‘Chronically at risk of falling into poverty’: Nearly HALF of all Americans severely struggling to make ends meet
Unemployment rate ticks up to 8.2%, 69K new jobs in May
Auto Jobs: Sign of the Times
Published: Wednesday, 30 May 2012 | 11:22 AM ET
By: Phil LeBeau
It should not come as a surprise with unemployment over 8% that good paying jobs in manufacturing are harder than ever to land.
At the Hyundai plant in Montgomery, Alabama more than 20,000 people have applied for one of the 877 job openings.
The surge of people applying may seem unusual, but it’s not.
Take a look:
There’s no doubt the recession and the fact so many Americans are still out of work was the primary factor driving the waves of people applying for jobs at auto plants.
Another huge factor is the type of jobs being offered. Good pay and benefits with solid companies in an industry set for steady growth over the next 3-5 years. Those jobs are hard to find in blue-collar America.
Broader Jobless Rate Jumps to 14.8%
June 1, 2012, 2:57 p.m. ET
Jobs Slowdown Adds to Global Fears
Payrolls Rise by Just 69,000; Jobless Rate Ticks Up to 8.2%
By JOSH MITCHELL
Feeble hiring by U.S. employers in May added gloom to an already darkening picture of the economy, which appears to be joining Europe and Asia in a spreading slowdown.
Employers added a seasonally adjusted 69,000 jobs last month, the smallest increase in a year, while numbers for the two prior months were clipped by a combined 49,000. The politically salient jobless rate ticked up—to 8.2% from 8.1% in April—and the report quickly became a flash point for a presidential election focused on the job-creating bona fides of the candidates.
Jobs were only one of the disappointing numbers out Friday that fueled anxiety about the U.S. economy. A separate report showed manufacturing growth cooled in May, with troublingly sharp drops in both production and exports. Another report showed consumer spending rose in April, but by more than incomes, suggesting the risk of consumers struggling to keep spending.
To be sure, the U.S. shows resilience in some areas. Inflation remains tame and auto sales continue to boom, while falling energy prices are helping ease some of the stress for consumers. But the larger picture is of a U.S. economy that seemed to be gaining traction earlier in the year only to start wobbling as the weather got warmer—a familiar pattern in recent years.
Stock markets tumbled in the wake of the job report. The Dow Jones Industrial Average slid more than 200 points, giving up its gains for the year, and the Standard & Poor’s 500 entered correction territory.
Jittery investors fled to bonds, with the 10-year Treasury’s yield falling below 1.5% for the first time ever. Gold surged above $1,600 and the dollar weakened against the euro and yen as traders positioned for possible stimulative action by the Federal Reserve.
The dismal jobs report is sure to sharpen a debate at the Federal Reserve about whether to do more to spur economic growth. Some Fed officials who are less worried about inflation had already started lobbying for additional action before Friday’s numbers.
But the central bank’s most influential decision makers have been hesitant to signal any additional moves. The report will give volume to the advocates of action and put pressure on officials to act, though it’s not clear this will result in a broader consensus for action right away.
Some Fed officials might want to wait to see more data before making what would surely be a controversial decision to do more to spur growth.
“The economy is shifting from ‘muddling through’ to paralysis,” Pierpont Securities economist Stephen Stanley said.
The jobs report came a day after the government downgraded its estimate of economic growth in the first quarter to a 1.9% annual rate, down from 3% in the fourth quarter of 2011. Some analysts said they planned to lower expectations for growth in the current quarter.
The U.S. recovery appears to be tracking a similar pattern of the three-year-old recovery, in which the economy gains steam early in the year only to slow down in the spring and summer. Previous slowdowns, however, have been more clearly linked to isolated events—such as a gas-price spike or a disaster such as last year’s Japanese earthquake and tsunami.
Economists attribute the slower growth to several factors. A warm winter likely led companies to hire earlier than usual, boosting winter job growth but taking away from spring job growth.
Renewed concerns about Europe—including the prospect of a Greece exit from the euro and subsequent contagion in financial markets—is shaking consumer and business confidence. Uncertainty about domestic policy—including what happens with a variety of tax rates that are set to rise at the end of the year—could be causing businesses to hold off on hiring.
Friday’s labor-market report was disappointing nearly all around. Job growth over the past three months is less than half the average 250,000-plus jobs added in the three earlier months—and nearly every sector has been hit. Workers saw their weekly hours cut, a sign of weaker demand from customers. The ranks of the long-term unemployed rose.
The jobs report contained one small glimmer of hope: the work force grew, a possible sign that more people felt more confident about their job prospects and began searching for work again.
GOP Blasts Obama Over Jobs Report
Markets tumble on weak unemployment report amid fear that U.S. recovery has stalled
By Ylan Q. Mui, Updated: Friday, June1, 12:57 PM
Businesses dramatically scaled back hiring in May, pushing the nation’s unemployment rate up to 8.2 percent and stoking fears that the economic recovery has stalled once again.
The Labor Department reported Friday morning that the country added a meager 69,000 jobs last month — less than half the number economists had expected. It also revised its estimate of job growth in April down from 115,000 to just 77,000.
Markets fell sharply at the news. By early afternoon, the Dow Jones, Standard & Poor’s and Nasdaq indexes had tumbled around two percent, with the Dow falling more than 200 points.
“It’s just headed the wrong direction,” said Keith Hall, a senior research fellow at George Mason University and former commissioner of the Bureau of Labor Statistics. “There just simply isn’t enough growth in the economy to support job growth at a higher level.”
The disappointing results quickly became a political flash point, with Republicans seizing on the data as fresh evidence of what they called President Obama’s mishandling of the recovery.
“Jobs are job one for the presidency,” Republican presidential candidate said in an interview with CNBC on Friday afternoon. “The president’s trade, energy and health-care policies have held back growth and are scaring employees from hiring. All of them have made it less likely for businesses small and large to want to hire people.”
Earlier in the day House Speaker John A. Boehner (R-Ohio) criticized the administration’s stimulus programs as spending binges and called on Obama to approve the controversial Keystone XL pipeline as a way to add jobs.
Later in the afternoon Obama was expected to announce a plan to help veterans earn certifications for high-tech manufacturing jobs, part of a broader initiative known as the Veterans Jobs Program. In a statement Friday, White House adviser Alan Kreuger emphasized that the nation’s economic problems began before Obama took office.
“Problems in the job market were long in the making and will not be solved overnight,” he said. “It is critical that we continue the President’s economic policies that are helping us dig our way out of the deep hole that was caused by the severe recession.”
Economists had hoped that lackluster job numbers in recent months were merely the consequence of a statistical fluke caused by unseasonably warm weather that sparked hiring gains earlier than usual. But Friday morning’s data suggested something more like deja vu: Job growth is the weakest since last May, when the economy fell into a slump that lasted through the summer.
Analysts say the country needs to add roughly 130,000 jobs per month for the recovery to maintain its momentum. But to truly make a dent in the unemployment rate, hiring must reach a sustained rate of 250,000 jobs per month. The country has hit that mark only three times over the past year and a half.
In May, the health-care and transportation sectors each hired more than 30,000 people, the most of any industry. But those gains were offset by a sharp drop in construction jobs. Economists also said that a small increase in the number of people who are now looking for work also helped drive up the unemployment rate.
“Very few companies are willing to take money and invest in the future now,” said Carl Camden, chief executive of Kelly Services, a global staffing firm.
There were small rays of optimism, however. The government also reported that consumer spending rose by 0.3 percent last month and that incomes increased 0.2 percent. Automakers announced strong May sales, with Chrysler up 30 percent in the United States.
But the gloomy employment data overshadowed those bright spots.
Signs of the slowdown appeared earlier this week when a key survey of businesses showed they hired fewer people than anticipated. The ADP National Employment Report showed a gain of 133,000 jobs last month — less than economists had expected. Most of the increase was driven by the service industry, while manufacturing and construction employment declined.
“The sharpness of the deceleration seems consistent with other incoming data suggesting the economy, weighed down by heightened uncertainty over the European financial crisis and by growing concerns about domestic fiscal policy, slowed early in the year,” said Joel Prakken, chairman of Macroeconomic Advisers, which helped compile the report.
The Labor Department’s weekly tally of people filing for unemployment benefits for the first time also dampened optimism. The number rose by 10,000 last week, to 383,000, while the previous week’s results were revised slightly upward.
Adding to the dour economic news was Commerce Department data showing that economic growth was slower than initially estimated. The agency revised first-quarter GDP growth down to a 1.9 percent annual rate, compared with the previously announced 2.2 percent rate.
“The domestic economy has repeatedly looked as if it was finally gaining traction, only to be beaten back again by the unique problems that keep surfacing during the recovery process,” said Steven Ricchiuto, chief economist at Mizuho Securities.
Economists also warned that rising tensions in the Middle East, particularly over Iran’s nuclear program, could push oil prices back up. That would dial back the gains in consumer spending as shoppers enjoyed some relief at the pump.
The uncertainty over the global economy has constrained domestic growth, said Bernard Baumohl, chief global economist for the Economic Outlook Group.
“These are periods that are very difficult to predict,” he said. “There is such a lack of clarity where the economy is heading that companies are apprehensive about significantly ramping up hiring.”
Employment data released June 1 must have sent a shudder throughout the White House, not just the Oval Office. President Obama’s staff may have been thinking about their next gig following the November election. It’s the economy stupid.
While corporate profits trend toward record levels, employment lags because fewer workers are required due to increased produtivity and fear over uncertainty.
Instead of investing in people:
The survey’s respondents said they would likely make acquisitions in the coming year (27.7%), increase their capital budgets (21.5%), buy back stock (11.9%), or provide dividends (5.4%). About one-third said they did not know whether their company would take any of these actions.
Still, just because survey respondents said they’d like their companies to make acquisitions, that doesn’t mean that will happen. So far, 2012 mergers-and-acquisitions activity has lagged behind 2011. As CFO reported earlier this week, 221 deals had been announced in North America as of January 20, down from 396 deals during the same period last year.
Once, a college degree meant great expectations could be realized. Once, a willingness to work with a positive attitude meant rising expectations for blue collar workers.
A Gap in College Graduates Leaves Some Cities Behind
By SABRINA TAVERNISE
Published: May 30, 2012
DAYTON, Ohio — As cities like this one try to reinvent themselves after losing large swaths of their manufacturing sectors, they are discovering that one of the most critical ingredients for a successful transformation — college graduates — is in perilously short supply.
Just 24 percent of the adult residents of metropolitan Dayton have four-year degrees, well below the average of 32 percent for American metro areas, and about half the rate of Washington, the country’s most educated metro area, according to a Brookings Institution analysis. Like many Rust Belt cities, it is a captive of its rich manufacturing past, when well-paying jobs were plentiful and landing one without a college degree was easy.
Educational attainment lagged as a result, even as it became more critical to success in the national economy. “We were so wealthy for so long that we got complacent,” said Jane L. Dockery, associate director of the Center for Urban and Public Affairs at Wright State University here. “We saw the writing on the wall, but we didn’t act.”
Dayton sits on one side of a growing divide among American cities, in which a small number of metro areas vacuum up a large number of college graduates, and the rest struggle to keep those they have.
The winners are metro areas like Raleigh, N.C., San Francisco and Stamford, Conn., where more than 40 percent of the adult residents have college degrees. The Raleigh area has a booming technology sector and several major research universities; San Francisco has been a magnet for college graduates for decades; and metropolitan Stamford draws highly educated workers from white-collar professions in New York like finance.
Metro areas like Bakersfield, Calif., Lakeland, Fla., and Youngstown, Ohio, where less than a fifth of the adult residents have college degrees, are being left behind. The divide shows signs of widening as college graduates gravitate to places with many other college graduates and the atmosphere that creates.
“This is one of the most important developments in the recent economic history of this country,” said Enrico Moretti, an economist at the University of California, Berkeley, who recently published a book on the topic, “The New Geography of Jobs.”
The recession amplified the trend. Metro areas where more than one in three adults were college-educated had an average unemployment rate of 7.5 percent earlier this year, compared with 10.5 percent for cities where less than one in six adults had a college degree, according to Edward Glaeser, an economist at Harvard and the author of “Triumph of the City.”
Historically, most American cities have had relatively similar shares of college graduates, in part because fewer people went to college. In 1970, the difference between the most educated and least educated cities, in terms of the portion of residents with four-year degrees, was 16 percentage points, and nearly all metro areas were within 5 points of the average. Today the spread is double that, and only half of all metro areas are within 5 points of the average, the Brookings research shows.
“There’s a relentless cycle in which knowledge breeds knowledge, but the flip side is that many places are left out,” said Alan Berube, a senior fellow at Brookings who conducted the analysis using census data from the American Community Survey.
Dayton lost about 1 percent of its college-educated 25- to 34-year-olds between 2000 and 2009 at a time when that group grew by 13 percent nationally, said Joe Cortright, senior policy adviser for CEOs for Cities, an economic development group. In Columbus, Ohio, about 70 miles away, the same group grew by 25 percent.
In a pattern that is part education, part family background, college graduates tend to have longer life expectancies, higher household incomes, lower divorce rates and fewer single-parent families than those with less education, and cities where they cluster tend to exhibit those patterns more strongly. Montgomery County, where Dayton is located, has a premature death rate that is more than double that of Fairfax County, Va., the highly educated Washington suburb, according to Bridget Catlin, a University of Wisconsin researcher.
Now, Dayton is racing to produce, attract and retain college graduates as a badly needed food for its hungry economy. But it is a painstaking process. Kate Geiger, who lost her job at General Motors in 2008, said she would never forget the feeling of sitting in a college classroom for the first time after 24 years on the factory floor.
“I am this 44-year-old, old-school union girl,” she said, “and here I am with all these 18-year-old kids who have grown up with computers.”
Retaining graduates is hard when a city has fewer to begin with, because college graduates, like migratory birds, tend to flock to places with many other college graduates. Kelley Shomaker, 23, who graduated from the University of Dayton this year, said she searched for work in Dayton but ultimately received an offer from Rock Hill, S.C., a suburb of Charlotte, N.C. In August, she and two friends will set off for that city to start teaching careers there.
Charlotte, once a city with very little education, now has a population that is more than a third college graduates. Ms. Shomaker estimated that 60 percent of her friends were moving to other cities.
Dayton’s past was rich, but by the 2000s the city was in trouble. It lost half of its manufacturing jobs in 12 years, according to Richard Stock, an economist at the University of Dayton. When the city’s last Fortune 500 company, National Cash Register, left in 2009, residents were jolted into action.
“Our premise is you have to change people’s mind-set,” said Thomas Lasley, the former dean of education at the University of Dayton, who runs Learn to Earn, the city’s effort to increase its share of college graduates. “We have to go from one where people think of themselves as being in a high-school-attending culture to being in a college-attending culture.”
One effort has shown marked success. The Dayton Early College Academy, which opened in 2003 as a public high school, focuses on preparing low-income students for college. It sends 97 percent of its graduates to college, the vast majority to four-year programs.
One of the graduates, Francei Brown, plans to attend Morehouse College in Atlanta in the fall. His father, who for years cobbled together part-time jobs fixing cars and doing plumbing and roofing, even in the worst weather, was resolute about college for his son.
“He said, ‘I want you to have a job where, if it’s cold outside, you’ll be warm inside,’ ” Mr. Brown said.
Dayton has used internships as a glue to keep recent graduates, and the city found through a recent survey that graduates were twice as likely to stay if they had done an internship at a local business. One of them, Richard Kaiser, who graduated from Wright State University, stayed in Dayton because it was cheaper and seemed faster to advance in a career, a choice he does not regret. Friends who moved to Chicago, he said, “ended up sitting at home and drinking cheap beer and playing video games every night.”
Dayton may be struggling to find a second act, but it has strengths that many industrial cities lack. Wright-Patterson Air Force Base is a major employer in the area. Lexis-Nexis, the research company, has a large operation here. And the city has an above average share of people with some college — those who have a two-year degree or who have taken some classes but have no degree.
Steven Lee Johnson, president of Sinclair Community College here, argues that the paradigm may be changing to one in which students take bundles of courses instead of spending four years on obscure academic topics. The approach has been popular among students here, who tend to have children and busy lives (about a tenth of students at Sinclair are displaced workers).
“There’s a concern among employers that a degree is not specific enough,” he said. “What will count is competencies — very concrete things that you have achieved.”
Even so, those with four-year degrees still tend to have the biggest impact on economic development, Mr. Cortright argues.
Ms. Geiger, the former G.M. employee, graduated with an associate degree in graphic design and is now working on a Web site and planning events for a Harley-Davidson shop.
The job does not pay very well, and she compares it to “new shoes that don’t really fit right yet.” But she loves the freedom of not having to clock in and out. “It’s so strange to find that there is life after G.M.,” she said.
Recession generation has adulthood on hold
Article by: JEAN HOPFENSPERGER
May 7, 2012 – 9:25 AM
Alyssa Kjellberg still can’t believe it. Two years beyond college, her career path has led only to jobs at a greenhouse, a hotel front desk, an aunt’s office and a seasonal landscaping company — all paying less than $12 an hour.
After applying for about 100 jobs, the environmental science major even offered “one week of free labor” last summer to get a foot in the door at the landscaping company. But that job ended with the season, as will the one she’s in now. Her dream of becoming a park ranger or environmental educator is drifting away.
“There are so many people looking for work, you feel lost in the shuffle,” said Kjellberg, 23. “I see my grandpa who lived through World War II and all he had to go through. Sometimes I feel like I’m living through something like that, too.”
Kjellberg is caught in a generation where gaining economic independence is a longer haul than it was for their middle-class parents — who continue supporting their now-adult offspring in ways big and small. More than half of the 18- to 24-year-olds surveyed in March by the Pew Research Center said they live with parents now or had recently because of the economy. Among those ages 25 to 29, 41 percent had done the same at some point.
Alyssa Kjellberg hoped to land a spot as a park ranger or a similar job but has found mostly seasonal work.
Glen Stubbe, Star Tribune
These job seekers were cranking out résumés and trying to enter the workforce just as the unemployment rate for young adults hit its highest point since 1948, when data tracking began. Sometimes called the “Lost Generation,” their slow start out of the economic blocks could affect the nature of the middle class far into the future.
“They can’t get their foot on the bottom rung of their career ladder,” said Lawrence Mishel, president of the Economic Policy Institute in Washington, D.C. “Research shows their wages will be scarred for their entire lifetimes. They are less likely to get fringe benefits like health care. The jobs they get pay worse.”
Job seekers under age 25 typically are the biggest losers in economic downturns and the current crop is no exception. Nationally, unemployment for them peaked at 18.4 percent in 2010.
Today, it remains at nearly 13 percent in Minnesota and 16 percent nationally — almost double the overall rate.
Those who did find work saw the biggest drop in earnings of any age group in the Great Recession, according to a new study by the Pew Research Center. From 2007 to 2011, earnings for older workers remained basically flat. But for full-time workers ages 18 to 24, median weekly earnings dropped 6 percent.
It could take a lifetime for them to regain lost wages and opportunities, economists say. The current wave of recovery may have swept right past them, if history is a guide. Seventeen years after the recession of the early 1980s, college grads who entered the workforce during that downturn still earned an average of 10 percent less than those who got their jobs before or after that recession, according to Yale University researcher Lisa Kahn.
But the long-term impact pales compared to the current stress on these children of the middle class trying to make it on their own. So far, their efforts have netted a swirl of temporary jobs, low pay and a chronic state of job searching.
New job reality
Kjellberg thought she did everything right. She took college classes in high school, knew her major the minute she set foot at St. Cloud State University, got good grades and had a decent internship. Then came graduation.
“I’ve been applying for jobs since 2010,” said Kjellberg, an outgoing young woman who grew up in Monticello and now lives in Shoreview. “I’ve been shocked at the number of places you never hear back from…. You start to wonder, should I even apply?”
Kjellberg had envisioned landing a government job at a park where she could be an educator or conservationist. Making ends meet by working in her aunt’s office and moving back to her mother’s house were not part of the plan.
A decade ago, such a serious job hunter was far more likely to land a job related to their training. Some still do today, but the norm is a longer job search punctuated by multiple entry-level jobs and internships — sometimes unpaid.
Her boyfriend, Dan Olson, estimates he has had 15 employers in the past four years.
As an apprentice carpenter, he finished a four-year training program last month, progress in his quest to work in commercial construction, with union wages. Now his dream is on hold. He needs 7,000 hours of on-the-job experience to graduate, but he’s short 1,000. He is taking resourcefulness to new heights to get those hours.
“I found jobs just driving around, looking for tower cranes,” said Olson, taking a break from sawing doors at the training center in St. Paul. “I walk up to the job site with my hard hat, safety glasses and tool bag. Sometimes they put you to work.”
But working job-to-job offers little financial stability, said Olson, who lived with his dad until last year. “You can’t even afford to go fishing because you can’t afford the gas. I sold my truck because I couldn’t afford the insurance.”
Apprentice carpenter Dan Olson is finding it hard to get the remaining 1,000 hours of experience he needs.
Renee Jones Schneider, Star Tribune
For many job seekers, uncertainty has become a way of life. Darren Eck, 23, graduated last year with a University of St. Thomas communications degree. He’s worked at his college development office, had a digital marketing internship and now has a temporary social media job at a St. Paul nonprofit.
“It’s always in the back of your mind: What’s your next move going to be?” said Eck, of Inver Grove Heights. “You send out 50 applications and you might hear back from one or two people. Sometimes you hear back so late that you forgot what you applied for.”
The lucky ones have bucked this trend by landing jobs through connections or by having high-demand skills.
Shortly after finishing a child psychology degree last year at the University of Minnesota, Kelsey Young learned from her brother that a family friend knew of an opening for a therapist for autistic kids — her specialty. Just three weeks after graduation, Young was hired.
“It’s a miracle,” she said.
Biding their time
Thousands are turning to national service jobs to wait out the economy, add a credential and do something good for the world in the process.
“It’s a nice resting place to figure out what to do next,” said Erica Linc, 23, of Crystal, who does outreach for a Minneapolis weatherization nonprofit. “You get experience…. Plus it seemed pragmatic to get the (student) loans deferred.”
Others have found an initial job, but keep working toward the career step up that could cement them into the next generation of the middle class.
After working a full day as an event planner, Emily Thielman of Crystal made a sandwich for her next day’s lunch. She and her brother Nick, center, are living with their parents, including mom Carol, right. The number of multi-generational households is at its highest since the 1950s.
Glen Stubbe, Star Tribune
Emily Thielman, also from Crystal, has a communications degree and works as an events planner, a job she enjoys. But she also freelances as a production assistant for visiting sports networks, such as ESPN, to keep her journalism credentials fresh.
Mark Zaczkowksi found a job in early childhood development soon after college in 2007. Last year, he decided to pursue a master’s degree in social work to expand his career prospects and better serve children.
But like many back-to-schoolers, he pads his résumé and wallet between classes, working part time at a children’s nonprofit, baby-sitting, dog-sitting and coaching basketball. He occasionally works for a movie-screen cleaning business, removing “Coke and Gummy Bears and pretty much anything you can throw at a screen,” he joked.
Zaczkowksi, like Thielman, still lives with his parents to save money. The number of multi-generational households is now the highest since the 1950s, according to a survey released in March by the Pew Research Center.
It showed parents and children generally are “content” — not “overjoyed” — with the arrangement. Thielman’s father, Chuck Thielman, sees two sides to having two adult kids unexpectedly back home.
“One advantage is you get to see your kids more often, and it makes you feel younger, too,” he said. “The disadvantage: You know they’d rather be on their own. And they are adults and we keep bumping into each other.”
There are house rules, such as keeping rooms clean and letting parents know if they’re not coming home for the night. The kids’ roughly $100 monthly “rent” includes Internet and cellphone service.
Even as they move back home, juggle multiple jobs and worry about student debt, the recession generation does have something important going for it, according to the Pew Research Center survey.
Olson, still driving around looking for construction cranes, agrees.
“It looks like things are turning around,” he said. “I’m keeping my fingers crossed.”
Dreams Deferred Dayton OH