America is the world’s largest economy, and yet many American companies are moving jobs and factories overseas.
Why do large companies based in the U.S. often move jobs and new factories overseas? Because our current tax system often makes doing business in America a losing proposition compared to expanding internationally. So, just how much more expensive is it to build that next factory or hire that next worker in America?
James Pethokoukis: Does Lower Labor Force Participation Mean the 5% US Unemployment Rate is a Phony Number?Posted: December 9, 2015
James Pethokoukis writes: The current 5% unemployment rate is half its worst level of the Great Recession. But the jobless rate would be 10.1% if the labor force participation rate — which feeds into the unemployment rate — were back at pre-recession levels. So what is the “real” unemployment rate? The other day, I quoted a new Goldman Sachs study on the LFPR issue:
What about the 3.6pp decline in the labor force participation rate since 2007? While it’s true that the unemployment rate would be much higher if participation had remained stable, we now believe most of the decline since that time should be considered structural. By far the largest contribution to the decline in participation has been an increase in retirees—mostly a natural consequence of the aging of the workforce. Rising disability rates—a trend mostly driven by demographics—and a tendency for young people to remain in school have also played a role.The remaining cyclical component is a relatively modest share of the labor force, and broadly captured by the U6 unemployment rate, in our view.
And n0w the San Francisco Fed offers a similar perspective:
First is the aging of the population. The baby boomers are entering retirement and people are living longer. Remember, the participation rate counts everyoneover 16, so my happily retired parents count as “out of the labor force,” even though, in their 80s, few people would still be working. Second is that younger people aren’t working as much as they used to. But this is partly because many have extended their education or gone back to school, and fewer are working when they’re there. Third is an increase in people deciding they’d rather have single-income families (Bureau of Labor Statistics 2007–2014). For whatever reason, they’ve traded a second paycheck for spending more time at home, whether it’s for child care, leisure, or simply that it’s a better lifestyle fit. Each of these groups is made up of people who are not working, but doing so for personal or demographic reasons. As their numbers swell, it will, obviously, push the participation rate down.
As for the area of concern, we’re emerging from the deepest, longest recession since the Great Depression. And it’s true that a lot of people did give up looking for work. A key indicator is the somewhat unfairly named “prime-age males” cohort, who are 25–54. This group has historically been a constant in the American workforce, but in the wake of the recession, its participation fell sharply. However, as the labor market has improved, that number has largely stabilized over the past two years, as has the overall participation rate.
The last factor to consider is whether there are people who will reenter the labor force and pull the participation rate back up. The “marginally attached” for instance, a group made up of people who are ready and able to work and who’ve searched for jobs in the past year but who aren’t currently looking. The assumption would reasonably be that this group is poised to return to the labor force. First off, these numbers have come down a lot, falling by over 12% in the past year alone. In addition, my staff has found that, over the past few years, their reentry rate back into the labor force has actually fallen. When you combine this with the aging workforce, it looks unlikely that participation will rise. This is supported by other research from both within and outside the Fed System (Stephanie Aaronson et al. 2014 and Krueger 2015). Overall, the evidence suggests that, even with a quite strong economy, we won’t see a significant number of people come back into the fold.
One can only wonder why the president continues to overlook the American businessmen and women who build the healthy economy that enables workers to find jobs and careers.
Andy Puzder writes: In his remarks at a White House event last week called the Summit on Worker Voice, President Obama said that people who work hard “should be able to get ahead” but went on to acknowledge that workers are “seeing their wages and their incomes flatlining.”
“Here’s the reality: Wages and incomes for workers are stagnant because there aren’t enough jobs…When the job market is strong and businesses must compete for employees, wages and benefits improve. The solution, then, is more jobs. This isn’t rocket science.”
The reason, according to Mr. Obama, is dwindling union membership. “Union membership today is as low as it’s been in about 80 years, since the ’30s,” he said. “And I believe that when folks attack unions, they’re attacking the middle class.” Thus he recommends “making it easier, not harder, for folks join a union.”
“Businesses create jobs; labor unions do not. To the contrary, labor unions often discourage businesses from creating jobs, particularly entry-level ones, by increasing the cost of labor without increasing its value.”
Here’s the reality: Wages and incomes for workers are stagnant because there aren’t enough jobs. It’s a matter of supply and demand. When jobs are scarce and people are unemployed, wages and benefits decline. When the job market is strong and businesses must compete for employees, wages and benefits improve. The solution, then, is more jobs. This isn’t rocket science. One can only wonder why the president continues to overlook the American businessmen and women who build the healthy economy that enables workers to find jobs and careers.
Businesses create jobs; labor unions do not. To the contrary, labor unions often discourage businesses from creating jobs, particularly entry-level ones, by increasing the cost of labor without increasing its value. Even if labor unions could magically lift wages for those lucky enough to have a job in this economy, what about the unemployed?
In September the labor-force participation rate—the percentage of Americans employed or actively looking for work—continued its decline under Mr. Obama, hitting 62.4%, a low last seen 38 years ago during the Carter administration. Read the rest of this entry »
Since the recession ended in June 2009, the economy has advanced at a 2.2% annual pace through the end of last year. That’s more than a half-percentage point worse than the next-weakest expansion of the past 70 years, the one from 2001 through 2007.
Eric Morath reports: The economic expansion—already the worst on record since World War II—is weaker than previously thought, according to newly revised data.
From 2012 through 2014, the economy grew at an all-too-familiar rate of 2% annually, according to three years of revised figures the Commerce Department released Thursday. That’s a 0.3 percentage point downgrade from prior estimates.
The revisions were released concurrently with the government’s first estimate of second-quarter output.
“While there have been highs and lows in individual quarters, overall the economy has failed to break out of its roughly 2% pattern for six years.”
Since the recession ended in June 2009, the economy has advanced at a 2.2% annual pace through the end of last year. That’s more than a half-percentage point worse than the next-weakest expansion of the past 70 years, the one from 2001 through 2007. While there have been highs and lows in individual quarters, overall the economy has failed to break out of its roughly 2% pattern for six years.
The latest revision, however, did significantly upgrade what was seen as a historically wretched winter of 2014.
The output reading for the first quarter of last year was recast to a 0.9% contraction instead of a 2.1% annualized drop. The prior figure represented the worst contraction on record outside of a recession. The new number isn’t even the worst quarterly contraction of the expansion. GDP declined at a 1.5% annual pace in the first quarter of 2011. Read the rest of this entry »
A groundbreaking online-spying case unearths details that companies wish you didn’t know about how vital information slips away from them
David Talbot writes: On a wall facing dozens of cubicles at the FBI office in Pittsburgh, five guys from Shanghai stare from “Wanted” posters. Wang Dong, Sun Kailiang, Wen Xinyu, Huang Zhenyu, and Gu Chunhui are, according to a federal indictment unsealed last year, agents of China’s People’s Liberation Army Unit 61398, who hacked into networks at American companies—U.S. Steel, Alcoa, Allegheny Technologies (ATI), Westinghouse—plus the biggest industrial labor union in North America, United Steelworkers, and the U.S. subsidiary of SolarWorld, a German solar-panel maker. Over several years, prosecutors say, the agents stole thousands of e-mails about business strategy, documents about unfair-trade cases some of the U.S. companies had filed against China, and even piping designs for nuclear power plants—all allegedly to benefit Chinese companies.
“We must pay the cost of security, which is inconvenience.”
It is the first case the United States has brought against the perpetrators of alleged state-sponsored cyber-espionage, and it has revealed computer-security holes that companies rarely acknowledge in public. Although the attackers apparently routed their activities through innocent people’s computers and made other efforts to mask themselves, prosecutors traced the intrusions to a 12-story building in Shanghai and outed individual intelligence agents. There is little chance that arrests will be made, since the United States has no extradition agreements with China, but the U.S. government apparently hopes that naming actual agents—and demonstrating that tracing attacks is possible—will embarrass China and put other nations on notice, inhibiting future economic espionage.
“The e-mails were cleverly designed. They purported to be from colleagues or board members, with subject lines relating to meeting agendas or market research, but they delivered malware by means of attachments or links.”
That may be unrealistic. Security companies say such activity is continuing, and China calls the accusations “purely ungrounded and absurd.” But there’s another lesson from the indictment: businesses are now unlikely to keep valuable information secure online. Whatever steps they are taking are not keeping pace with the threats. “Clearly the situation has gotten worse, not better,” says Virgil Gligor, who co-directs Carnegie Mellon University’s computer security research center, known as CyLab. “We made access to services and databases and connectivity so convenient that it is also convenient for our adversaries.” Once companies accept that, Gligor says, the most obvious response is a drastic one: unplug.
Fracking and hacking
Sitting at a small conference table in his office in the federal courthouse in Pittsburgh, David Hickton, the United States attorney for western Pennsylvania, opened a plastic container he’d brought from home and removed and peeled a hard-boiled egg for lunch. Although we were discussing an investigation involving global players and opaque technologies, the homey feel of our meeting was apt: the case had many roots in close-knit business and political circles in Pittsburgh. Hickton showed me a framed photo on a shelf. In the picture, he and a friend named John Surma are standing next to their sons, the boys wearing hockey uniforms, fresh from the ice. Both fathers had attended Penn State. As Hickton rose in the prosecutorial ranks, Surma rose in the corporate world, becoming CEO of U.S. Steel. When Hickton became the top federal prosecutor in the area in 2010, one of his meet-and-greet breakfasts was with Surma and Leo Girard, the boss of United Steelworkers, which represents 1.2 million current or retired workers in several industries. “I was asking them in a completely unrelated matter to serve on a youth crime prevention council,” Hickton recalls. “They said, ‘Can we talk to you about something else?’”
At the time, the American fracking boom was in full swing, with ultra-low interest rates that had been set to stimulate the economy also lubricating the business of extracting previously hard-to-reach natural gas and oil. U.S. Steel had a flourishing business selling pipes specially designed for the extraction process. Among other traits, the pipes have no vertical seams, so they will hold up as they’re rammed thousands of feet into the earth and yet bend to convey oil and gas without breaking. Read the rest of this entry »
“He stated he is aware it is against government rules and regulations, but he often does not have enough work to do and has free time.”
For the Washington Times, Jim McElhatton reports: For one Federal Communications Commission worker, his porn habit at work was easy to explain: Things were slow, he told investigators, so he perused it “out of boredom” — for up to eight hours each week.
…In other news, the CIA is spying on the Senate, the president is assassinating American citizens, our governors are ungovernable, our cops are criminals, our corruption investigations are corrupt, our anti-crime programs are criminal enterprises, the IRS agents charged with keeping nonprofits from turning into fronts for crass and illegal political campaigns have turned the agency into a front for a crass and illegal political campaign, our Border Patrol agents are engaged in human trafficking . . .
But let’s talk about porn…(read more)
Lack of work has emerged time and again in federal investigations, and it’s not just porn, nor is it confined to the FCC. Across government, employees caught wasting time at work say they simply didn’t have enough work to do, according to investigation records obtained under the Freedom of Information Act.
For WSJ, Jonathon House reports: Weather disruptions at home and weak demand abroad caused a contraction of rare severity in the U.S. economy in the first quarter, renewing doubts about the strength of the nation’s five-year-old recovery.
Gross domestic product, the broadest measure of goods and services produced across the economy, fell at a seasonally adjusted annual rate of 2.9% in the first quarter, the Commerce Department said in its third reading of the data Wednesday.
That was a sharp downward revision from the previous estimate that output fell at an annual rate of 1%. It also represented the fastest rate of decline since the recession, and was the largest drop recorded since the end of World War II that wasn’t part of a recession. Read the rest of this entry »
BREAKING: U.S. Economy Shrank at 2.9 Percent Annual Rate in First Quarter, Worst Showing Since RecessionPosted: June 25, 2014
BREAKING: US economy shrank at 2.9 percent annual rate in first quarter, worst showing since recession.
— The Associated Press (@AP) June 25, 2014
The US economy shifted into reverse in the first three months of 2014 shrinking by an annualized rate of 1%, official estimates have shown.
Worst economic performance since the first quarter of 2011.
It is also a big fall on the 2.6% rise in economic output in the final quarter of last year. The US Commerce Department’s first reading of gross domestic product (GDP) showed the economy grew at an annualised rate of just 0.1%.
The fall in output was blamed on an unusually cold and disruptive winter – one of the coldest in the US for 20 years – and a plunge in business investment.
“The White House said the GDP revision was subject to a number of notable influences, including the severe winter weather, which temporarily lowered growth.”
Economists estimate the weather could have cost up to 1.5 percentage points of GDP.
However, the Commerce’s Department’s report did not estimate the effect of the winter weather.
The fall was also twice as big as economists expected. Read the rest of this entry »
WASHINGTON (AP) — The U.S. economy slowed drastically in the first three months of the year as a harsh winter exacted a toll on business activity. The sharp slowdown, while worse than expected, is likely to be temporary as growth rebounds with warmer weather.
The economy’s growth slowed to a barely discernible 0.1 percent annual rate in the January-March quarter, the Commerce Department said Wednesday. That was the weakest pace since the end of 2012 and was down from a 2.6 percent growth rate in the October-December quarter.
Consumer spending grew at a 3 percent rate. But that gain was dominated by a 4.4 percent rise in spending on services, reflecting higher utility bills. Spending on goods barely rose. Also dampening growth were a drop in business investment, a rise in the trade deficit and a fall in housing construction.
The scant 0.1 percent increase in the gross domestic product, the country’s total output of goods and services, was well below the 1.1 percent rise economists had been predicting. The last time the quarterly growth rate was so slow was in the final three months of 2012, when it was also 0.1 percent. Read the rest of this entry »
For The Daily Caller, Giuseppe Macri reports: The United States Department of Commerce gave up control of the organization charged with managing the Internet’s core infrastructure Friday as a result of mounting global pressure born out of the backlash over global National Security Agency surveillance. Read the rest of this entry »
From The American Interest: America is sitting pretty when it comes to energy production, and a new report suggests things will be getting even better. In its January Short-Term Energy Outlook, the Energy Information Administration bumped up its forecasts for U.S. oil and gas production. Oil output is set to hit a 43-year high next year, while annual natural gas production is expected to rise to an all-time high for the fifth straight year in 2015.
Even better, burgeoning domestic production means less of a need to import oil and gas. Natural gas imports are forecast to drop to a near 30 year low next year, and as the WSJ reports, America’s oil trade balance is at its healthiest state in 20 years:
The trade deficit in petroleum products hit a 2013 low in November, falling to $15.2 billion, according to seasonally adjusted data released by the Commerce Department on Tuesday. Adjusted for inflation in 2009 dollars, the gap between petroleum imports and exports is the lowest since at least 1994.