Sluggishness Certainly Stays

America's Jobs Report: Still Sluggish

The Economist

October 22, 2013

By G.I.

Last fall, the Federal Reserve began open-ended bond buying with newly printed money in hop to generate growth in the larbour market. This seemed to have been successful, until last fall. Data suggests that recently, there is no explanation for the amount of non-farm payroll employment. Non-farm payroll employment rose 148,00 in September from August, which was much less than expected. This was the second weak reading in a row, and vindicates the Fed's decision not to dial back its $85 billion. 

The revisions to prior payrolls were upsetting to the public. A large amount of September's gains were in state and local employment. Normally, this data would be positive, however, recently this has been such a powerful headwind for the economy and has had negative affects. A decrease in private job creation has also decreased the pickup in government hiring. The monthly average of private job creation is 129,000 in the last three months from 232,000 last December. 

One positive to this situation is the decline in the unemployment rate to 7.2%, a tiny decrease from 7.3%, a near-five year low. Lower participation, which means fewer unemployed, are recorded as looking for work, rather than higher employment.The "non-employment" rate, which is simply everyone not working as a share of the civilian, non-institutional population, has remained at 41.4%.This is not primarily due to a weak economy; the number of people not in the labour force who want a job has actually fallen 9% since December, to 6.2m. The people who are leaving the labour force do not want to work. 

The reason that the labour market has dropped is very unclear. Other, less comprehensive information is more upbeat: unemployment insurance claims through September had decreased. Surveys of hiring were also positive, even though they took a plunge during the government shutdown. The overall rise in mortgage rates since the Spring has caused housing to decrease dramatically. However, construction employment rose 20,000 in September. 

Before today's report, the Fed was not willing to decrease bond purchases ($85 billion a month.) Even though officials appear maleable, officials' outlook, they claim, is for improvement. However, the follow-through is hard to determine before it actually occurs, in December. The government shutdown reduced employment overall for October. Also, an index compiled by Gallup suggests private job creation also slowed that month.  

Fed officials have often been unable to explain the criteria for beginning and ending QE, but one thing is clear: they had hoped the labour market would be gaining, not losing, steam by now. Concluding, the exit seems no clearer than when this round of QE started a year ago. 

Starbucks' Snark

Author: James O’Toole

Date: October 11, 2013

Title: “Starbucks Releases Petition Calling for End to Debt Ceiling, Shutdown Fights-Oct. 10, 2013”

CNN.com

Starbucks’ Snark?

Last Thursday, Starbucks called for leaders in Washington to resolve the ongoing financial crisis. The Starbucks company came to the conclusion to offer a petition on the subject to customers at its thousands of locations in the United States. Howard Schultz, CEO of Starbucks, announced on the Starbucks website (SBUX, Fortune 500) that Americans “have no platform with which to voice their frustration with Washington and the current stalemate that threatens our nation.” The petition, instead, requests the lawmakers to “reopen” their government to “serve the

people,” and for Americans to “pay our debts on time to avoid another financial crisis” and “pass a bipartisan and comprehensive long-term budget deal by the end of the year.” "Our leaders need to lead, and we need a better solution in Washington, D.C.," Schultz said in a video posted on the Starbucks website. Throughout the past week, Schultz has called in his chief executives to discuss the showdown in Washington. "I don't pretend that both parties are equally to blame for this crisis," he said. "But, I do think they are equally responsible for leading us to a solution." A meeting at the White House followed Starbucks’ call where Wall Street CEOs were warned of serious, weighty, economic consequences if the shutdown and debt limit issues are not resolved.  Although the government shut down seems as though it does not have an effect as much on things that are not government run, that preconception is in fact wrong.  Starbucks, a corporate company, will be influenced greatly by the government shut down if plans do not get resolved within the near future. “The U.S. Chamber of Commerce, an influential business lobbying group, called legislation to fund the government and raise the debt ceiling "must-pass." In the past, Schultz has successfully provided a positive outlook in traumatic situations. For instance, in 2011, as lawmakers underwent a “fiscal cliff,” Schultz asked his employees in the D.C. area (approximately 120 stores) to write “Come Together” on Starbucks coffee cups when serving them. Throughout the constant interception between the Democrats and Republicans amongst this tough time, it seems as though nobody can really agree upon anything. But, if everyone agreed on what should be done, everyone would be in one political party; democracy would not exist. America would be ruled under one political party with one view on everything. When one party rules every aspect of the government, that is not what a democracy is. Someone needs to pose an opposition and both parties need to be held accountable for getting this country into deep debt, not a single political party. Everyone needs to take responsibility for their actions in this country and need to come to the conclusion with themselves that everyone has contributed to where this country has gotten, not just a single person or a small group of people.

What College Funding?

In today’s economy and society, college has become very expensive! Scholarships are harder to attain and gain now more than ever. Previously, students coming from middle to lower income families would receive scholarships based on merit, however, that money now goes towards the better off students, who might be considered a better candidate for the college of their choice. These scholarships are no longer granted based on need, but rather, on whom the admissions counselors think deserve to attend the college.

The choices that these academic counselor’s are making could possibly negatively impact the government and economy. People that actually need help paying for college are no longer granted the help they once received. In the article, Max Russell was interviewed about his problems attaining financial aid for college. During his junior year, of high school, his dad died and his family members began working twenty-five hours a week. Unfortunately, Max’s study time was intervened by his job, as his grade point average was drastically affected. Max had to attend a community college for a few years in order to qualify for student loans, which allowed him to go to Purdue. On the other hand, Max’s wealthy friend was granted a full ride to his top school.

I think that this has gotten entirely out of hand. The economy is not being fair by not offering students who come from lower income families more money than students that come from well off families. And yes, it makes sense that the rich kids have better grades, mainly because they have the option of paying for tutors and outside helpers to help them get into college and basically do their homework and write their college essays for them. Also, the rich kids do not have to work jobs and instead have time to do homework and play sports. Although all kids face hardships, the hardships amongst the poor seem to usually be more serious and end up taking more time out of their day, generally, than the rich kids. Even though the rich kids have worked hard to attain their grades, well, some at least, it is important to develop scholarships for all different types of kids from all different backgrounds with all different life stories.

People are always complaining about how the government spending is going to the wrong places and this is definitely one of them. As social security funding decreases, college funding increases but only offers money for the wrong reasons. The government should offer all types of students who make all different types of grades and test scores scholarships, not just the smartest kids on paper, but the well rounded kids as well and the quirky one’s as well.

Rampell, Catherine. “Freebies for the Rich.” NYTimes.com. The New York Times Magazine, 24 Sept. 2013. Web. 6 Oct. 2013.

What College Funding?

In today’s economy and society, college has become very expensive! Scholarships are harder to attain and gain now more than ever. Previously, students coming from middle to lower income families would receive scholarships based on merit, however, that money now goes towards the better off students, who might be considered a better candidate for the college of their choice. These scholarships are no longer granted based on need, but rather, on whom the admissions counselors think deserve to attend the college.

The choices that these academic counselor’s are making could possibly negatively impact the government and economy. People that actually need help paying for college are no longer granted the help they once received. In the article, Max Russell was interviewed about his problems attaining financial aid for college. During his junior year, of high school, his dad died and his family members began working twenty-five hours a week. Unfortunately, Max’s study time was intervened by his job, as his grade point average was drastically affected. Max had to attend a community college for a few years in order to qualify for student loans, which allowed him to go to Purdue. On the other hand, Max’s wealthy friend was granted a full ride to his top school.

I think that this has gotten entirely out of hand. The economy is not being fair by not offering students who come from lower income families more money than students that come from well off families. And yes, it makes sense that the rich kids have better grades, mainly because they have the option of paying for tutors and outside helpers to help them get into college and basically do their homework and write their college essays for them. Also, the rich kids do not have to work jobs and instead have time to do homework and play sports. Although all kids face hardships, the hardships amongst the poor seem to usually be more serious and end up taking more time out of their day, generally, than the rich kids. Even though the rich kids have worked hard to attain their grades, well, some at least, it is important to develop scholarships for all different types of kids from all different backgrounds with all different life stories.

People are always complaining about how the government spending is going to the wrong places and this is definitely one of them. As social security funding decreases, college funding increases but only offers money for the wrong reasons. The government should offer all types of students who make all different types of grades and test scores scholarships, not just the smartest kids on paper, but the well rounded kids as well and the quirky one’s as well.

Rampell, Catherine. “Freebies for the Rich.” NYTimes.com. The New York Times Magazine, 24 Sept. 2013. Web. 6 Oct. 2013.

The Positive Outlook on Obamacare

Title of Article: "Obamacare Premium Rates Lower than Expected"
Date: September 25, 2013
Source: CNN
Author: Tami Luhby

The Positive Outlook on Obamacare


According to new data, Obamacare will cost less than
predicted. The release of new information provided a look into rates for
consumers buying individual insurance on the 36n federally run exchanges. The
national average will be 328 dollars a month, before subsidies, for this new
premium program; this is sixteen percent less than projected by the
Congressional Budget Office. With less money spent on governmental health care,
the government and people who will have Obamacare are free to spend that money
however they wish. 
 
The subsidies will offer maximum caps for low-and
moderate-income Americans in the benchmark plans. However, those who choose not
to enroll in Obamacare are not guaranteed a fixed price for healthcare, as the
prices range varies based on one’s age, income, and state. “For instance, a
27-year-old-living in Dallas making $25,000 could pay as little at $74 a month
for the cheapest “bronze” plan after subsidies, according to the Department of
the Health and Human Services.” While a sixty-year-old woman in Wyoming who
makes more than 46,000 dollars a year could pay as much at 758 dollars for an
extremely similar plan. Nevertheless, the majority of people uninsured today
will be able to find a policy for one-hundred dollars or less a month with
account subsidies and Medicaid eligibility taken into account. 
 
Starting October 1st, consumers will be able to
start enrolling with coverage that begins in January. Starting in 2014, “nearly
everyone” must have insurance, either through jobs, government programs, or the
individual market, otherwise, they will face a penalty. These newly released
rates do not apply to those who receive insurance through their employer. 
 
Most people who are expected to sign up for coverage in the
exchange have incomes up to 400 percent of poverty and will be eligible for federal
subsidies. The lower your income, the more expensive the benchmark plan in your
state, the larger your subsidy. Anyone who earns fewer than 45,960 dollars
would be responsible for the entire tab on the Obamacare health plan of his/her
choice. Premiums are higher in states with only a handful of insurers, says
Gary Claxton, vice president at the Kaiser Family Foundation. The three most
expensive states are Wyoming, Alaska, and Mississippi, where residents will
only have a choice of two insurers. With more opportunities for insurance,
leads to different deals and prices because that specific economy is allowing
choice. 

This program is extremely important because it affects most of the people in
the United States. The fact that health insurance will be determined based
partly on where people live may lead to an increase in population in places
where the Obamacare is more readily available and cheap and a decline in places
where Obamacare is more expensive.     

Underestimated Unemployment

New Source: Associated Press
Date of Article: September 19, 2013
Author of Article: Christopher Rujaber
Title of Article: US Unemployment Benefit Applications Rise to 309K

As technology moves forward and innovations continue to develop, the unemployment rate increases as well, unfortunately. In a society that is constantly moving forward, one would think that the rate of employment would exponentially grow, with new products on the market, meaning more job opportunities. However, with the steady increase of inflation, people cannot seem to manage to find a job that offers steady pay.

The number of people seeking U.S. unemployment benefits rose fifteen-thousand last week to 309,000.  The Labor Department says that this data was not correct and that the four-week average fell seven-thousan to 314,750: the lowest in six years. California and Nevada claimed they were unable to submit all of their data due to computer upgrades, however, that does not change the fact that the number of people seeking U.S. unemployment benefits is the highest it has been in the past six years. A government spokesman says that those states reported all of the applications that came in last week. But backlogged date from two weeks ago may elevate the figures in the coming weeks, he said.

The broader trend in applications has been favorable, signaling fewer layoffs. The four-week average fell six percent in the two months before the computer upgrades distorted the numbers. As the layoffs are down, companies have yet to step up the rate of hiring. Employers have added an average of just 155,000 jobs a month since April. That is down from an average of 205,000 for the first four months of the year. This is one of the main contributing factors as to why the Federal Reserve on Wednesday help off slowing its $85 billion-a-month in bond buying. Those purchases are intended to keep mortgage and other longer-term interest rates low and encourage borrowing, spending, and growth.

Unfortunately, the economy grew at a whopping 2.5 percent annual rate in April-June quarter. That is too slow to generate hiring strong enough to rapidly lower the unemployment rate, which is still 7.3 percent higher than after the Great Recession ended. As consumers have grown more cautious about spending, higher interest rates have threatened to slow the housing recovery.

This article is especially important because it talks about where our economy stands today, and where it is going. It highlights how important it is for America to increase the overall unemployment rate and that if the rate does not increase, more people will be filling for US Unemployment Applications which will destroy the governments funds.    

Protests of Partisan and Paranoia

9/15/13

Title of Article-"Workers' Protests Highlight Fast-Food Economics"
Date of Article-September 1, 2013
Authors-Candice Choi and Jonathan Falley

This past year, thousands of fast-food workers and supporters have been protesting against the federal minimum wages. The increase in protest activity has raised the question of whether the economics can actually provide these workers with a feasible response to their request.

The industry of fast-food is built on the idea of keeping costs low in order to make money while satisfying America's love of cheap, greasy, satisfying, food. Customers love the fact that they save money at McDonald's, this is what keeps people coming back: the predictability and consistency of the food quality and price. Unfortunately, store owners claim to be surviving on "slim margins" as the menu items are cheap.

Along with that, the corporations have to grow profits to keep shareholders happy. Althought the median hourly wage for a fast-food cook has increased from seven dollars to nine dollars, many workers make the federal mimimum wage at $7.25 an hour, making less than half of the median salarty of an American worker.

New York, Chicago, and Detroit protests are pushing for $15 an hour ($31,000 a year,) but in actuality, the protestors would be happy gaining just a few more dollars, as they are trying more or less, to raise awareness to their minimal wages. However, low wages and a lack of benefits for workers is nothing new at McDonalds, but the large number of people who have jobs at McDonalds is, and the number is growing exponentially. "Nearly 70 percent of the jobs gained since the recession ended have been in low-paying industries such as fast food."

The franchises claim their profit margins are thin so they can't afford to increase the workers pay. Over 90 percent of McDonald's and Burger Kings are owned by franchisees who claim they have to worry about making rent, buying supplies, paying fees to their parent company, while proividing extremely cheap prices to customers, therefore creating a higher wage is nearly impossible. Kathryn Slater Carter, who owns two McDonald's in California, said that what franchisees can pay dependes "on what money you've got left after all (the company's) interference."

As food ingredients and insurance prices increase, the workers pay amount is not one of the franchisees priorities. Other labor groups give a large profit to the CEOs while the workers receive barely anything. However, McDonald's and Burger King claim they do not determine wages for workers as the majority of restaurants are run by franchisees. The company aslo noted that an increase in entry-level wages would mean an increase in overall costs, which would result in higher prices on menus, which could possibly have a negative impact on employment and business growth in the fast-food industry. Labor organizers disagree with the idea that companies cannot influence the worker pay, as they state that the companies have total control of "every other aspect of the operations."

Although many Americans claim to support higher wages for workers, they flock to the cheapest meals in reality, which cut into profits, which is why fast-fppd chains have been stepping up[ deals and promotions in the weak economy. The impact of the series of protests against low wages has been unclear. No stores have shut down even in New York City, after 400 protesters trageted a McDonald's by the Empire State Building this past week, business remained regular.

I think that his specific article is extremely important because of the mass amount of people that are affected. Critically, in today's economy, more and more people have low income jobs, yet nobody seems to be doing anything about their low-wages. It is important to note that Americans claim to want to increase the pay of the minimum0waged workers, but are not willing to pay for more expensive items as a result. Americans claim one thing, making it seem like they care about bettering America as a whole, when in reality, Americans are selfish and care about their own profit more than the nation's average income level. The fast-food economy relies on one of the economic and social goals of the U.S., "economic efficiency" as they spend minimal amounts of money on their workers. In effect, the benefits gained are indubitably greater than the costs incurred. Although economic equity seizes to exist due to CEO's and franchisers who spend fast-food profit elsewhere, it is a trade-off made for economic efficiency. I think that these industries should try to focus more on providing their workers with better pay. Otherwise, the inconsistency and unpredictability of the staff will continue. Plus, as America's economy as a whole continues to to evolve and become more expensive, the wages of the workers should coincide and increase as well, otherwise they are unable to support themselves r their families and are unable to buy products therefore the markets would not be as high and those people working for those products would not have as many job opportunities. In conclusion, the economy runs on a ripple effect. Everything that one company does somehow affects someone else somewhere.