positive,” or “very positive”(!) (40 percent, seven percent, and two percent, respectively). Just 42 percent say it was either somewhat or very negative. I don’t know how to explain that except to speculate that a huge chunk of voters simply have no idea of what constitutes healthy job growth. They hear that 60,000 jobs have been created and they think “hey, great” without paying close enough attention to know that that’s far below what we need to bring down unemployment. I think that’ll change later this year as people start focusing more on political news in anticipation of election day, but who knows? Maybe The One will surf to victory on a wave of idiots who think 50,000 jobs a month is pretty goshdarned impressive.

A couple of points: One, there are probably a considerable amount of people who when asked by a pollster if they follow a topic closely, instinctively say “yes,” because they don’t want to admit that they’re not paying attention to current events.

Two, some folks are hardcore partisans, and will insist that bad news under their guy is really good news. That’s how I would score a portion of the 9 percent who claim to follow the news closely and insist the report was positive.

But yes, there are a lot of voters out there who aren’t really up to speed on what “good” job creation looks like.

Tags: Jobs , Unemployment

Obama: Let’s Escape Partisanship by Blaming Senate Republicans


It’s nothing new, but there’s something striking about how easily and effortlessly Obama can blame partisanship and pointing fingers in one breath and then blame Republicans in the next, and never recognize any contradiction between the two actions.

Once you escape the partisanship and the political point-scoring in Washington, once you start really start listening to the American people, it’s pretty clear what our country and your leaders should be spending their time on. Jobs.

Moments later:

None of this matters to the Republicans in the Senate — because last week they got together to block this bill. They said no to putting teachers and construction workers back on the job. They said no to rebuilding our roads and our bridges and our airports. They said no to cutting taxes for middle-class families and small businesses when all they’ve been doing is cutting taxes for the wealthiest Americans. They said no to helping veterans find jobs.

I take it the president will be taping attack ads against Sens. Jon Tester of Montana and Ben Nelson of Nebraska, both Democrats who voted against his jobs bill.

Tags: Jobs , Obama , Senate Republicans

Obama’s ‘Jobs Act’ Tour Strangely Avoids Wavering Democrats


White House press secretary Jay Carney declared, “The president is campaigning for jobs.” But instead of heading to states where there are persuadable senators, he’s heading to 2012 swing states.

As NBC News correspondent Norah O’Donnell noticed, Obama somehow feels the need to hold events to promote this legislation — again, the legislation, not his reelection bid — only in states that are considered in play in the 2012 presidential election.

Immediately after his address to Congress, Obama touted the act in Richmond, Virginia; Columbus, Ohio; and Raleigh-Durham, North Carolina. In Virginia, Obama’s job approval/disapproval split is 40/54; in Ohio it’s 44/52; in North Carolina, it’s 40/54.

So Obama can’t quite intimidate wavering members of Congress to support his “American Jobs Act” by impressing them with his immense popularity. If you think about it, the lawmakers most likely to be persuaded would be red-state Democrats. At least with them, he can appeal to party loyalty and the argument that their fates are tied; a country vastly disapproving of Obama is likely to throw out a lot of red-state Democrats along with him in 2012. If his numbers improve, their chances of survival improve.

So on paper, Obama would be better off reaching out to Sens. Mary L. Landrieu of Louisiana, Jon Tester of Montana, and Joe Manchin of West Virginia. And then there’s Ben Nelson of Nebraska, who sounds iffy. (The Senate’s other Democratic Nelson up for reelection next year, Bill of Florida, is making generally positive noises.) Of course, all those senators probably don’t want Obama coming to their states, and Louisiana, Montana, West Virginia, and Nebraska aren’t really on Obama’s target list for 2012.

Even then, it doesn’t appear that the rallies for the Jobs Act are really working, at least on Democrats who represent states Obama has visited, or at least not yet:

Senator Kay Hagan declined on Wednesday to say her support for the bill that Mr. Obama spent the day promoting in her state was indubitable. “We’ve got to have legislation that is supported by Democrats and Republicans,” she said. “I’m going to have to look at it.”

Representative Heath Shuler, another North Carolina Democrat, said Congress should tame the deficit before approving new spending for job programs. “The most important thing is to get our fiscal house in order,” said Mr. Shuler, a leader of the fiscally conservative Blue Dog Coalition. “Then we can talk about other aspects of job creation.”

On Thursday, Obama’s Jobs Act tour goes back to the swing state of Ohio. Coincidentally, of course.

Tags: Barack Obama , Jobs , Red State Democrats

Obama’s ‘Consecutive-Months of Job Creation’ Smoke & Mirrors


In today’s article about the ubiquitous “unexpectedly” adverb in economic reports, I note that President Obama likes to talk about how many consecutive months the American economy has seen private-sector job growth.

What Obama says is technically true — I suppose Vice President Biden would say “literally” — but increasing the number of private-sector jobs doesn’t necessarily bring down the unemployment rate. The single biggest factor is that the size of the labor pool normally grows from month to month, and while economists disagree on precisely how many jobs need to be added each month just to keep pace with the additional workers, it generally ranges from 100,000 per month (AP) to 100,000 to 125,000 (Heritage Foundation) to about 130,000 (New York Times). Some say a “sustained recovery” requires 250,000 jobs per month.

For perspective, the U.S. economy lost 8.8 million jobs in this recession.

All figures are from the Bureau of Labor Statistics.

Private-Sector Job Growth, by Month
July 2011 154,000 (preliminary)
June 2011 80,000 (preliminary)
May 2011 99,000
April 2011 241,000
March 2011 219,000
February 2011 261,000
January 2011 94,000
December 2010 167,000
November 2010 128,000
October 2010 193,000
September 2010 112,000
August 2010 143,000
July 2010 117,000
June 2010 61,000
May 2010 51,000
April 2010 241,000
March 2010 158,000
February 2010 62,000
January 2010 16,000
December 2009 -83,000

Depending on your measuring stick, during these 19 months of private-sector job creation, the U.S. only “gained ground” in 12 of them (if the threshold is 100,000) or 9 of them (if the threshold is 130,000). At no point has job creation hit the “sustained recovery” threshold.

One last point: In April 2010, Vice President Biden declared, “I’m here to tell you, some time in the next couple of months, we’re going to be creating between 250,000 jobs a month and 500,000 jobs a month.”

Tags: Barack Obama , Jobs , Joe Biden , Unemployment

For Everyone Who Found Friday’s Job Report Too Cheery . . .


From the first Morning Jolt of the week:

‘Well, It Could Be Worse.’ (Ominous Growling) ‘It’s Worse.’

John Crudele of the New York Post reiterates some points you’ve seen every now and then on Campaign Spot, but are worth remembering as the jobs picture and high unemployment start to become the defining issue of the 2012 election cycle:

If you are an American looking for work — no, make that pleading to be allowed to earn a living — you already know this: the job market is even worse than Washington is telling us. And Washington yesterday told us that the employment situation is just plain ugly.

For one thing, the number of jobs increased in June only because the Labor Department simultaneously revised downward the number of jobs that existed in this country during May. It’s like moving the fences at Citi Field so the Mets players can hit more home runs. It might make Jose Reyes feel better, but it doesn’t actually make him more powerful.

Without the fence-moving operation in the May employment report, the June number — yesterday’s number — would have shown a decline of 26,000 jobs.

Then there’s another problem with June’s employment report. Included in the 18,000 headline number is a guesstimate that 131,000 jobs were created by newly formed — and, therefore, invisible — companies.

If you want to send your resume to one of these companies, don’t bother. They probably don’t exist, and neither do the jobs the government thinks they are creating. These figments of the imagination of the Labor Department’s computers will probably disappear when the numbers are checked early next year . . . The job numbers are only going to get worse in the months ahead.

For one thing, the government will stop adding jobs for those small, newly formed fictitious companies. That bit of optimistic statistical hocus-pocus has been lifting the job reports during all the spring months.

“In truth, we’ve been losing jobs for several months, possibly several years, depending on how horribly jiggered the numbers are,” speculates Bill Quick.

Cold Fury is fed up with the spin: “The good ship Socialism is on the shoals, and all the lying spin in the world ain’t gonna refloat it. . . . Every month, we get a new, dismal, and ‘unexpected’ bad report on unemployment which, a month or so later, is quietly revised even further downward. Why should this one be any different? Rainbows and unicorn farts aren’t real either, and [President Obama] coasted his whole life on ‘em without ever actually accomplish a damned thing worthy of note, all the way to his nice new throne presiding over the final ruin of the nation.”

The self-described “Scared Monkeys” see a reckoning coming down the pike: “Make no mistake about it, the American voters will remember that Obama said that the $878 billion stimulus would keep unemployment below 8% and that then Democrat Speaker of the House Pelosi said that Obamacare would create 400,000 jobs instantly. Come 2012 there will be a reckoning and Democrats are going to pay an even steeper price than they did in the 2010 midterms.”

Tags: Barack Obama , Jobs

Unemployment Rate: Up. Discouraged Workers: Up. McCaskill: Looks Strong to Me!


Sen. Claire McCaskill, Democrat of Missouri, looks at today’s unemployment report from the Bureau of Labor Statistics and concludes: ”Another strong jobs report.”

Indeed, the numbers indicate that the U.S. economy created 244,000 jobs in the past month.

However, the unemployment rate actually increased from 8.8 percent to 9 percent. What’s more, the number of “discouraged workers” — those who haven’t looked for a job in six months — increased from 921,000 to 989,000, and those marginally attached to the workforce increased from 2,434,000 to 2,466,000. Not huge jumps, but certainly not moving in the right direction.

The labor participation rate — already strikingly low compared with the past few decades — remained the same at 64.2 percent.

If you’re wondering how the private sector can create jobs, labor participation can remain the same, and unemployment can still increase, it is because the figure of the number of jobs created comes from BLS surveying establishments — i.e., employers — while the unemployment-rate figure stems from surveying households. Each month, BLS conducts a sample survey called the Current Population Survey (CPS) to measure the extent of unemployment in the country, talking to 60,000 households, or approximately approximately 110,000 individuals.  The process is laid out here.

Tags: Claire McCaskill , Jobs

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