Jobs!

The jobs report for February is out and the news is decent. 236,000 net new non-farm jobs and the unemployment rate is down to 7.7%.

While we've still never had the really big job numbers that historically occur in recoveries, this was a good number in terms of beating expectations.

About the only bad news in the report is that last month's job number was revised downward from 157,000 to 119,000, a 24% downward adjustment.

Given that the confidence interval on these initial numbers is something over  + / - 50,000, we shouldn't get too excited or too upset at any single initial job number.

Please to calm down about the minimum wage

As we all know, President O has called for raising the Federal minimum wage to $9.00 an hour. This has caused many of my friends to get fairly upset and argue that this is a bad policy that will raise unemployment.

But....

(1) In truth, we don't really know what the minimum wage does to unemployment. Studies are mixed at best on that issue. It's just not that easy to isolate causal effects here.

(2) We just don't live in a principles of micro world where markets are perfectly competitive and firms have no market power / economic profits, so any wage above an individual's marginal product is impossible to sustain.  Besides the difficulty of identification, this is probably the main reason why it's so hard to find employment effects of minimum wage changes.

(3) A better reason to object to the minimum wage increase is that there are much more efficient ways to help the working poor. It doesn't seem to be well appreciated, but a substantial fraction of workers earning the minimum wage do NOT live in poor households. They are teenagers living at home or second workers in a household. If we wish to aid the working poor, increasing the earned income tax credit (EITC) is a much more effective approach.

(4) It is also good to remember that there are still a lot of jobs out there where the minimum wage does not apply (some classes of young worker, workers who earn tips).

(5)  This is a bit of a stretch but if the higher minimum wage did price someone out of the labor market, perhaps it would propel them into upgrading their human capital, with a GED or some vocational training or community college.

Finally, I'd like to ask my conservative friends to stop making the "if a higher minimum wage is good why stop at $9, why not make it $90 and everyone would be rich" argument.

It's just silly.

Obviously, we could find a minimum wage that would have serious employment effects. But it's not in the $9.00 neighborhood, and no one is proposing even a doubling of the current minimum wage.

If Reid & Pelosi (in 2014 after the Dems take back the House) propose a $20 minimum wage, then I'll join y'all on the ramparts.

Otherwise, let's consider giving it a rest. There are far far far worse policies that are actually in effect which deserve our attention and effort.

On the rebound?

Over at Slate, Matt asks if the "manufacturing rebound" actually happening. He shows a graph of manufacturing employment, reproduced here:

(click the pic for an even more Perk-esque image).

However if we look at output instead of employment, the picture is quite different:

(clic the pic for an even more Chamberlin-ian image)

The amount of stuff we manufacture has recovered in a V like pattern, without adding very many employees. Since the end of the recession, it looks like around a 17% increase in output but only around a 4% increase in employment. Notice that in the last downturn both series fell substantially (17% fall in employment, 19% fall in output) so it's probably not a labor hoarding story that explains the jobless recovery in manufacturing).

So what is manufacturing? The products or the jobs?

Jobs Report!

In January the economy added a net of 157,000 new jobs and the unemployment rate ticked up from 7.8 to 7.9 percent. Just another blah report, right?

Well, no because as is often the case, the news is buried in the revisions to previous months:

The change in total nonfarm payroll employment for November was revised from +161,000 to +247,000, and the change for December was revised from +155,000 to +196,000.

247,000 is a pretty good monthly jobs number and 196,000 is at least semi-respectable.

But this continues to be a horrible "recovery" for employment. We've never really gotten the historically typical run of really big job growth numbers that push employment sharply back up after the recessionary decline, as this chart from Calculated Risk shows:

(clic the pic for an even more sluggish image)

You can see the strongly V shaped pattern of many previous recessions and recoveries and also that the 2001 recession recovery, while anemic, was still much faster than this one.

At this rate we have around 2 more years before employment will recover it's pre-recession peak level.

The Takeaway

In which I try to get happy about the increased employment in the 16-24 age group.

I tried, I really did. It was on The Takeaway.

Expensive But Mandatory Health Care = Unemployment

Is one cause of stubbornly high unemployment... the new health care law?

I say yes, in this interview.

Employment Rate

I had wondered about the employment rate, since it is a better picture of discouraged workers and population changes.

And then I got this in an email from Henry Olsen. Not good.
.

Danish realize extending unemployment benefits bad idea

Really, they did. Check the NYT story.

Money quote: "The cold fact is that the longer you are out of a job, the more difficult it is to get a job,” Claus Hjort Frederiksen, the Danish finance minister, said during an interview. “Four years of unemployment is a luxury we can no longer allow ourselves.”

Darned facts!

Letter to the Editor

A letter to the Editor, shared by KPC friend Douglas Coate:

The roots of Rand Paul's opposition to the 1964 Civil Rights Act as applied to private employers run deep. In English history, back to the Anglos and the Saxons, the Magna Carta, and the common law. In Western civilization the roots run longer, through Roman law, the Babylonian codes, and to the early traders in Mesopotamia. There has always been tension between citizen traders on the one hand and the
state on the other. Merchants have tried to enhance and preserve their wealth by gaining rights to property, contract, and trade, while states have too often tried to expropriate it by denying these rights. The great accomplishments of Western civilization, and now Eastern civilization, have resulted from the spread of these rights and the flowering of trade, cooperation, and specialization.

Fair employment laws or anti discrimination laws are the latest attempt by the state to take wealth from those that create it. By changing the hiring, firing, pay, and promotion decisions of private firms from their profit maximizing levels the state can redistribute wealth to favored groups. But not without consequences. Targeted
firms will have higher costs, some will be driven from business, and all will try to sell their goods at higher prices. Trade, cooperation, specialization, and wages and living standards will suffer.

Private firms if left alone do not discriminate. They hire the best workers they can at prevailing wages. Not to do so would increase their costs, lower their profits, and threaten their existence. Workers themselves become the ultimate arbiters of employer fairness in a market economy, for they can leave one employer for another without notice.

So, what did Rand Paul do wrong? He caved! If he had stuck to his position, he would have at least made people think.

The Onion Has to Stop Publishing

This story is hilarious satire, until it turns out not to be satire at all.

The NYTimes Story

Hold out for a "corporate job", instead of a "dead-end job"?

Angus worked as a welder! I laid sod, worked as a night manager at a Burger Chef (like a Hardees, but not so upscale and fancy) (!) and unloaded boxcars of lumber by hand, in Florida, in the summer. GET OVER YOURSELF, BOY, and get a FREAKIN' JOB!

(Nod to Anonyman)

UPDATE: Les Cargill rightly suggests that I was about 3 seconds from the Four Yorkshiremen skit. And here it is...

Unemployment Benefits

A somewhat dated, but quite interesting, piece on unemployment benefits by KPC friend George Leef. It was published in Regulation, in 1998.

Takeaway: In Which I Play Scrooge

I was on "The Takeaway" this morning. National NPR program. You can listen by clicking "listen" here.

They asked me to do a little blog post, so I did. Call me Scrooge-mael.