By Erica Alini - Monday, January 7, 2013 - 0 Comments
How long will it take until unemployment hits 6.5 per cent?
Last month, the U.S. Federal Reserve announced it would keep borrowing costs at rock bottom until unemployment drops to 6.5 per cent, provided inflation doesn’t rise past 2.5 per cent. It was a revolutionary statement. America’s monetary policy is now explicitly tied to the jobless rate, rather than just price levels. The Fed was administering the U.S. economy the equivalent of “a new drug that is yet to go through clinical testing,” wrote Mohamed El-Erian, the CEO of PIMCO, which runs the world’s largest bond fund.
The move raises a tough question: how long will it take to reach 6.5 per cent unemployment? It could happen as early as next year or as late as 2018, according to Michael Greenstone and Adam Looney at the Brookings Institution, a think tank based in Washington. Some observers are asking what Fed chairman Ben Bernanke will do if the jobless rate falls simply because more Americans give up looking for jobs, thus taking themselves out of the unemployment head count. Continue…
By Stephen Gordon - Thursday, September 13, 2012 at 3:35 PM - 0 Comments
The Labour Force Survey release for August was typical of LFS releases since the recession ended three years ago: modestly good news, but not enough to put a serious dent in the unemployment rate. When will things get back to normal?
The answer is “things are already back to normal.” Canadian unemployment rates simply don’t fall quickly back to pre-recession levels during a recovery (click on the graphs to open a larger version in a new window):
To understand why unemployment jumps up quickly but declines slowly requires looking at the dynamics of the labour market.
By Luiza Ch. Savage - Friday, June 8, 2012 at 11:52 AM - 0 Comments
Just how ugly is the 2012 campaign going to get?
When Mitt Romney finally clinched the delegates he needed to win the Republican presidential nomination last week, the U.S. general election race began in earnest. President Barack Obama’s campaign has given a first look at its campaign strategy; 2008’s feel-good “hope and change” theme is long gone. The high-minded and genial candidate once dubbed “Obambi” has given way to the steely President who took out Osama bin Laden and has now set his sights on Mitt Romney.
Even some Democrats were stunned by a recent Obama campaign ad attacking Romney’s successful career at Bain Capital as a story of corporate looting and worker exploitation. “Like a vampire. They came in and sucked the life out of us,” says a worker in the cinematic campaign ad; it profiles a Kansas City steel mill that was shut down after Romney’s firm took over. Says another: “They came in and they destroyed—it was like watching an old friend bleed to death.”
Like the “Swift Boat” attacks that allies of George W. Bush unleashed in 2004, assailing John Kerry’s military record, Obama’s ads don’t highlight an opponent’s weaknesses, rather, they seek to reverse his biggest strength—in Romney’s case, a reputation as an expert in engineering economic turnarounds. The Obama ad focused on one company: Kansas City’s GST Steel, which Bain Capital bought in 1993, then shuttered in 2001. Bain, over those eight years, loaded the steel company with debt, using the borrowed money to pay itself dividends; when it eventually took the company into bankruptcy, workers lost jobs, benefits and some pension payments. PolitiFact, the Pulitzer-winning fact-checking website, rated the ad “mostly true.” What it left out was the broader picture. As CEO of Bain Capital, Romney helped successfully turn around other companies, creating thousands of jobs. Several business-friendly Democrats lined up to denounce the ad, among them, Newark, N.J. Mayor Cory Booker, who called it “nauseating.” Obama’s former auto bailout adviser, Steve Rattner, labelled it “unfair.” Even Bill Clinton chimed in, defending Romney’s business career as “sterling.” Watch the video:
By Luiza Ch. Savage - Tuesday, May 22, 2012 at 11:00 AM - 0 Comments
Washington wants Ottawa to make it easier for U.S. workers to fill vacancies there
With the U.S. unemployment rate stuck above eight per cent, Americans need jobs. And Alberta needs more workers—as many as 114,000 in the next decade, according to provincial figures. It seems like the perfect opportunity—bring trained U.S. workers to help ﬁll the labour shortage in booming Alberta. Yet hiring those workers is difficult, employers complain.
“It hasn’t been our first place to look,” says Jim Finnigan, human resources manager for the North American Construction Group, an Edmonton-based company that serves the oil sands in mining, heavy construction and pipelines. Finnigan needs heavy equipment mechanics, welders, electricians for electric cable shovels, as well as project managers, civil estimators and various types of engineers. He’s brought them in from as far away as Chile and Ireland, and dealt with long delays in government approvals and the uncertainty of skills testing when they arrived. (Some Chileans had to be sent back, he says, because they didn’t have the language skills to pass highly technical written exams even though their spoken English was fine.)
Yet bringing in workers from the U.S. has been far more challenging. It’s not only government red tape, but the difficulties in getting recognition for the workers’ skills. Unlike some countries, the U.S. does not have an equivalent of Canada’s formal apprenticeship and certification system for many skilled trades, adding another layer of complexity to hiring. “The easiest ones to get for us should be U.S. labourers,” says Finnigan. “But the hardest ones to get are the American ones.”
By macleans.ca - Friday, December 2, 2011 at 12:24 PM - 2 Comments
Surprise dip reflects growth of both economy activity and the number of Americans exiting the workforce
The U.S. economy delivered an unexpectedly low unemployment rate in November, at 8.6 per cent from 9 per cent in October. The number of new jobs, which comes from different data from the U.S. Labor Department, at 120,000, fell just short of economists’ expectations of 125,000 new openings. The surprise drop in the unemployment rate reflects both a pick-up in economy activity and growing number of Americans who’ve given up looking for a job aren’t therefore counted as “unemployed.”
By Jason Kirby - Wednesday, November 30, 2011 at 3:00 PM - 16 Comments
With 25 million out of work or underemployed, the U.S. is in the grips of a jobs depression
Eight months ago, Deborah Burnley, an administrative assistant in Baltimore, suddenly found herself among America’s growing army of unemployed. Losing her job at a cash-strapped non-profit was a demoralizing and debilitating experience, she says, and to keep her spirits from crashing she’s sought solace in, of all things, the bleak arithmetic of her job hunt: 226 positions applied for, six temp agencies engaged, and countless miles travelled across the region for interviews. “I try to think of it as a numbers game, that each day is basically one more step closer to being employed,” says Burnley, 52. In other words, if she applies for enough positions, and meets enough prospective employers, some day— eventually—she’s bound to find work. But even as she clings to that hope, Burnley acknowledges she and her husband, who also lost his job as a facilities manager six weeks ago, have depleted their savings and almost maxed out their credit cards. “It can be hard to see the light at the end of the tunnel.”
Two-and-a-half years after the Great Recession was deemed officially over, that light has never seemed dimmer for the close to 25 million Americans who are either out of work or underemployed today. Like a gaping wound at the heart of the economy, the U.S. job crisis has cast a vast swath of the population into a state of semi-permanent unemployment. At the same time, America’s housing market is in a shambles and poverty is on the rise. Even if economists weren’t already once again warning of another global recession, a realization is slowly setting in: the United States is suffering from an outright economic depression, and it threatens to leave a deep scar on the American psyche for decades to come. As Robert Reich, a professor of public policy at the University of California at Berkeley and a former secretary of labour, put it recently: “America’s ongoing jobs depression, which is what it deserves to be called, is the worst economic calamity to hit this nation since the Great Depression.”
By Erica Alini - Thursday, July 28, 2011 at 12:25 PM - 0 Comments
Are manufacturing jobs are making a comeback?
Eighteen thousand is an abysmal number when it indicates the number of jobs the world’s biggest economy created in a month. Unfortunately, that’s how many new positions U.S. employers added in June, the Department of Labor announced two weeks ago—a bulletin that sank the hopes of the country’s 14 million unemployed. Yet, there is at least one sector of the U.S. economy that seems poised for expansion, bringing with it a much-needed fistful of new jobs: manufacturing.
Assembly lines and factories—which seemed to be going the way of the dinosaurs in recent decades in North America—are making a comeback. The Boston Consulting Group predicts “a manufacturing renaissance” in the U.S. in the next five years, courtesy of rising wages in China and high fuel prices, which make it more convenient for companies to relocate production lines back home. With Chinese workers pocketing wage increases of about 17 per cent per year, the yuan appreciating, and U.S. states such as Mississippi, South Carolina and Alabama offering flexible work rules and government incentives, the difference between production costs in China and the U.S. will “drop to single digits or be erased entirely” in certain sectors in the next few years, notes the BCG. Last week, General Electric said its U.S. manufacturing operations will grow this year, as labour becomes a smaller component of its costs. Caterpillar Inc. announced last year the expansion of its U.S. operations, a move expected to add 500 new jobs—or 2.7 per cent of the jobs the entire U.S. economy added last month. Other prominent U.S. manufacturers have also relocated operations at home.
Offshoring is becoming démodé elsewhere in the West as well. New Call Telecom, a British company, recently opened a new call centre in Burnley, near Manchester, reportedly because commercial property there is as cheap as in Mumbai—as low as $6 per square foot. In Canada, though, the picture is mixed, according to a recent report by the Department of Foreign Affairs and International Trade, with a roughly equal number of manufacturers offshoring and inshoring.