In today’s Los Angeles Times, we find this unexpected news about unemployment:
A second report from the Labor Department showed the number of Americans filing new claims for unemployment aid unexpectedly edged higher last week, reinforcing a view that the job market recovery has stalled.
There are two things the media never expects: (1) The Spanish Inquisition and (2) increases in jobless claims. In 19 of the past 24 months, the media has considered it “unexpected” when jobless claims increase:
April 2009 – New Jobless Claims Rise Unexpectedly (AP)
June 2009 – New Jobless Claims Rise Unexpectedly To 627K, 6.7M Still Unemployed (Huffington Post)
August 2009 – Jobless Claims Rise Unexpectedly (Washington Post)
October 2009 – New jobless claims rise more than expected (AP)
December 2009 – Jobless claims rise unexpectedly (Christian Science Monitor)
January 2010 – New jobless claims rise unexpectedly (AP)
February 2010 – First-time jobless claims rise unexpectedly (AP)
April 2010 – Initial jobless claims increase unexpectedly (AP)
May 2010 – New jobless claims rise unexpectedly (AP)
June 2010 – “The number of Americans seeking jobless benefits last week unexpectedly rose to a one-month high, indicating firings are staying elevated even as the U.S. economy grows.” (Bloomberg)
July 2010 – Weekly jobless claims rise unexpectedly (The Hill)
August 2010 – Stocks drop as jobless claims rise unexpectedly (AP)
September 2010 – New Jobless Claims Rise Unexpectedly (AP)
October 2010 – US initial weekly jobless claims rise unexpectedly (International Business Times)
January 2011 – “U.S. jobless claims jumped unexpectedly last week to their highest level since October, suggesting the labor market is still in a rut despite signs of improvement in the economy.” (Reuters)
February 2011 – First-time jobless claims rise unexpectedly (AP)
April 2011 – Initial Jobless Claims Rise Unexpectedly (Reuters)
May 2011 - Jobless Claims Rise Unexpectedly (Bloomberg News)
See Also: Why the News Makes Us Dumb
“Great Minds Think Alike” Update: Pundit Press’ “Unexpectedly” Compilation
June 23rd, 2011 | 1:09 pm
Thank you for the link! Pundit Press is honored to be linked to by First Things
June 23rd, 2011 | 1:49 pm
It points to the need for a third and probably a fourth political party. Creating jobs is the most serious economic issue in the US and elsewhere. The GOP congress has done nothing to prod Big Business to cough up its trillions for personnel and investment, and the Dems are little better.
Instead, we have market investors recovering most of their losses from 2008–which was the whole point of Bush-inspired and Dem-endorsed bailouts.
Until I hear major party politicians campaign on a job-first platform, any mewlings about the dangers of the deficit will be discounted.
Lacking an alternative to Republicrats or Demicans, I’d love to have a line on the ballot for “none of the above.” It would force the parties to field real candidates who have at heart the best interests of all citizens, not just the ones profiteering from foreign oil adventurism or corporate welfare.
On a local level, businesses with at least ten employees should be encouraged to stretch themselves to hire an 11th. And if large corporations aren’t willing to expand their workforce by ten percent, I’m sure they have the cash in their coffers to contribute to government-funded back-to-work efforts. It would be the patriotic thing to do, ratcheting the tax rates back to what they were in the good ol’ Eisenhower days.
June 23rd, 2011 | 2:50 pm
Joe: the media ALWAYS expect (read: hope for) jobless claim increases in Republic administrations.
June 23rd, 2011 | 2:53 pm
“On a local level, businesses with at least ten employees should be encouraged to stretch themselves to hire an 11th.”
I’m assuming Todd has never been in business. Any business would love to hire a new employee, because that would mean they were producing and/or selling more of whatever it is they do. And in fact, many would like to hire that extra employee in order to promote increased sales or production in advance. If they’re not doing it, it’s because it’s economically either infeasible or impossible, not because Ebenezer is sitting in the back room cackling over his stacks of unspent gold.
June 23rd, 2011 | 3:40 pm
“If they’re not doing it, it’s because it’s economically either infeasible or impossible”
Not always.
Sometimes people don’t do it because they’re stingy, or they value excess profit above giving service to consumers.
Frankly, I’d prefer businesses stretch to hire an employee or two rather than pay a bunch of extra taxes. Keeps the money in the community, especially if it’s a local business. Sets a good example for others. Shows the commitment to good citizenship.
And yes, my church probably could stretch to hire another full-timer, if our personnel committee were on board.
June 23rd, 2011 | 4:01 pm
The sad thing is that one of the few things Obama said that explains a lot of this got mocked- the “ATM Puts people out of jobs” line.
A lot of this unemployment is systemic and will not return. It’s because productivity gains enable less people to do the same job. Those gains are expanding to other fields thought immune: automated checkouts vs cashiers for one, robocalls versus live humans for another.
It’s going to get even worse. Near-field communication might remove the need for cashiers entirely: just swipe your cellphone and leave. Just a door-checker is needed. Martin Ford at his blog econfuture makes some eye-opening arguments about it.
Get used to a lot of unexpectedness.
June 23rd, 2011 | 5:07 pm
This is what I have come to call an Inigo moment. Que Mandy Patinkin with bad Spanish accent to say, “This word ‘unexpected’ I do na theenk it means what you theenk it means…”
June 23rd, 2011 | 6:39 pm
Headline on the day after the election: “Obama unexpectedly loses re-election bid.”
June 23rd, 2011 | 6:51 pm
[...] More here. [...]
June 23rd, 2011 | 7:36 pm
“A lot of this unemployment is systemic and will not return. It’s because productivity gains enable less people to do the same job.”
Then it’s time to carve out new jobs.
“Those gains are expanding to other fields thought immune: automated checkouts vs cashiers for one, robocalls versus live humans for another.”
I can have fun with the latter. A live person can hang up. A robo will get strung along; it doesn’t know it’s getting played.
As for the former, a swipe machine can’t switch for a cracked egg I missed, or tell me they moved canned beans to aisle 3. I refuse to use automated checkout. I prefer a friendly college student. I don’t use ATM’s; I prefer to park my car (or bike, even), walk into the bank and chat up the teller and assistant manager.
People have to want these changes. And if consumers find themselves unimpressed they will go elsewhere. And if employees had a proper democratic say in such “improvements” a lot of this nonsense would be nipped in the bud. But unfortunately, as Henry Ford noted long ago, many corporations are run like socialist dictatorships.
Business is about forging and maintaining relationships. Many, though not all, corporations have lost the thread on that one. The only thing that permits their survival is unfair or even illegal practices. If local businesses were able to compete on a level playing field, a lot of corporations would be selling off acquisitions big time.
June 23rd, 2011 | 8:37 pm
“Sometimes people don’t do it because they’re stingy, or they value excess profit above giving service to consumers.”
Well, if they value “excess profit” above giving service to consumers AND are dumb enough to think that giving more service to more consumers isn’t going to get them more profits, you have a point.
June 23rd, 2011 | 9:36 pm
I’m not going to say that employers are too stingy to hire new people, but you do have to wonder why they would advertise positions that explicitly exclude the unemployed from consideration. Two related articles:
http://money.cnn.com/2010/06/16/news/economy/unemployed_need_not_apply/index.htm
http://www.businessweek.com/ap/financialnews/D9MQO1100.htm
June 24th, 2011 | 1:36 am
Who can’t love Joe Carter and the First Things blog when the first link is to the rack! Thanks Joe for helping us keep a sense of humor about all these things.
June 24th, 2011 | 8:10 am
It’s interesting that on this article about economics, the greatest cumulative commentary so far is by someone who knows nothing about economics, which puts him in the majority of our US populace. This is perhaps why politicians who harp about taxing the rich, or personally creating jobs, or urging (forcing?) companies to hire an 11th employee for no reason other than to provide a job–this is why such people are taken seriously and even elected. And why we’re in that ugly body of water named Dyer Straits.
When I invest in a business (which I do, and you do too, if you have any savings or retirement plan), I do not expect in return, someone else’s relationships. Unless those relationships foster the main responsibility of the managers of firms I’ve invested in, which is to give me a return.
I’m not being uncharitable. If I’m getting a return, it means that people’s economic needs and wants are being efficiently provided, others are gainfully employed, and my fellow investors and I are rewarded for taking a risk to help all this good happen.
By the way, I always go to the self-service checkout. Get better service that way. Also, I contribute to cost control, which means, ultimately, your groceries will cost you less.
June 24th, 2011 | 9:55 am
Of course the biggest pile of financial punditry nonesense isn’t the ‘unexpected jobless claims’ but the Carnac the Magnificent act done each time they report whereever the DOW was. “The Dow fell ten points, worried about Greek debt”, “The Dow was up fifty points, bullied by reports that flooding on the Mississippi was not as bad as expected!”…..they might was well just say “I had sex with my wife last night, as a result the Dow shot up 70 points this morning!, but then I ate too many tacos for lunch and felt bad causing the Dow to give up those gains and fall to end where it began”….at least it would be more amusing and no less accurate!
Dblade
A lot of this unemployment is systemic and will not return. It’s because productivity gains enable less people to do the same job. Those gains are expanding to other fields thought immune: automated checkouts vs cashiers for one, robocalls versus live humans for another.
The unemployment is due to lack of demand which must continue to be stimulated until unemployment falls again. Productivity does not cause unemployment. If an ‘automated checkout’ can cut the number of cashiers in half for a given amount of transactions, then stores can handle two times as many transactions using the same number of cashiers. If you’ve experienced a massive increase in productivity then you can happily maintain full employment by increasing demand. This should happen more or less automatically as the increase inproductivity will lower prices and/or increase profits.
Systemic unemployment is a less happy case. It happens when the economy shifts what it produces and it takes time for workers to adjust. The quip sometimes asserted about this recession is that we have ‘too many home builders’ and ‘not enough nurses’ and since unemployed construction workers can’t just become nurses overnight we have ‘systemic unemployment’.
The problem though is that it doesn’t really fit the facts. In systemic based unemployment you have the unemployed concentrated in one sector (say building homes) while employment shortgages in another sector (nursing) causing wage increases. The differential between the two is the incentive for the economy to shift the workers around (say by motivating the creation of schools that offer accelerated nursing programs, pushing college biology majors to switch over to nursing etc.). While there are *always* differentials like that in an economy, there’s no sign imo that’s happening here. There’s job losses across all sectors and while some places, companies, careers fair better than others it’s not systemic overall.
June 24th, 2011 | 9:57 am
Todd/ Pentamom
I think the frictional factor about going from 10 to 11 workers isn’t so much about ‘excess profits’ than it is about security. If the increase in sales looks like a blip, better to give the 10 existing workers some overtime….if it looks like a sustained increase for the long term then adding an 11th worker is justified.
June 24th, 2011 | 9:58 am
“If I’m getting a return, it means that people’s economic needs and wants are being efficiently provided …”
Ya think?
Bernie Madoff got a return, too. And so did the people who got in and out early with his schemes.
The truth is that people make mistakes, and even business folk fail at what they do. There are also financial predators out there who are willing to go to any means to deprive people of their hard-earned money.
I love it when the business apologists emerge and mewl about being forced to do things they don’t like. It sounds like Bill Murray: don’t pick your nose, say please and thank you, and don’t drive on the railroad tracks. It’s little better than a comedy routine: I invest in business and someday I’ll be a millionaire. You buy lottery tickets, too, Joe?
June 24th, 2011 | 10:31 am
“Bernie Madoff got a return, too. And so did the people who got in and out early with his schemes.”
Again with the assumption that stupidity works as well as intelligence for a successful business owner. Believe it or not, anyone dumb enough to think that “early returns” on a Ponzi scheme and winding up in jail at the end of it represents success, might indeed be eager to hire that 11th person as a result of some incentive, but all 11 of them will be out of work when he goes bankrupt a few years later as a result of his evident stupidity.
IOW, designing policies to motivate people too dumb to run an enduring business to engage in this or that short-term behavior is not a winning proposition.
June 24th, 2011 | 10:36 am
“If the increase in sales looks like a blip, better to give the 10 existing workers some overtime….if it looks like a sustained increase for the long term then adding an 11th worker is justified.”
Boonton — I wholeheartedly agree. But that’s just another way of saying that the owner is not certain that adding the extra person is a good business decision, and why Todd’s assurance that failure to do so is because his only motivation could be to sit on unproductive “excess profits” is foolish.
I don’t dispute Todd’s contention that people are sometimes greedy and that not everyone makes good business decisions. However, people with their own stake in their own business are more likely to make good ones than some economist who decides that we should incentivize a certain behavior to the degree that people are motivated to do it even if it isn’t an otherwise rational decision for a particular business.
June 24th, 2011 | 11:25 am
I think an aspect missing here is ‘animal spirits’ or to borrow a word from the Marine manual on warfare (see Joe, I did peruse your book recommendations), ‘boldness’. The business owner doesn’t quite know if a bit of increased sales is a blip or long term. If its long term he should grab a worker now before his competitors do and be ready to add market share as the market recovers and his competitors struggle to catch up. If its a blip, though, he may be stuck without enough work.
All in all, its a bit like a grade school dance. If you’re the first to walk to the center of the floor and start dancing you’re either going to end up a laughing stock or the coolest kid in the school. But for the dance to ‘work’ someone has to take that leap so Todd IMO is not quite off in ‘pushing’.
Bernie Madoff got a return, too
Technically he didn’t. If his fund did proper accounting it would have shown flat or negative returns from the beginning.
June 24th, 2011 | 11:36 am
“Again with the assumption that stupidity works as well as intelligence for a successful business owner.”
Hardly. I would argue that for the big banks in 2008, stupidity plus a whole lot of cash in political coffers worked really well for them. When you’re at the top, you have lots of people tell you your underwear looks like a business suit.
I would think more of the example of Kodak in my hometown. They declined to get on board with digital imaging technology, and while they’re still in business, and likely paying their top CEO’s more than they were making in the 80′s, it might be argued that big layoffs put the consequences with the workers. Workers, who, might have done just as well being retrained for computers instead of developing film and the like.
My sense is that good business has some elements of a crapshoot. Sometimes you get lucky. Sometimes you have a great idea filling a need, and you can’t make it work. Talk to some business owners about that one.
Getting back to the small business I know, we could improve our “product” by hiring one full-time person to take over a broad spectrum of communications: social media, publications, and making connections with our parishioners. A lot of us on staff struggle with our limited knowledge of the possibilities. There’s no doubt in my mind that such a person would help us forge better connections with alumni and potential donors.
I suspect that for many medium-sized businesses, there’s no lack of work. And while it’s more cost-effective to ask one person to work 70 hours a week than to ask two to do 35 apiece, there is a moral cost: lost family time, lost leisure time to patronize other businesses, low morale.
I find it endlessly curious that a simple suggestion like thinking about hiring an 11th worker raises so much defensiveness. That so many employers dismiss it out of hand might be itself a sign of the lack of flexibility and creativity in the business arena.
June 24th, 2011 | 11:47 am
“But for the dance to ‘work’ someone has to take that leap so Todd IMO is not quite off in ‘pushing’.”
I agree with the first half of your sentence, not so much with the second. The problem with “pushing” is, to extend the grade school dance metaphor, is that if you make the incentives strong enough to really push effectively, you’re going to push the dorky kids who really have no business even trying to set a trend out onto the dance floor, to be made a laughingstock. Government should simply not be in the business of inducing people to make bad business decisions, in the hope that a few people will be induced to make good ones. Better to simply let business catch up to reality at its own pace. Yeah, that makes growth a bit slower initially, but isn’t it all about “sustainability” nowadays? ;-)
June 24th, 2011 | 12:25 pm
The problem with “pushing” is, to extend the grade school dance metaphor, is that if you make the incentives strong enough to really push effectively, you’re going to push the dorky kids who really have no business even trying to set a trend out onto the dance floor,
Im not sure what type of incentive would be so strong as to pull the ‘dorky kids’ to the floor but leave the kids with booggie unmoved?
Like going on the dance floor, whether a business decision is ‘bad or good’ isn’t an intrinsic attribute of the decision itself. Hiring the worker is good if eveyone else is going to start hiring, bad if no one else is. You can’t divorce the quality of the decision from the rest of the economy because in this case the rest of the economy defines what makes it ‘good’ or ‘bad’.
June 24th, 2011 | 12:54 pm
Todd’s right about CEO pay. On the one hand, it’s likely that the CEO(s) responsible for spurning digital image technology are no longer at Kodak, and the current CEO shouldn’t be punished for that lack of foresight. On the other hand, it’s been demonstrated repeatedly that (a) people who run large companies are resistant to innovation (IBM w/the PC, AT&T w/pretty much everything, American car companies w/fuel efficient cars, and on and on) and (b) there is little, if any, correlation between CEO pay and performance. They are, for all intents and purposes, a class apart. Things that would get most of us fired get them raises — or, at worst, a pleasant severance.
But these are large companies, not small. Suppose you “push” a small company to hire that 11th worker, and the blip turns out to be just that — a blip. The cause might not even be economic; it might be the irrational whim of a client. Whatever the cause, a $70,000 increase in revenue has just evaporated; worse, another $30,000 or more has gone along with it. Suddenly the owner is $100,000 down from what he expected, and has to let go of that $40,000 (say) worker he took on when things looked rosy. Now the media holds him up as the bad guy for laying someone off, rather than artificially stimulating demand.
Yes: businessmen are, on the whole, not very certain of what they are doing. Neither are doctors, meteorologists, salesmen, stockbrokers, and an awful lot of clergy.
& this is a fundamental problem w/arguments like those of Todd & others (both left and right). They pretend to a certainty that they do not have. Centralized planning didn’t work well at all for the Soviet Union, somewhat-centralized planning isn’t working that well for Europe, and IMHO decentralized planning hasn’t worked nearly so well for the US as its advocates pretend (neither as bad as its enemies pretend).
The economists of the early 20th century generally agreed that economic cycles come and go, and there’s little government can do to prevent or encourage them; about all you can do is mitigate the suffering and rein in the excess. Sure, you might postpone a recession for a while, but the likely consequence would be a much worse recession further down the road.
Then we came up with the idea of priming the economic pump, and no one thinks otherwise any longer. Both left & right want to do it, each in different ways: increase spending or cut taxes). History has demonstrated repeatedly that each approach fails. Things inevitably go sour, yet when they do, it’s always, always The Other Guy’s Fault.
June 24th, 2011 | 1:30 pm
“They pretend to a certainty that they do not have.”
Well, Jack, you’re making the choice to read “certainty” into other people’s ideas when there’s really no such thing.
All I’m suggesting–not ordering you to do–is consider that economics is not a science like calculus, where you can map, manipulate and make numbers stand up and dance for you.
My suggestion is actually more traditional Republicanism: take initiative and responsibility on the local level. Why should we wait for the next economics guru at Fed to tell us everything’s hunky dunky? Or buy into the notion that hiring an 11th worker or expanding a business’s reach is bad if nobody else is doing it? It seems to me that if number 11 is a go-getter fresh out of college with new ideas, and everybody else is standing pat with what they’ve been dealt, expansion and innovation are as likely as anything to work out.
And sure, sometimes the decision will be a stinker. But really, are American businesses small and medium-sized really ready for the Chinese or Tim Geithner to say “Frog!” before jumping into action? Are we kids that we need permission to take a chance on employment?
No, I’m not telling Jack or Joe or anybody else to hire a newbie. I am telling you that millions are unemployed and most of those jobs just vaporized at the same time big banks busted and went crying to Uncle Ben for help.
That eleventh worker–at in putting her or him on payroll, you’ll be getting an honest day’s work. What’s Bank of America done for you lately, baby?
June 24th, 2011 | 2:11 pm
“Im not sure what type of incentive would be so strong as to pull the ‘dorky kids’ to the floor but leave the kids with booggie unmoved?”
Not claiming the kids with the boogie would be unmoved, just that the dorky kids would be harmed in the process. And while it’s true that whether a decision is good might be affected by whether everyone else is doing it, it might also be that a bad decision is just a bad decision no matter what because of the circumstances of the particular employer. Maybe the dorky kids would just be better standing around by the punch bowl serving other people because there’s no way they’re going to come off as good on the dance floor no matter who else is out there. In those cases, people would be induced to do themselves harm, and government should simply have no part in inducing individuals to do themselves harm, and should not discount that as the cost of getting other people to do themselves good. Far better to stay neutral.
June 24th, 2011 | 3:03 pm
It seems to me that if number 11 is a go-getter fresh out of college with new ideas, and everybody else is standing pat with what they’ve been dealt, expansion and innovation are as likely as anything to work out.
I think you’re misreading me (I’m replying to more than just what you wrote). To start with, I don’t run a business (in fact, I teach at a university). Beyond that, I think I’d repeat myself, so I’d suggest you read what I wrote again, and think more carefully about the natural reading of some of the things you wrote, including (but not limited to): And if large corporations aren’t willing to expand their workforce by ten percent, I’m sure they have the cash in their coffers to contribute to government-funded back-to-work efforts. It would be the patriotic thing to do…
June 25th, 2011 | 4:17 am
Boonton, demand is more or less fixed. Your store is not going to see two times the customers. The easiest gains will be from letting less people do more: its been consistent throughout business since the downsizing crazes.
For many businesses, there simply wont be any real gains for increasing total capacity. You just shed the jobs and use the savings.
The problem with shifting is that there’s been a hollowing out of unskilled jobs replaced by a much smaller base of skilled jobs. Your average video store clerk or bookstore operator is not going to retrain as an RN. Everyone says “WE need programmers!” but watch a community college algebra class sometime. Not going to be retraining people any time soon.
There’s nothing to distribute to, and thats why we have 9% unemployment. It’s worse in other places.
June 25th, 2011 | 10:50 am
Not claiming the kids with the boogie would be unmoved, just that the dorky kids would be harmed in the process.
Probably not. No guts no glory.
it might also be that a bad decision is just a bad decision no matter what because of the circumstances of the particular employer.
True, but there will always be people who try out bad business ideas. At the end of the day we are better off for it than worse off. Quite often buisness failures become the building grounds of another business’s success. How many times will a successful business get its start by taking over some storefront or spot left empty by a failed business?
June 26th, 2011 | 6:00 pm
Gotta break some eggs, Boonton? Nah. I agree that things that are bad for one person can be good for another or for us all, but *harm to individuals should not be induced by government,* and we shouldn’t consider such harm just the cost of doing business. Of course bad business decisions do get made, but the power of Uncle Sam should not be used to sweeten the ant traps so they look like good ones.
June 28th, 2011 | 1:02 am
[...] Thank you, Joe Carter. Someone finally said it! [...]
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