Sunday, December 31, 2017

Labor Line

September 2017___________________________________

Labor line has job news and commentary with a one stop short cut for America's job markets and job related data including the latest data from the Bureau of Labor Statistics.

This month's job and employment summary data are below. This month's inflation data is below.

The Establishment Job Report and Establishment Job Details for data released September 1, 2017.

American Job Market The Chronicle

Current Job and Employment Data

Jobs
Total Non-Farm Establishment Jobs up 156,000 to 146,730,000
Total Private Jobs up 165,000 to 124,432,000
Total Government Employment down 9,000 to 22,298,000

Employment Note
Civilian Non-Institutional Population up 206,000 to 255,357,000
Civilian Labor Force up 77,000 to 160,571,000
Employed down 74,000 to 153,439,000
Employed Men up 37,000 to 81,310,000
Employed Women down 111,000 to 72,129
Unemployed up 151,000 to 7,132,000
Not in the Labor Force up 128,000 to 94,785,000

Unemployment Rate was up .1 % to 4.4% or 7132/160,571
Labor Force Participation Rate stayed the same at 62.9%, or 160,571/255,357

Prices and inflation measured by the Consumer Price Index (CPI) for all Urban Consumers was up by a monthly average of 1.26 percent for 2016.

The August CPI report for the 12 months ending with July, shows the

CPI for All Items was up 1.7%
CPI for Food and Beverages was up 1.1%
CPI for Housing was up 2.8%
CPI for Apparel was down .4%
CPI for Transportation including gasoline was up 1.2%
CPI for Medical Care was up 2.5%
CPI for Recreation was up 1.3%
CPI for Education was up 2.3%
CPI for Communication was down 6.3%

This Month's Establishment Jobs Press Report

A HO-HUM MONTH

The Bureau of Labor Statistics published its September report for jobs in August. The employed decreased 74 thousand while the unemployed increased 151 thousand. The resulting increase in the labor force of 77 thousand fell well below monthly population growth and so 128 thousand more adults left, or did not enter, the labor force. The increase in the unemployed and decrease in the employed worked together to raise the unemployment rate, up .1 percent to 4.4 percent. The labor force participation rate stayed constant at 62.9 percent for August.

The seasonally adjusted total of establishment employment was up 156 thousand for August. The increase was a total of 95 thousand more private service sector jobs and 70 thousand more jobs in goods production. The 165 thousand private sector jobs total combined with a decrease of 9 thousand government service jobs accounts for the total increase.

All three goods production sub sectors had more jobs for August with a combined increase of 70 thousand jobs, a much bigger increase than usual. Natural resources jobs were up 6 thousand while construction also had a bigger than usual increase of jobs: 28 thousand for August. Manufacturing did well with 36 thousand more jobs, which was 28 thousand new durable goods jobs combined with 8 thousand more non-durable goods jobs. The biggest gains came in motor vehicles and parts manufacturing with 13.7 thousand new jobs, which offset small losses in other transportation equipment. Fabricated metal products did well with 5.2 thousand new jobs; computer and electronic products had 3.9 thousand new jobs. Food processing accounted for 6.6 thousand of the 8 thousand new jobs in non-durable goods.

Government service employment fell a combined 9 thousand seasonally adjusted jobs for August. Federal, state and local governments all lost jobs. The federal government dropped a thousand jobs, mostly from a drop in postal service employment. State government was off 5 thousand jobs; local government was off 3 thousand jobs. State education employment had 2.6 thousand of the state job declines. Local public schools had just 300 new jobs. Private education was up a seasonally adjusted 8.6 thousand jobs, which combined with public education left a net of gain a little over 6 thousand jobs in public and private education. Notice the replacement of private education for public education; this is not the first month of that.

Professional and business services had the biggest increase in service employment for August with 40.4 thousand new jobs. The professional and technical service sub sector picked up 22.4 thousand jobs of the total increase, management of companies added a mere hundred jobs while administration and support services including waste management added a net increase of 17.9 thousand jobs.

Among professional and technical services, computer design and related services did the best as it often does with 8 thousand new jobs. Architecture and engineering services added 4.4 thousand jobs; management and technical consulting added another 3.1 thousand jobs.

Among administrative and support services, employment services had a modest gain of 7 thousand jobs while services to buildings added 6.5 thousand jobs. Business support service jobs were down 1.6 thousand for the month amid a few other small gains.

Health Care had a meager 17 thousand new jobs, a low increase and a poor month for health care employment. Ambulatory care added 11 thousand jobs; hospital employment added another 6.4 thousand jobs; nursing and residential care a small 2.8 thousand jobs. Social assistance had a 3.6 thousand job decline. The August growth rate in health care employment was 1.02 percent, well below recent months and well below the fifteen year trend of 2.34 percent.

Trade, Transportation and Utilities had only 8 thousand new jobs, a tiny number for a sector with 18.7 percent of nationwide jobs. Wholesale added 6.3 thousand jobs while retail added just 8 hundred jobs. Transportation did about as poorly as last month with a net gain of 1.9 thousand jobs. Couriers and messengers added 3.9 thousand jobs that offset losses in modal transportation. Utilities dropped 5 hundred jobs.

Leisure and hospitality had a tiny increase of 4 thousand jobs for August, an unusually small increase after last month's big gain. Arts, entertainment and recreation lost a net 3.4 thousand jobs; a gain of 6 thousand jobs in amusements, gambling and recreation offset losses in performing arts and spectator sports. Accommodations dropped 1.7 thousand jobs, a typical loss, while food services and restaurants picked up 9.2 thousand jobs, a modest monthly increase.

Information services dropped 8 thousand jobs, reversing last month's gains. Publishing, motion picture and sound recording, broadcasting, telecommunications and data processing all lost jobs. Financial activities added a net of 10 thousand jobs that included 2.9 thousand new jobs in finance and insurance while real estate and rental and leasing added another 6.8 thousand jobs. The category, other services, added 16 thousand jobs, an unusually large increase. Non-profit associations had 12.3 thousand of the total increase while personal and laundry services and repair and maintenance services also added a few more jobs.

Establishment employment was up 156 thousand in August at an annual growth rate of 1.28 percent, below last month and below recent months. It is ironic that the best monthly gain in manufacturing employment for a long time comes in a month with unusually low gains across many services; especially health care, education, leisure and hospitality, and retail services. Health care, professional and business services, and leisure and hospitality account for just under 40 percent of establishment jobs, but over the last year these three sectors account for over 60 percent of new jobs. So far the gainers gain enough to offset the losers, especially manufacturing and trade, but there is no guarantees in a ho-hum economy.

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August Details

Non Farm Total +156
The Bureau of Labor Statistics (BLS) reported Non-Farm employment for establishments increased from July by 156 thousand jobs for a(n) August total of 146.730 million. (Note 1 below) An increase of 156 thousand each month for the next 12 months represents an annual growth rate of 1.28%. The annual growth rate from a year ago beginning August2016 was +1.45%; the average annual growth rate from 5 years ago beginning August 2012 was +1.78%; from 15 years ago beginning August 2002 it was .78%. America needs growth around 1.5 percent a year to keep itself employed.

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Sector breakdown for 12 Sectors in 000's of jobs

1. Natural Resources +6
Natural Resources jobs including logging and mining were up 6 thousand from July at 719 thousand jobs in August. An increase of 6 thousand jobs each month for the next 12 months would be a growth rate of +10.10 percent. Natural resource jobs are up 58 thousand for the 12 months just ended. Jobs in the 1990's totaled around 770 thousand. Job growth here will be small compared to America's job needs. This is the smallest of 12 major sectors of the economy with .5 percent of establishment jobs.

2. Construction +28
Construction jobs were up 28 thousand from July with 6.918 million jobs in August. An increase of 28 thousand jobs each month for the next 12 months would be an annual growth rate of +4.88 percent. Construction jobs are up 214 thousand for the 12 months just ended. The growth rate for the last 5 years is +4.14%. Construction jobs rank 9th among the 12 sectors with 4.7 percent of non-farm employment.

3. Manufacturing +36
Manufacturing jobs were up 36 thousand from July with 12.480 million jobs in August. An increase of 36 thousand jobs each month for the next 12 months would be an annual growth rate of +3.47 percent. Manufacturing jobs were up for the last 12 months by 138 thousand. The growth rate for the last 5 years is +.85%; for the last 15 years by
-1.29%. In 1994, manufacturing ranked 2nd but now ranks 6th among 12 major sectors in the economy with 8.5 percent of establishment jobs.

4. Trade, Transportation & Utility +8
Trade, both wholesale and retail, transportation and utility employment was up 8 thousand from July at 27.390 million jobs in August. An increase of 8 thousand each month for the next 12 months would be an annual growth rate of +.35 percent. Jobs are up by 108 thousand for the last 12 months. Growth rates for the last 5 years are +1.46 percent. Jobs in these sectors rank first as the biggest sectors with combined employment of 18.7 percent of total establishment employment.

5. Information Services -8
Information Services employment were down 8 thousand from July at 2.711 million jobs in August. A decrease of 8 thousand each month for the next 12 months would be an annual growth rate of -3.53 percent. (Note 2 below) Jobs are down by 67 thousand for the last 12 months. Information jobs reached 3.7 million at the end of 2000, but started dropping, reaching 3 million by 2004, but now holds in the 2.7 million range. Information Services is a small sector ranking 11th of 12 with 1.9 percent of establishment jobs.

6. Financial Activities +10
Financial Activities jobs were up 10 thousand from July at 8.464 million in August. An increase of 10 thousand each month for the next 12 months would be an annual growth rate of + 1.42 percent. Jobs are up 149 thousand for the last 12 months. (Note 3 below)This sector also includes real estate as well as real estate lending. Financial Services has been growing slowly with many months of negative growth. The long term growth rates are now at a 5 year growth rate of +1.68 percent, and a 15 year growth rate of +.42 percent. Financial activities rank 8 of 12 with 5.8 percent of establishment jobs.

7. Business & Professional Services +40
Business and Professional Service jobs went up 40 thousand from July to 20.798 million in August. An increase of 40 thousand each month for the next 12 months would be an annual growth rate of +2.31 percent. Jobs are up 602 thousand for the last 12 months. Note 4 The annual growth rate for the last 5 years was 2.93 percent. It ranks as 2nd among the 12 sectors now. It was third in May 1993, when manufacturing was bigger and second rank now with 14.2 percent of establishment employment.

8. Education including public and private +6
Education jobs went up 6 thousand jobs from July at 13.997 million in August. These include public and private education. An increase of 6 thousand jobs each month for the next 12 months would be an annual growth rate of +.54 percent. Jobs are up 59 thousand for the last 12 months. (note 5) The 15 year growth rate equals +.68 percent, slower than the national average. Education ranks 4th among 12 sectors with 9.6 percent of establishment jobs.

9. Health Care +17
Health care jobs were up 17 thousand from July to 19.535 million in August. An increase of 17 thousand each month for the next 12 months would be an annual growth rate of +1.02 percent. Jobs are up 401 thousand for the last 12 months. (note 6) The current month was below long term trends and less than growth from a year ago when the annual growth rate was +2.10 percent. Health care has been growing at +2.34 percent annual rate for the last 15 years, a rate greater than the national rate. Health care ranks 3rd of 12 with 13.3 percent of establishment jobs.

10. Leisure and hospitality +4
Leisure and hospitality jobs went up 4 thousand from July to 15.996 million in August. An increase of 4 thousand each month for the next 12 months would be an annual growth rate of +.30 percent. Jobs are up 323 thousand for the last 12 months. (note 7) The 5 year growth rate is 2.98%. More than 80 percent of leisure and hospitality are accommodations and restaurants assuring that most of the new jobs are in restaurants. Leisure and hospitality ranks 4th of 12 with 10.9 percent of establishment jobs. It moved up from 7th in the 1990's to 5th in the last few years.

11. Other +16
Other Service jobs, which include repair, maintenance, personal services and non-profit organizations went up 16 thousand from July to 5.783 million jobs in August. An increase of 16 thousand each month for the next 12 months would be an annual growth rate of +3.33 percent. Jobs are up 88 thousand for the last 12 months. (note 8) Other services had +1.26 percent growth for the last 5 years. These sectors rank 10th of 12 with 3.9 percent of total non-farm establishment jobs.

12. Government, excluding education -5
Government service employment was down 5 thousand from July to 11.940 million jobs in August. A decrease of 5 thousand each month for the next 12 months would be an annual growth rate of -.52 percent. Jobs are up 25 thousand for the last 12 months. (note 9) Government jobs excluding education tend to increase slowly but surely with a 15 year growth rate of +.18 percent. Government, excluding education, ranks 7th of 12 with 8.2 percent of total non-farm establishment jobs.


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Sector Notes___________________________

(1) The total cited above is non-farm establishment employment that counts jobs and not people. If one person has two jobs then two jobs are counted. It excludes agricultural employment and the self employed. Out of a total of people employed agricultural employment typically has about 1.5 percent, the self employed about 6.8 percent, the rest make up wage and salary employment. Jobs and people employed are close to the same, but not identical numbers because jobs are not the same as people employed: some hold two jobs. Remember all these totals are jobs. back

(2) Information Services is part of the new North American Industry Classification System(NAICS). It includes firms or establishments in publishing, motion picture & sound recording, broadcasting, Internet publishing and broadcasting, telecommunications, ISPs, web search portals, data processing, libraries, archives and a few others.back

(3) Financial Activities includes deposit and non-deposit credit firms, most of which are still known as banks, savings and loan and credit unions, but also real estate firms and general and commercial rental and leasing.back

(4) Business and Professional services includes the professional areas such as legal services, architecture, engineering, computing, advertising and supporting services including office services, facilities support, services to buildings, security services, employment agencies and so on.back

(5) Education includes private and public education. Therefore education job totals include public schools and colleges as well as private schools and colleges. back

(6) Health care includes ambulatory care, private hospitals, nursing and residential care, and social services including child care. back

(7) Leisure and hospitality has establishment with arts, entertainment and recreation which has performing arts, spectator sports, gambling, fitness centers and others, which are the leisure part. The hospitality part has accommodations, motels, hotels, RV parks, and full service and fast food restaurants. back

(8) Other is a smorgasbord of repair and maintenance services, especially car repair, personal services and non-profit services of organizations like foundations, social advocacy and civic groups, and business, professional, labor unions, political groups and political parties. back

(9) Government job totals include federal, state, and local government administrative work but without education jobs. back

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Notes

Jobs are not the same as employment because jobs are counted once but one person could have two jobs adding one to employment but two to jobs. Also the employment numbers include agricultural workers, the self employed, unpaid family workers, household workers and those on unpaid leave. Jobs are establishment jobs and non-other. back

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Friday, September 8, 2017

Insulting Labor

Insulting Labor

The current United States Secretary of Labor, Alexander Acosta, has proposed putting former President Ronald Reagan in the Department’s Labor Hall of Honor. Ronald Reagan became president in January 1981 and so it was still early in his first term when the strike of the nation’s air traffic controllers union, PATCO, started August 3, 1981. The strike ended abruptly two days later when President Ronald Reagan fired 11,345 air traffic controllers. The firing ended, or busted, the union, which was decertified with little delay.

Many cite the failed PATCO strike as the date of an abrupt degeneration in U.S. labor relations. Reagan era strikes brought similar strikes with union defeats and failures at Phelps-Dodge in Arizona, to airline pilots, to Yale University support staff, at Hormel, at International Paper and others. Bush era strikes at Pittston Coal Co, A.E. Staley, Caterpillar and Bridgestone-Firestone were all defeats for organized labor.

It does not matter which side anyone takes in these disputes or that Reagan was the innocuous head of the Screen Actors Guild. Putting a management figure who crudely busted a union into a Labor Hall of Honor amounts to be a deliberate Trump style insult that ridicules and debases organized labor. Ronald Reagan was rigid and sanctimonious through the whole episode but I doubt even he would choose to show such contempt for the others in a labor hall of honor.

Wednesday, August 9, 2017

West Virginia Jobs 2016

West Virginia Jobs 2016

West Virginia lost 11 thousand jobs during the recession that ran from the fall of 2008 until spring of 2010, but recovered those losses by 2012 when statewide employment reached its high of 765.2 thousand jobs. However, since 2012 statewide employment has declined by 17.4 thousand jobs to 747.8 thousand jobs in 2016. Even though jobs recovered to their pre-recession totals, the recent decline leaves West Virginia with a 2.3 percent loss of statewide employment. That makes West Virginia one of nine states with a loss of jobs since the 2008-2010 recession. Only two states had a bigger percentage loss of jobs than West Virginia. Those losses came even though national employment increased from 132 million to just under 138 million jobs during the same years.

After reaching a statewide high in 2012, West Virginia had a decrease in jobs in the lumber and mining industries, construction, manufacturing, wholesale-retail trade, financial activities, and a combination of repair and maintenance services, personal services, and non-profit associations. By 2016 the combined loss in these sectors was 26.3 thousand jobs.

Health Care, Government, and private education offset some of the losses with 6.9 thousand new jobs. An additional 700 hundred jobs in transportation and warehousing, a hundred jobs in information services, 800 jobs in business and professional services, mostly support services, and 400 jobs in restaurants bring the total job gains to 8.9 thousand jobs for those industries with any new jobs. Combining the gains of 8.9 thousand with the losses 26.3 thousand accounts for the net loss of 17.4 thousand jobs.

The prospects for job growth remain poor.

Back in 1990 West Virginia had 34 thousand jobs in lumber and mining, mostly coal mining, which was 5.4 percent of statewide employment. It was still 34 thousand in 2012 but the total was down to 4.4 percent of statewide jobs. By 2016 only 20 thousand jobs remained with a 2.7 percent share of statewide employment. Almost all of the job loss in lumber and mining came in the last four years. The sudden loss of jobs makes the decline more noticeable, but a 2.7 percent share for lumber and mining keeps West Virginia well above the national percentage of 1.7 percent for these jobs. There are only 50.3 thousand coal mining jobs left in the entire United States and they continue to fall month to month. West Virginia will not be able to hold onto its current coal jobs, much less increase them.

West Virginia has a smaller share of statewide employment than the national economy in all but three industry sub-sectors: health care, government service for the federal, state, and local government, and repair, maintenance, and personal services. Combined these three industries have 43.8 percent of West Virginia employment. Combined health care and government service had a 1.5 percent increase in the share of statewide jobs from 2012 to 2016. Only three other sub sectors had any percentage increase – business support services, private education, restaurants – and their total increase was .7 percent less than half of the health care and government increase.

West Virginia continues to lose jobs in all the same sectors as the national economy, but does not generate more jobs in the sectors doing well in the national economy. For example, professional and technical services have 6.2 percent of national jobs, but only 3.3 percent in West Virginia. In the national economy professional and technical services provide a major source of new jobs adding 30 to 60 thousand jobs a month, but in West Virginia the total has remained at or below 25 thousand jobs for over a decade with no growth.

In the national economy leisure and hospitality, especially restaurants, provide a major source of new jobs. They are often low paid jobs, but the West Virginia economy has not been generating many low paid jobs. Leisure and hospitality have only 9.9 percent of statewide employment, a percent below the national average. Worse their 2016 employment in this sector has not budged above 74 thousand jobs in the last four years.

In the national economy administrative support services provide a major source of new jobs. Administrative support services have 6.3 percent of jobs in the national economy but only 4.6 percent in West Virginia. These are jobs at employment services, telemarketing bureaus, security and armored car services, janitorial services, landscaping and a few more. They were 32.4 thousand in 2012 that reached their statewide high in 2016, but still only 34 thousand jobs.

In the national economy government services have 15.4 percent of national employment, but 20.9 percent of statewide West Virginia employment. All three levels of government employment – federal, state, local – have higher shares in West Virginia than the national economy. In the national economy health care has 13.2 percent of national employment, but 15.4 percent of West Virginia jobs. With so many industries in decline new jobs in health care and government services elevate their relative importance to new heights.

Between 2012 and 2016 the Bureau of the Census reports West Virginia had a drop in statewide population of 25.5 thousand. Given the prospects for jobs, we might consider them the smart ones; they left. In a recent news story the Governor of West Virginia announced he was leaving the Democratic Party to join the Republicans. Soon after Trump came to cheer him on with a rant through his well worn list of personal grudges. He did not tell the crowd their only hope for new jobs and a better economy lies with health care and government service. A good policy for jobs would tax the rich to pay for infra structure construction and generate government service jobs, especially social services. Wild, miserable West Virginia.



Monday, July 24, 2017

State Health Care Employment 2016

State Health Care Employment 2016

Health care employment varies widely from one state to another. In the national economy establishment employment in health care has 19.1 million jobs, or 13.2 percent of national employment. California employs 2.183 million in the four health care sub-sectors of physicians services, hospitals, nursing and residential care and social services. California has the high while Wyoming is the low with only 24.8 thousand jobs working in the health care industry. The high percentage for health care in statewide employment is 17.3 percent in Massachusetts and the low 8.8 percent in Wyoming.

To allow for the enormous state population differences it is necessary to use employment per thousand population to compare state variation. Variations diminish but remain: California has 55.6 employed in health care per thousand population while Wyoming has 42.8 per thousand population and Massachusetts 90.5.

The high for health care employment per thousand population is 101 in the District of Columbia while the low is 39 in Nevada. There are 9 states with health care employment below 50 per thousand while 13 states have health care employment above 70 per thousand. The average is 61.3.

The five southern states - Alabama, Georgia, Mississippi, South Carolina, North Carolina – are among the nine low health care employment per thousand population states. The other four including Nevada are Utah, Wyoming and Hawaii.

The nine states above 70 jobs per thousand population have five of the six New England states – Maine, Vermont, Massachusetts, Connecticut, Rhode Island – and also close by New York and Pennsylvania are above 70 per thousand population as well. However the remaining six show less connection to location or population. They are the District of Columbia and Delaware in the east and North and South Dakota, Nebraska and Minnesota in the mid-west.

There are 32 states and the District of Columbia that took the Obama Care Medicaid option and 19 states that did not. All five of the low health care employment southern states mentioned above did not take the Medicaid option. Florida, Virginia, Tennessee and Texas did not take the Medicaid option either. While their health care employment was above 50 per thousand population, they were below the average; all four were between 50 and 55 per thousand population.

The remaining ten states that did not take the Medicaid option are scattered geographically and show a moderate correlation with employment per thousand population. The Pearson correlation coefficient between the Medicaid option (Yes = 1, No = 0) and health care jobs per thousand population in the fifty states and the District of Columbia equals .36, where 0 means random variation and 1 predicts exact variation.

If we think of health care employment per thousand population as a measure of state effort and commitment to health care, then there are some good signs. Every single state and the District of Columbia have a higher health care employment per thousand population in 2016 than in 2007, the last full year before the 2008 to 2010 recession. All the states are doing better. Four states have an increase over 20 percent and 12 more had an increase of 15 to 20 percent. However, the correlation between health care per thousand population in 2007 and 2016 is high, .98, meaning roughly the same relative differences between the states continue now as they were in 2007. While it is certain the Medicaid option helps health care employment the effect so far appears modest. The differences suggest a difference of state preferences reflected through fifty-one varied political systems, although the result does not necessarily reflect the popular will. We know there is money in politics as well as health care.






Thursday, July 20, 2017

Ohio Jobs 2016

Ohio Jobs 2016

Ohio establishment jobs dropped from a high of 5.625 million in 2000 to 5.427 million in 2007 before the Bush recession cut employment further to 5.036 million in 2010 just as the recession came to an end. Ohio lost so many manufacturing jobs in the seven years from 2000 to 2007 it lost a statewide average of 197 thousand jobs a month even though national employment increased from 132 million to just under 138 million jobs during the same years. Note (1)

The recession ran from the fall of 2008 until spring of 2010, which makes 2007 the last full year before the 2008 to 2010 recession got started. The national establishment employment surpassed the pre-recession high in 2014. Ohio jobs finally climbed above its 2007 total in 2016 when jobs reached an average monthly total of 5.481 million, a total that surpasses pre-recession employment by 54 thousand jobs, or just 1 percent above 2007. Ohio ranks 39th in the percentage increase of statewide jobs above the pre-recession total. Nine states remain below 2007 totals. There were just 54 thousand new statewide jobs even though the Bureau of Census reports an increase in the Ohio population over 147 thousand.

National establishment employment reached 144.3 million in 2016, up 6.3 million jobs over 2007. The increase in national employment is a net increase because many industry sub sectors like manufacturing lost jobs. In Ohio, natural resources, construction, manufacturing, wholesale trade, retail trade, information services, financial activities, personal services, non-profit associations, and government services all lost jobs in the years 2007 to 2016. The total of jobs lost in these sectors equals 200.2 thousand. Since Ohio had a net increase of 54 thousand jobs, Ohio had 254.2 thousand new jobs in just a few sub sectors to offset the job losses.

To make up for job losses in declining industries assures that remaining industries will become especially important as a source of new jobs. Over the last two decades new jobs in the U.S. economy have come from a short list of industry sub-sectors and especially so in Ohio where new jobs came primarily from business and professional services, health care and leisure-hospitality.

Business and professional services have three components: 1. professional and technical services, 2. establishments that manage companies and enterprises, and 3. administrative and support services. In Ohio, two professional and technical services - computer design and related services and management and technical consulting – added 21.1 thousand jobs. The job gains in these two professional sub sectors offset job losses in other professional services like legal services, accounting and bookkeeping services, architecture and engineering services, and advertising and related services, which cut the net increase to 15.8 thousand professional jobs.

Management of companies and enterprises added 26.6 thousand jobs, an unusually large number. These are office jobs of holding companies and corporate, subsidiary and regional managing offices. In the national economy establishments managing companies make up 1.5 percent of employment, but 2.5 percent in Ohio. The 26.6 thousand new jobs raised the Ohio share of employment in this sub sector from 2.0 to 2.5 percent of statewide employment.

Administrative and support services including waste management added 11.5 thousand jobs, but 6.7 thousand of these jobs were in services to buildings and dwellings that includes janitorial services, landscaping, carpet cleaners and exterminators.

Health care added 107.6 thousand jobs primarily in physician services, hospitals and social services. Private school education added 22.3 thousand jobs and state and local government education another 4.4 thousand jobs. Leisure and hospitality added 50.2 thousand jobs, but with 75 percent of the jobs at restaurants: 37.3 thousand of 50.2 thousand jobs. Slightly 60 percent of new jobs in Ohio came from just two professional services, management of companies and health care. Including the jobs from leisure and hospitality adds another 20 percent. Add 8 percent more for private schools.

Those with college and professional degree skills specialized in computing, accounting, finance and health care have the best chance of finding self supporting work. Employment in health care tends to be widely dispersed geographically given the need for patients to visit doctors and clinics. Ohio has kept up well with health care employment and wisely took the Medicaid expansion. However, more and more of professional and technical services can be delivered electronically, which allows them to be produced and delivered from any other state. Electronic delivery of professional services puts the states in competition for these jobs. In the national economy professional and technical services make up 6.15 percent of jobs, but only 4.69 percent in Ohio in 2016. For the years from 2007 to 2016 Ohio ranks 30th for job gains in professional services among the fifty states and the District of Columbia.

The average annual growth rate of statewide establishment employment since 2007 comes to .11 percent, far below the national average. Jobs in services like retail, publishing, telecommunications, finance and real estate do poorly in the national economy, but they lag even more in Ohio. For those in Ohio with high school degree skills the options are few.

The limited number of service sectors generating a net increase of jobs significantly lowers prospects for statewide job growth. It guarantees that health care employment must grow for Ohio to have a statewide increase of jobs. Computer design and related service jobs in Ohio have 1 percent of statewide employment, up from .8 percent in 2007, but still only 59 thousand jobs. Computer design and related services have 1.5 percent of national employment. Otherwise restaurants will have to provide thousands of new jobs a year to maintain even modest job growth

The idea people can finish high school and find career employment or self-supporting work breaks down day by day while business has started complaining of labor shortages. Politicians suggest a few bromides, but they offer nothing to solve the dismal record of Ohio jobs.


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Note (1) All job and employment number citations are from the Bureau of Labor Statistics, United States Department of Labor, Current Employment Survey. No exceptions.


Saturday, July 1, 2017

The Pathetic Case of Oklahoma Jobs

The Pathetic Case of Oklahoma Jobs

Oklahoma establishment employment reached a monthly average high of 1,677.8 million in 2015, but dropped to 1.652 million jobs in 2016. The annual rate of growth rate since 1990 is 1.2 percent, not great but not bad compared to the national average and other states. From 2000 to 2016 the annual rate of growth dropped to .59 percent, a fifty percent decline. Oklahoma jobs declined during both of the Bush recessions, which came after the first quarter of 2001 and the second recession after the third quarter of 2008. Jobs have recovered but it was 2013 before Oklahoma jobs reached their 2008 level.

Every county in Oklahoma voted for Trump. Since Trump promised jobs that might be one reason. While he has yet to follow through with any more than talk, the problem with Oklahoma jobs shows up in the most glaring fashion over the last four years from 2012 to 2016. Over those four years monthly establishment employment was up a grand total of 38 thousand jobs at a .58 percent growth rate. Downright pitiful.


Goods Production

Goods production includes mining and mining related jobs like oil drilling, construction and manufacturing. Mining had its largest employment in 2014 with 62.1 thousand jobs, but it was still less than 2 percent of statewide establishment employment. It dropped to 44 thousand in 2016. Construction added 7 thousand jobs from 2012 to 2016 while manufacturing employment dropped 7 thousand canceling the construction gains.

To be fair the decline in goods production employment over the last four years comes as part of a long term trend of more than two decades. Since 1990 goods production lost 4.3 percent of statewide employment; since 2000 it lost 2.5 percent. However the entire 2.5 percent loss came in the four years, 2012 to 2016.


The Service Industries with a net job loss from 2012 to 2016

Important parts of the Oklahoma service industry, representing slightly more than 30 percent of statewide employment, did poorly. Service industries did have a few more jobs, although a few services lost jobs over the four year period. The information services lost a thousand jobs. It has publishing including software and Internet publishing, broadcasting, telecommunications, data processing and a few more. The total of Oklahoma financial activities including banking, credit and real estate services added just one thousand jobs.

The combination of professional and business support services had a net increase of a 1 thousand jobs, an especially poor performance for a sector with just over 11 percent of statewide employment in 2012. Professional services has law firms, accounting firms, architecture and engineering firms, computer design and relation services, management and technical consulting services, advertising and related services, but these services added only 3 thousand jobs, which were offset by a loss of two thousand jobs in business support services. Professional services need people with college degree skills, but Oklahoma College graduates will have to leave Oklahoma to find these jobs.

The worst failure to create jobs comes with health care. Over the four year period 2012 to 2016 Oklahoma health care employment increased at an annual growth of .85 percent, when the national average over the same four years was 2.36 percent. Total health care job growth over the four years comes to just 7 thousand new jobs. Slightly less than half the jobs came in services that actually provide patient care: physicians services, outpatient care, hospital services, and nursing and nursing home care. The other half came in social assistance jobs mostly non-profit family services, community food and housing and emergency relief services.

If we combine the 15.1 percent of statewide employment in goods production jobs with the 31.5 percent of statewide jobs in information services, financial activities, business and professional services, private education and health care we have a combined loss of 7 thousand jobs for 46.6 percent of statewide employment.


The Service Industries with a net job gain from 2012 to 2016

The remaining 53.4 percent of statewide employment comes in wholesale and retail trade, leisure and hospitality, repair and maintenance services, personal services, non-profit associations, and government. Wholesale trade was up only a thousand jobs, but retail trade did well among services with 11 thousand new jobs. Transportation and warehousing added 5 thousand new jobs, but modal transportation did poorly: airlines lost a thousand jobs, trucking added only a thousand jobs.

Leisure and hospitality added 17 thousand jobs with 13.3 thousand of these jobs at full service and fast food restaurants. The highest annual growth rate in jobs for any Oklahoma industry over the four years came in full service restaurants: 2.63 percent, more than four times the statewide growth rate.

Repair and maintenance services, and personal services had no new jobs over the four years. Non-profit associations added a little over 4 thousand jobs and government had a net increase of 6.5 thousand jobs. It was a net increase because federal and state government jobs declined while local government employment was up almost 8 thousand job over the four years.


Reality Check

Oklahoma ranks 45th in statewide job growth over the four years 2012 to 2016. While the monthly average increase was only 38 thousand jobs, the two metropolitan areas, Oklahoma City and Tulsa, had 53 thousand new jobs over the four years. That means the rural areas that make up the balance of state employment lost 15 thousand jobs. All of the 7 thousand new health care jobs were in Oklahoma City and Tulsa, the net change in health care in the rural balance of state was zero.

The state legislature has apparently cut state income taxes along with corresponding cuts in services, especially education. Nothing assures Oklahoma residents will return their tax cut to the Oklahoma economy; the poor job performance suggests these funds left the state. The state legislature also had the opportunity to bring in federal dollars with Medicaid expansion offered during the Obama administration. Additional health care spending would create jobs and health services for state residents, especially the rural poor, but the legislature threw them away. Oil exploration creates less than 2 percent of statewide jobs for the environmental dangers it creates.

Just over 45 percent of new jobs over the last four years came in Leisure and hospitality and almost 80 percent of those jobs came in restaurant occupations such as cooks, waiters, waitresses, and combined food preparation and serving workers, including fast food. The later occupation, food preparation and serving workers, has the highest employment of all restaurant and food preparation jobs in the state of Oklahoma, 34,520. That is up from 28,650 in 2012, which equals a 4.77 percent annual rate of growth compared to the .58 percent rate for statewide employment mentioned above. These jobs have a median wage in Oklahoma of $18,080 as reported by the Bureau of Labor Statistics in its Occupational Employment files. It is the lowest median wage of 710 occupations reported for the state of Oklahoma; dead last.

Enough said.

Thursday, June 8, 2017

Oklahoma Republicans Cut School Budgets

Oklahoma Republicans Cut School Budgets

Recently the Washington Post described a deepening budget crisis in the Oklahoma public schools. [Cuts push many Okla. schools to four-day week, WP, 5/28/17] Budget cuts have eliminated funds for art, foreign language, textbooks and cut the school week to four days for 96 of 513 school districts with 44 planning a four day week in the fall.

The hardship comes from deliberate cuts in State income taxes as the article mentions: “School districts staring down deep budget holes have turned to shorter weeks in desperation as a way to save a little bit of money and persuade increasingly hard-to-find teachers to take some of the nation’s lowest-paying jobs.” Republicans have controlled the Oklahoma legislature since 2009 with a Republican governor since 2011. Since then they have cut income taxes and also significantly lowered taxes on oil and gas production to “pay for” education cuts.

Oklahoma teachers do not have some of the lowest paid teachers in the United States, they have the lowest paid teachers in the United States as I found out looking at the Occupational Employment Survey data from the United States Bureau of Labor Statistics.

Oklahoma pre-schoolteachers have a 2016 median wage of $32,240; kindergarten teachers have a median wage of $38,190, elementary teachers $38,830, middle school teachers $40,290 and high school teachers $40,780. There are thirty five states and the District of Columbia that pay high school teachers with a median wage above $50,000 and sixteen states have median wages above $70,000. One Oklahoma elementary school teacher interviewed by the Washington Post earns $39,350 after 18-years in the classroom.

The median wage for elementary school teachers in Oklahoma in 2006 was $34,430. If the median wage increased by the amount of inflation between 2006 and 2016 the wage would be $40,989.96. Instead it was $38,830 as mentioned above, which equals a 5.27 percent decrease in buying power for elementary school teachers. Inflation; silent but deadly.

It gets worse. During the period from 2000 to 2016 the Oklahoma State population increased from 3.4 million to 3.9 million, but the total number of teachers declined. In the year 2000 Oklahoma employed 57,220 teachers. By 2005 it was down to 52,870; by 2010 to 51,450; by 2016 to 48,790.

Private education employment as a percentage of combined private and public school employment for primary, secondary and post secondary education was 18.1 percent of monthly employment in 1990, using Bureau of Labor Statistics establishment data. It has slowly but surely increased to 25.6 percent by 2016, a 7.5 percent increase. Funding cuts for public schools continue as part of a relentless, long term Republican Party campaign to make education a privilege of the rich and the well-to-do. It is the same plan Republicans have for health care.

Every county in Oklahoma voted for Trump. His new Secretary of Education, DeVos, makes a relentless push for school vouchers to allow individuals the choice to pull their property taxes out of the public schools. Vouchers contribute funding to private schools that set tuition as they decide and accept or reject students as they wish. School choice plans and charter schools maintain public funding in the public schools, but vouchers compel the country to concede the Republican Party notion that education has no social or public benefits the wealthy should be expected to support.

Is that what voters and residents want in Oklahoma?

Wednesday, May 10, 2017

Jobs and the repeal of the Affordable Care Act



An economy equals the flow of transactions exchanging goods or services for money. Your weekly purchase of corn flakes supports production, income and employment back through the marketing chain starting with the farmer and ending with the cashier in the grocery store. The total flow of production in billions of transactions equals the Gross Domestic Production.

The million plus college students who take economics every year know the above phrasing as the circular flow of transactions, which brings a warning about the proposed repeal of the Affordable Care Act and Medicaid cuts. They threaten to eliminate billions of dollars of transactions and the production and employment that goes with it.

Make no mistake the recent Republican proposal repeals the Affordable Care Act(ACA) on top of $880 billion of estimated Medicaid cuts. The Obama version of the ACA required all insurers to offer at least one policy based on a national risk pool. A national risk pool spreads risk of illness and injury to everyone and assures no one can be excluded based on any definition of a preexisting condition. The Republican repeal eliminates the national risk pool and eliminates the controls on insurance charges that must go with it. It makes no difference if insurers must offer a policy to those with a preexisting condition if they can in turn charge whatever they want; they just price people out of insurance.

Charges for insurance were controlled under Obama Affordable Care, which the Republican repeal eliminates. Subsidies for the working poor based on income were funded with dedicated taxes, which the Republican repeal eliminates. Instead the Republican repeal offers a federal tax credit that will be useless without controls on charges. The $2,000 will become the minimum charge on the way up to whatever the traffic will bear, and the working poor do not have enough income to use a $2,000 of tax credit anyway.

If we assume the middle class can pay higher premiums for health insurance more dollars going to health care redirects spending and employment away from spending on consumer goods or from industries like leisure and hospitality. However, cuts in Medicaid, a service the working poor cannot afford, eliminate billions in transactions and the employment that goes with it.

Health care employment that includes ambulatory care, hospital care, nursing and residential care facilities, and social assistance services has just over 19 million jobs in the U.S. economy. Since 1990 health care generated 28 percent of new jobs or 9.72 million new jobs out of a total of 34.7 million new jobs. Last year in 2016 health care added 498 new jobs, more than any other industry sector or sub sector.

Leisure and hospitality – arts, entertainment, recreation including gambling, accommodations, food services and restaurants – was second for new jobs with 459 thousand more jobs, except the Trump administration has attacked foreign nationals and threatened foreign travel and tourism dimming the prospects for job growth here. Many of these jobs pay low wages anyway.

A third sector for new jobs came in professional and technical services that added 268.3 thousand new jobs, but well over half of them came in just two sub sectors: computer design and related services and management and technical consulting services. Administrative and support services added 200.3 thousand jobs in addition but over half of these jobs came in temporary help services, and services to buildings, especially landscaping.

A fourth sub sector for job growth was government services that added 194.1 thousand jobs, but almost all of them came at the local government level, much of it in primary and secondary public schools and Republicans attack government everyday.

The four sub sectors listed above accounted for two thirds of America’s new jobs last year with health care and leisure and hospitality by far the biggest gainers. The combined new jobs last year from all jobs in goods production – natural resources, construction, manufacturing - wholesale and retail trade, information services including Internet services, financial services including real estate and rental services, and personal services did not equal new jobs in health care alone. Given the prospects for job growth are limited to two industries and two professional sub sectors it does not appear smart to attack health care employment. That assumes Trump does not want a recession, which could be wrong.

Tuesday, April 25, 2017

Vendetta

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

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

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

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

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

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

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

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

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

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

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

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

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

Tuesday, April 18, 2017

Retail Retrenchments

Retail Retrenchments

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

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

The Short Term

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

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

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

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

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

Long term

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

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

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

Friday, March 17, 2017

Doctrinaire Paul Ryan – True Believer

Doctrinaire Paul Ryan – True Believer

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

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

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

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

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

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

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

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

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

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

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


Wednesday, February 8, 2017

The Trump Job Fantasies

The Trump Job Fantasies

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

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

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

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

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

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