Tuesday, February 9, 2010

Some Welcome Jobs News, RIP John Murtha, Craig Becker Goes Down

When 9.7% Is Actually a Good Number
The news reports are somewhat confusing, but make no mistake about it - the Bureau of Labor Statistics release that showed that the unemployment rate in the US dropped from 10.0% to 9.7% is extremely good news.

Let me deal with the confusion in the news reports. It arises from the report fact that while the unemployment rate fell in January by it's largest amount in years, jobs actually shrunk by 20,000.

The conclusion that one might jump to if you have been following these statistics, is that the only way that this could happen is if a large number of workers became discouraged and stopped looking for work, as the unemployment rate only counts those who are actively looking. Such a phenomenon happened a couple of months ago when the unemployment rate fell from 10.1% to 10.0% but jobs declined. This would not be good news -- fewer jobs and more people quitting the workforce is bad on both fronts.

But this is NOT what happened in January. The so-called "underemployment" rate, which counts those unemployed, those who have looked for work in the past 12 months but are not employed and not presently looking (sometimes called those "marginally attached to the workforce", includes discouraged job-seekers and those who have forgone employment for other reasons) and those who are working part time because they cannot find fulltime work actually fell as well. Those who were working part time because they could not find fulltime work declined from 9.2 million the 8.3 million. Those "marginally attached" number was constant at 2.5 million. Those officially categorized as "unemployed" fell from 15.3 million to 14.8 million.

All told, the "underemployment rate" declined by even more than the official "unemployment rate", dropping from 17.6% to 16.8%, a huge 0.8% decline.

So how exactly is this possible if we lost 20,000 jobs?

The answer lies in the source of the data. The unemployment numbers come from surveying real people about their employment situation. The job creation (or destruction)number comes from surveying businesses about their hiring. While it is impossible for either survey to be 100% accurate -- they are polls after all, both are extremely extensive and have very low margins of error. But the so-called "establishment survey" that looks at job creation has one flaw that causes it not to pick up a nascent recovery as early as the so-called "household survey" which measures unemployment. The establishment survey cannot and does not adequately survey small businesses. It is far harder to measure employment creation at a single-owner convenience store or a small restaurant than it is at Google or GM. Job recoveries generally begin with small businesses, not the Fortune 500, and the establishment survey therefore lags reality in terms of projecting a recovery. The household survey does not have this flaw as people are randomly surveyed, regardless of what the size of the company that they work for is.

So, make no doubt about it, the January unemployment release is the most encouraging sign for the job market since the start of the recession. We are a long way from declaring prosperity -- almost one in ten people is still officialy unemployed, over one in six still underemployed, worse than at any point from in the 25 year period from 1983 to 2008.

But signs of life in the job market and the surest sign yet that we are in a real recovery. Let's hope the trend continues.

John Murtha, In Memorium
Rep. John Murtha (D-PA) has passed away from surgery complications at the age of 77. While the House does not have the same tradition as the Senate of having "fixtures", John Murtha is certainly the closest thing to a Ted Kennedy in the House. For 36 years, an astonishing 18 terms, he represented Pennsylvania's blue collar 12th district.

Murtha was a tireless advocate for the working class and an unapologetic liberal. A Vietnam vet, Murtha was perhaps best known in recent years for being at the forefront in openly calling for withdrawal from Iraq from very early on.

Murtha was a divisive figure, even within the Democratic party. He unsuccessfully fought for the Majority Leader post when Democrats took the House in 2006, losing out to the more moderate and cerberal Steny Hoyer (D-MD). He was labeled as the "king of pork", unapologetically bringing home more earmarks than any other congressman almost every year. He also made waves in the 2008 Presidential election for calling some of his own constituents racists and stating his belief that they would not vote for a black candidate.

In spite of all of this, Murtha was liked in PA-12, winning with 58% of the vote last November in a district that split evenly between McCain and Obama, implying it is 7% more conservative than the nation as a whole.

This GOP +7% dynamic creates another headache for Democrats. By state law, a special election must be held relatively soon (within 70 days of the vacancy being officially declared.) At this point, it appears likely that the special election will take place May 18th, to align with the Pennsylvania primary, although it is not entirely clear that the vacancy can be "slow-walked" long enough to make that date possible as it would require a vacancy to be declared no earlier than March 9th, a seemingly absurd situation since the former incumbent is no longer living.

Either way, the race is expected to be extremely competitive, and one would have to give the early edge to the GOP, given the GOP +7% dynamic and the overall national mood. Put simply, if President Obama couldn't win this district last November, in a political climate much more favorable to the left, this one seems like a pretty good bet for the right. Of course, candidates matter and who the two parties pick will weigh heavily on the nature of this race.

Craig Becker Fails at Filibuster
President Obama's latest nominee for the 5-member National Labor Relations Board has failed to clear the Senate, with a vote to end a GOP filibuster failing to reach the required 60 votes. The procedural vote was 52-33 in favor of breaking the filibuster, 8 votes short of the 60 required. Moderate Democrats Ben Nelson (NE) and Blanche Lincoln (AR) joined all of the present Republicans in voting no, including newly sworn-in Scott Brown (MA), who was casting only his second vote in the Senate. 15 senators missed the vote including 4 Democrats and Independent Bernie Sanders. Even with their votes, the DEMs were clearly 3 votes short as they had no GOP support and lost 2 Democrats.

Becker was clearly strongly to the left on labor, consistent with the President's own leanings. He has consistently put strongly pro-union appointees into labor positions, starting with Hilda Solis. It is not surprising that Democrats in right-to-work states would have some concern over a very pro-union appointment. It is somewhat surprising that they would join a filibuster, especially considering Nelson's previously stated belief that filibusters should be reserved for extreme cases. I guess everyone has implicitly agreed that you can't do anything in the Senate without 60 votes.

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