Tag Archives: jobs

Mexicans and Chinese Aren’t “Stealing Our Jobs”, by Bill Bonner

The US government, not the Mexicans and Chinese, are responsible for the drying up of vitality and risk taking, and consequently the job creation, of the economy. From Bill Bonner at bonnerandpartners.com:

GUALFIN, ARGENTINA – Now comes a report from the Financial Times that tells us the nation’s No. 1 industry – homebuilding – has been backing up for a quarter of a century.

According to the newspaper, U.S. homebuilders “started work on the same number of houses in the past year as they did a quarter of a century ago, even though there are 36% more people working as residential builders now than then.”

The report puzzled over the apparent collapse in productivity in the sector.

“Somewhat difficult to believe,” say researchers.

(It’s not so difficult for us to believe… but we’ll get to that in a minute.)

Tremendous Flop

As we’ve written about before, so far, the 21st century has been a tremendous flop.

At least for America.

Economic growth rates have been trending down for 40 years. The number of people with “breadwinner” jobs – as a percentage of the working-age population – is at a 40-year low. And homeownership is back to where it was half a century ago.

There are pockets of prosperity. But get too far from the good neighborhoods and you find dilapidated houses… minimum wages… and drugs.

What happened to all that dazzling new technology from Silicon Valley?

What happened to all that super-duper capital allocation being done by Wall Street – matching young entrepreneurs with trillions of dollars in financing?

And where did all those trillions of dollars in new money – put out by the Fed via its quantitative easing (QE) program – go?

Many are the bogeymen… the fall guys… and the stooges in this spectacle.

Ask around: Some blame the Democrats. Some blame the Republicans. Some blame robots. Most don’t know whom to blame.

To continue reading: Mexicans and Chinese Aren’t “Stealing Our Jobs”

Manufacturing Might Come Back to the US, but Robots will Get the Jobs: Apple CEO, by Wolf Richter

America is producing as much manufactured goods as it ever has, with a lot fewer people. Even if the Trump administration is successful in bringing factories back to this country, it won’t be a jobs boom because such factories will be highly automated. From Wolf Richter at wolfstreet.com:

Robots are the Great Equalizer.

Apple will invest in and promote “advanced manufacturing” in the US, CEO Tim Cook told CNBC’s Jim Cramer on Wednesday after the somewhat uninspiring earnings report. It was one of the ways Apple would create jobs in America, he said. To do that, Apple would put $1 billion in a fund that would invest in “advanced manufacturing” companies.

Apple has already “created two million jobs in America,” he said in the interview. This includes 80,000 jobs at Apple in the US; plus jobs at US suppliers, such as Corning, which makes the glass for the iPhone and iPad, and 3M, which makes adhesives that Apple uses in its devices; plus the “developer community” of almost 1.5 million people who write apps that, as he said, “change the world.”

So to “get more people to do advanced manufacturing in the US,” he said, Apple is setting up a fund, “initially” putting in $1 billion. “We’re announcing it today,” he said. “We’ve talked to a company that we’re going to invest in already.”

This $1 billion would have to be “our US money which we have to borrow to get, which is another whole topic….” Most of Apple’s cash is registered overseas, the result of profits that have not been taxed in the US. Apple’s overseas cash can be and is already invested in the US, such as in Treasury securities, but it cannot be used for capital expenditures or share buybacks in the US without being “repatriated” under the US tax code and thus triggering an income-tax event.

That’s why “comprehensive tax reform is so important to this economy,” he said. Practically everyone agrees on that. Practically no one agrees on how to do it.

By promoting advanced manufacturing in the US, “we can be the ripple in the pond,” he said. “Because if we can create many manufacturing jobs, those manufacturing jobs create more jobs around them because you have a service industry that builds up around them.”

To continue reading: Manufacturing Might Come Back to the US, but Robots will Get the Jobs: Apple CEO

How Many Jobs Do Robots Destroy? Answers Emerge, by Wolf Richter

Robotics may not be a replay of the Industrial Revolution, during which technology created more jobs than it destroyed. From Wolf Richter at wolfstreet.com:

But this isn’t the Industrial Revolution.

How many jobs do robots – whether mechanical robots or software – destroy? Do these destroyed jobs get replaced by the Great American Economy with better jobs? That’s the big discussion these days.

The answers have been soothing. Economists cite the Industrial Revolution. At the time, most humans replaced by machines found better paid, more productive, less back-breaking jobs. Productivity soared, and society overall, after some big dislocations, came out ahead. The same principle applies today, the soothsayers coo.

But this isn’t the Industrial Revolution. These days, robots and algorithms are everywhere, replacing not just manufacturing jobs but all kinds jobs in air-conditioned offices that paid big salaries and fat bonuses.

Just today, BlackRock announced a plan to consolidate $30 billion of their actively managed mutual fund activities with funds that are managed by algorithms and quantitative models. As these software robots take over, “53 stock pickers are expected to step down from their funds. Dozens more are expected to leave the firm,” as the New York Times put it.

“We have to change the ecosystem – that means relying more on big data, artificial intelligence, factors and models within quant and traditional investment strategies,” BlackRock CEO Laurence Fink told The Times.

In a similar vein, “robo-advisors” are becoming a cheap and hot alternative for many customers at major brokerage houses, replacing human financial advisors. A lot of the grunt work that used to be done during all-nighters by highly paid law school grads in big law offices is now done by computers.

So job destruction due to automation is not a blue-collar thing anymore. It’s everywhere. But soothsayers have been steadfastly claiming that for each destroyed job, the Great American Economy will generate more and better jobs, because, well, that’s how it worked during, you guessed it, the Industrial Revolution.

To continue reading: How Many Jobs Do Robots Destroy? Answers Emerge

 

How The Market Creates Jobs (And How Government Destroys Them), by Walter Block

In a free market there’s always scarcity and thus, work to be done, which means unemployment is a matter of choice. Governments have all sorts of ways of imposing non-voluntary unemployment. From Walter Block at mises.org:

The Creation of Jobs
If the media tell us that “the opening of XYZ mill has created 1,000 new jobs,” we give a cheer. When the ABC company closes and 500 jobs are lost, we’re sad. The politician who can provide a subsidy to save ABC is almost assured of wide spread public support for his work in preserving jobs.

But jobs in and of themselves do not guarantee well-being. Suppose that the employment is to dig huge holes and fill them up again? What if the workers manufacture goods and services that no one wants to purchase? In the Soviet Union, which boasts of giving every worker a job, many jobs are just this unproductive. Production is everything, and jobs are nothing but a means toward that end.

Imagine the Swiss Family Robinson marooned on a deserted South Sea island. Do they need jobs? No, they need food, clothing, shelter, and protection from wild animals. Every job created is a deduction from the limited, precious labor available. Work must be rationed, not created, so that the market can create the most product possible out of the limited supply of labor, capital goods, and natural resources.

The same is true for our society. The supply of labor is limited. We must not allow government to create jobs or we lose the goods and services which otherwise would have come into being. We must reserve precious labor for the important tasks still left undone.

To continue reading: How The Market Creates Jobs (And How Government Destroys Them)

 

Does Technology Destroy Jobs? If Not What Does? by Mike Mish Shedlock

If technology destroys jobs, how come, if we are at the most advanced state of technology ever, we are not all unemployed? Perhaps technology creates more jobs than it destroys. That’s not the drift of about 85 percent of the articles on the Internet (the Drudge Report seems to have at least one new scary headline about automation per day), but it’s the truth. From Mike Mish Shedlock at mishtalk.com:

In light of my posts on robots, driverless vehicles, and automation, readers keep asking: where will the jobs come from?

I do not know, nor does anyone else. But does that mean jobs won’t come?

Is technology destroying jobs for the first time?

Daniel Lacalle on the Hedgeye blog offers this bold claim: Face It, Technology Does Not Destroy Jobs.

If you read some newspapers and politicians’ comments, it seems that technology companies are a threat and robots will take your job . The idea is interesting and has populated hundreds of pages of science fiction books that feed on a dystopic view of the future where humans are only an annecdote.

It’s an interesting idea, there’s only one problem. It is a fallacy.

The idea that technology will destroy jobs starts with exaggerated estimates – as always – with the objective of presenting a world in which there must be an intervention – fiscal, of course – from governments, in order to save you from a future that has always been wrongly predicted … But this time it’s different.

The empirical evidence of more than 140 years is that technology creates more jobs than it destroys and that there is nothing to fear of artificial intelligence. Randstad studies show that technology will create more than 1.25 million jobs in Spain alone over the next five years.

Evidence shows us that if technology really destroyed jobs, there would be no work today for anyone. The technological revolution we have seen in the past 30 years has been unparalleled and exponential, and there are more jobs, better salaries.

The best example is the German region of Baviera, one of the parts of the world with a higher degree of technification and robotization, and with a 2.6% unemployment. An all-time low. The same can be said about South Korea, and the world in general.

To continue reading: Does Technology Destroy Jobs? If Not What Does?

 

LinkedIn Job Postings Plunge, “by far the Worst Month since January 2009” by Wolf Richter

The job market is sputtering at the low end, the high end, and all ends in between. From Wolf Richter at wolfstreet.com:

Is the job market for professionals unraveling?

The jobs data in the US has recently taken a nasty spill. Last week it was an ugly jobs report from the Bureau of Labor Statistics. It could bounce off next month, and the current data could be revised higher, but we’re not seeing the signs of this sort of hiring momentum.

Instead, we’re confronted with a sharp and ongoing deterioration of a leading indicator of the labor market: temporary jobs. They rise and fall months ahead of the overall number of jobs. The sector peaked in December 2015 at 2.94 million. It shed 21,000 jobs in May, and 63,800 since December. This is also what happened in 2007 and 2000, at the eve of recessions [read… What Makes this Jobs Report so Truly Ugly?].

This week, it was the Fed’s very own Labor Market Conditions Index which dropped to the worst level since the Financial Crisis, a level to which it typically drops shortly before the onset of a recession – and shortly before employment gives way altogether. It still could bounce off as it had done in early 2003, but it better do so in a hurry:

So now comes LinkedIn, or rather MKM Partners, an equity and economics research firm, with a report in Barron’s about LinkedIn – “While we like LinkedIn’s long-term prospects and believe that sentiment on the company’s opportunity is overly negative, we remain at Neutral on the stock,” it says. Rather than disputing the deterioration in the labor market or throwing some uplifting tidbits into the mix, the report highlights yet another 2009-type super-ugly data point.

LinkedIn has some, let’s say, issues. Its stock has gotten hammered, including a dizzying plunge in February. It’s now down over 50% from its high in February 2015. The company lost money in 2014, 2015, and in the first quarter 2016 despite soaring revenues. And that revenue growth may now be at risk.

But we aren’t concerned about the stock or the company. We’re concerned about that 2009-type super-ugly employment data point.

MKM Partners discussed that data point because it’s worried that investors might misconstrue it as weakness at LinkedIn, rather than what’s happening in the labor market and the overall economy:

We believe that LinkedIn is a unique network, the de facto in Recruiting with promising opportunities in Sales and Learning. We are concerned that the jobs tailwind over the past six-years is becoming a headwind and that any further softness in Hiring revenue would incorrectly be perceived as a TAM (total addressable market) issue vs. a macro issue.

The online jobs data is getting “incrementally worse,” the report explained (emphasis added):

After 73 consecutive months of year-over-year growth, online jobs postings have been in decline since February. May was by far the worst month since January 2009, down 285k from April and down 552k from a year ago.

Online job postings are not a direct revenue driver for LinkedIn. We do however believe it is a reflection of overall hiring activity and should be considered a check on demand vibrancy.

And the report frets that “further deterioration” could trigger a “revenue shortfall” in the second half.

LinkedIn caters to professionals, people with well-paid jobs, or people looking for well-paid jobs. They’re software developers, program managers, petroleum engineers, executives of all kinds, marketing professionals, sales gurus…. They span the entire gamut. And companies use LinkedIn to recruit those folks.

To continue reading: LinkedIn Job Postings Plunge, “by far the Worst Month since January 2009”

The Keynesians Stole The Jobs, by Ron Paul

In the long run, Keynesian economics destroys jobs. From Ron Paul, and ronpaulinstitute.org:

Late last week the markets were shocked by a surprisingly bad May jobs report – the worst monthly report in nearly six years. The experts expected the US economy to add 160,000 jobs in May, but it turns out only 38,000 jobs were added. And to make matters worse, 13,000 of those 38,000 were government jobs! Adding more government employees is a drain on the economy, not a measure of economic growth. Incredibly, there are more than 102 million people who are either unemployed or are no longer looking for work.

Gold reacted to the report quickly and decisively, gaining 2.5 percent to $1,243 per ounce on Friday. Gold mining stocks also saw significant gains on the day.

As recently as late May, there was confident talk about a rate increase when the Federal Reserve meets in June. Transcripts of the Federal Reserve’s April meeting showed that the central bank was seriously considering a June rate hike. With last week’s jobs report and other bad news, that is increasingly unlikely. In fact, citing the weak May employment numbers, Goldman-Sachs is now predicting that there is a zero percent chance of a rate hike in June. Of course they also see this as a temporary blip in an otherwise robust economy, predicting a 40 percent chance of a rate hike in July.

I don’t mean to rain on Goldman’s parade, but there are no miracles between now and July that will propel the economy to where according to their terms a rate hike would be appropriate.

Many will point to the May employment numbers and the weak economy in general and pin all the blame on President Obama. However, Obama is only part of the problem. The real culprit is an economic philosophy shared by both Republicans and Democrats for many decades. It is a belief in the fantasy of effective central economic planning by the Federal Reserve. It is a belief that a central bank can determine better than the free market what interest rates should be. This belief results in mal-investment, spiraling debt, distorted markets, inflation, bubbles, and finally economic depression.

I was not surprised by the lousy May employment numbers. Actually, I am surprised that so many others were surprised. While the “experts” have talked about our “economic recovery” since the crash of 2008, I happen to believe we have been in a recession or even a depression for the past eight years. The government manipulates the statistics to hide how bad the economy really is, until finally a bit of the truth leaks out and everyone seems surprised.

The people sense something is wrong but many don’t fully understand what it is. They have been told that more government spending will stimulate the economy and bring back jobs, and that more tinkering with interest rates will finally produce ideal economic conditions. But the real problem is that there is a cancer out there and it needs to be aggressively treated, not handed an aspirin. What we are seeing is an epic failure of the Keynesians who have tricked so many people into believing that economic interventionism can create a perfect economy. They have mismanaged the economy and I am afraid the worst is yet to come.

To continue reading: The Keynesians Stole The Jobs

And this is When the Jobs “Recovery” Goes Kaboom, by Wolf Richter

From Wolf Richter at wolfstreet.com:

A party pooper showed up.

The future for employment looks bright. The gig economy is firing on all cylinders. The FOMC, in its statement concerning its interest rate decision today, was practically gleeful about employment and where it’s headed:

A range of recent indicators, including strong job gains, points to additional strengthening of the labor market.

The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will continue to strengthen.

Elsewhere, employment has been cited as one of the strong points of the economy. Companies have been hiring and creating jobs by the millions since the Great Recession, bringing total “non-farm employment,” as defined by the Bureau of Labor Statistics, from a low of 129.7 million in February 2010 to 143.6 million in February 2016. That’s nearly 14 million more employed folks!

A lot of them might be part-timers, and there are some with more than one part-time job, and some have been counted twice, and many people are mired in the vast category of the “working poor.” But some sectors in some parts of the country have been booming and adding jobs that pay well, for example the “tech” sector, which includes all kinds of app-companies that are actually just trying to sell something to consumers, such as a craft-brew delivery service or Uber.

Some of these “tech” companies, from startups to broken icons like Yahoo, are running into trouble and are axing jobs, and so some unease has invaded the tech sector, but other “tech” companies are still hiring. And per our most recent employment reports, the party goes on.

But in July 2014, a party pooper showed up. That’s when total business sales in the US peaked, according to Census Bureau data. Since then, total business sales, which include US sales of all companies, not just the largest in the S&P 500, have fallen 5%, to $1.296 trillion in January, about where they’d been two years ago!

This has been confirmed by Corporate America. Revenues of S&P 500 companies, based on their earnings reports as parsed by FactSet, fell 3.6% in 2015.

To continue reading: And this is When the Jobs “Recovery” Goes Kaboom

The Self-Serving Apologists for Student Debt-Serfdom, by Charles Hugh Smith

From Charles Hugh Smith at oftwominds.com:

Mankiw’s claim that college costs are the inevitable result of Baumol’s Disease is pure self-serving rubbish.

Everyone who isn’t blinded by self-interest sees that the cost of higher education in America–and the way we pay for it, by turning students into debt-serfs– is unsustainable. Those benefiting richly from the bloated, ineffective bureaucracy see no alternative, of course; their self-serving handwringing would be laughable if it wasn’t so destructive to the nation and the economy.

Greg Mankiw, professor at Harvard, recently offered up a typical helping of self-serving handwringing: Three Reasons for Those Hefty College Tuition Bills. Mankiw squeezes out a few insincere (but necessary for PR purposes) alligator tears over the soaring costs of a college degree, and then trots out the usual justifications for maintaining the status quo, which just so happens to reward him so well.

Let’s dismantle his bogus justifications one by one.

1. Mankiw predictably trots out the Gold Standard of justifying the absurdly high cost of an often-ineffective and useless college degree: those with college degrees earn $1.5 million more over a lifetime of work than those without degrees.

On the face of it, this offers plenty of justification for $120,000 piles of debt for degrees in Critical Studies, etc.: that extra $1.5 million will easily fund the cost of a 4-year degree.

But this data is completely out of date. Yes, a college degree offered substantial lifetime wage increases back when four years of college cost about as much as a new car, not a new house, i.e. the current cost; but as recent graduates have discovered, a four-year college degree offers little advantage, and substantially underperforms journey-person wages for skilled trades workers such as pipefitters, plumbers, etc.

The exception is of course highly technical degrees in engineering, computer science, biotechnology, etc. But this reality has led to a systemic over-supply of graduates with STEM degrees (science, technology, engineering, math), as the economy does not create paid positions in these fields simply because more people have studied these subjects.

As I often note here (and in my book that proposes a much cheaper and more effective system of higher education, The Nearly Free University and the Emerging Economy: The Revolution in Higher Education), employers can only hire employees if the business will earn a profit from their labor–and opportunities to earn a profit in STEM fields are not as abundant as boosters of the status quo claim.

The economy has changed profoundly and structurally in the past 15 years, and the breezy cliche that a college degree automatically boosts lifetime earnings by $1.5 million is no longer supported by current realities. Just having a college diploma offers little advantage, especially when compared to those with real-world skills. Even those with STEM degrees find themselves in a Darwinian struggle to get a job in these fields, a struggle that forces many to get deeper in debt to secure a Masters or PhD.

But alas, tens of thousands of other under-employed college graduates had the same idea, and the job market is over-supplied with graduates holding Masters and PhDs.

Yes, if a student slaves away for 7 years to secure a PhD in computer security, he/she will likely enjoy multiple job offers. But the number of such positions is vanishingly small in an economy of 140+ million workers.

The reality is a college degree no longer offers the leverage it once did, due to simple supply and demand: millions of other people have degrees now, too, including advanced degrees, and the job market doesn’t create jobs just because people have degrees.

To continue reading: The Self-Serving Apologists for Student Debt-Serfdom

Another Phony Payroll Jobs Number , by Paul Craig Roberts

Month after month the Bureau of Labor Statistics announces the employment statistics, and month after month various alternative internet sites thoroughly dismantle them, casting all sorts of reasonable doubt on their veracity. Month after month the mainstream media takes the numbers at face value, even though they will be “officially” revised several time before they’re put to bed. The points and criticisms of the alternative sites are never acknowledged or addressed. From Paul Craig Roberts at paulcraigroberts.org:

The Bureau of Labor Statistics announced today that the US economy created 271,000 jobs in October, a number substantially in excess of the expected 175,000 to 190,000 jobs. The unexpected job gain has dropped the unemployment rate to 5 percent. These two numbers will be the focus of the financial media presstitutes.

What is wrong with these numbers? Just about everything. First of all, 145,000 of the jobs, or 54%, are jobs arbitrarily added to the number by the birth-death model. The birth-death model provides an estimate of the net amount of unreported jobs lost to business closings and the unreported jobs created by new business openings. The model is based on a normally functioning economy unlike the one of the past seven years and thus overestimates the number of jobs from new business and underestimates the losses from closures. If we eliminate the birth-death model’s contribution, new jobs were 126,000.

Next, consider who got the 271,000 reported jobs. According to the Bureau of Labor Statistics, all of the new jobs plus some—378,000—went to those 55 years of age and older. However, males in the prime working age, 25 to 54 years of age, lost 119,000 jobs. What seems to have happened is that full time jobs were replaced with part time jobs for retirees. Multiple job holders increased by 109,000 in October, an indication that people who lost full time jobs had to take two or more part time jobs in order to make ends meet.

Now assume the 271,000 reported jobs in October is the real number, and not 126,000 or less, where are those jobs? According to the BLS not a single one is in manufacturing. The jobs are in personal services, mainly lowly paid jobs such as retail clerks, ambulatory health care service jobs, temporary help, and waitresses and bartenders.

To continue reading: Another Phony Payroll Jobs Number