Friday, March 7, 2014

Those Lazy February Numbers (Unemployment)



Normally, I call the monthly layman's analysis of the Bureau of Labor Statistic's employment figures a "run at the numbers". But this months report is another instance of the numbers barely moving. My hamster (nocturnal) and cat (also nocturnal) are far more active in daylight than the national employment situation has been over the last month.

So, I figured if readers want to read just more of  the same, they could easily look that the previous couple of years worth of analysis.

Good news, the Labor Participation Rate, or Workforce Participation Rate, remained unchanged. It's still just above that 30 year low it hit in December '13 and remains stagnant at an awful and depressing 63.0%. The U3 unemployment rate didn't go up too much. It still rose. For February, it jumped from 6.6% to 6.7%.

Nationally, there were 175,000 jobs created. Some may celebrate that new jobs were created. However, economic models show that is half the number the nation needs to pull out of the recession. Correction, that is half the number the nation would have needed to create each month starting in July 2009 in order to recover by December 2014. To make up for that, we'd need to create closer to four times that amount for the rest of the year. Last year's average was 189k per month.

In reality, a handful of states are carrying the majority of the weight in job creation and economic recovery. Texas and Nebraska, who won Site Selection Magazine's Governor's Cups, are part of the handful. Texas won the overall. Nebraska won the per capita cup. Ohio's Governor Kasich and his administration have been criticized for enacting more conservative leaning economic policies. Ohio took second in both categories for the Governor's cup.

Texas saw it's seasonally adjusted U3 rate drop from 6.0% in December to 5.7% in January. It remains well below the national average. Governor Rick Perry commented on the numbers:

"Every day, more Texans are going to work, earning a living and supporting their families because we follow a simple recipe for job creation: we keep our taxes low, our regulations effective and predictable, our courts fair and our schools accountable. That's why Texas has been the national epicenter for job creation for more than a decade, and today's numbers indicate we're not slowing down anytime soon. While Washington is unable to significantly move the needle on unemployment, in Texas we free job creators to pursue success, which means more good-paying jobs for more Texans."

The Dakotas also have been pulling a large amount of that recovery weight. Many of those jobs are due to shale oil and gas fracking in those states. Those jobs generated economic booms in support industries such as grocery stores and restaurants.

The national economy has fallen into a state of socialism. The few who can and will are pulling all the weight for those who won't.

Texas has been well praised for the state's business-friendly policies that have placed the state at the pinnacle of economic performance. Some naysayers complain about increased public debt. The majority of those debts are at the municipal level, not the state level. Cities keep borrowing money, called issuing bonds. They do so to fund projects, using a selling point of "we can do this without raising taxes". It's a lie. What they mean is:  "We won't raise your taxes this year. In five years we will in order to start paying back the money we owe. The interest at that point will make the amount we owe so much higher. So, you and your kids and grandkids will need to pay back those loans".

A better idea would be to stop politicking to raise funds for things we don't need, and many don't even want. Examples are "light rail" systems. The light rail project in San Antonio is costing tax payers far more than the potential revenue it could ever accrue. The monthly overhead costs are more than the potential revenue. The construction costs will never see equity.

If you were a small business owner that sold ice cream, would that business model make any sense to you? Your supplies cost you $0.75 per serving. The labor cost per serving is $0.50. The overhead (utilities, rent, taxes, healthcare) amount to $1.25 per serving. In order to sell any, you have to compete with the market value of $2.00 per serving, for a loss of $0.50 per serving. You have to pay to stay in business. You lose money. Would you undertake this business? It will fail.

I know this from experience. I was a silent partner in a business. My partner changed the business model, against my advice, while I was deployed. She wanted to increase customer numbers. So she lowered prices. The reality was most of the "customers" were people hanging out and not purchasing anything. She started selling coffee at a loss, hoping to garner more paying customers. The only nights that saw a profit were those with special entertainment and a cover charge. People were willing to pay to hang out, participate (or watch) open-mic nights, sing karaoke, or watch local bands perform. I proposed she enact either a "must purchase" policy on non-event nights or start charging a "hangout fee". Instead, she lowered the cover charge on event nights and lowered the prices of the products. She sold more. But each sale was at a loss.

This is what municipalities run by left-wing ideologues are doing. They expect the tax payers to pick up the bills for the "politicians' wants" when they should be scaling budgets back towards those needs of citizens that fall under the explicitly enumerated authority and responsibility of the municipal government. Stop buying things we don't need, and most of us don't want. 

Outside of Texas, you have whole states that cannot understand this concept. We have a federal government that cannot understand this simple concept. For example, we waste tax money on green energy projects in the Department of Defense that will cost more in the long run. They will not save either money nor energy. Meanwhile, they propose we cut our military personnel, and cut the benefits of those remaining. Why? Because they waste operational, training, and logistic funding on crap like windmills and algae-based fuels.