STATES WITH HIGHER MINIMUM WAGE GAIN MORE JOBS

Original Story: Freep.com

WASHINGTON — Maybe a higher minimum wage isn't so bad for job growth after all.

The 13 states that raised their minimum wages at the beginning of this year are adding jobs at a faster pace than those that did not, providing some counter-intuitive fuel to the debate over what impact a higher minimum has on hiring trends.

Many business groups argue that raising the minimum wage discourages job growth by increasing the cost of hiring. A Congressional Budget Office report earlier this year lent some support for that view. It found that a minimum wage of $10.10 an hour, as President Obama supports, could cost 500,000 jobs nationwide.

But the state-by-state hiring data, released Friday by the Labor Department, provides ammunition to those who disagree. Economists who support a higher minimum say the figures are encouraging, though they acknowledge they don't establish a cause and effect. There are many possible reasons hiring might accelerate in a particular state.

"It raises serious questions about the claims that a raise in the minimum wage is a jobs disaster," said John Schmitt, a senior economist at the liberal Center for Economic and Policy Research. The job data "isn't definitive," he added, but is "probably a reasonable first cut at what's going on."

Just last week, Obama cited the better performance by the 13 states in support of his proposal for boosting the minimum wage nationwide.

"When ... you raise the minimum wage, you give a bigger chance to folks who are climbing the ladder, working hard.... And the whole economy does better, including businesses," Obama said in Denver.

In the 13 states that boosted their minimums at the beginning of the year, the number of jobs grew an average of 0.85% from January through June. The average for the other 37 states was 0.61%.

Nine of the 13 states increased their minimum wages automatically in line with inflation: Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Vermont and Washington. Four more states -- Connecticut, New Jersey, New York and Rhode Island -- approved legislation mandating the increases.

Twelve of those states have seen job growth this year, while employment in Vermont has been flat. The number of jobs in Florida has risen 1.6% this year, the most of the 13 states with higher minimums. Its minimum rose to $7.93 an hour from $7.79 last year.

Some economists argue that six months of data isn't enough to draw conclusions.

"It's too early to tell," said Stan Veuger, a scholar at the American Enterprise Institute. "These states are very different along all kinds of dimensions."

For example, the number of jobs in North Dakota -- which didn't raise the minimum wage and has prospered because of a boom in oil and gas drilling -- rose 2.8% since the start of this year, the most of any state.

But job growth in the aging industrial state of Ohio was just 0.7% after its minimum rose to $7.95 from $7.85. The federal minimum wage is $7.25.

Veuger, one of the 500 economists who signed a letter in March opposed to an increase in the federal minimum, said the higher wages should over time cause employers to hire fewer workers. They may also replace them with new technologies.

The Congressional Budget Office cited those factors in its February report. But in addition to job losses, the CBO also said a higher minimum could boost paychecks for another 16.5 million workers.

Sylvia Allegretto, an economist at the University of California, Berkeley, said that research comparing counties in states that raised their minimums with neighboring counties in states that did not has found no negative impact on employment.

Restaurants and other low-wage employers may have other ways of offsetting the cost of higher wages, aside from cutting back on hiring, she said. Higher pay can reduce staff turnover and save on hiring and training costs.

State and local governments have become increasingly active on the issue as the federal minimum wage has remained unchanged for five years. Twenty-two states currently have higher minimums than the federal requirement.

And 38 states have considered minimum wage legislation this year, the most on record, according to the National Conference of State Legislatures. At least 16 will boost their minimums starting next year, the NCSL says.

CLASS OF 2014 FACES TOUGH JOB MARKET

Original Story Money.CNN.com

Class of 2014: Get ready for a rocky job market.

It's been about five years since the recession officially ended, but there is still a sizable group of young high school and college grads who are idle. Known as "disconnected youth," these under 25-year-olds are neither working, nor enrolled in college.

Roughly 1 in 5 young high school graduates and 1 in 10 recent college graduates fell into these ranks last year, according to a new report by the Economic Policy Institute, a liberal think tank.

The researchers used government census data to come to some rather depressing conclusions for the class of 2014. Young people graduating from high school or college in the next few months will "join a sizable backlog of unemployed college graduates from the last five graduating classes in an extremely difficult job market," they say.

Share: Not working, not in school? What are you doing instead?

The growing ranks of "disconnected youth" make for a worrisome trend, confirmed by earlier studies conducted by the Brookings Institution and the Social Science Research Council.

While the three research groups crunched the data separately, the conclusions all remain the same: Being "disconnected" is a setback that could have a lasting impact on millennials' career tracks and lifetime earnings.

So if they're not working or studying, what are these young people doing instead?

Unfortunately, the data doesn't get very specific. Many are actively looking for jobs, while others may be taking care of family, volunteering, living with a disability that makes it difficult to work, or yes... vegging out playing video games.

 As for those who do get jobs, they are not immune from the ongoing impact of the jobs crisis, either.

For starters, even the lucky graduates who find jobs are starting out with wages lower than the generation that came before them. Wages for young graduates have been falling for over a decade, according to EPI.
 Recent high school grads (ages 17 to 20) earn hourly wages around $9.82. After adjusting for inflation, that's 11% lower than they earned in 2000.

For recent college grads between the ages of 21 and 24, average earnings are around $16.99, or 8% lower than they were in 2007.

These declines represent a substantial amount of money. If wages had merely remained about the same, for example, today's young graduates would be earning about $2,500 to $3,000 more per year.

Meanwhile, job benefits are also on the decline. In 2000, about 53% of newly employed college grads received health insurance from their job. Now only 31% do.

It's possible to overcome these setbacks as young workers move up the career ladder, but the process often takes 10 to 15 years, the report warns.

"The evidence suggests that because of their unlucky timing -- in other words, through absolutely no fault of their own -- this cohort is very likely to fare poorly for at least the next decade," it says.

Business leaders warn as cliff nears

originally appeared in USA Today:

Business leaders are getting more worried about the fiscal cliff, and urging Congress and President Obama to make a deal before the New Year triggers a series of tax increases and spending cuts that would likely put the nation back in a recession.

The Business Roundtable released a letter signed by 158 chief executives of companies with more than $7.3 trillion in sales and 16 million workers, saying congressional Republicans need to make concessions on revenue, and Democrats need to give ground on entitlements such as Medicare and Social Security.

At the same time, the National Federation of Independent Business said a survey of its members showed a huge drop in confidence after the November election, as the cliff drew closer.

The NFIB survey of business confidence fell almost six points to 87.5, the lowest score since 2009 and far below stock market expectations for 92.5. The drop is a sign that business owners are losing confidence as Congress moves closer to raising taxes on couples making more than $250,000 a year, even though less than 5% of business owners make that much, said UBS economist Drew Matus. Only 9% expect better conditions in six months, compared with 49% who expect things to get worse, the NFIB said.

The United States will suffer significant negative economic, employment, and social consequences for going over the fiscal cliff, the CEOs said in a letter to congressional leaders. In many cases, the damage will be long-lasting, if not permanent. But it does not have to happen.

The chief executive of USA TODAY parent Gannett, was one of the CEOs who signed the letter.

The NFIB survey showed declines in nine out of 10 indicators of confidence, with a slight uptick in hiring plans for early next year, the federation said.

Marginal investments may not be undertaken as the increase in taxes moves some investment from the yes to the no column. The debate is whether that marginal investment is a significant source of innovation or employment.

The survey was more bearish than other indicators of business confidence recently. Moody's Analytics' weekly survey of business confidence, released Monday, said confidence rose slightly but remains at a low level. About a third of respondents expect the economy to get worse in the next few months, Moody's reported. In Moody's survey, government officials were the most pessimistic about the economy.

Like investors, businesses appear to believe that policymakers will come to terms before pushing the economy back into recession, Moody's chief economist wrote in a report. However, business sentiment appears very fragile and likely to turn sour quickly if policymakers do fall short.

Small business owners created 19,000 new jobs in November, payroll processing company ADP reported on Dec. 5.

Cities Seeing Falling Unemployment

story first appeared in usatoday.com

Unemployment rates declined last month in more than half of the 372 largest U.S. cities, further evidence of steady improvement in the job market.

The Labor Department said Wednesday that rates fell in 201 metro areas. They rose in 116 and were unchanged in 55. And the number of cities with unemployment below 7% rose to 180 last month, up from 107 a year ago.

Child protective services defense lawyers have found that each 1 percent increase in unemployment was associated with at least a 0.50 per 1,000 increase in confirmed child maltreatment reports one year later. In addition, higher levels of unemployment appeared to raise the likelihood of child maltreatment, as it was not only the lagged change in unemployment, but also the previous year's unemployment level that influenced the number of child abuse cases.

Nationwide, the unemployment rate ticked up to 7.9% from 7.8% in September. That was mostly because more Americans began searching for work but not all found jobs.

Employers added 171,000 jobs in October and the previous two months were revised higher.

Unlike the national data, the metro unemployment rates are not adjusted for seasonal trends, such as the hiring of many part-time retail employees for the winter holidays. So they tend to be more volatile from month to month.

The number of areas with sharply higher unemployment is declining. Thirty-five metro areas had unemployment rates of 10% or above last month. That's the same as the previous month but down from 80 a year ago.

Bismarck, N.D. once again posted the lowest unemployment rate, at 2.2%. The city is benefiting from an oil and gas drilling boom.

Yuma, Ariz. and El Centro, Calif. recorded the highest unemployment rates, at 29.8% and 28.1%, respectively. Both cities include large numbers of migrant farm workers.

Construction Industry Lacks Workers

story first appeared in usatoday.com

The construction industry shed 2.2 million workers between January 2007 and last year.

So now there's an overabundance of them eager for jobs, right?

Wrong.

Contractors are struggling with shortages of workers as the home-building market comes to life and some commercial sectors strengthen. The crunch is affecting a handful of states, including Texas, Arizona, Iowa and Florida. But it's expected to worsen and spread across the USA over the next few years, building officials say. The shortages are already prompting builders to raid each other's job sites for workers.

Milton Chicas, who heads recruiting for Wayne Bros., a Kannapolis, N.C.-based commercial builder in the Southeast, said he thought because there are so many individuals out of work right now, he thought we were going to have a large amount of individuals coming through the door, but was shocked by the contrary.

During the downturn, hundreds of thousands of laid-off construction workers left the field, retired or moved to other states to find work, leaving some markets without an adequate supply for even the current moderate upswing in activity. After scrounging for odd jobs and hoping for an upturn, many workers retooled to become truck drivers, factory workers or roughnecks in the nation's booming oil and natural gas fields.

Meanwhile, Baby Boomers are retiring and fewer high school graduates are entering the field as parents and school officials promote a college education or training in high-tech fields such as computers.

The result is a widening gap between construction labor demand and supply in some areas.

Nationally, building-permit applications for homes and apartments this year are up 31% over 2011, though they're still well below average and the mid-2000s peak, according to the Census Bureau. Builders are finally responding to record low new-home inventories, historically low interest rates and a modestly improving job market. All construction spending, including commercial and government, in September was up 14% from the market bottom in February 2011.

Yet construction payrolls are virtually unchanged from two years ago at 5.5 million. Contractors are coping with the added workload in part by paying employees more overtime, says Ken Simonson, chief economist of Associated General Contractors of America.

Some companies are being cautious following a brutal slump, but others simply can't find workers. Despite the industry's static employment, its jobless rate has dropped from 17.3% to 11.4% the past two years as 320,000 construction laborers stopped working or looking for work, Labor Department figures show.

Twenty-nine percent of home builders surveyed by the National Association of Home Builders in June reported some shortage of framing workers and 6% said there was a serious deficit — only slightly less than in 2006 at the height of the home construction frenzy. By 2017, there could be a shortage of 2 million commercial construction workers, according to the Construction Users Roundtable, a trade group.

The shortfalls are slowing the recovery​ in some states hit hardest by the housing crash. In Florida, permits to build single-family homes this year are up 25% from last year but remain less than a quarter of the 2005 peak. In Tampa, crews that install drywall in new homes are especially scarce after many headed north when projects and wages plummeted in the recession, says Angela Phillian, owner of Angela Drywall. Walls can typically be installed in a house in a week, but it's now taking up to two weeks or more, she says, because she often has to wait at least several days for a crew to free up from another job.

She routinely contends with managers of rival companies who sidle up to a job site and poach her workers by offering them an extra dollar per drywall board, a tactic Phillian says she's forced to deploy as well.

Recently, she says, the builders that subcontract drywall services have agreed to pay more. That has allowed Phillian and her competitors to return their pay rates to pre-recession levels of $5 per board after they fell to less than half that. And it's helping Phillian gradually lure drywall crews back to Tampa from Northern states such as New York.

But it's squeezing Tampa builders such as John Fowke, who says he's been hit recently with a 10% increase in both labor and material costs, forcing him to raise the sales prices of his houses. He worries that home appraisers won't increase their valuations in a still-distressed market, preventing buyers from obtaining a loan.

In Arizona, which is also seeing a moderate turnaround after being battered by the housing crash, a labor shortage is exacerbated by the new law that lets police check people's immigration status. Most white laborers won't work in Arizona's brutal heat and many Hispanic construction workers have left the state because of the law, says Buddy Satterfield, president of Shea Homes in Scottsdale. He says he's tried to coax Hispanic workers from Texas, Colorado and New Mexico, but "those guys won't come to Phoenix."

Satterfield says he's building about 450 homes this year instead of the 750 he should be putting up based on demand.

Although the housing bust wasn't nearly as severe in Texas, many construction workers left the industry to toil in the state's thriving oil and natural gas drilling fields for higher pay and greater stability. With limited crews putting up frames, Tilson Homes is building houses in six to eight months, two months longer than normal, says President Eddie Martin.

Commercial contractors are also struggling in some areas. Scott Norvell, head of Master Builders of Iowa, a trade group, worries there won't be enough workers in the state to handle billions of dollars in projects over the next few years to rebuild structures damaged by the 2011 floods.

Redstone Painting & Finishes, which is turning a historical 12-story building in Des Moines into a complex of offices, stores and condos, has been unable to add 14 workers to the 41 now on site, says company President Rob Knudsen. Instead, he says, existing employees are running up overtime, increasing his costs by 50% and reducing his profits by 25%.

Knudsen says he could double his revenue if he could find enough workers.

At North Carolina's Wayne Bros., which builds concrete walls and foundations for power plants and other commercial buildings, positions stay open three to six months, forcing the company to accept about 25% fewer jobs than it can handle, Chicas says. The contractor offers apprenticeships, but it takes one to three years for an apprentice to be productive, he says.

Such training is less prevalent than it used to be. Many commercial contractors offer apprenticeships and courses in-house or through local trade groups and unions, says Don Whyte, president of the National Center for Construction Education and Research. But a declining number of residential builders provides training, says John Courson, head of the Home Builders Institute. There were 5,453 construction apprenticeship programs overseen by the federal government in fiscal 2012, down from 6,076 in fiscal 2007, Labor Department figures show.

Home builders want workers that can hit the job site and go to work the first day, Courson says.

Meanwhile, some laid-off construction workers are trickling back as activity picks up, but others are entrenched in more stable fields. James Bewley of Omaha, a 36-year mason who was laid off in 2008, worked sporadically at reduced hours for several years. After his income dwindled so dramatically that he almost lost his house, he took a $4,000, four-week class at JTL Truck Driver Training in August 2011.

His first job kept him away from home 11 days at a time and paid half the roughly $50,000 salary he earned in construction. But he recently took a $34,000 job with a petroleum company that lets him make deliveries to area stores and sleep at home nightly. His company also offers a 401(k) plan and paid holidays and vacation — perks he never had in construction.

He sometimes misses his old job, but hasn't forgotten how difficult it was.

Others are open to returning to construction. Steelworker Ryan Espinoza of Reno saw his work slow down in 2008, forcing him to eventually take a job as a bill collector for a cable company and file for bankruptcy. This year, he took a 16-week class to learn to operate computer-controlled factory machines.

He quickly found work at an area factory earning $12 an hour, far below his $30-an-hour construction salary. He also misses working outside and at an endless variety of locations. Espinoza says he'll stay in manufacturing if he can learn to program factory machines, allowing him to approach his former pay.

Apple Inc Critisized for Overseas Factory Conditions

Story first appeared in the Yahoo news.

SAN FRANCISCO - Apple Inc and its main contract manufacturing Foxconn agreed to tackle violations of conditions among the 1.2 million workers assembling iPhones and iPads in a landmark decision that could change the way Western companies do business in China.

Taiwan's Foxconn Technology Group, whose subsidiary Hon Hai Precision Industry assembles Apple devices in factories in China, will hire tens of thousands of new workers, eliminate illegal overtime, improve safety protocols and upgrade workers' housing and other amenities.  A Memphis Employment Lawyer follows the case.

It is a response to one of the largest investigations ever conducted of a U.S. company's operations outside of America. Apple had agreed to the probe by the independent Fair Labor Association (FLA) to stem a crescendo of criticism that its products were built on the backs of mistreated Chinese workers.  The case raises the intrigue of Employment Lawyers in Memphis and elsewhere in the United States due to the severity of the accusations.

The association, in disclosing its findings from a survey of three Foxconn plants and over 35,000 workers, said it had unearthed multiple violations of labor law, including extreme hours and unpaid overtime.

The FLA President expects the agreement between Apple, the world's most valuable listed company, and Foxconn, which supplies 50 percent of the world's consumer electronics, to have far reaching affects.

That could affect brand names that have contracts with the Taiwanese company, including Dell Inc, Hewlett-Packard, Amazon.com Inc, Motorola Mobility Holdings, Nokia Oyj and Sony Corp.

The agreement is a sign of the increasing power of Chinese workers to command higher wages given increasing prices in China, and an ageing workforce that has led to labor shortages.

Working conditions at many Chinese factories supplying Western brands are considerably inferior to those at Foxconn, experts say.

Still, labor costs are a fraction of the total cost of most high-tech devices, so consumers might not see higher prices.

Under the agreement, Foxconn said it will reduce working hours to 49 per week, including overtime, while keeping total compensation for workers at its current level. The FLA audit found workers in the three factories put in more than 60 hours per week on average during peak production periods.

To keep up with demand, Foxconn will hire tens of thousands of additional workers and build more housing and canteens.

Apple CEO, who took over from the late co-founder last year, has shown a willingness to tackle the criticism head-on.

But New York-based labor advocacy group China Labor Watch said the report failed to address the workers' primary concerns.

The agreement has not gone down well with some Foxconn workers, either.

An employee who has worked at a Foxconn factory at Longhua in southern Guangdong province for four years, complained that her salary will drop to just over 2,000 yuan a month ($317) from over 4,000 yuan.

FIRST PHASE

Hon Hai shares fell on Friday around 1.3 percent, underperforming a rising market. Apple shares, which hit a record high on Wednesday, dropped 1.3 percent on Thursday.

The report marks the first phase of a probe into Apple's contract manufacturers across the world's most populous nation.

Foreign firms have long grappled with working conditions in China, dubbed the world's factory because of its low wages and efficient coastal transport and shipping infrastructure.

Global protests against Apple swelled after reports spread in 2010 of a string or suicides at Foxconn's plants in southern China, blamed on inhumane working conditions and the alienation that migrant laborers, often from impoverished provinces, face in a bustling metropolis like Shenzhen, where two of the three factories the FLA inspected are located.  A Personal InjuryLawyer in Memphis is following the case, in regards to reports of employee suicides as a result of poor working conditions and wages.

In months past, protesters have shown up at Apple events - the rollout of the new iPad, the iPhone 4GS and its annual shareholders' meeting - holding up placards urging the $500 billion corporation to make "ethical" devices.

Some have also criticized the FLA for its close alignment with corporations.

NEW DORMS

The FLA in its report sought measures that will reduce working hours while ensuring that migrant laborers - often willing to pile up the overtime to make ends meet back home - do not forego much-needed income.

Foxconn committed to building new housing to ease situations where multiple workers were squeezed into rooms that seemed inhumane by Western standards. The accommodations do not compare to posh New York or Philadelphia Apartments. It agreed to improve accident reporting and help workers enroll for social welfare and increase their participation in committees and other union structures.

The FLA will conduct onsite verification visits to make sure the agreement is implemented.

Apple is not the first U.S. consumer brand to respond to criticism of working conditions at factories abroad making its products.

Nike Inc implemented wide-ranging changes to improve safety and working conditions after it was rocked by reports in the 1990s that its contractors in China and elsewhere forced employees to work in slave-like conditions for a pittance.

Yet even Nike stopped short of Apple's and Foxconn's hiring and income-boosting spree. Last month, Foxconn said it was raising salaries by 16 to 25 percent, and was advertising a basic monthly wage, not including overtime, of 1,800 yuan ($290) in the southern city of Shenzhen, Guangdong province - where the monthly minimum wage is 1,500 yuan.

Future forays by the FLA over coming months will encompass Apple contractors Quanta Computer Inc, Pegatron Corp, Wintek Corp and other suppliers, all notoriously tight-lipped about their operations.

Best Buy Downsizing Stores

Story first appeared in The Detroit News.

Minneapolis -- In order to grow, Best Buy is shrinking.

The largest U.S. specialty electronics retailer for years expanded quickly by opening big-box stores across the country. But shoppers have started using the stores as showrooms, testing products before buying them cheaper elsewhere.

To revamp the struggling chain, Best Buy said Thursday it plans to close 50 of its U.S. big box stores, cut 400 corporate jobs and trim $800 million.

The company, which has about 1,400 U.S. locations, also plans to open 100 smaller and more profitable Best Buy Mobile stores throughout the country.

Best Buy is trying to avoid the fate of its rival Circuit City, which liquidated in 2009 after it struggled with the changing electronics landscape. Sales of TVs, digital cameras and videogame consoles -- once the bread-and-butter of electronics retailers -- have weakened, while sales of lower-margin items like tablet computers, smartphones and e-readers have increased. The rise in competition from Internet rivals like Amazon.com and discounters like Target also has hurt electronics retailers.

To better compete, Best Buy is shaking up its business. The company said it will focus on what sets it apart from its rivals: trained sales staff that can help shoppers get the most out of their tablets, TVs and other electronic devices, including tech support from its "Geek Squad" service and repair unit.

But as Best Buy announced its changes Thursday, the Minneapolis-based firm posted a $1.7 billion fourth quarter loss due in part to restructuring charges.

At a Glance: 2 Employment Surveys

Associated Press

The economy added a net 290,000 jobs in April — the biggest monthly total in four years. Yet the unemployment rate rose from 9.7 percent to 9.9 percent.

How did that happen? It's because of how the government calculates who's employed and who isn't.

The government does two employment surveys each month.

One is called the payroll survey. It asks companies and government agencies how many people they employ. This survey produces the number of jobs gained or lost during the month. In April, the payroll survey showed a net increase of 290,000 jobs. By contrast, in January 2009, the survey showed a loss of 779,000 jobs.

The other is called the household survey. Government workers ask households about the employment status of adults living there. Those without jobs are asked whether they're looking for one. If they're not, they're no longer considered part of the work force and aren't counted as unemployed. The household survey produces the unemployment rate each month.

As recessions drag on, many people who have lost a job and have looked for one for months, give up. These "discouraged" workers were counted as unemployed in the household survey while they were looking. But once they stop, they're no longer counted as unemployed. About 2.4 million people were classified as "discouraged workers" last month, up from 1.4 million when the recession began in December 2007. That exodus helped keep the unemployment rate from rising even higher.

Once a recovery gets under way, positive news — like rising stock prices or companies announcing plans to hire — leads discouraged workers to start looking again. As they rejoin the work force and look for jobs, these people are once again counted as unemployed in the household survey. And they drive up the unemployment rate.

All that's happening now. Previously discouraged workers have become encouraged enough to start looking again because companies have started hiring again. So these people are counted as unemployed again. The result is that in April, the unemployment rate rose from 9.7 percent to 9.9 percent.

Employers Cut 85,000 Jobs To End 2009

The Wall Street Journal

U.S. job losses were higher than expected in December of last year and the unemployment rate remained at a lofty 10%, a sign the labor market has still some way to recover.

Although the November 2009 data was revised to show the U.S. economy added jobs for the first time since the recession began two years earlier, the December payroll number was worse than forecast.



Nonfarm payrolls fell by 85,000 last month, compared with a revised 4,000 gain in November, the Labor Department said Friday.

Economists surveyed by Dow Jones Newswires had expected a payroll decrease of just 10,000. The November figure originally showed an 11,000 drop in payrolls.

The unemployment rate, calculated using a survey of households as opposed to companies, remained at 10% in December, the same level as the previous month. Economists had forecast the jobless rate would edge higher to 10.1%.

Employment fell in construction, manufacturing, and wholesale trade, while temporary help services and health care continued to add jobs.

Even though the payroll number was worse than expected, the data reflects an improvement in the jobs market. Job losses have been moderating substantially during 2009 as the U.S. economy recovered from its worst recession in decades.

In the fourth quarter of 2009, employment losses averaged 69,000 per month, compared to job losses of 691,000 a month in the first quarter of last year.

Employment in construction fell by 53,000 in December, while manufacturing jobs fell by 27,000. Temporary help services added 47,000 jobs in December and health care employment continued to increase, by 22,000.

Ahead of the release, analysts warned against reading too much into one piece of data.

"The number, as reported, is revised no less than three times, often showing a final number that bears little resemblance to the originally reported figures" said Dan Greenhaus, chief economist at Miller Tabak & Co.

The Federal Reserve's view that U.S. interest rates must remain at a record low for several more months isn't expected to change following the December jobs report.

The central bank's rate-setting committee left interest rates close to zero mid-December in the face of low inflation and still-high unemployment. Since the financial crisis began in 2007, the Fed has slashed its benchmark lending rate from a peak of 5.25%.

Minutes of last month's meeting, released earlier this week, showed that Fed officials remained worried about the labor market's weakness. "Several participants observed that more than one good report would be needed to provide convincing evidence of recovery in the labor market," the December minutes showed.

Fed officials have predicted the unemployment rate will average between 9.3% and 9.7% in the fourth quarter of 2010 due to a slow recovery.

The U.S. economy is expected to have expanded at a healthy pace in the second half of 2009, but the jobs market's weakness, tight bank lending and a fading government stimulus is seen keeping the recovery contained.

Friday's report showed that average hourly earnings rose to $18.80 from $18.77.

Underemployed With Two Jobs

Wall Street Journal

For Richard Crane, the "new normal" in the labor market began when he was laid off from a New Jersey battery plant in the summer of 2006.

Mr. Crane had been earning more than $100,000 a year operating heavy machinery at Delco, a former unit of General Motors. He worked there for 23 years, since graduating from high school. But when he lost his job he was thrust into a netherworld of part-time gigs: working the registers at Taco Bell, organizing orders at McDonald's, whatever he could find.

"I thought it would be temporary," says Mr. Crane, 49 years old. Three years later, he is selling outdoor furniture by day and pumping gas by night, while worrying about his skills atrophying and spending scant time with his teenage son. He makes about a third of his former pay.

Mr. Crane is part of a growing group of underemployed -- people in part-time jobs who want full-time work or people in jobs that don't employ their skills. Since the recession began two years ago, the number of people involuntarily working part-time jobs has more than doubled to 9.3 million, according to the federal Bureau of Labor Statistics, the highest number on record.

The proliferation of underemployed could represent a profound reordering of the employment structure. Many people who had comfortable full-time jobs with benefits and advancement opportunities now are cobbling together smaller jobs often at lower pay, in a shift that economists say could become permanent for many individuals stuck in the cycle. Underemployment, along with unemployment, is widely seen as a force slowing the economic recovery.

The trend has been building for years, says Robert Reich, who served as labor secretary under President Bill Clinton and now is a professor of public policy at the University of California, Berkeley. "For decades, workers have been watching their salaries and benefits erode," says Mr. Reich, who took an 8% pay cut last week, along with the rest of the Berkeley faculty.

"We are subjecting millions of people to a standard of living below that which they could achieve if the economy were at full capacity," he says. "Underemployment means that many more people who can't spend as much as they otherwise would."

Federal Reserve Chairman Ben Bernanke last week lamented in a speech to the Economic Club of New York that the number of underemployed is rising much faster than during previous recessions. And the average workweek has fallen to 33 hours, the lowest level in the post-World War II period.

"These data suggest that the excess supply of labor is even greater than indicated by the unemployment rate alone," Mr. Bernanke said. The unemployment rate is now 10.2%.

Among the underemployed is Marty Rasmussen of Walnut Creek, Calif., who was a banking executive for more than 15 years. He and his wife earned a combined income of more than $250,000 a year. As a hobby, he built cabinets and furniture.

Two years ago, he was laid off by a big bank in San Francisco. While job-hunting, he volunteered to build cabinets for a local Lutheran church, and some fellow parishioners hired him to do work. His onetime hobby became his sole source of income. In the last year, he earned more than $10,000 replacing windows and installing crown molding. He just finished a pair of nightstands commissioned by a friend paying $700. His wife also lost her job this year and is collecting unemployment benefits. "It is hard transitioning from hobbyist, because I'm used to giving my work as gifts," he says.

State labor officials and economists generally label the underemployed as those who are working part-time when they would prefer full-time work, as well as people who are working beneath their skill level.

Federal figures on the underemployed, however, don't count that second group -- those who are overqualified for their jobs. Still, the government's broadest measure of labor underutilization -- known as the U6 -- has more than doubled in the two years since the recession began to 17.5%, and it is up from 12% just a year ago, according to the Bureau of Labor Statistics. This means that nearly one in five people are either unemployed, involuntarily working part-time or "marginally attached" -- they want jobs but haven't searched in at least a month. It also counts "discouraged workers" who have stopped searching.

"The number would be much higher if we included the mechanical engineers working at 7-Eleven," says Heidi Shierholz, who studies underemployment at the Economic Policy Institute, a left-leaning Washington think tank.

Melanie Donahoe might be one of them. The 56-year-old mother of three who lives in Stuyvesant, N.Y, has watched her gross income as a self-employed jeweler shrink from a peak of $55,000 to $40,000 when the recession set in, to perhaps $25,000 this year. "Between the recession and the high price of gold, it just keeps slipping and slipping," she says. This summer, she signed on for work as a government census taker, which paid $15 an hour and tided her over for a few months. Then, she joined a local Lowe's as a part-time cashier, earning $9 an hour. She hopes it leads to full-time work.

After being laid off by the New Jersey battery plant in 2006, Mr. Crane took a job stocking shelves at Costco in the fall of 2006. His pay was $10.76 an hour -- the same money he earned when he was hired by Delco in 1983, just out of high school. "It's sad," says Mr. Crane, who had been earning about $28 per hour at Delco, before overtime.

In late 2007, he took a job at Lowe's while working at a series of fast-food jobs on the side, as well as a stint at Pathmark supermarket. He still works at Lowe's, earning $15.96 an hour selling lawnmowers, outdoor furniture and Christmas ornaments. At night, he pumps gas at a Quick Check for $13.70 an hour.

Typically, he works between 61 and 63 hours per week. It wouldn't be so bad, he says, if the hours were consecutive. But with the gap between jobs, he can only sleep a few hours a night now -- sometimes just an hour. Last week, he managed to clock 87 hours and barely saw his son.

"That's all I do -- every day -- I just keep working," he says. "I've got to. I'm not going to lose everything I have."

His wife, who had been a stay-at-home-mother, also took a job. She earns about $20,000 working at a nursing home.

Last year, they collectively earned of about $42,000. This year, they expect between $48,000 and $50,000.

Mr. Crane has applied for hundreds of jobs, among them sanitation worker, bridge painter, tree cutter and transit worker. There were some factory openings, he says, but they pay less than Lowe's.

Over the summer, Mr. Crane's electricity was shut off, he says. He paid the bill and had it restored. But he didn't pay the gas, which is about $175 per month. Instead, all summer, they cooked on the grill outside. Mr. Crane bought an electric hot water heater for baths and laundry. They lived that way for three months before finally turning the gas back on.

Ultimately, many economists expect the underemployment situation to improve, but not for a few years. Companies are cutting back hours, so as they pick up, they are likely to return hours to current staff before hiring new people. "This whole pool of people with reduced hours means recovery of employment is that much farther off," says Ms. Shierholz of the Economic Policy Institute.

Eventually, employment will pick up. But for people like Mr. Crane, the current situation could become permanent.

As they work part-time, they have less time to look for work. Their résumés, meanwhile, become spotty. "If you have a string of jobs beneath your skills, it erodes your resume and marketability," says Ms. Shierholz.

Mr. Crane no longer sees his new life as temporary. He no longer dreams of going and fixing equipment at the factory and operating big machines.

"My new goal is to become a manager at Lowe's," he says. "That will pay $17 an hour. I'm hoping this happens in the next couple of years, by the time my son is in high school."

Job Loss Rate Slows

Significant job losses continued across the economy in October, although the pace of layoffs abated.

Private-sector employment declined 203,000 in October, the seventh-straight month of moderating job losses and the smallest decline since July 2008, according to a report released Wednesday by payroll firm Automatic Data Processing Inc.

Meanwhile, job cuts announced by employers declined for the third-straight month, down 16% from September to 55,679, outplacement firm Challenger, Gray & Christmas said. That was the best reading since March 2008 and less than half the cuts made in October 2008.

The reports came against a faster decline in service-sector employment in the Institute for Supply Management's nonmanufacturing survey. The overall ISM reading slipped to 50.6 in October from 50.9 the previous month, showing slightly slower growth for the sector. (Figures above 50 indicate expansion.) The ISM's employment index fell to 41.1 from 44.3 in September as purchasing managers in the survey reported more layoffs and hiring freezes as companies assess the sustainability of the economic recovery.

Just three of 18 industries in the service-sector survey reported increasing employment in October: real estate, rental and leasing; mining; and management of companies and support services, which includes temp firms.

"The employment piece of the puzzle is what's really holding back this recovery," said Anthony Nieves, a senior vice president at Hilton Hotels Corp. who directs the ISM survey. "Companies are cautious. The consumer is cautious. Everybody is very nervous and holding things close to the vest right now."

The latest reading for the service sector came after the ISM's manufacturing index this week showed continued improvement, particularly in jobs. Manufacturers appeared to be recalling some workers and expanding work schedules, offering hope that other sectors could follow.

The losses in the ADP report are worse than economists' consensus estimate that employers, including the government, cut 175,000 jobs in October. The Labor Department, which releases its estimate of October employment on Friday, previously reported that payrolls fell 263,000 in September.

"The number of unemployed is not the only issue," notes overtime lawyer Verne Elron. "Underemployment and cut-backs in hours are still seriously affecting those who still technically have jobs."

Despite stabilization in the economy, employment "is likely to decline for at least a few more months," said Joel Prakken, chairman of the forecasting firm Macroeconomic Advisers, which produces the private-sector report with ADP.

Amercans Still Wary Of Economy

AP

The housing market and stocks may be looking up, but Americans just can't shake their job worries.

In a sign that talk of an economic recovery has yet to soothe a recession-battered nation, consumer confidence fell in October and came in well below what analysts were expecting.

For stores, the reading is reason to worry that holiday sales might be even worse than they feared.

In a separate reading, the Conference Board reported shoppers' sentiments about the state of the economy are the gloomiest in nearly three decades. Americans reported they plan to cut back on spending, in large part because they don't trust the job market.

The unemployment rate is just under 10 percent, and economists say it could hit 10.5 percent next year.

"It's hard to get a job, and the ones that are out there don't pay enough," said Mitch Hicks, a 33-year-old from Hillsboro, Ore., who lost his job at a cabinet company a year ago and is still struggling to find work.

The board's index of consumer confidence fell to 47.7 in October from 53.4 in September. Economists were expecting only a small decline, to 53.1. It takes a reading of 90 to indicate an economy on solid footing, 100 or more to indicate growth.

Nearly half the 5,000 households surveyed by the board said jobs were hard to come by, and about one in four said they expected fewer available jobs in the coming months.

"We've gone down so far that it's kind of like when you fall into a deep hole and you're down 20 feet and you climb up by three feet," said Brian Bethune, an economist at IHS Global Insight. "You're better off than you were before, but you've still got a long way to go to get out."

There have been signs of recovery elsewhere: Corporate earnings are getting stronger, the stock market has regained much of its lost ground and figures due out Thursday are expected to show the recession officially ended in June or July.

And there was another indication Tuesday that the housing market is stabilizing. The Standard & Poor's/Case-Shiller price index showed home prices in August climbed for the third consecutive month, helped by a popular tax credit for first-time homebuyers.

But all the improvements haven't translated to economic security.

Sharon Jerndt, 47, is trimming her holiday gift list because she's scared of racking up credit card debt. She's also eating at home and skipping other indulgences.

"I'm trying to only pay with cash," said Jerndt, who works as a court reporter in Chicago.

Economists pay close attention to consumer confidence because it's a good barometer of the attitude of shoppers, whose spending on goods and services ultimately fuels 70 percent of the U.S. economy.

At best, economists expect holiday sales to be flat from a year ago, when businesses recorded their biggest declines in at least four decades.

Americans are "quite pessimistic about their future earnings, a sentiment that will likely constrain spending during the holidays," said Lynn Franco, director of The Conference Board's Consumer Research Center.

The confidence index sank to a historic low of 25.3 in February. It's still well below the reading of 61.4 last fall just before Lehman Brothers collapsed, the beginning of the financial crisis.

Employers Still Holding Off On Hiring

 Wall Street Journal

Companies across the economy are holding off on hiring even as the profit outlook improves, amid economic uncertainty and their own success at raising productivity in rough waters.

Hiring always lags behind in economic recoveries, but the outlook this time is worse, many economists say. Most forecasters now expect a prolonged period of high unemployment, even though the government is expected to report next week that the economy grew in the third quarter, after four quarters of contraction. That is sure to frustrate the jobless and could be a problem for the Obama administration.

There are several major factors behind the trend, which is coming on top of sharper-than-expected job cuts in the recession. Many businesses have nagging doubts about the durability of the upturn, attributing much of the recent growth in orders to a move by their customers to rebuild inventories and to government stimulus spending, rather than underlying strength in their markets.

The average workweek is now down to 33 hours, the lowest since records started in the 1960s

Businesses also face uncertainty about the potential costs of regulatory moves -- such as an expansion of health care and climate legislation -- that could drive up costs. And many employers have learned how to produce more with a smaller number of people than they previously thought possible.

That is what happened at D'Addario Co. in Farmingdale, N.Y., one of the world's leading producers of guitar strings. Business began reviving in August, roughly when economists believe the recession ended. Chief Executive James D'Addario credits an influx of orders from retailers and China's guitar factories. But he sees much of this growth as a reaction to the slump earlier this year, when his customers were frantically slashing inventories to conserve cash. "Now, the pipeline's empty," he said.

Still, Mr. D'Addario sees no reason to start hiring. He shed 150 workers and cut hours during the darkest days of the slump, bringing the head count down to 950. A host of efficiency moves -- such as teaching many workers to inspect their own work, which let D'Addario go from 17 inspectors to 10 -- has saved so much labor that there's no need to hire now. "I estimate we can produce 15% to 20% more with the same number of people," he said.

The same story is being repeated across the economy -- in factories, hotels and banks. The average workweek is now down to 33 hours, the lowest since records started in the 1960s. Productivity, or output per hour of work, grew at a 6.6% annual rate in the second quarter, as employers shed workers faster than they cut output. It was the largest increase in any quarter since 2003. Productivity grew at a 2.5% pace from 2000 through 2008.

"Businesses have been so aggressive in cutting labor input that productivity rose noticeably in the first half of the year," Federal Reserve staff economists told officials at their September meeting, according to minutes released last week.

Some employers have started calling back workers, and some are expanding. Steel mills and auto factories have reopened. Cree Inc., a Durham, N.C., maker of lighting fixtures, earlier this month said it would add 275 jobs as part of an expansion.

But most employers haven't resumed hiring. The U.S. has shed 7.2 million jobs since the recession began in December 2007, the deepest contraction since the Great Depression. Even if the job market started spitting out jobs as fast as it did during the 1990s boom, adding 2.15 million private-sector jobs a year, the U.S. wouldn't get back to a 5% unemployment rate until late 2017.

"Given the uncertain outlook in the economy and credit conditions, firms are reluctant to hire," says economist Mark Gertler of New York University. "This is a very tough labor market. It looks like it's going to be a slow process."

At the Sheraton Maui Resort & Spa in Hawaii, general manager Chip Bahouth said the recession prompted his hotel to look hard at ways to save money.

Service businesses pose distinct challenges. Unlike factories -- which can automate -- a service business is defined by people vacuuming rugs and scrubbing toilets.

Even so, Mr. Bahouth found ways to nip and tuck. The coffee cart in the hotel lobby used to open at 6 a.m., but sold only about 10 cups in the first hour. So the hotel started opening it at 7, reducing one work hour each day for the cart operator. Similarly, the hotel used to have two full-time carpet cleaners who ran lumbering machines that deep-cleaned about 10 rooms each a day. By staging big drums of cleaning solution in closets on each floor, workers no longer have to make trips to a basement stockroom to refill their machines, and each can now clean up to 15 rooms a day.

Productivity growth is ultimately good for companies, workers and the economy. More productive companies have greater profits, which allow them to pay higher wages. That also allows the economy to grow faster without generating inflation. But in the short run, stretching existing workers means hiring fewer new ones.

Another reason not to hire new workers: Many companies already have excess labor on hand. After reducing hours and cutting overtime during the recession, they can easily increase production by simply adding hours for existing workers.

There's also the fear factor. As companies cut back, remaining workers often picked up the slack. At 352 Media Group, a Web design firm in Newberry, Fla., head count has been reduced to about 40 from 50 a year ago. But Peter VanRysdam, a company principal, said he notices a lot more cars in the parking lot when he gets in each morning.

In a two-week pay period in January, before the layoffs, Mr. VanRysdam said, the company had 1,065 billable hours across 33 Web developers. In the most recent pay period, the company had 1,329 hours from only 26 people.

"After the cuts were made, the people that are still here...are motivated that much more," he said. "They know they can't just put their résumé out there, because this is happening across the industry."