MONEY Jobs

Unemployment Rate Falls to 5.9% on Strong Job Growth

The unemployment rate is the lowest since 2008.

The economy added 248,000 jobs in September, the Bureau of Labor Statistics reports, beating analyst expectations and improving significantly over August’s disappointing numbers. The bureau’s last monthly release showed the U.S. only adding 142,000 jobs, the fewest in eight months. Friday’s data could help quell any fears of a worsening employment climate.

Today’s nonfarm payroll report also showed the unemployment rate falling to 5.9%, down from 6.1% in August and the lowest since July of 2008. The labor force participation rate — the percentage of the workforce that is either employed or actively looking for work — remained mostly static at 62.7% as older Americans continue to drop out of the work force. The unemployment rate has dropped by 0.7% in 2014, but still remains about 1.5 percentage points higher than its pre-crisis lows.

 

Despite an increase in hiring, average hourly earnings did not budge. Wages growth was static in September, and hourly wages have increased just 2% over the year.

Economists and investors have been closely watching monthly jobs numbers, partly to glean insight into when the Federal Reserve will begin to raise interest rates. Fed chair Janet Yellen has made employment growth a key factor in determining monetary policy, and repeatedly cited labor market slack as a reason for keeping rates at historic lows. However, as MONEY’s Taylor Tepper notes, Yellen is unlikely to raise interest rates in the near future due to inconsistent employment numbers and concerns over a shaky global economy, particularly in Europe.

MONEY’s Pat Regnier points out that while consumer spending has largely recovered since the housing crash, construction and government spending has not. Until public spending begins to return to pre-recession levels, job growth may continue to be especially sluggish. September showed little increase in government spending.

TIME Workplace & Careers

1 in 5 U.S. Workers Say They Were Laid Off in Last 5 Years: Poll

New York Job Fair Offers Services For Chronically Unemployed
People stand in a line that stretched around the block to enter a job fair held at the Jewish Community Center (JCC), on March 21, 2012 in New York City. John Moore—Getty Images

Total of 30 million say they received pink slips since 2009

One in five American workers say they have lost their jobs at some point within the last five years, according to a new survey that reveals that the recession, which technically ended in 2009, has continued to rattle the labor market.

The survey findings, released by Rutgers University’s John J. Heldrch Center for Workforce Development, exposes the lingering costs of lay-offs, both for those who cannot find work and those who have. Nearly 4 out of 10 laid-off workers say they spent more than seven months searching for a new job and nearly half of those who managed to find work said their new job was a step lower on the payscale.

Regardless of employment status, two-thirds of all adults in the survey say the recession negatively impacted their own standard of living, but the workers that took the hardest hits to income and savings were those who had been unemployed for a period longer than 6 months, whose struggles the authors called “among the most persistent, negative effects of the Great Recession.”

 

MONEY Millennials

10 Places Millennials Are Moving For Bigger Paychecks

140918_CAR_MillennialsMove_NewOrleans
With 5.1% unemployment and low-priced homes, New Orleans is a top town for millennials. John Coletti—Getty Images

Over the past five years, Gen Yers have decamped for some surprisingly pricey cities in search of a higher-paying job.

Millennials are on the hunt for high-paying jobs, and they’re moving to some unexpected places to find them, according to a new report out today.

Bruised by the rough post-recession job market, Gen-Yers are moving from lower-cost cities to places with a higher cost of living but more plentiful and lucrative jobs, a RealtyTrac analysis of Census data from 2007 through 2013 found.

“Millennials are attracted to markets with good job prospects and low unemployment, but that tend to have higher rental rates and high home-price appreciation,” says Daren Blomquist, vice president of RealtyTrac. “It’s a tradeoff.”

In the 10 U.S. counties with the biggest increase in millennials, the average unemployment rate is 5.2%, well below the national average of 6.1%. The average household income is $62,496, vs. $51,058 nationally. The median home price is $406,800 (nearly double the U.S. median of $222,900), while a three-bedroom apartment rents for $1,619 a month on average, just over the national average of $1,550.

Riding the robust job market in the D.C. area, two counties in Northern Virginia with unemployment rates below 3.7% top the list. But not all places that the 69-million-strong millennial generation are flocking to are expensive. New Orleans, where the median home price is $140,000, edged out San Francisco, where tech jobs may be plentiful but the median home price is nearly $1 million.

New Orleans, where the unemployment rate is 5.1%, is a transportation center with one of the busiest and largest ports in the world, as well as tons of jobs related to the local oil refineries. Denver, Nashville, and Portland, Ore., all top 10 areas, offer median home prices below $300,000 and a diversity of jobs in technology, health care, and education.

Perhaps the most surprising millennial magnet: Clarksville, Tenn, the fifth largest city in the state behind Nashville, Memphis, Knoxville, and Chattanooga. Forty five miles north of Nashville, it benefits from spillover from that city’s strong job market, but Clarksville also has its own industrial base, plus nearby Ft. Campbell and Austin Peay State University. The unemployment rate: 4.7%.

Here are RealtyTrac’s top 10 destinations for millennials on the move:

Rank County State Metro Area % Increase in Millennial Population, 2007-2013 Milennials % of Total Population, 2013 Median Home Price, April 2014 Average Monthly Apartment Rent (3 beds), 2014
1 Arlington County Va. Washington, DC 82% 39% $505,000 $1,996
2 Alexandria City Va. Washington, DC 81% 34% $465,000 $1,966
3 Orleans Parish La. New Orleans 71% 30% $140,000 $1,190
4 San Francisco County Calif. San Francisco 68% 32% $950,000 $2,657
5 Denver County Colo. Denver 57% 33% $270,000 $1,409
6 Montgomery County Tenn. Clarksville 46% 31% $128,000 $1,016
7 Hudson County N.J. New York 44% 31% $330,000 $1,643
8 New York County N.Y. New York 43% 32% $850,000 $1,852
9 Multnomah County Ore. Portland 41% 28% $270,000 $1,359
10 Davidson County Tenn. Nashville 37% 29% $160,000 $1,131
MONEY Economy

The Real Reason Jobs Are So Slow to Come Back

Garden snail
Daly and Newton—Getty Images

It's not tax rates, or too much regulation, or college kids majoring in art history instead of computer science. This is a global slowdown.

Jobs growth has been frustratingly slow in this recovery. The headline unemployment rate is down to 6.1%, but there’s still a lot of slack in the labor market. Wages are stagnant, long-term unemployment is strikingly high, and an unusually large number of Americans are so discouraged about their prospects that they’ve stopped looking for work.

So what’s holding us back from a full recovery? Maybe taxes are too high. Or perhaps regulation is holding us back. Or too many people are going on disability. Or maybe—this theory is especially popular now—there’s something wrong with the workforce we have. Too many liberal arts majors, not enough welders and truckers and computer scientists.

The problem with those theories is that they are way too local. The jobs shortfall isn’t just an American thing—it’s global. Earlier this week, the World Bank released a report on jobs in the “G20″ group of major world economies. Missing jobs and stagnant wages is a story all around the world. Here’s a snapshot from the report, showing how far below the pre-crisis trend jobs growth has been:

Screen Shot 2014-09-11 at 4.58.17 PM
SOURCE: World Bank

So what is it that’s holding almost everyone back? The World Bank chalks it up to a weak “aggregate demand”—but that only gets us halfway to an answer. What’s harder and more controversial is figuring out why demand for goods and services, which is what ultimately convinces employers to hire, has been so sluggish. One possibility is that consumers are too nervous to kick-start a virtuous cycle, where they buy more and thus spur more production and more hiring. The report notes that consumers around the world found themselves mired in debt after the crash, and that the growth in their income has been disappointing. In advanced economies, the share of GDP that goes to employee pay and benefits has declined substantially.

Screen Shot 2014-09-11 at 4.53.46 PM
SOURCE: World Bank

But to bring the story back home to U.S., at least, the anxious consumer alone isn’t a good enough answer anymore. As economist Brad DeLong points out here, consumption in the U.S. isn’t actually down by that much. What is down, he says, is construction and government spending. And on government spending, what’s true in the U.S. has been true with a vengeance in Europe, where policymakers have pursued government austerity policies.

Rethinking education, or how we train the workforce, or tax policy, or regulations might very well help economic growth in the long run. Finding some way to boost the mood of consumers couldn’t hurt, either. But the big-picture view suggests a deeper problem. The economic crisis blew a massive hole in the global economy. And more than five years later, the evidence is mounting that governments around the world just did too little, too late to help mend the gap.

TIME Economy

A Global Jobs Crisis Is Coming, Says World Bank

And a new report says there’s no immediate solution in sight for the problem

We are heading for a global jobs crisis, says the World Bank, warning that 600 million new jobs would have to be created by the year 2030 just to keep up with current levels of population growth.

A study released by the organization Tuesday at the G-20 Labor and Employment Ministerial Meeting in Australia indicates there are currently over 100 million people unemployed and around 447 million that live on less than $2 per day across G-20 member nations, reports Agence France-Presse.

“As this report makes clear, there is a shortage of jobs — and quality jobs,” said Nigel Twose, the World Bank’s senior director for jobs. He warns that although progress had been made in emerging economies like Brazil, China and South Africa, wage and income inequality continues to widen in several G-20 countries.

“There is no magic bullet to solve this jobs crisis, in emerging markets or advanced economies,” Twose said, adding that the creation of enough jobs to sustain the growing population calls for “a whole of government approach cutting across different ministries, and of course the direct and sustained involvement of the private sector.”

[AFP]

MONEY temps

Why Your Colleague Has the Same Boss, but a Different Employer

Temp nameplate
Jeffrey Coolidge—Corbis

As the economy recovers, companies are hiring more "temporary" workers who aren't all that temporary.

When Americans get back into the office after Labor Day weekend, they’ll probably see fewer empty cubicles than they have in recent years. New jobless claims have been falling, and as of May there are more people working than there were in early 2008, before the downturn.

But some of those people sitting next to you, or chatting with you by the coffee machine, might be working for a different company.

According to the Bureau of Labor Statistics, an estimated 2.9 million Americans work in the “temporary help services industry.” That means that while they show up at the office of one employer, they really work for the staffing agency that signed their contract.

Of course, “temps” are nothing new. Companies—especially in white-collar industries—have been hiring temporary workers since the 1950s, often for specialized tasks for a short period of time. But today, some “temporary” employees do the exact same tasks as permanent employees, and they stick around for a lot longer.

“‘Temp’ is kind of a misnomer,” says Catherine Ruckelshaus, general counsel and program director at the National Employment Law Project, a liberal advocacy group. “Staffing companies are acting like human resource departments. They’re placing permanent slots, if not permanent workers.”

The number of temp jobs really began to balloon in the early 1990s. And since temps are easy to hire and easy to fire, they’ve borne the brunt of the booms and busts of the last 25 years. Temps were hit particularly hard during the recession of the early 2000s. “More than 25 percent of all jobs lost during that period were in temporary help services, despite their accounting for less than 2 percent of total employment,” according to the BLS.

“Whenever there’s a recession, temp and staffing trails off early and picks up in the beginning as the jobs start to come back,” Ruckelshaus says. “Oftentimes employers start to fill up their payroll with temp and staffing jobs as opposed to permanent positions.”

temporary help

That’s exactly what has happened since late 2009. “It’s a little bit early to tell if that’s a long-term trend or if that’s a normal bubble,” Ruckelshaus adds.

Increasingly, blue collar industries like janitorial services, warehouse and logistics, and home care have started to make use of contract workers. So have white collar industries like legal services, accounting, records processing, and media. (Some journalists at Time Inc., which publishes this site, are employed by an outside staffing company.)

What’s in it for companies? They like the flexibility—which is another way of saying easy-to-hire, easy-to-fire. Research suggests that temps are generally paid less, get fewer benefits and face more health and safety violations than direct hires.

In a new case before the National Labor Relations Board, a union argues that a subcontractor relationship has weakened its collective bargaining power. Browning-Ferris Industries gets some of its workers at a recycling facility though Leadpoint, a temporary staffing company. The union wants both companies to be considered those workers’ employers. The case could change the way NLRB evaluates “joint-employer” relationships, the Wall Street Journal reports.

Even so, it’s unlikely to mean that employers will stop using outside staffing—at least not until the job market is strong enough for potential employees to demand a less “flexible” arrangement.

Related:
If Jobs Are Back, Where’s My Raise?
If You’re Looking for Work, the Outlook Is Brightening
5 Ways to Speed Up Your Job Search This Fall

TIME White House

Biden Celebrates Labor Day With Call For ‘Fair Wage’

A job's about a lot more than a paycheck. It's about your dignity, it's about your place in the community, it's about who you are."

Vice President Joe Biden celebrated Labor Day with a call for a “fair wage” at a union rally for workers in Detroit on Monday.

“Folks, the middle class is in real trouble now,” Biden said to an enthusiastic crowd. “A job’s about a lot more than a paycheck. It’s about your dignity, it’s about your place in the community, it’s about who you are.”

Biden’s 20-minute speech employed a populist and personal tone as he took on everything from the estate tax to American corporations that have moved operations overseas.

Biden, who is known for his blue collar roots, referenced his family roots and his ties to labor.

“‘Joey, you’re labor from belt buckle to shoe sole,'” Biden said his uncle told him.

 

TIME Education

Here Are the Crucial Job Skills Employers Are Really Looking For

483636127
Tom Merton—Gety Images

'Soft skills' like professionalism and oral communication rank among the most valued, regardless of education level

Labor Day offers an opportunity for politicians and economists to offer their two cents on the state of labor. It’s a good bet that some of that commentary will focus on the so-called “skills gap” — the notion that millions of jobs in highly technical fields remain unfilled while millions of Americans without those skills remain unemployed.

The solution according to the pundits? Education and training that focus on technical skills like computer engineering, or on crucial but scarce skills like welding. Match these newly trained employees with open jobs that require those skills and, voila, the skills gap is gone — and the labor market is steadied.

If only it were so simple.

Yes, more American workers need to learn skills that are underrepresented in the labor market. And yes, those technology titans who advocate for more challenging school curricula, for greater funding for science and engineering education and for immigration reforms to bring more skilled workers are responding to a real problem. But that’s not all there is to it. The problem with the skills gap argument is that it accounts for only one set of skills that employers consider important.

I work at Books@Work, a non-profit organization that brings university professors to the workplace to lead literature seminars with employees. The employers with whom we work want to provide professional development opportunities for all members of their organizations, and — we like to think — are more creative in their approach to doing so than most. Yet even this group of employers has few ways of helping their employees to develop skills that aren’t about content or subject matter — skills like communication, critical thinking, creativity, empathy and understanding of diversity.

Such skills cut across sector, hierarchy and function – and are, according to employers, crucial to the success of their companies. According to research conducted by the Association of American Colleges and Universities (AACU), 93 percent of business and non-profit leaders who were surveyed consider critical thinking and communication skills to be more important than a person’s undergraduate major when it comes to hiring.

That’s bad news because, while many public programs try to bridge gaps in the knowledge of future workers, there are few programs to address the gap in skills that are more difficult to measure, like creativity and critical thinking. My colleagues and I often hear from hiring managers who are hungry for programs that will encourage their employees (at all levels of the organization) to think more creatively, communicate more effectively and become more adept at reacting to changing circumstances.

The gap in these “soft” skills is very real. Professionalism/work ethic, teamwork/collaboration, and oral communication rank among the top five skills valued by employers hiring candidates at any educational level, according to one study. Yet employers rank significant portions of those entering the workforce deficient on all these dimensions. The problem is particularly acute among those without a college degree. Employers rate those entering the workforce with a high school degree deficient on professionalism/work ethic, critical thinking/problem solving, and oral communication. Meanwhile, employers do not regard a majority of college graduates deficient in any of these areas.

The introduction at the K-12 level of the Common Core, which is supposed to emphasize critical thinking and problem solving, may produce changes in these figures in the years to come. But for now, those without access to a university education — and even some workers with college degrees — enter the workforce lacking the interpersonal, reasoning and thinking skills necessary for success. Unlike direct knowledge areas — like computer basics — that can be taught through employer training sessions, there is no set curriculum for critical thinking or applied reasoning.

There is no silver bullet for addressing this gap, though our approach at Books@Work, having employees read literature and reflect on it, is one example of an attempt to disseminate some of the benefits of a liberal arts education beyond the confines of the traditional university setting. We need many more such efforts. In discussing Macbeth or Frankenstein, workers explore complex (and timeless) interpersonal dynamics — an opportunity that a training on the latest operating system or review of safety regulations is unlikely to provide.

We’ve found that reading literature with colleagues can offer a new perspective on the practice of work itself, leading to greater professionalism and new ways of doing things. Themes of empathy in a powerful novella by May Sarton, As We Are Now, which is about a woman in a terrible nursing home, led workers in one hospitality company to reconsider their approach toward customers, resulting in a renewed awareness of customer needs and expectations. A conversation about the racial tension in the post-war Northwest in David Guterson’s Snow Falling on Cedars became a platform to discuss personal integration issues in a company growing rapidly through acquisition and organizational acculturation.

Programs like Books@Work are not an adequate substitute for public policy solutions to the gap in thinking and interpersonal skills. We do not address disparities in such skills among job applicants — only among those who are hired. And they place the burden for addressing the problem squarely with employers. But programs that address the significant divide in soft skills are a first step toward realizing that solving the so-called skills gap requires more than teaching kids to code, retraining the unemployed as welders or encouraging college dropouts to complete technical degrees. We all need to continue to improve the most important skill of them all – our thinking.

Rachel Burstein, Ph.D. is Academic Director at Books@Work. This piece originally appeared at Zocalo Public Square.

MONEY Jobs

If Jobs Are Back, Where’s My Raise?

Empty pockets of businessman
Dude, where's my raise? Jeffrey Coolidge—Getty Images

Despite good jobs numbers, wages aren't growing much. The reason why is the biggest debate in economics right now

Today’s strong jobless claims data, which show that applications for unemployment benefits dropped again, is one reason to be cheerful heading into the Labor Day weekend.

Yet despite this, and the fact that the unemployment rate is now down to 6.2%, the economy still has this glaring weak spot: Workers aren’t getting serious raises.

Here’s how two important measures of wage growth have done since the recession. (The Brookings Institution keeps a running tab of these and other key economic indicators in the excellent interactive graphic here.)

fredgraph

Basically, what you are seeing is that pay to workers, whether measured as hourly wages or salaries plus benefits, has been running neck-and-neck with inflation of a bit under 2%. As Fed chair Janet Yellen pointed out in her recent speech at a Fed symposium in Jackson Hole, Wyo., wages are also growing less than workers’ productivity.

Why is this happening? Yellen, for one, likely thinks there’s some remaining “slack” in the economy. Employers are still wary about whether there’s growing demand for their stuff, and so they remain slow to hire. The low unemployment figures leave out a large number of workers who have become discouraged after a long time out of work. But if the slack explanation is right, as companies continue to hire, more of those labor-force dropouts will be drawn back into the employment pool. You won’t see companies under serious pressure to raise wages until that process has played out and companies start competing for a scarcer pool of job-seekers.

Yellen points to (though doesn’t endorse) another possible explanation. Many economists believe wages are downwardly “sticky”—even when companies want to cut costs, they’d rather lay people off than reduce the pay of the people they hang onto. That means that for people who kept working after the recession, wages were higher than they’d otherwise be. And now that the economy is (fitfully) coming back, maybe that means there’s also less room for wages to rise.

Another factor, of course, is that both corporate managers and workers are human, and people can take some time to adjust to new economic signals. Back in July, I sat down with a stock fund manager, who talked about what he was seeing going on at the companies he kept in touch with. More than five years after the financial crisis, he said, the corporate culture among top managers had changed. The people in the C-suite got their positions not by expanding their companies and finding great new hires, but by cutting costs. And they got used to a slack labor market. The manager used the specific example of truckers: You always know you can get a guy to drive a truck from your warehouse to your customer on a moment’s notice. So why worry about hiring more truckers?

As it happens, at the New York Times Upshot blog earlier this month, Neil Irwin wrote that this may be changing. A trucking company called Swift told investors it was having hard time finding enough drivers. The company says the problem is that there aren’t enough skilled people, but Irwin wonders if the problem is really that companies just aren’t paying enough. Trucker pay has fallen, in real terms, over the past decade. Irwin writes:

The most basic of economic theories would suggest that when supply isn’t enough to meet demand, it’s because the price—in this case, truckers’ wages—is too low. Raise wages, and an ample supply of workers should follow…. But corporate America has become so parsimonious about paying workers outside the executive suite that meaningful wage increases may seem an unacceptable affront.

The question now is, how strong does the economy have to get before employers are forced to change their thinking?

Related:
If You’re Looking for Work, the Outlook is Brightening
Why the Fed Won’t Care About Higher Prices Until You Get a Real Raise
What’s the Deal With America’s Declining Workforce?

MONEY Federal Reserve

The Big Takeaway From Yellen’s Speech. It’s About Jobs

At Jackson Hole, Yellen is greeted by demonstrators who want the Fed to push for more jobs John Locher—AP

Fed Chairman Janet Yellen says the weak economy has room to improve. But many Americans may never get back to work.

Federal Reserve chairm Janet Yellen gave a much-anticipated speech at the Fed’s annual Jackson Hole, Wyo. symposium Friday. The transcript isn’t exactly beach reading. Fed officials, wary of spooking antsy stock and bond traders, can be almost maddeningly obscure. But anyone who’s following the stock market — or looking for a job — should pay attention.

Five years after the financial crisis, the Federal Reserve is still taking extraordinary measures to prop up the economy, including buying up bonds and holding interest rates near zero. Those measures can spur growth as long as the economy isn’t running at full capacity. But once it is, the fear is that they can spur too much inflation.

Officials at the Fed, including the presidents of the regional banks and members of the committee that sets rates, are split into two broad camps. Inflation “hawks” believe it’s time to start weaning the economy from aid. “Doves” favor continued intervention. Earlier this week the release of the minutes of a Fed meeting in late July showed the hawks pressing their point, emphasizing that the economy was improving and raising questions about whether the much-anticipated return to normal interest rates should begin.

Yellen is widely considered a dove. That means on Friday Fed watchers were looking for signs she might be trying to rebut the argument that the economy is running near full tilt. In the event, she seemed to give ammunition to both hawks and doves.

Here are the speech’s highlights:

Yellen starts off both cheering the recovery and reminding us how far we may still have to go.

The unemployment rate, at 6.2 percent in July, has declined nearly 4 percentage points from its late 2009 peak. Over the past year, the unemployment rate has fallen considerably, and at a surprisingly rapid pace. These developments are encouraging, but it speaks to the depth of the damage that, five years after the end of the recession, the labor market has yet to fully recover.

That’s pretty dovish.

But in the bulk of her speech she explains reasons why it’s hard to get a read on the labor market, starting with the fact so many people have been out of work for so long.

Consider first the behavior of the labor force participation rate, which has declined substantially since the end of the recession even as the unemployment rate has fallen. As a consequence, the employment-to-population ratio has increased far less over the past several years than the unemployment rate alone would indicate, based on past experience. For policymakers, the key question is: What portion of the decline in labor force participation reflects structural shifts and what portion reflects cyclical weakness in the labor market?

That’s subtly hawkish. Here’s why: Usually, when the unemployment rate falls more people start looking for work. This time that hasn’t happened to the extent one might expect. The worry is, if there’s a big group of workers who just aren’t going to come back into the work force—because they are just too discouraged, or they don’t have the skills for the current jobs on offer, or maybe because they’ve been replaced by new technology—then maybe there isn’t as much “slack” in the economy as the low participation numbers suggest. Even with a comparatively high number of people working, employers could start to feel pressure to raise wages (creating inflationary pressures) to attract and retain the workers who’ve stayed in the labor force.

Yellen doesn’t answer whether this “structural” worry is justified, but she does flesh out the problem further.

….the rapid pace of retirements over the past few years might reflect some degree of pull-forward of future retirements in the face of a weak labor market.

Translation: Many baby boomers who lost their jobs may simply have decided to retire, rather than seek to reboot their careers.

But then Yellen goes a bit dovish again. She points out that wage growth has in fact been sluggish. That suggests at least some extra slack.

Over the past several years, wage inflation, as measured by several different indexes, has averaged about 2 percent, and there has been little evidence of any broad-based acceleration in either wages or compensation.

In other words, the Fed is still playing wait-and-see. For investors, that suggests more of the fairly bullish status quo: low rates and a slow unwinding of the “quantitative easing” bond-buying program. For people hoping for the job market to come roaring back, the Yellen’s speech sounds a somewhat discouraging note. It suggests that the economy could have shifted into a permanently slower mode, with fewer jobs. Or, at any rate, that there are many at the Fed who are willing to live with that to ensure inflation stays low.

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