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.
Showing posts with label jobs. Show all posts
Showing posts with label jobs. Show all posts
Monday, July 21, 2014
Thursday, March 6, 2014
WEST LEADS IN U.S. JOB GROWTH
Original Story from USATODAY.com.
Go west, young job-seeker.
Seven of the 10 states with the fastest job growth this year will be in the West, as the region benefits from a stronger housing recovery and continued gains in its bread-and-butter energy, technology and tourism industries, according to forecasts by IHS Global Insight.
The states, which generally led the nation with rapid payroll increases last year, as well, are North Dakota, Texas, Arizona, Colorado, Utah, Idaho and Oregon.
The West was a hotbed of population and job growth for decades after World War II, but some states in the region were hit harder by the housing downturn than the rest of the country and were slower to rebound early in the recovery.
Now that states such as Arizona and Nevada have worked through most of their home foreclosures, residential construction is rebounding sharply, spawning thousands of new jobs, economists say. Many Western states, however, still trail the nation in recouping jobs lost in the recession.
"It was down so far, and the housing market has finally stabilized," says Richard Wobbekind, head of business research at University of Colorado, Boulder.
Other factors are also at work. North Dakota and Texas are riding an oil boom after largely avoiding the recession's most punishing blows. Colorado and Utah, while enjoying a surge in oil and natural gas drilling, are also now high-tech centers helping satisfy Americans' appetite for mobile devices and applications.
Oregon is a semiconductor manufacturing hub. In Arizona, job growth is being fueled by a technology base that includes Apple's new 2,000-employee glass factory in Mesa, as well as surging tourism, now that rising household wealth is spurring more consumer spending.
As technology increasingly allows Americans to work remotely, the entire Western region is drawing more residents from other states who want to live amid scenic mountains and enjoy a better quality of life, says IHS economist Jim Diffley.
"They're just progressive, attractive places to live," Diffley says.
During the recovery's early days, migration to the West was limited by the large number of Americans who couldn't move because they owed more on their mortgages than their homes were worth, says economist Chris Lafakis of Moody's Analytics. But the stock of so-called underwater homes has fallen dramatically.
Home buyers are also finding it easier to qualify for mortgages, allowing them to pick up stakes. Many older Americans are finally feeling that their nest-egg investments are secure enough for them to move to retirement havens in the West.
"We expect 2014 to be the year when in-migration (to western states) picks up a lot," Lafakis says.
That will increase the need for local services and jobs.
Go west, young job-seeker.
Seven of the 10 states with the fastest job growth this year will be in the West, as the region benefits from a stronger housing recovery and continued gains in its bread-and-butter energy, technology and tourism industries, according to forecasts by IHS Global Insight.
The states, which generally led the nation with rapid payroll increases last year, as well, are North Dakota, Texas, Arizona, Colorado, Utah, Idaho and Oregon.
The West was a hotbed of population and job growth for decades after World War II, but some states in the region were hit harder by the housing downturn than the rest of the country and were slower to rebound early in the recovery.
Now that states such as Arizona and Nevada have worked through most of their home foreclosures, residential construction is rebounding sharply, spawning thousands of new jobs, economists say. Many Western states, however, still trail the nation in recouping jobs lost in the recession.
"It was down so far, and the housing market has finally stabilized," says Richard Wobbekind, head of business research at University of Colorado, Boulder.
Other factors are also at work. North Dakota and Texas are riding an oil boom after largely avoiding the recession's most punishing blows. Colorado and Utah, while enjoying a surge in oil and natural gas drilling, are also now high-tech centers helping satisfy Americans' appetite for mobile devices and applications.
Oregon is a semiconductor manufacturing hub. In Arizona, job growth is being fueled by a technology base that includes Apple's new 2,000-employee glass factory in Mesa, as well as surging tourism, now that rising household wealth is spurring more consumer spending.
As technology increasingly allows Americans to work remotely, the entire Western region is drawing more residents from other states who want to live amid scenic mountains and enjoy a better quality of life, says IHS economist Jim Diffley.
"They're just progressive, attractive places to live," Diffley says.
During the recovery's early days, migration to the West was limited by the large number of Americans who couldn't move because they owed more on their mortgages than their homes were worth, says economist Chris Lafakis of Moody's Analytics. But the stock of so-called underwater homes has fallen dramatically.
Home buyers are also finding it easier to qualify for mortgages, allowing them to pick up stakes. Many older Americans are finally feeling that their nest-egg investments are secure enough for them to move to retirement havens in the West.
"We expect 2014 to be the year when in-migration (to western states) picks up a lot," Lafakis says.
That will increase the need for local services and jobs.
Tuesday, November 6, 2012
Manufacturing Jobs lost to Federal Prisoners
story first appeared on Associate Press
On the outside, Unicor, with its big oaks and magnolia trees, looks like it could be part of a landscaped industrial park. Step a little closer and it's clear the apparel shop lies in the middle of a medium-security federal prison in east Alabama.
The factory and those like it that employ convicted felons are at the heart of a simmering debate about whether prisons should be siphoning away jobs — at much lower wages — that could be filled by those who need them during the nation's toughest period of unemployment in decades.
Congressional Republicans, a handful of Democrats and private-industry critics want to clamp down on Unicor, the trade name for Federal Prison Industries.
Almost 13,000 inmates working in federal lockups around the country for a few dollars a day make everything from military uniforms to office furniture to electrical parts that are sold exclusively to federal agencies. With annual revenues that reached $900 million last year, Unicor is the federal government's 36th-largest vendor.
Corrections officials say the program teaches prisoners invaluable job skills and personal discipline that help cut down on their return to prison. Inmates who work in the program are 24 percent less likely to commit more crimes than other prisoners after being released, they say.
Philip J. Sibal, senior deputy assistant director of Federal Prison Industries, told a congressional committee earlier this year that althought Unicor operates as a business, the benefit is inmates who are trained in marketable job skills so that they can return to the community as productive members of society.
But Misti Keeton's eyes welled with tears at the thought of losing her job to a convict. She sews military apparel in the west Alabama town of Fayette at American Power Source. The company is laying off about 50 workers at her plant and another one in Columbus, Miss., after losing a contract to make Air Force exercise garb to Unicor.
Critics of the program say Unicor undercuts private companies because of lower operating costs and laws that require federal agencies to use inmate-produced products when able.
Inmates in the Talladega prison factory are paid by the pieces of clothing they complete and average around $150 a month, which goes into an account at the prison. At American Power Source, workers make $9.25 an hour average, or about $1,480 a month based on a 40-hour week.
Federal prisoners, though, haven't taken huge numbers of jobs away from private industry. Private groups supporting limits on Unicor's operation have documented only 300 or so layoffs directly linked to private companies losing work to federal prisoners, all at four textile plants in Alabama and Tennessee.
And, though Unicor doesn't have to pay benefits like many private employers, Talladega plant manager Robert Bynum said the factories face a challenge other businesses don't: Making quality products with convicted felons, many of whom don't know how to work. He says many have never had a job.
Correctional officers are stationed all around the prison, but not inside the factory unless needed.
The tension between private jobs and rehabilitating prisoners has hounded the prison industry program since it began under President Franklin D. Roosevelt during the Great Depression in 1934, when the national unemployment rate was 22 percent.
Back then, the American Federation of Labor opposed creating a prison-based manufacturing network, arguing it would suck jobs away from the private sector at a time when working people needed every job they could get. The arguments today against Unicor are similar as the nation tries to escape lingering high unemployment following the worst recession since before World War II.
Federal agencies are now required to purchase items when possible from Unicor. However, Rep. Bill Huizenga, R-Mich., is the primary sponsor of legislation to change that.
Among other things, the proposal that has drawn bipartisan support would subject prison factories to direct competition with private business by removing a requirement that makes Unicor the "mandatory source" for some products for government agencies.
The House passed such legislation in 2003 and 2006 before it stalled in the Senate both times; this year's version got stuck in the committee that held the hearing where Sibal spoke in June.
John M. Palatiello of the Business Coalition for Fair Competition, which supports the bill, says there is still a good opportunity to get something done.
But with Unicor plants at 66 prisons nationwide, critics say prisoners are doing work that law-abiding citizens could be performing. The operation isn't nearly as big as just a few years ago because the sluggish economy and tight budgets have reduced government orders, forcing the Bureau of Prisons to close or downsize 43 Unicor factories nationwide.
James Hamm isn't following the Unicor debate closely, but he knows all about prison factories: He's serving 38 years for bank robbery at the Talladega Federal Correctional Institution, which houses 1,050 prisoners. Hamm is among the 210 inmates who produce military apparel in a 30,000-square-foot factory at the prison.
Hamm, 34, has used prison wages to pay his court-ordered fine of $1,200, and he earned the high school equivalency degree that was required as part of his participation in Unicor. He said the prison job has taught him about hard work and responsibility — things he didn't know anything about on the outside.
About 130 miles away on the other side of Alabama, Keeton does the same thing at American Power Source.
Keeton sympathizes with the need to rehabilitate prisoners in a way few others might — she's a former inmate herself. Keeton served time at a state prison on drug-related charges but is now laboring in the same building where her mother worked for 27 years for a different apparel maker.
On the outside, Unicor, with its big oaks and magnolia trees, looks like it could be part of a landscaped industrial park. Step a little closer and it's clear the apparel shop lies in the middle of a medium-security federal prison in east Alabama.
The factory and those like it that employ convicted felons are at the heart of a simmering debate about whether prisons should be siphoning away jobs — at much lower wages — that could be filled by those who need them during the nation's toughest period of unemployment in decades.
Congressional Republicans, a handful of Democrats and private-industry critics want to clamp down on Unicor, the trade name for Federal Prison Industries.
Almost 13,000 inmates working in federal lockups around the country for a few dollars a day make everything from military uniforms to office furniture to electrical parts that are sold exclusively to federal agencies. With annual revenues that reached $900 million last year, Unicor is the federal government's 36th-largest vendor.
Corrections officials say the program teaches prisoners invaluable job skills and personal discipline that help cut down on their return to prison. Inmates who work in the program are 24 percent less likely to commit more crimes than other prisoners after being released, they say.
Philip J. Sibal, senior deputy assistant director of Federal Prison Industries, told a congressional committee earlier this year that althought Unicor operates as a business, the benefit is inmates who are trained in marketable job skills so that they can return to the community as productive members of society.
But Misti Keeton's eyes welled with tears at the thought of losing her job to a convict. She sews military apparel in the west Alabama town of Fayette at American Power Source. The company is laying off about 50 workers at her plant and another one in Columbus, Miss., after losing a contract to make Air Force exercise garb to Unicor.
Critics of the program say Unicor undercuts private companies because of lower operating costs and laws that require federal agencies to use inmate-produced products when able.
Inmates in the Talladega prison factory are paid by the pieces of clothing they complete and average around $150 a month, which goes into an account at the prison. At American Power Source, workers make $9.25 an hour average, or about $1,480 a month based on a 40-hour week.
Federal prisoners, though, haven't taken huge numbers of jobs away from private industry. Private groups supporting limits on Unicor's operation have documented only 300 or so layoffs directly linked to private companies losing work to federal prisoners, all at four textile plants in Alabama and Tennessee.
And, though Unicor doesn't have to pay benefits like many private employers, Talladega plant manager Robert Bynum said the factories face a challenge other businesses don't: Making quality products with convicted felons, many of whom don't know how to work. He says many have never had a job.
Correctional officers are stationed all around the prison, but not inside the factory unless needed.
The tension between private jobs and rehabilitating prisoners has hounded the prison industry program since it began under President Franklin D. Roosevelt during the Great Depression in 1934, when the national unemployment rate was 22 percent.
Back then, the American Federation of Labor opposed creating a prison-based manufacturing network, arguing it would suck jobs away from the private sector at a time when working people needed every job they could get. The arguments today against Unicor are similar as the nation tries to escape lingering high unemployment following the worst recession since before World War II.
Federal agencies are now required to purchase items when possible from Unicor. However, Rep. Bill Huizenga, R-Mich., is the primary sponsor of legislation to change that.
Among other things, the proposal that has drawn bipartisan support would subject prison factories to direct competition with private business by removing a requirement that makes Unicor the "mandatory source" for some products for government agencies.
The House passed such legislation in 2003 and 2006 before it stalled in the Senate both times; this year's version got stuck in the committee that held the hearing where Sibal spoke in June.
John M. Palatiello of the Business Coalition for Fair Competition, which supports the bill, says there is still a good opportunity to get something done.
But with Unicor plants at 66 prisons nationwide, critics say prisoners are doing work that law-abiding citizens could be performing. The operation isn't nearly as big as just a few years ago because the sluggish economy and tight budgets have reduced government orders, forcing the Bureau of Prisons to close or downsize 43 Unicor factories nationwide.
James Hamm isn't following the Unicor debate closely, but he knows all about prison factories: He's serving 38 years for bank robbery at the Talladega Federal Correctional Institution, which houses 1,050 prisoners. Hamm is among the 210 inmates who produce military apparel in a 30,000-square-foot factory at the prison.
Hamm, 34, has used prison wages to pay his court-ordered fine of $1,200, and he earned the high school equivalency degree that was required as part of his participation in Unicor. He said the prison job has taught him about hard work and responsibility — things he didn't know anything about on the outside.
About 130 miles away on the other side of Alabama, Keeton does the same thing at American Power Source.
Keeton sympathizes with the need to rehabilitate prisoners in a way few others might — she's a former inmate herself. Keeton served time at a state prison on drug-related charges but is now laboring in the same building where her mother worked for 27 years for a different apparel maker.
Wednesday, July 27, 2011
WAS TEXAS JOB BOOM JUST IN GOVERNMENT JOBS?
This story first appeared on WSJ.com.
As Texas Gov. Rick Perry ponders a bid for the Republican presidential nomination, Texans weighing his economic legacy are debating the role played by a long boom in government jobs—and the possible bust ahead.
Texas has enjoyed the most robust economy in the U.S. during Mr. Perry's decade as governor, which is one reason his potential candidacy is attracting national attention. The Lone Star State gained more than a million jobs since the end of 2000, while the U.S. has lost almost 1.5 million.
About 300,000 of the new Texas jobs were in government. Well over half of them, fueled by the surging population, were at public schools. Employment in the state's public sector has jumped 19% since 2000, compared with a 9% rise in the private sector.
Now layoffs loom. State budget cuts, championed by Mr. Perry to address a big budget shortfall, are prompting school districts around the state to lay off hundreds of teachers and other workers going into the school year starting next month.
The layoffs haven't shown up in federal data, but some economists forecast they may damp the state's vaunted economic growth. And many more jobs are likely to disappear over the next two years as a result of about $15 billion in state budget cuts.
Mr. Perry's office said he wasn't available to comment. A spokeswoman said the growth in public-school jobs reflects the population boom, adding Mr. Perry doesn't believe budget cuts will hamper the Texas economy. She said the key to prosperity is the growth of the private sector, not the government sector.
Mr. Perry has urged the rest of the U.S. to use the state's low taxes, light regulation and tort reform as a model for driving private-sector growth. The fastest-growing employment sector in Texas during his tenure has been mining, which includes the booming oil and gas industry, up 63% in past decade, or 94,000, to 243,000 jobs.
Looking at the number of net new jobs, the biggest increases were in private education and health, up 408,000 jobs, or 40%, and government, up 301,000, or 19%. Employment in manufacturing and information fell.
Critics say many of the new jobs are low-wage and without benefits; according to federal data, the state is tied with Mississippi for the largest percentage of hourly workers who make minimum wage or less, at 9.5%.
Texas also benefits from factors not easily replicated elsewhere. Among them: Texas' massive size, which can support job-rich infrastructure such as the Port of Houston; its oil and gas deposits; its proximity to Mexico, an important trading partner; and its young and expanding population.
Over the past decade, Texas has added more people than any other state and now accounts for 8.1% of the U.S. population, up from about 7.4% in 2000. And Texas has added more than one in five of the public-sector jobs nationwide, including those at the local, state and federal levels.
Local government jobs in Texas rose by 225,000, or 21%, between year-end 2000 and 2010, with 169,000 of those jobs related to education, an increase of 24%, all according to federal data not adjusted for seasonal factors.
Mr. Perry has tended to play down the magnitude of government hiring, maintaining that the government's economic role is to create a favorable climate for private businesses. Las month he said that government doesn't create any jobs, they can actually run jobs away.
But the Texas numbers show the government did create jobs, with the help of federal stimulus funds, said Rep. Garnet Coleman, a Democratic state representative from Houston.
Though tea-party supporters in Texas have backed big cuts in government spending, Mark Reid, chairman of the steering committee of the Texas Tea Party Alliance, said he wasn't bothered by the expansion of local education jobs. "I know people are moving to the state and as communities grow we have to build schools," he said.
In Texas, the state is responsible for a large portion of local schools' spending. Faced with a big budget shortfall, the legislature this spring reduced per-pupil aid by several billion dollars. Those cuts will result in more than 48,000 public-school layoffs just in 2013, said Eva de Luna Castro, a senior budget analyst at the Center for Public Policy Priorities, a left-leaning think tank in Austin. Other say such forecasts are overblown, arguing schools can save jobs through efficiencies and tapping reserve funds.
Austin Independent School District has already given pink slips to more than 500 workers.
As Texas Gov. Rick Perry ponders a bid for the Republican presidential nomination, Texans weighing his economic legacy are debating the role played by a long boom in government jobs—and the possible bust ahead.
Texas has enjoyed the most robust economy in the U.S. during Mr. Perry's decade as governor, which is one reason his potential candidacy is attracting national attention. The Lone Star State gained more than a million jobs since the end of 2000, while the U.S. has lost almost 1.5 million.
About 300,000 of the new Texas jobs were in government. Well over half of them, fueled by the surging population, were at public schools. Employment in the state's public sector has jumped 19% since 2000, compared with a 9% rise in the private sector.
Now layoffs loom. State budget cuts, championed by Mr. Perry to address a big budget shortfall, are prompting school districts around the state to lay off hundreds of teachers and other workers going into the school year starting next month.
The layoffs haven't shown up in federal data, but some economists forecast they may damp the state's vaunted economic growth. And many more jobs are likely to disappear over the next two years as a result of about $15 billion in state budget cuts.
Mr. Perry's office said he wasn't available to comment. A spokeswoman said the growth in public-school jobs reflects the population boom, adding Mr. Perry doesn't believe budget cuts will hamper the Texas economy. She said the key to prosperity is the growth of the private sector, not the government sector.
Mr. Perry has urged the rest of the U.S. to use the state's low taxes, light regulation and tort reform as a model for driving private-sector growth. The fastest-growing employment sector in Texas during his tenure has been mining, which includes the booming oil and gas industry, up 63% in past decade, or 94,000, to 243,000 jobs.
Looking at the number of net new jobs, the biggest increases were in private education and health, up 408,000 jobs, or 40%, and government, up 301,000, or 19%. Employment in manufacturing and information fell.
Critics say many of the new jobs are low-wage and without benefits; according to federal data, the state is tied with Mississippi for the largest percentage of hourly workers who make minimum wage or less, at 9.5%.
Texas also benefits from factors not easily replicated elsewhere. Among them: Texas' massive size, which can support job-rich infrastructure such as the Port of Houston; its oil and gas deposits; its proximity to Mexico, an important trading partner; and its young and expanding population.
Over the past decade, Texas has added more people than any other state and now accounts for 8.1% of the U.S. population, up from about 7.4% in 2000. And Texas has added more than one in five of the public-sector jobs nationwide, including those at the local, state and federal levels.
Local government jobs in Texas rose by 225,000, or 21%, between year-end 2000 and 2010, with 169,000 of those jobs related to education, an increase of 24%, all according to federal data not adjusted for seasonal factors.
Mr. Perry has tended to play down the magnitude of government hiring, maintaining that the government's economic role is to create a favorable climate for private businesses. Las month he said that government doesn't create any jobs, they can actually run jobs away.
But the Texas numbers show the government did create jobs, with the help of federal stimulus funds, said Rep. Garnet Coleman, a Democratic state representative from Houston.
Though tea-party supporters in Texas have backed big cuts in government spending, Mark Reid, chairman of the steering committee of the Texas Tea Party Alliance, said he wasn't bothered by the expansion of local education jobs. "I know people are moving to the state and as communities grow we have to build schools," he said.
In Texas, the state is responsible for a large portion of local schools' spending. Faced with a big budget shortfall, the legislature this spring reduced per-pupil aid by several billion dollars. Those cuts will result in more than 48,000 public-school layoffs just in 2013, said Eva de Luna Castro, a senior budget analyst at the Center for Public Policy Priorities, a left-leaning think tank in Austin. Other say such forecasts are overblown, arguing schools can save jobs through efficiencies and tapping reserve funds.
Austin Independent School District has already given pink slips to more than 500 workers.
Monday, October 25, 2010
Target, Toys R Us, other Retailers boost Jobs for Holidays
USA Today
Holiday retail sales are expected to be up only slightly this year, but the news may be better for those looking to work in retailing around Christmas.
Increased online sales, more temporary stores and guarded optimism about the season are leading some retailers to expand their workforces more than usual for the holidays.
The National Retail Federation predicts holiday sales will be up just 2.3% this year. John Challenger, CEO of consulting firm Challenger Gray & Christmas, says recent sales increases will lead retailers to step up hiring but he predicts it will fall short of pre-recession levels. Holiday hiring hit a 22-year low in 2008 and increased by 54% last year.
Retailers overall added more than 220,000 new workers between March and September, Challenger says. Privately held retailers, however, have been slow to hire, so they are well-positioned to add people if sales warrant, says Melinda Crump of Sageworks, which provides data on private companies. Payroll costs as a percentage of sales are down 12% for independent retailers this year over last, she says.
What's prompting the hiring:
•More temporary stores.Toys R Us is hiring 45,000 seasonal workers this holiday season, up 10,000 from last year. The additional workers will staff 600 new temporary stores the chain will open this fall. Brookstone, the gift and gadget retailer, is adding 36% more holiday workers — 900 people altogether — this year than it did last year for the expected increase in business and to work in 150 temporary stores and kiosks.
"We're bullish on the holiday this year, and, yes, we're hiring," Brookstone CEO Ron Boire says.
•More in-store business. A recent survey by retail finance company CIT found 68% of retailers expect to hire more workers this season than last; the same percentage said they expected revenue to increase in the next 12 months. Macy's is predicting a 3% to 3.5% rise in sales in the second half of fiscal year 2010 and says the 65,000 holiday workers it plans to hire is a slight increase over last year. Kohl's plans to hire 40,000 seasonal workers, up 20% from 2009.
•More online sales. Arise Virtual Solutions, which provides several major retailers with customer service people who work out of their homes, says it plans to hire 6,000 more of these call-center people by the end of the year to cope with the increase in online sales. Arise CEO Angela Selden says these at-home workers adapt easily to the ebb and flow of business. Lexsine Mitchell, an at-home customer service representative for Arise since 2004 with 426 people reporting to her, says the work fits her life as a single mom.
Increased online sales, more temporary stores and guarded optimism about the season are leading some retailers to expand their workforces more than usual for the holidays.
The National Retail Federation predicts holiday sales will be up just 2.3% this year. John Challenger, CEO of consulting firm Challenger Gray & Christmas, says recent sales increases will lead retailers to step up hiring but he predicts it will fall short of pre-recession levels. Holiday hiring hit a 22-year low in 2008 and increased by 54% last year.
Retailers overall added more than 220,000 new workers between March and September, Challenger says. Privately held retailers, however, have been slow to hire, so they are well-positioned to add people if sales warrant, says Melinda Crump of Sageworks, which provides data on private companies. Payroll costs as a percentage of sales are down 12% for independent retailers this year over last, she says.
What's prompting the hiring:
•More temporary stores.Toys R Us is hiring 45,000 seasonal workers this holiday season, up 10,000 from last year. The additional workers will staff 600 new temporary stores the chain will open this fall. Brookstone, the gift and gadget retailer, is adding 36% more holiday workers — 900 people altogether — this year than it did last year for the expected increase in business and to work in 150 temporary stores and kiosks.
"We're bullish on the holiday this year, and, yes, we're hiring," Brookstone CEO Ron Boire says.
•More in-store business. A recent survey by retail finance company CIT found 68% of retailers expect to hire more workers this season than last; the same percentage said they expected revenue to increase in the next 12 months. Macy's is predicting a 3% to 3.5% rise in sales in the second half of fiscal year 2010 and says the 65,000 holiday workers it plans to hire is a slight increase over last year. Kohl's plans to hire 40,000 seasonal workers, up 20% from 2009.
•More online sales. Arise Virtual Solutions, which provides several major retailers with customer service people who work out of their homes, says it plans to hire 6,000 more of these call-center people by the end of the year to cope with the increase in online sales. Arise CEO Angela Selden says these at-home workers adapt easily to the ebb and flow of business. Lexsine Mitchell, an at-home customer service representative for Arise since 2004 with 426 people reporting to her, says the work fits her life as a single mom.
Friday, October 15, 2010
Wall Street Feeling some of Main Street's Woes
LA Times
Analysts have recently slashed earnings estimates for a number of big players, and several firms have quietly fired staff. Many more layoffs are expected by early next year.
For a while, Wall Street seemed impervious to the economic woes clobbering Main Street, with bank profits, bonuses and share prices rebounding sharply.
Not anymore.
Not anymore.
With the country's major banks due Wednesday to start reporting third-quarter earnings, a new pessimism is taking hold on Wall Street based on the growing belief that the economy will remain weak for some time, limiting the industry's ability to make money.
Without strong economic growth, "you don't need as many financial services as we have now," banking analyst Nancy Bush said.
Wall Street analysts who follow their own industry have recently slashed earnings estimates for a number of big players. Several firms have quietly fired staff, and many more layoffs are expected by early next year. There are even predictions of a severe drop in Wall Street's notoriously generous compensation.
"We're going to see a larger increase in unemployment in the financial services than anyone had expected," said Steven Eckhaus, a lawyer who advises banks on employment matters.
Bank stocks have slid since peaking in April. Shares of Bank of America Corp. are down 31%, while JPMorgan Chase & Co. is off 15%.
JPMorgan was expected Wednesday to report sharply lower third-quarter revenue. The two remaining giant firms that are predominantly investment banks, Goldman Sachs Group Inc. and Morgan Stanley, have seen their earnings projections plunge in recent weeks and months.
Rochdale Securities analyst Richard X. Bove felt compelled to apologize recently when he reduced his earnings estimate for yet another bank. "The reasons for the reductions are not due to failures within the firms, but rather the weakness in the industry," he wrote.
Although the newly pessimistic outlook stems in part from recently tightened regulations that will limit some of Wall Street's most profitable activities, the mood largely reflects the persistent sluggishness of the economy.
"Projecting forward it seems like the profits of Wall Street and Main Street are going to be more in sync," said Michael Wong, a bank analyst at research firm Morningstar Inc. "The banks have had to readjust their expectations and to readjust their hiring practices."
Meredith Whitney, one of the most respected analysts following financial companies, recently projected that in the next year Wall Street firms could shed as many as 80,000 jobs — 10% of their combined workforces.
Bank of America, JPMorgan and the Wall Street unit of Britain's Barclays Bank have in recent weeks laid off staff such as investment bankers and traders, according to people familiar with the moves. Morgan Stanley is said to have imposed a firmwide hiring freeze.
Head counts on Wall Street remain down significantly from before the financial crisis, in part because of the collapse of some big firms. But a year ago, the talk was of hiring, not shrinking.
Now many are anticipating a big wave of layoffs early next year. And for those who remain, average compensation per employee will be down 32% in 2011 from 2009's level, industry analysts at JPMorgan forecast.
The gloom and doom has not reached every corner of the industry. Asset management services for wealthy people are doing well, for example. Fee revenue from advising companies on mergers also is up. Such work used to be the bread and butter of investment banks before it was supplanted by profits from securities trading. Last year, for example, the trading desks at Goldman Sachs brought in 76% of the company's revenue.
But among the lines of business on Wall Street, trading could take the biggest hit from the weak economy as well as from new regulatory constraints.
Trading revenues since the spring are already down from their eye-popping levels in the same months of 2009, although that was to be expected.
"You had to be stupid not to make good trading profits last year," said analyst Bush, citing the big stock market rebound that began in March 2009, coupled with the relative ease with which traders can make money in a period of rising share prices and high market volume.
The summer months were "painfully slow" for trading, Jefferies Group Inc. Chief Executive Richard Handler told analysts last month as the mid-size investment bank got a jump on reporting earnings because its fiscal third quarter ended Aug. 31.
Some of the layoffs at JPMorgan and Bank of America were in units doing so-called proprietary trading, which at banks was largely banned by the federal financial regulatory overhaul enacted during the summer. Recently adopted international rules also could reduce trading profits by limiting the amount of money a bank can have tied up in risky activities.
Until recently, banks had expressed confidence in their ability to adapt and even profit under tighter regulation. But a long period of economic weakness, which Wall Street economists now say is likely, is another matter.
If those forecasts are borne out, the industry could see little growth, said Handler of Jefferies, which was hiring furiously early this year.
"If the environment continues to be extremely slow," he said, "all investment banks are going to be slowing down their expansion plans."
Without strong economic growth, "you don't need as many financial services as we have now," banking analyst Nancy Bush said.
Wall Street analysts who follow their own industry have recently slashed earnings estimates for a number of big players. Several firms have quietly fired staff, and many more layoffs are expected by early next year. There are even predictions of a severe drop in Wall Street's notoriously generous compensation.
"We're going to see a larger increase in unemployment in the financial services than anyone had expected," said Steven Eckhaus, a lawyer who advises banks on employment matters.
Bank stocks have slid since peaking in April. Shares of Bank of America Corp. are down 31%, while JPMorgan Chase & Co. is off 15%.
JPMorgan was expected Wednesday to report sharply lower third-quarter revenue. The two remaining giant firms that are predominantly investment banks, Goldman Sachs Group Inc. and Morgan Stanley, have seen their earnings projections plunge in recent weeks and months.
Rochdale Securities analyst Richard X. Bove felt compelled to apologize recently when he reduced his earnings estimate for yet another bank. "The reasons for the reductions are not due to failures within the firms, but rather the weakness in the industry," he wrote.
Although the newly pessimistic outlook stems in part from recently tightened regulations that will limit some of Wall Street's most profitable activities, the mood largely reflects the persistent sluggishness of the economy.
"Projecting forward it seems like the profits of Wall Street and Main Street are going to be more in sync," said Michael Wong, a bank analyst at research firm Morningstar Inc. "The banks have had to readjust their expectations and to readjust their hiring practices."
Meredith Whitney, one of the most respected analysts following financial companies, recently projected that in the next year Wall Street firms could shed as many as 80,000 jobs — 10% of their combined workforces.
Bank of America, JPMorgan and the Wall Street unit of Britain's Barclays Bank have in recent weeks laid off staff such as investment bankers and traders, according to people familiar with the moves. Morgan Stanley is said to have imposed a firmwide hiring freeze.
Head counts on Wall Street remain down significantly from before the financial crisis, in part because of the collapse of some big firms. But a year ago, the talk was of hiring, not shrinking.
Now many are anticipating a big wave of layoffs early next year. And for those who remain, average compensation per employee will be down 32% in 2011 from 2009's level, industry analysts at JPMorgan forecast.
The gloom and doom has not reached every corner of the industry. Asset management services for wealthy people are doing well, for example. Fee revenue from advising companies on mergers also is up. Such work used to be the bread and butter of investment banks before it was supplanted by profits from securities trading. Last year, for example, the trading desks at Goldman Sachs brought in 76% of the company's revenue.
But among the lines of business on Wall Street, trading could take the biggest hit from the weak economy as well as from new regulatory constraints.
Trading revenues since the spring are already down from their eye-popping levels in the same months of 2009, although that was to be expected.
"You had to be stupid not to make good trading profits last year," said analyst Bush, citing the big stock market rebound that began in March 2009, coupled with the relative ease with which traders can make money in a period of rising share prices and high market volume.
The summer months were "painfully slow" for trading, Jefferies Group Inc. Chief Executive Richard Handler told analysts last month as the mid-size investment bank got a jump on reporting earnings because its fiscal third quarter ended Aug. 31.
Some of the layoffs at JPMorgan and Bank of America were in units doing so-called proprietary trading, which at banks was largely banned by the federal financial regulatory overhaul enacted during the summer. Recently adopted international rules also could reduce trading profits by limiting the amount of money a bank can have tied up in risky activities.
Until recently, banks had expressed confidence in their ability to adapt and even profit under tighter regulation. But a long period of economic weakness, which Wall Street economists now say is likely, is another matter.
If those forecasts are borne out, the industry could see little growth, said Handler of Jefferies, which was hiring furiously early this year.
"If the environment continues to be extremely slow," he said, "all investment banks are going to be slowing down their expansion plans."
Friday, October 1, 2010
Employers Aren’t Trying Hard to Hire
The Wall Street Journal
Unemployed workers have a point when they complain that companies aren’t really trying to fill open jobs, a new study suggests.
In recent months, policy makers have puzzled over the inadequate rate at which job searchers and job vacancies are coming together. By some estimates, if openings were turning into hires at the rate they typically do, the unemployment rate should be about three percentage points lower than the current 9.6%.
Explanations have tended to focus on workers. Extended unemployment benefits could make people less willing to take jobs that pay poorly or don’t quite fit. Mortgage troubles and employed spouses could make it harder for people to move for work. People might not have the right qualifications for the jobs available.
A new paper, though, suggests employers themselves are at least part of the problem. The authors — Steven Davis of Chicago Booth School of Business, R. Jason Faberman of the Philadelphia Fed and John Haltiwanger of the University of Maryland — take a deep dive into Labor Department data and come up with an estimate of what they call “recruiting intensity,” a measure of employers’ vacancy-filling efforts including advertising, screening and wage offers.
Their finding: Employers haven’t been trying as hard as they usually do. Estimates provided by Mr. Davis suggest that over the three months ending July, recruiting intensity was about 12% below the average for the seven years leading up to the recession. Their lack of effort probably accounts for about a quarter of the shortfall in the hiring rate.
Depressing as it might seem, the finding is in some ways encouraging. It suggests that the trouble with hiring might be more a “cyclical” function of low business confidence than a chronic, “structural” ailment that will last for years to come.
In recent months, policy makers have puzzled over the inadequate rate at which job searchers and job vacancies are coming together. By some estimates, if openings were turning into hires at the rate they typically do, the unemployment rate should be about three percentage points lower than the current 9.6%.
Explanations have tended to focus on workers. Extended unemployment benefits could make people less willing to take jobs that pay poorly or don’t quite fit. Mortgage troubles and employed spouses could make it harder for people to move for work. People might not have the right qualifications for the jobs available.
A new paper, though, suggests employers themselves are at least part of the problem. The authors — Steven Davis of Chicago Booth School of Business, R. Jason Faberman of the Philadelphia Fed and John Haltiwanger of the University of Maryland — take a deep dive into Labor Department data and come up with an estimate of what they call “recruiting intensity,” a measure of employers’ vacancy-filling efforts including advertising, screening and wage offers.
Their finding: Employers haven’t been trying as hard as they usually do. Estimates provided by Mr. Davis suggest that over the three months ending July, recruiting intensity was about 12% below the average for the seven years leading up to the recession. Their lack of effort probably accounts for about a quarter of the shortfall in the hiring rate.
Depressing as it might seem, the finding is in some ways encouraging. It suggests that the trouble with hiring might be more a “cyclical” function of low business confidence than a chronic, “structural” ailment that will last for years to come.
Tuesday, September 21, 2010
North Carolina Job Search a `Battle' as Poverty Rises in U.S.
Bloomberg
Brandy Burkhead, 28, says she lost her $13-an-hour job as a medical assistant in April and hasn’t been able to find work since.
“It’s a battle,” said Burkhead, standing in a line of people waiting yesterday to apply for jobs at a Tanger Outlet Center that will open in Mebane, North Carolina, in November.
Burkhead said her family of five subsists on $600 a month in unemployment benefits plus help from relatives, putting them below the threshold of poverty. The proportion of Americans living in poverty, defined as $21,954 in income for a family of four, climbed to a 15-year high last year, according to a Census Bureau report released yesterday.
The number of poor rose to 43.6 million, the most in the 51 years for which the figures have been published, underscoring the toll exacted by the deepest recession since the 1930s. The poverty rate climbed to 14.3 percent from 13.2 percent.
“There are a lot of people hurting out there,” said Wade Horn, a former assistant secretary for Children and Families at the Department of Health and Human Services. “The only way to lift people out of poverty is to have a robust economy so that that people who are at the bottom can work their way up.”
The Census Bureau report comes as Congress debates the effectiveness of more spending to reduce unemployment, and it may add fuel to an election-year debate over the Obama administration’s economic policies.
President Barack Obama last week urged approval of a package of $180 billion in business tax breaks and infrastructure spending to boost the economy, a proposed supplement to the $814 billion stimulus measure enacted last year.
‘Just Beginning’
The Census figures “make it clear that our work is just beginning,” Obama said yesterday in a statement. He urged policies “to improve our schools, build the skills of our workers, and invest in our nation’s critical infrastructure.”
Rising poverty, along with unemployment near a 26-year high and a wave of home foreclosures, are symptoms of the economic distress that will help Republicans capture more seats in the House and Senate in November, said Jeffrey Berry, a politics professor at Tufts University in Medford, Massachusetts.
“This report is part of a long-term trend, which is an economy that can’t quite lift itself out of mediocre growth rates,” Berry said. “The Democrats own this recession. They didn’t cause it, but it was on their desk when Barack Obama was elected.”
Median Incomes
The median household income fell to $49,777 last year from $50,112 in 2008, a change the Census Bureau report said wasn’t statistically significant.
The 1.1 percentage point increase in the poverty rate was the biggest since 1980, Census Bureau officials said on a conference call with reporters. The number of poor increased from 39.8 million in 2008.
The unemployment rate in the U.S. has risen to 9.6 percent in August from 5 percent in December 2007, when the recession began. While the rate has dropped from 10.1 percent last October, sluggish private job creation following the loss of 8.4 million jobs has weighed on incomes consumer spending, and prices of Raleigh homes, slowing the pace of recovery.
Barbara Hood, 52, has been out of work since August, 2008, when she lost her job as an educational assistant in the Washington, D.C., public school system. She said she has applied for 15 positions and couldn’t even land a temporary job at a clothing store.
“Lord knows I’ve tried to get a job,” she said.
Line of Job Seekers
In Mebane, a town of 9,851 people located midway between Durham and Greensboro, North Carolina, the line of job seekers circled three sides of the Mebane Arts & Community Center before veering across an adjacent lawn and running alongside a football field.
Even before the doors opened, about 500 people had applied online for jobs at Bass, Izod and Van Heusen stores, said Lu Ann Austin, a Philips-Van Heusen Corp. district sales manager.
“It’s nothing like I’ve ever seen,” said Austin, who expects to hire as many as 45 for the three stores. “People need work.”
Tanger Factory Outlets Inc., a Greensboro, North Carolina- based real estate investment trust that operates outlet shopping centers and stores that will occupy the new center plan to hire about 800 people, according to Kathy Hackshaw, the center’s general manager.
Traffic Backed Up
The community center’s parking lot was full by late morning, prompting police to close the street leading to the center, where traffic was backed up for more than a mile. Some people parked on side streets and walked to the fair.
Timothy Masho, 43, lost his cleaning job of 11 years at a local hospital a year ago. “I’m looking for anything, stocking or helping customers,” he said.
Burkhead, the mother of three who lost her nursing job, said her $722 monthly rent exceeds her unemployment benefits, and she has turned to her mother and grandmother to help pay the bills. Her husband, Stevie, last worked installing car windshields about six years ago. “We’re living off of nothing,” she said.
“It’s a battle,” said Burkhead, standing in a line of people waiting yesterday to apply for jobs at a Tanger Outlet Center that will open in Mebane, North Carolina, in November.
Burkhead said her family of five subsists on $600 a month in unemployment benefits plus help from relatives, putting them below the threshold of poverty. The proportion of Americans living in poverty, defined as $21,954 in income for a family of four, climbed to a 15-year high last year, according to a Census Bureau report released yesterday.
The number of poor rose to 43.6 million, the most in the 51 years for which the figures have been published, underscoring the toll exacted by the deepest recession since the 1930s. The poverty rate climbed to 14.3 percent from 13.2 percent.
“There are a lot of people hurting out there,” said Wade Horn, a former assistant secretary for Children and Families at the Department of Health and Human Services. “The only way to lift people out of poverty is to have a robust economy so that that people who are at the bottom can work their way up.”
The Census Bureau report comes as Congress debates the effectiveness of more spending to reduce unemployment, and it may add fuel to an election-year debate over the Obama administration’s economic policies.
President Barack Obama last week urged approval of a package of $180 billion in business tax breaks and infrastructure spending to boost the economy, a proposed supplement to the $814 billion stimulus measure enacted last year.
‘Just Beginning’
The Census figures “make it clear that our work is just beginning,” Obama said yesterday in a statement. He urged policies “to improve our schools, build the skills of our workers, and invest in our nation’s critical infrastructure.”
Rising poverty, along with unemployment near a 26-year high and a wave of home foreclosures, are symptoms of the economic distress that will help Republicans capture more seats in the House and Senate in November, said Jeffrey Berry, a politics professor at Tufts University in Medford, Massachusetts.
“This report is part of a long-term trend, which is an economy that can’t quite lift itself out of mediocre growth rates,” Berry said. “The Democrats own this recession. They didn’t cause it, but it was on their desk when Barack Obama was elected.”
Median Incomes
The median household income fell to $49,777 last year from $50,112 in 2008, a change the Census Bureau report said wasn’t statistically significant.
The 1.1 percentage point increase in the poverty rate was the biggest since 1980, Census Bureau officials said on a conference call with reporters. The number of poor increased from 39.8 million in 2008.
The unemployment rate in the U.S. has risen to 9.6 percent in August from 5 percent in December 2007, when the recession began. While the rate has dropped from 10.1 percent last October, sluggish private job creation following the loss of 8.4 million jobs has weighed on incomes consumer spending, and prices of Raleigh homes, slowing the pace of recovery.
Barbara Hood, 52, has been out of work since August, 2008, when she lost her job as an educational assistant in the Washington, D.C., public school system. She said she has applied for 15 positions and couldn’t even land a temporary job at a clothing store.
“Lord knows I’ve tried to get a job,” she said.
Line of Job Seekers
In Mebane, a town of 9,851 people located midway between Durham and Greensboro, North Carolina, the line of job seekers circled three sides of the Mebane Arts & Community Center before veering across an adjacent lawn and running alongside a football field.
Even before the doors opened, about 500 people had applied online for jobs at Bass, Izod and Van Heusen stores, said Lu Ann Austin, a Philips-Van Heusen Corp. district sales manager.
“It’s nothing like I’ve ever seen,” said Austin, who expects to hire as many as 45 for the three stores. “People need work.”
Tanger Factory Outlets Inc., a Greensboro, North Carolina- based real estate investment trust that operates outlet shopping centers and stores that will occupy the new center plan to hire about 800 people, according to Kathy Hackshaw, the center’s general manager.
Traffic Backed Up
The community center’s parking lot was full by late morning, prompting police to close the street leading to the center, where traffic was backed up for more than a mile. Some people parked on side streets and walked to the fair.
Timothy Masho, 43, lost his cleaning job of 11 years at a local hospital a year ago. “I’m looking for anything, stocking or helping customers,” he said.
Burkhead, the mother of three who lost her nursing job, said her $722 monthly rent exceeds her unemployment benefits, and she has turned to her mother and grandmother to help pay the bills. Her husband, Stevie, last worked installing car windshields about six years ago. “We’re living off of nothing,” she said.
Friday, September 17, 2010
FedEx Delivers International Profits, but Cuts U.S. Jobs
Associated Press
FedEx Corp. indicated Thursday that the global economic recovery remains uneven. While strength in international shipments is boosting net income, FedEx is cutting 1,700 jobs in its U.S. freight business to offset losses there.
The world's second-largest package delivery company did raise its financial outlook after as it said first-quarter net income doubled. But projections for the second quarter and full year fell shy of Wall Street expectations. FedEx shares dropped almost 4 percent.
International air shipments have driven FedEx's results for more than a year; international revenue rose 24 percent in the quarter ended Aug. 31. But while FedEx earned $380 million in the first quarter, the FedEx Freight segment lost $16 million and has been unprofitable for four straight quarters.
The unit moves large items like refrigerators and other large appliances from factories to retailers and competes with other large trucking companies such as Arkansas Best and YRC Worldwide, which runs trucks under the Yellow, Roadway and New Penn names. Sluggish demand, combined with the heated competition in this segment of the U.S. shipping market, has forced FedEx to forgo the rate increases that are helping its other segments grow.
The freight unit, started in 2001, is separate from FedEx Ground, which trucks packages directly to consumers.
FedEx will combine its FedEx Freight and FedEx National less-than-truckload operations on Jan. 30 and close 100, or 20 percent, of its service centers. The 1,700 job cuts represent about 5 percent of the freight division's workers. Overall, FedEx has about 280,000 employees.
FedEx says the move, along with other cost cuts, will ensure the freight business is profitable next year. Less-than-truckload shippers take goods from many different manufacturers and consolidate them into a single truck for delivery.
For the current quarter that ends in November, FedEx expects to earn between $1.15 and $1.35 per share. Analysts were expecting $1.36 per share.
Chief Executive Fred Smith thinks the economic hiccups are typical for a recovery.
"We believe slower growth is consistent with historical business cycles," Smith said in a conference call with analysts. "We believe drivers of sustainable growth are in place."
For the fiscal year that ends in May, FedEx forecasts net income of $4.80 to $5.25 per share. That's up from a previous estimate of $4.60 to $5.20 per share. But some analysts had forecasts as high as $5.60 per share, according to Thomson Reuters.
"We expect a very solid peak season," said Executive Vice President Mike Glenn, referring to the important holiday shipping period. "It always gets a little cloudy after that."
While retailers aren't overly optimistic about the holiday shopping season, FedEx has reason to show more holiday cheer. FedEx benefits from e-commerce business, which now routinely outpaces brick and mortar retail growth as more people order gifts online. Also, retailers placed many holiday orders in the spring when their outlook for consumer spending was brightening. With recent mixed signals about U.S. economic strength, some worry that they may have ordered too much - bad for them, but good for shippers like FedEx.
The Memphis, Tennessee, company earned or $1.20 per share in the fiscal first-quarter that ended in August, compared with $181 million, or 58 cents per share a year ago. That's slightly under the $1.21 per share that Wall Street expected. Revenue rose 18 percent to $9.46 billion.
As overall business has improved, costs have risen. The reinstatement of some employee compensation programs, higher pension, medical and aircraft maintenance expenses - as well as the loss at FedEx Freight - countered improvements at the Express and Ground operations.
Operating income at the Ground division rose 37 percent to $287 million. The Express division, which handles everything from air cargo to overnight documents, had operating income of $357 million, more than double a year ago.
The world's second-largest package delivery company did raise its financial outlook after as it said first-quarter net income doubled. But projections for the second quarter and full year fell shy of Wall Street expectations. FedEx shares dropped almost 4 percent.
International air shipments have driven FedEx's results for more than a year; international revenue rose 24 percent in the quarter ended Aug. 31. But while FedEx earned $380 million in the first quarter, the FedEx Freight segment lost $16 million and has been unprofitable for four straight quarters.
The unit moves large items like refrigerators and other large appliances from factories to retailers and competes with other large trucking companies such as Arkansas Best and YRC Worldwide, which runs trucks under the Yellow, Roadway and New Penn names. Sluggish demand, combined with the heated competition in this segment of the U.S. shipping market, has forced FedEx to forgo the rate increases that are helping its other segments grow.
The freight unit, started in 2001, is separate from FedEx Ground, which trucks packages directly to consumers.
FedEx will combine its FedEx Freight and FedEx National less-than-truckload operations on Jan. 30 and close 100, or 20 percent, of its service centers. The 1,700 job cuts represent about 5 percent of the freight division's workers. Overall, FedEx has about 280,000 employees.
FedEx says the move, along with other cost cuts, will ensure the freight business is profitable next year. Less-than-truckload shippers take goods from many different manufacturers and consolidate them into a single truck for delivery.
For the current quarter that ends in November, FedEx expects to earn between $1.15 and $1.35 per share. Analysts were expecting $1.36 per share.
Chief Executive Fred Smith thinks the economic hiccups are typical for a recovery.
"We believe slower growth is consistent with historical business cycles," Smith said in a conference call with analysts. "We believe drivers of sustainable growth are in place."
For the fiscal year that ends in May, FedEx forecasts net income of $4.80 to $5.25 per share. That's up from a previous estimate of $4.60 to $5.20 per share. But some analysts had forecasts as high as $5.60 per share, according to Thomson Reuters.
"We expect a very solid peak season," said Executive Vice President Mike Glenn, referring to the important holiday shipping period. "It always gets a little cloudy after that."
While retailers aren't overly optimistic about the holiday shopping season, FedEx has reason to show more holiday cheer. FedEx benefits from e-commerce business, which now routinely outpaces brick and mortar retail growth as more people order gifts online. Also, retailers placed many holiday orders in the spring when their outlook for consumer spending was brightening. With recent mixed signals about U.S. economic strength, some worry that they may have ordered too much - bad for them, but good for shippers like FedEx.
The Memphis, Tennessee, company earned or $1.20 per share in the fiscal first-quarter that ended in August, compared with $181 million, or 58 cents per share a year ago. That's slightly under the $1.21 per share that Wall Street expected. Revenue rose 18 percent to $9.46 billion.
As overall business has improved, costs have risen. The reinstatement of some employee compensation programs, higher pension, medical and aircraft maintenance expenses - as well as the loss at FedEx Freight - countered improvements at the Express and Ground operations.
Operating income at the Ground division rose 37 percent to $287 million. The Express division, which handles everything from air cargo to overnight documents, had operating income of $357 million, more than double a year ago.
Wednesday, September 8, 2010
Unemployment in U.S. May Rise Toward 10% on ‘Feeble’ Growth
Bloomberg
The jobless rate in the U.S. is likely to approach 10 percent in coming months as the economy fails to grow quickly enough to employ people rejoining the labor force, according to economists at BofA Merrill Lynch Global Research and Morgan Stanley.
Private payrolls climbed 67,000 in August, after a gain of 107,000 the previous month, and the unemployment rate rose to 9.6 percent, Labor Department figures showed Sept. 3. The economy expanded at a 1.6 percent annual rate in the second quarter, down from 3.7 percent in January through March.
Employers including government agencies have added 723,000 workers to payrolls so far in 2010, showing it’ll take years to recoup the 8.4 million jobs lost during the recession, the biggest employment slump in the post-World War II era. Still, the August employment report eased concerns the economy will falter and may postpone action by Federal Reserve policy makers aimed at bolstering the recovery.
“Growth is too sluggish to successfully bring down the unemployment rate,” said Michelle Meyer, a senior economist at BofA Merrill Lynch in New York. “At this stage, about one year into the recovery, this was still quite feeble job growth.”
BofA Merrill Lynch says the jobless rate will peak at 10.1 percent next year, up from a previous projection of 9.5 percent, with growth slowing to 1.8 percent for all of 2011, down from an earlier estimate of 2.3 percent.
Federal Reserve
The employment report, together with figures last week showing manufacturing expanded faster than forecast in August, reduces the odds that the Federal Open Market Committee will ease policy at its next meeting on Sept. 21, economists said. The data also bolstered Fed Chairman Ben S. Bernanke’s view that the conditions are in place for a pickup in growth in 2011.
Neal Soss, chief economist at Credit Suisse in New York, said in a Sept. 3 note to clients that the economy will expand at a 2 percent rate this quarter, compared with a previous projection of 2.5 percent. He also revised his forecast for the unemployment rate, saying it will end the year at 9.6 percent instead of 9.2 percent.
Unemployment, which reached a 26-year high of 10.1 percent in October, will average more than 9 percent through 2011, according to a Bloomberg News survey last month.
President Barack Obama yesterday proposed spending at least $50 billion to rehabilitate the nation’s transportation infrastructure to help spur the economy.
At a Labor Day rally in Milwaukee two months before midterm congressional elections, Obama called for a six-year program to fix roads, railways and runways, and to modernize the air- traffic control system.
“All of this will not only create jobs now, but will make our economy run better over the long haul,” Obama said.
Tax Credit
The president will also urge Congress to permanently extend and expand a research-and-development tax credit for businesses, according to two administration officials. The plan, which he’ll announce in Cleveland tomorrow, would cost about $100 billion over a decade.
Obama’s approval ratings have slipped and support for the Republican Party has grown during the summer months amid signs the economy was cooling. A USA Today/Gallup Poll completed Aug. 30 found Americans believe Republicans in Congress would do a better job on the economy than Democrats, by 49 percent versus 38 percent plurality.
Overall employment, including government agencies, fell 54,000 for a second month, the Labor Department report showed. The decrease reflected a 114,000 drop in temporary workers hired by the government to conduct the 2010 census.
Census Winds Down
The unwinding of census employment distorts the payroll figures for months as the government dismisses workers as the count winds down. For that reason, economists say private payrolls, which exclude government jobs, are a better gauge of the state of the labor market.
U.S. Stocks rose and Treasuries fell following the Sept. 3 employment report. The Standard & Poor’s 500 Stock Index rose 1.3 percent to close at 1,104.51 in New York. Ten-year Treasury yields climbed to 2.71 percent from 2.63 percent the day before.
Economists at Morgan Stanley in New York, led by Richard Berner and David Greenlaw, are forecasting growth at a 2 percent pace for the last three quarters of 2010.
“Such tepid growth implies a higher unemployment rate at year-end, perhaps 9.7 percent rather than the 9.4 percent we had assumed,” the economists said in a research note.
The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- increased to 16.7 percent in August from 16.5 percent.
The figures also showed long-term unemployment dropped. The number of people unemployed for 27 weeks or more fell as a percentage of all jobless to 42 percent from 44.9 percent.
Some export-oriented companies are boosting staff as the global economy shows stronger signs of growth than the U.S. Peoria, Illinois-based Caterpillar Inc., the world’s largest maker of construction equipment, said last month it may add as many as 9,000 workers worldwide this year as sales climb in developing markets.
Friday, August 20, 2010
Employment Numbers Vary Widely State to State
Reuters
U.S. government data released on Friday showed employment conditions varied widely from state to state in July, indicating that the economic recovery may not be consistent across the country.
The jobless rate fell in 18 states and the District of Columbia in July from June, while it rose in 14 states and was unchanged in 18 states, the Labor Department said.
Compared to a year earlier, the jobless rate fell in 27 states and rose in 20.
North Dakota, buoyed by a strong natural resources sector, again had the lowest rate in the country, at 3.6 percent. Nevada remained the state with the highest unemployment rate, at a record 14.3 percent.
Michigan followed with 13.1 percent, but the state also had the largest increase in employment from June, adding 27,800 jobs.
For many months Michigan, home to major U.S. automakers, suffered the highest jobless rate in the country, but since the start of the year the rate has slowly dropped.
Most of the jobs gains in July were in manufacturing. But the state labor department said that even without new factory jobs the July payrolls number was the highest of the year.
"Michigan's manufacturing job market has stabilized thus far in 2010," said Rick Waclawek, director of the state's labor bureau. "Automakers and suppliers minimized July retooling layoffs reflecting streamlined production schedules, strong vehicle sales, and lean inventories."
Altogether, the number of jobs increased in 37 states and in Washington, DC.
North Carolina lost the most jobs in July, at 29,800, followed by New Jersey.
Over the year, payrolls grew in 30 states and Washington, DC, and dropped in 19 states.
In Georgia, the unemployment rate declined to 9.9 percent. But it was still the 34th straight month in which the state's jobless rate exceeded the national one, currently 9.5 percent.
"Georgia's job market continued to deteriorate," said State Labor Commissioner Michael Thurmond in a statement.
"Although the unemployment rate remained virtually unchanged, a growing number of discouraged workers dropped out of the workforce," he said.
Nationally, the employment picture remains a confusing jumble. On Thursday, the U.S. Labor Department reported new jobless claims hit a nine-month high last week.
Also on Thursday the head of the U.S. Congressional Budget Office, Douglas Elmendorf, said the U.S. jobless rate will not drop below 5 percent until 2014. The rate has been gradually declining after hitting 10.1 percent in October, a high not seen since 1983.
Florida highlighted the uneven labor market. In July the state, which was hurt especially hard by the housing market downturn, saw its unemployment rate rise to 11.5 percent while the number of jobs increased by 5,700.
Pennsylvania added 3,400 jobs in July, bringing the number of private positions created in the state since the beginning of the year to 52,400. But the state's unemployment rate also rose to 9.3 percent.
More than 8,400 Pennsylvanians were working on nearly 200 highway and bridge repair projects funded by the federal economic stimulus plan in July, Governor Ed Rendell said.
"Hiring is occurring, but we need to accelerate the pace and do more to put Pennsylvanians back to work by making targeted investments in our transportation infrastructure that will create tens of thousands of jobs," he said.
The jobless rate fell in 18 states and the District of Columbia in July from June, while it rose in 14 states and was unchanged in 18 states, the Labor Department said.
Compared to a year earlier, the jobless rate fell in 27 states and rose in 20.
North Dakota, buoyed by a strong natural resources sector, again had the lowest rate in the country, at 3.6 percent. Nevada remained the state with the highest unemployment rate, at a record 14.3 percent.
Michigan followed with 13.1 percent, but the state also had the largest increase in employment from June, adding 27,800 jobs.
For many months Michigan, home to major U.S. automakers, suffered the highest jobless rate in the country, but since the start of the year the rate has slowly dropped.
Most of the jobs gains in July were in manufacturing. But the state labor department said that even without new factory jobs the July payrolls number was the highest of the year.
"Michigan's manufacturing job market has stabilized thus far in 2010," said Rick Waclawek, director of the state's labor bureau. "Automakers and suppliers minimized July retooling layoffs reflecting streamlined production schedules, strong vehicle sales, and lean inventories."
Altogether, the number of jobs increased in 37 states and in Washington, DC.
North Carolina lost the most jobs in July, at 29,800, followed by New Jersey.
Over the year, payrolls grew in 30 states and Washington, DC, and dropped in 19 states.
In Georgia, the unemployment rate declined to 9.9 percent. But it was still the 34th straight month in which the state's jobless rate exceeded the national one, currently 9.5 percent.
"Georgia's job market continued to deteriorate," said State Labor Commissioner Michael Thurmond in a statement.
"Although the unemployment rate remained virtually unchanged, a growing number of discouraged workers dropped out of the workforce," he said.
Nationally, the employment picture remains a confusing jumble. On Thursday, the U.S. Labor Department reported new jobless claims hit a nine-month high last week.
Also on Thursday the head of the U.S. Congressional Budget Office, Douglas Elmendorf, said the U.S. jobless rate will not drop below 5 percent until 2014. The rate has been gradually declining after hitting 10.1 percent in October, a high not seen since 1983.
Florida highlighted the uneven labor market. In July the state, which was hurt especially hard by the housing market downturn, saw its unemployment rate rise to 11.5 percent while the number of jobs increased by 5,700.
Pennsylvania added 3,400 jobs in July, bringing the number of private positions created in the state since the beginning of the year to 52,400. But the state's unemployment rate also rose to 9.3 percent.
More than 8,400 Pennsylvanians were working on nearly 200 highway and bridge repair projects funded by the federal economic stimulus plan in July, Governor Ed Rendell said.
"Hiring is occurring, but we need to accelerate the pace and do more to put Pennsylvanians back to work by making targeted investments in our transportation infrastructure that will create tens of thousands of jobs," he said.
Thursday, August 19, 2010
The Lost Generation of American Workers
The Washington Independent
An International Labor Organization’s report released today shows that young workers are among the worst-hit by the global recession. All in all, there are 620 million people aged 15 to 24 who want to work. 81 million are unemployed, the highest level and the greatest number since the ILO started keeping track 20 years ago. Globally, the youth unemployment rate hit 13 percent in 2009, up from 12 percent in 2007. The organization expects the youth unemployment rate to continue rising until 2011.
In the report, the ILO warns of “significant consequences for young people as upcoming cohorts of new entrants join the ranks of the already unemployed” and of the “risk of a crisis legacy of a ‘lost generation’ comprised of young people who have dropped out of the labor market, having lost all hope of being able to work for a decent living.”
Despite its relative wealth, the situation remains parlous for young workers in the United States as well. The unemployment rate is 26.5 percent for teenagers, and 15.7 percent for workers aged 20 to 24. The rate rises to a whopping 47.8 percent for black male teenagers, the demographic group with the highest jobless rate. Despite this, across the country, summer jobs programs for young people were slashed, as Congress failed to re-up federal funding provided in the Feb. 2009 stimulus bill.
In the report, the ILO warns of “significant consequences for young people as upcoming cohorts of new entrants join the ranks of the already unemployed” and of the “risk of a crisis legacy of a ‘lost generation’ comprised of young people who have dropped out of the labor market, having lost all hope of being able to work for a decent living.”
Despite its relative wealth, the situation remains parlous for young workers in the United States as well. The unemployment rate is 26.5 percent for teenagers, and 15.7 percent for workers aged 20 to 24. The rate rises to a whopping 47.8 percent for black male teenagers, the demographic group with the highest jobless rate. Despite this, across the country, summer jobs programs for young people were slashed, as Congress failed to re-up federal funding provided in the Feb. 2009 stimulus bill.
Wednesday, August 11, 2010
U.S. Plans More Aid for Jobless Homeowners
NY Times
In an acknowledgment that the foreclosure crisis is far from over, the Obama administration on Wednesday pumped $3 billion into programs intended to stop the unemployed from losing their homes.
The housing market, which usually helps lead the country out of a recession, is this time helping hold the recovery back. Interest rates are at record lows, but too few can afford to buy or refinance. Unemployed homeowners who live in communities where values have fallen sharply are often unable to sell. Their foreclosures weaken neighborhoods and create a vicious circle by further undermining the market.
To try to break this pattern, the Treasury Department said it was adding $2 billion to its Hardest Hit Fund, roughly doubling its size. The fund, first announced by President Obama in February and expanded in March, goes to housing finance agencies in various states to create local aid programs.
Most of the state programs from the first two rounds are barely under way, but Treasury officials said it was clear that more funds were needed.
“In this very deep recession, people have tended to be out of work a little longer,” Herbert M. Allison Jr., assistant secretary for financial stability, said. “That’s why we think this additional relief for people searching for a job is so important.”
The second program, announced by the Department of Housing and Urban Development, will draw on $1 billion authorized by the new financial overhaul law.
The agency said it would work with local aid groups to offer bridge loans of up to $50,000 to eligible borrowers to help them pay their mortgage principal, interest, insurance and taxes for up to 24 months. The loans will be interest-free.
Until now, the Hardest Hit Fund had been projected to help about 140,000 borrowers. Treasury officials said that number would grow with the new infusion of money, but offered no estimate. HUD also did not say how many homeowners would be eligible for its program.
If the new money is spent in the same way as the previous money, both programs would eventually aid about 400,000 borrowers — a large number, but not when set against the 14.6 million unemployed or three million contemplating foreclosure.
Over the last two years, the government has deployed many programs to help housing. It pushed interest rates down, offered tax credits and set up an ambitious mortgage modification program. Yet housing remains feeble and seems poised after a brief respite this year to become weaker again.
“I think all these government programs are helpful, but I wouldn’t look for them to cure the recession or even what ails housing,” said the economist Karl E. Case. “At best, they’re preventing things from getting much worse.”
The Hardest Hit Fund will draw on the $45.6 billion set aside for housing in the Troubled Asset Relief Program, the rescue measure begun at the height of the financial crisis in the fall of 2008. Initially, the fund gave $1.5 billion to five hard-hit states: Arizona, California, Florida, Michigan and Nevada. The second round in March of $600 million went to North Carolina, Ohio, Oregon, Rhode Island and South Carolina.
The expanded list of states eligible for the latest funding includes Alabama, Illinois, Kentucky, Mississippi and New Jersey, as well as the District of Columbia. Each state’s share of the money is based on its population.
Many of the programs involve direct assistance. Ohio, for instance, said it would use its $172 million to aid 15,356 homeowners by helping bring delinquent mortgages current for owners experiencing hardship because of a loss of income. The assistance will last up to 12 months.
The other housing money in the Troubled Asset Relief Program is earmarked for the modification programs ($30.6 billion) and a Federal Housing Administration refinancing program ($11 billion). The administration can shift money between the programs only until Oct. 3, the two-year anniversary of the program.
HUD said it was in the process of determining which communities would receive its money and how exactly the process would work. “We’re still in the design phase,” said Bill Apgar, HUD senior adviser for mortgage finance.
The housing market, which usually helps lead the country out of a recession, is this time helping hold the recovery back. Interest rates are at record lows, but too few can afford to buy or refinance. Unemployed homeowners who live in communities where values have fallen sharply are often unable to sell. Their foreclosures weaken neighborhoods and create a vicious circle by further undermining the market.
To try to break this pattern, the Treasury Department said it was adding $2 billion to its Hardest Hit Fund, roughly doubling its size. The fund, first announced by President Obama in February and expanded in March, goes to housing finance agencies in various states to create local aid programs.
Most of the state programs from the first two rounds are barely under way, but Treasury officials said it was clear that more funds were needed.
“In this very deep recession, people have tended to be out of work a little longer,” Herbert M. Allison Jr., assistant secretary for financial stability, said. “That’s why we think this additional relief for people searching for a job is so important.”
The second program, announced by the Department of Housing and Urban Development, will draw on $1 billion authorized by the new financial overhaul law.
The agency said it would work with local aid groups to offer bridge loans of up to $50,000 to eligible borrowers to help them pay their mortgage principal, interest, insurance and taxes for up to 24 months. The loans will be interest-free.
Until now, the Hardest Hit Fund had been projected to help about 140,000 borrowers. Treasury officials said that number would grow with the new infusion of money, but offered no estimate. HUD also did not say how many homeowners would be eligible for its program.
If the new money is spent in the same way as the previous money, both programs would eventually aid about 400,000 borrowers — a large number, but not when set against the 14.6 million unemployed or three million contemplating foreclosure.
Over the last two years, the government has deployed many programs to help housing. It pushed interest rates down, offered tax credits and set up an ambitious mortgage modification program. Yet housing remains feeble and seems poised after a brief respite this year to become weaker again.
“I think all these government programs are helpful, but I wouldn’t look for them to cure the recession or even what ails housing,” said the economist Karl E. Case. “At best, they’re preventing things from getting much worse.”
The Hardest Hit Fund will draw on the $45.6 billion set aside for housing in the Troubled Asset Relief Program, the rescue measure begun at the height of the financial crisis in the fall of 2008. Initially, the fund gave $1.5 billion to five hard-hit states: Arizona, California, Florida, Michigan and Nevada. The second round in March of $600 million went to North Carolina, Ohio, Oregon, Rhode Island and South Carolina.
The expanded list of states eligible for the latest funding includes Alabama, Illinois, Kentucky, Mississippi and New Jersey, as well as the District of Columbia. Each state’s share of the money is based on its population.
Many of the programs involve direct assistance. Ohio, for instance, said it would use its $172 million to aid 15,356 homeowners by helping bring delinquent mortgages current for owners experiencing hardship because of a loss of income. The assistance will last up to 12 months.
The other housing money in the Troubled Asset Relief Program is earmarked for the modification programs ($30.6 billion) and a Federal Housing Administration refinancing program ($11 billion). The administration can shift money between the programs only until Oct. 3, the two-year anniversary of the program.
HUD said it was in the process of determining which communities would receive its money and how exactly the process would work. “We’re still in the design phase,” said Bill Apgar, HUD senior adviser for mortgage finance.
Incomes Fall in most Metro Areas
The Wall Street Journal
Personal incomes fell across the U.S. last year except in areas with a high concentration of federal government and military jobs, the Commerce Department said Monday. They declined most in places with a lot of housing and finance jobs.
Among the 52 metro areas with populations of more than one million, in only three did both net earnings and the broader measure of personal income both rise.
All three had strong ties to the federal government: the Washington, D.C., area and two areas with a large military presence, San Antonio and Virginia Beach, Va. In all three, the biggest gains were among workers in the federal government and the military; private sector compensation fell.
The same picture was reflected nationally, as private employers froze and in many cases reduced workers' pay and hours.
The only other big metro areas with rising personal incomes—Baltimore and Pittsburgh—had falling net earnings but a sharp increase in government checks, such as unemployment benefits.
There are myriad sources of personal income, the largest being wages and salaries that accounted for just over half—some $6.3 trillion—of U.S. income last year. The balance comes from a combination of investment income like rents and dividends, as well as government payments such as Social Security and disability benefits.
The new data offer the most detailed, ground-level look at the impact of federal government employment and spending last year, highlighting those parts of the country that have received the most benefits and those that have been hit hardest by the drop in private employment. The support of government was reflected nationally last year, with private wages falling 6% in 2009 as government pay rose 2.6%.
Even in the bright spots, gains were only relative. Many of the best-performers had a strong government presence whose workers were less susceptible to the ups and downs of the economy. In other places, the influx of federal transfer payments kept incomes from falling much further than they would have. "It shows the role of federal support programs in helping offset the loss of wages," said Steven Cochrane, an economist at Moody's Analytics.
Among all of the Census Bureau's 366 metropolitan statistical areas—collections of cities or counties that are economically tied to an urban core with at least 50,000 people—personal income declined in 223 areas in 2009. It rose in 134 areas and was unchanged in nine, before adjusting for inflation. The biggest percentage decline in per capita income—8.4%—was in Midland, Texas, where incomes fell with oil prices last year.
Among the 20 areas where per capita personal income fell furthest, six were in Texas, where declines in energy prices slowed oil and gas drilling activity. Still, Texas has fared much better than the rest of the country through the recession and recovery, in part because resource jobs have buoyed employment, especially as oil came off its recession lows through this year. The unemployment rate in Midland, for instance, fell to 5.9% in June from 6.8% in June 2009. The national unemployment rate is 9.5% today.
Among the 134 metro areas that saw personal incomes rise, most of the gains were from big jumps in transfer payments, the Commerce Department said. In the 57 places where earnings increased, many are home to soldiers whose wages are unaffected by the economy. Among the 10 metro areas with the largest personal income growth, seven had a strong military presence, among them Jacksonville, N.C., which houses the Marine Corps' Camp Lejeune and Fayetteville, N.C., home of the Army's Fort Bragg.
In only five metro areas—Kennewick, Wash.; Cumberland, Md.; Morgantown, West V. Va.; Cape Girardeau, Mo.; and Ithaca, N.Y.—did the private sector account for more of the earnings growth. Those gains also had a government component.
The Kennewick area has received a flurry of stimulus money to clean up the Hanford nuclear waste site, some of which flowed to local firms. The other four have either a strong presence in either the heath care or education sectors, which remained the two strongest sectors through the recession. New York City and the Bridgeport-Stamford Connecticut, both leaders in finance, are still among the richest metro areas in the country but saw big declines amid falling bank bonuses last year. Per capita income fell 4.6% in the New York metropolitan area.Bridgeport-Stamford, a hedge fund hub known locally "Wall Street North," remained the country's richest metropolitan area—with per capita income of $73,720 despite a 6.8% decline from a year ago.
Some of the biggest year-over-year personal income drops were in major metro areas in Nevada, Arizona and Florida, which have all seen steep declines in housing prices—and where unemployment is higher than the national average. Nevada's 14.2% unemployment rate is the nation's highest.
Other hard hit areas included several in the industrial Midwest, which saw a precipitous decline in manufacturing jobs in 2009, leading to income declines.
In the Elkhart, Indiana metro area, for instance, per capita income fell 6.5%, the eighth biggest drop in the nation. The area—where unemployment is 17.8% —also saw a 21.4% rise in transfer income, the biggest jump in the nation.
The metro area with the second-highest per capita income was San Francisco, with $59,696. Those with the lowest were McAllen, Texas ($19,720) and Brownsville, Texas ($21,756).
Among the 52 metro areas with populations of more than one million, in only three did both net earnings and the broader measure of personal income both rise.
All three had strong ties to the federal government: the Washington, D.C., area and two areas with a large military presence, San Antonio and Virginia Beach, Va. In all three, the biggest gains were among workers in the federal government and the military; private sector compensation fell.
The same picture was reflected nationally, as private employers froze and in many cases reduced workers' pay and hours.
The only other big metro areas with rising personal incomes—Baltimore and Pittsburgh—had falling net earnings but a sharp increase in government checks, such as unemployment benefits.
There are myriad sources of personal income, the largest being wages and salaries that accounted for just over half—some $6.3 trillion—of U.S. income last year. The balance comes from a combination of investment income like rents and dividends, as well as government payments such as Social Security and disability benefits.
The new data offer the most detailed, ground-level look at the impact of federal government employment and spending last year, highlighting those parts of the country that have received the most benefits and those that have been hit hardest by the drop in private employment. The support of government was reflected nationally last year, with private wages falling 6% in 2009 as government pay rose 2.6%.
Even in the bright spots, gains were only relative. Many of the best-performers had a strong government presence whose workers were less susceptible to the ups and downs of the economy. In other places, the influx of federal transfer payments kept incomes from falling much further than they would have. "It shows the role of federal support programs in helping offset the loss of wages," said Steven Cochrane, an economist at Moody's Analytics.
Among all of the Census Bureau's 366 metropolitan statistical areas—collections of cities or counties that are economically tied to an urban core with at least 50,000 people—personal income declined in 223 areas in 2009. It rose in 134 areas and was unchanged in nine, before adjusting for inflation. The biggest percentage decline in per capita income—8.4%—was in Midland, Texas, where incomes fell with oil prices last year.
Among the 20 areas where per capita personal income fell furthest, six were in Texas, where declines in energy prices slowed oil and gas drilling activity. Still, Texas has fared much better than the rest of the country through the recession and recovery, in part because resource jobs have buoyed employment, especially as oil came off its recession lows through this year. The unemployment rate in Midland, for instance, fell to 5.9% in June from 6.8% in June 2009. The national unemployment rate is 9.5% today.
Among the 134 metro areas that saw personal incomes rise, most of the gains were from big jumps in transfer payments, the Commerce Department said. In the 57 places where earnings increased, many are home to soldiers whose wages are unaffected by the economy. Among the 10 metro areas with the largest personal income growth, seven had a strong military presence, among them Jacksonville, N.C., which houses the Marine Corps' Camp Lejeune and Fayetteville, N.C., home of the Army's Fort Bragg.
In only five metro areas—Kennewick, Wash.; Cumberland, Md.; Morgantown, West V. Va.; Cape Girardeau, Mo.; and Ithaca, N.Y.—did the private sector account for more of the earnings growth. Those gains also had a government component.
The Kennewick area has received a flurry of stimulus money to clean up the Hanford nuclear waste site, some of which flowed to local firms. The other four have either a strong presence in either the heath care or education sectors, which remained the two strongest sectors through the recession. New York City and the Bridgeport-Stamford Connecticut, both leaders in finance, are still among the richest metro areas in the country but saw big declines amid falling bank bonuses last year. Per capita income fell 4.6% in the New York metropolitan area.Bridgeport-Stamford, a hedge fund hub known locally "Wall Street North," remained the country's richest metropolitan area—with per capita income of $73,720 despite a 6.8% decline from a year ago.
Some of the biggest year-over-year personal income drops were in major metro areas in Nevada, Arizona and Florida, which have all seen steep declines in housing prices—and where unemployment is higher than the national average. Nevada's 14.2% unemployment rate is the nation's highest.
Other hard hit areas included several in the industrial Midwest, which saw a precipitous decline in manufacturing jobs in 2009, leading to income declines.
In the Elkhart, Indiana metro area, for instance, per capita income fell 6.5%, the eighth biggest drop in the nation. The area—where unemployment is 17.8% —also saw a 21.4% rise in transfer income, the biggest jump in the nation.
The metro area with the second-highest per capita income was San Francisco, with $59,696. Those with the lowest were McAllen, Texas ($19,720) and Brownsville, Texas ($21,756).
Wednesday, July 28, 2010
Weld Done: Equipment Maker Arcs up its Profits
News OK
In 1895, after John Lincoln was laid off from his manufacturing job, he decided to start his own company. The sting of a layoff hit home.
The company Lincoln founded doesn't do layoffs, no matter how bad things get. Lincoln Electric sometimes cuts hours or salaries or suspends its yearly bonus — which in 2008 was more than $28,000 per employee. But for the past 60 years, the Cleveland, Ohio, company hasn't laid off a worker. The company has existed through many changes in the welding industry, and has seen such innovations as welding gas regulators.
A maker of welding equipment, Lincoln was featured this week in an episode of "Religion & Ethics Newsweekly” on PBS. Lincoln is the worst nightmare of organized labor: It's a non-union manufacturer that doesn't offer paid sick leave, among other atypical practices.
Lincoln is the antithesis of behemoth manufacturers such as General Motors, which have so succumbed to union pressure that they have trouble competing. When GM's Oklahoma City assembly plant was closed, its dislodged workers were basically paid to do nothing for 18 months. Such a notorious "jobs bank” doesn't exist in most of America. It certainly doesn't exist at Lincoln Electric. But then Lincoln doesn't lay off workers, either.
In 1934, in the midst of a depression, Lincoln began a profit-sharing program. The company has been profitable ever since. Last year, Lincoln had to temporarily reduce its work week to 32 hours and cut wages across the board. Ten percent of the work force took an early retirement buyout. But those who stayed helped Lincoln earn yet another annual profit — and employees got yearend bonuses averaging $17,000 each.
The company Lincoln founded doesn't do layoffs, no matter how bad things get. Lincoln Electric sometimes cuts hours or salaries or suspends its yearly bonus — which in 2008 was more than $28,000 per employee. But for the past 60 years, the Cleveland, Ohio, company hasn't laid off a worker. The company has existed through many changes in the welding industry, and has seen such innovations as welding gas regulators.
A maker of welding equipment, Lincoln was featured this week in an episode of "Religion & Ethics Newsweekly” on PBS. Lincoln is the worst nightmare of organized labor: It's a non-union manufacturer that doesn't offer paid sick leave, among other atypical practices.
Lincoln is the antithesis of behemoth manufacturers such as General Motors, which have so succumbed to union pressure that they have trouble competing. When GM's Oklahoma City assembly plant was closed, its dislodged workers were basically paid to do nothing for 18 months. Such a notorious "jobs bank” doesn't exist in most of America. It certainly doesn't exist at Lincoln Electric. But then Lincoln doesn't lay off workers, either.
In 1934, in the midst of a depression, Lincoln began a profit-sharing program. The company has been profitable ever since. Last year, Lincoln had to temporarily reduce its work week to 32 hours and cut wages across the board. Ten percent of the work force took an early retirement buyout. But those who stayed helped Lincoln earn yet another annual profit — and employees got yearend bonuses averaging $17,000 each.
Monday, July 19, 2010
Google Expansion Helps Economy, Hurts Stock Price
Associated Press
Google Inc. is doing its part to stimulate the economy and hurting its stock in the process.
With its payroll swelling at the fastest rate in four years, some of Google's expenses are climbing faster than its revenue.
That's creating a drag on its earnings, which is pulling down the Internet search leader's stock price.
Consider Google's second-quarter results released late Thursday. Both net income and revenue rose 24 percent from the previous year, but that didn't impress investors because the earnings missed the target set by analysts.
Google shares dropped $23.32, or 4.7 percent, in Friday premarket trading. The stock had closed Thursday at $494.02 and declined in extended trading.
Here's the main reason for the earnings letdown: Google is spending more to maintain its commanding lead in Internet search while it also tries to diversify by developing products in other promising niches such as online video, mobile devices and computer operating systems. To help achieve its goals, the company added nearly 1,200 employees in the second quarter to end June with more than 21,800 workers.
Google, based in Mountain View, has hired nearly 2,000 workers through the first half of the year, putting it on pace to add the most people to its payroll since 2006 when it ushered in 6,100 new employees in 12 months.
The European debt crisis also worked against Google in the April-June period.
Investors are worried the euro will crumble if governments in Greece, Spain, Portugal and Italy default on their perilously high debts.
Those fears hurt Google because about one-third of the company's revenue comes from Europe, and customer payments made with the euro translated into fewer dollars than a year ago. Even so, the currency squeeze wasn't as severe as some analysts anticipated.
The dollar seems more likely to weaken than Google's commitment to bring in more engineers and sales representatives to peddle the online ads that generate most of the company's income.
Without making specific projections, Google's management left little doubt substantially more people will be joining the company in the months ahead as it pursues long-term opportunities.
"Google is building a business not for this quarter or the next quarter, but an infrastructure for the next half-decade to decade," Patrick Pichette, Google's chief financial officer, said in an interview late Thursday. "What a great moment for us to invest to create these fantastic products that everybody is going to live on."
Even as Google sacrifices earnings growth, it is accumulating more cash. Google had $30 billion at the end of June, up from $26.5 billion. And it might not even use that money to invest in new technology or buy more companies. That's because the company revealed Thursday that it may borrow up to $3 billion on the premise that its money managers can realize investment returns that outstrip its borrowing costs.
Although Google remains the Internet's most profitable company, investors have been fretting about signs of decelerating growth amid stiffer competition from Apple Inc., Facebook and Microsoft Corp. On top of those challenges, a showdown over online censorship in China has muddied Google's future prospects in the world's most populous country.
Those factors have contributed to a 23 percent decline in Google's stock price that has erased about $45 billion in shareholder wealth so far this year.
Google earned $1.84 billion, or $5.71 per share, in the second quarter, up 24 percent from $1.48 billion, or $4.66 per share, a year ago.
If not for expenses covering employee stock compensation, Google said it would have made $6.45 per share. That figure was below the average estimate of $6.52 per share among analysts polled by Thomson Reuters.
Revenue climbed 24 percent to $6.82 billion, from $5.52 billion a year earlier. After subtracting commissions paid to its ad partners, Google's revenue stood at $5.09 billion - about $10 million above analyst projections.
In another key figure watched closely by investors, the number of revenue-generating clicks on Google's ads in the second quarter increased 15 percent from the same time last year. The gain is in the same range as the increases in the past year.
The average price per ad click in the second quarter edged up 4 percent from last year, but it's slower than the growth seen during the previous two quarters.
That's creating a drag on its earnings, which is pulling down the Internet search leader's stock price.
Consider Google's second-quarter results released late Thursday. Both net income and revenue rose 24 percent from the previous year, but that didn't impress investors because the earnings missed the target set by analysts.
Google shares dropped $23.32, or 4.7 percent, in Friday premarket trading. The stock had closed Thursday at $494.02 and declined in extended trading.
Here's the main reason for the earnings letdown: Google is spending more to maintain its commanding lead in Internet search while it also tries to diversify by developing products in other promising niches such as online video, mobile devices and computer operating systems. To help achieve its goals, the company added nearly 1,200 employees in the second quarter to end June with more than 21,800 workers.
Google, based in Mountain View, has hired nearly 2,000 workers through the first half of the year, putting it on pace to add the most people to its payroll since 2006 when it ushered in 6,100 new employees in 12 months.
The European debt crisis also worked against Google in the April-June period.
Investors are worried the euro will crumble if governments in Greece, Spain, Portugal and Italy default on their perilously high debts.
Those fears hurt Google because about one-third of the company's revenue comes from Europe, and customer payments made with the euro translated into fewer dollars than a year ago. Even so, the currency squeeze wasn't as severe as some analysts anticipated.
The dollar seems more likely to weaken than Google's commitment to bring in more engineers and sales representatives to peddle the online ads that generate most of the company's income.
Without making specific projections, Google's management left little doubt substantially more people will be joining the company in the months ahead as it pursues long-term opportunities.
"Google is building a business not for this quarter or the next quarter, but an infrastructure for the next half-decade to decade," Patrick Pichette, Google's chief financial officer, said in an interview late Thursday. "What a great moment for us to invest to create these fantastic products that everybody is going to live on."
Even as Google sacrifices earnings growth, it is accumulating more cash. Google had $30 billion at the end of June, up from $26.5 billion. And it might not even use that money to invest in new technology or buy more companies. That's because the company revealed Thursday that it may borrow up to $3 billion on the premise that its money managers can realize investment returns that outstrip its borrowing costs.
Although Google remains the Internet's most profitable company, investors have been fretting about signs of decelerating growth amid stiffer competition from Apple Inc., Facebook and Microsoft Corp. On top of those challenges, a showdown over online censorship in China has muddied Google's future prospects in the world's most populous country.
Those factors have contributed to a 23 percent decline in Google's stock price that has erased about $45 billion in shareholder wealth so far this year.
Google earned $1.84 billion, or $5.71 per share, in the second quarter, up 24 percent from $1.48 billion, or $4.66 per share, a year ago.
If not for expenses covering employee stock compensation, Google said it would have made $6.45 per share. That figure was below the average estimate of $6.52 per share among analysts polled by Thomson Reuters.
Revenue climbed 24 percent to $6.82 billion, from $5.52 billion a year earlier. After subtracting commissions paid to its ad partners, Google's revenue stood at $5.09 billion - about $10 million above analyst projections.
In another key figure watched closely by investors, the number of revenue-generating clicks on Google's ads in the second quarter increased 15 percent from the same time last year. The gain is in the same range as the increases in the past year.
The average price per ad click in the second quarter edged up 4 percent from last year, but it's slower than the growth seen during the previous two quarters.
Thursday, July 15, 2010
Jobs Program Gives Brevard At-Risk Teens an Edge
Florida Today
"Let's go. It's time. Put your phone away," Roy Kearse said to the group of boys, mostly 16 and 17, as the clock struck 9 a.m. at The Monroe Center.
On tap for the day: pressure-washing the center's walls and painting an outdoor hallway connecting two of the buildings of the historic all-black high school that now houses Brevard Health Alliance and other social service groups.
Under Kearse's guidance, the boys have learned this summer how to trim trees, clear brush, landscape and put down new mulch in garden spots around the courtyards.
"They learn," Kearse said. "You can always make some money doing lawn maintenance in Florida. It's an honest day's pay for honest work."
Kearse, who is a facilities manager for the Child Care Association's properties, one of which is The Monroe Center, was brought together with the eight boys in a jobs program targeting at-risk youth. The program wraps up today and the eight teens hope their new skills land them jobs despite tough times for teens and summer jobs.
Jobs for young people have been more difficult to come by in recent years as the economic downturn causes many to be edged out by older, laid-off workers.
Weed & Seed, a youth anti-crime organization, put 13 youths in summer jobs and paid them $7.25 hourly. To get the jobs, they completed two earlier programs where they learned appropriate job behavior, how to write resumes and fulfilled volunteer hours.
Weed & Seed Director Delores McLaughlin paired the boys with Kearse to learn landscaping and lawn maintenance at The Monroe Center. The historic building has signs of wear and tear. Child Care Association relies on volunteers in addition to Kearse's professional services, and McLaughlin saw a perfect match for the jobs program and the association's need for volunteers.
They have been put to work on tree and shrub care. The boys point out palm trees they trimmed and a bush in the back parking lot so overgrown the fence disappeared.
"There was a lot of stuff messed up with this building," said Jaquan Harvey, 16, while he and Travis Hartley, 17, hauled an extra hose from across the street for pressure washing. The boys learned how to paint, use power and hedge-cutting tools and how to perform proper lawn mower maintenance.
Hartley said that should give him an edge when applying for a job.
"They won't have to waste time showing me how to use the tools," he said.
They also learned job responsibility: showing up on time, working hard and working with others.
"I told them from day one, if you're having a bad day, let me know. I don't like being hard on them. They're still young men. But they have to learn to leave the attitude at the door," Kearse said.
On tap for the day: pressure-washing the center's walls and painting an outdoor hallway connecting two of the buildings of the historic all-black high school that now houses Brevard Health Alliance and other social service groups.
Under Kearse's guidance, the boys have learned this summer how to trim trees, clear brush, landscape and put down new mulch in garden spots around the courtyards.
"They learn," Kearse said. "You can always make some money doing lawn maintenance in Florida. It's an honest day's pay for honest work."
Kearse, who is a facilities manager for the Child Care Association's properties, one of which is The Monroe Center, was brought together with the eight boys in a jobs program targeting at-risk youth. The program wraps up today and the eight teens hope their new skills land them jobs despite tough times for teens and summer jobs.
Jobs for young people have been more difficult to come by in recent years as the economic downturn causes many to be edged out by older, laid-off workers.
Weed & Seed, a youth anti-crime organization, put 13 youths in summer jobs and paid them $7.25 hourly. To get the jobs, they completed two earlier programs where they learned appropriate job behavior, how to write resumes and fulfilled volunteer hours.
Weed & Seed Director Delores McLaughlin paired the boys with Kearse to learn landscaping and lawn maintenance at The Monroe Center. The historic building has signs of wear and tear. Child Care Association relies on volunteers in addition to Kearse's professional services, and McLaughlin saw a perfect match for the jobs program and the association's need for volunteers.
They have been put to work on tree and shrub care. The boys point out palm trees they trimmed and a bush in the back parking lot so overgrown the fence disappeared.
"There was a lot of stuff messed up with this building," said Jaquan Harvey, 16, while he and Travis Hartley, 17, hauled an extra hose from across the street for pressure washing. The boys learned how to paint, use power and hedge-cutting tools and how to perform proper lawn mower maintenance.
Hartley said that should give him an edge when applying for a job.
"They won't have to waste time showing me how to use the tools," he said.
They also learned job responsibility: showing up on time, working hard and working with others.
"I told them from day one, if you're having a bad day, let me know. I don't like being hard on them. They're still young men. But they have to learn to leave the attitude at the door," Kearse said.
Wednesday, July 14, 2010
Former CEOs Join Ranks of Unemployed
The Wall Street Journal
Anne Stevens is among a growing number of job-hunting former CEOs.
Nowadays, former chief executive Anne Stevens spends time job hunting and making créme caramel in the kitchen of her 13,400-square-foot home in this Philadelphia suburb.
Nine months after leaving the highest job at Carpenter Technology Corp., she typically devotes at least three hours a day making calls to company executives, recruiters and professional contacts. A board member at Lockheed Martin Corp. and one-time Ford Motor Co. executive, Ms. Stevens faces a job market unusual in the exclusive ranks of top executives—but not unfamiliar to many Americans.
"There just aren't a lot of [CEO] searches out there," she says.
No one knows how many out-of-work CEOs are looking for corner office suites, but recruiters say their numbers are growing. Fewer big businesses are switching bosses these days and mergers and bankruptcies have further reduced their job prospects. Only 48 companies in the S&P 500 index changed leaders last year, the lowest level since recruiters Spencer Stuart began tracking it in 2004.
Replacement of big-business CEOs picked up in the second quarter, according to Spencer Stuart. But it will take more than a slight gain to find good homes for every unemployed chief. Just two of 13 major corporations switching leaders in the latest quarter chose an outsider.
Some boards are loath to change chiefs during economic turbulence, and the choppy recovery so far hasn't sufficiently heartened boards, recruiters say.
Big-company mergers have eliminated dozens of senior management jobs, too. Jonathan Schwartz, the former chief at Sun Microsystems, now owned by Oracle Corp., and Todd Stitzer at Cadbury, now owned by Kraft Foods Inc. are among those hoping to be CEOs elsewhere. Mr. Stitzer says he has flirted with several mid-sized U.S. concerns about taking their helm.
"We have a much higher flow of former CEOs than we have seen in many years looking for a position again at the CEO level," says James G. Aslaksen, a senior client partner for recruiters Korn/Ferry International. He finds these job hunts can now last 18 months, up from no more than a year in 2005. Among major corporations, however, "the [CEO] opportunity pool is fairly small," adds Dennis Carey, also of Korn/Ferry.
Smaller companies have started to look for new CEOs again, recruiters report. But many former corporate chiefs want another big-company post.
Carlos Gutierrez, a former Kellogg Co. CEO who resigned as U.S. Commerce secretary early last year, desires to run a public company with at least $14 billion in annual revenue. He says he's spurned feelers about running concerns that he felt were too small, headquartered abroad or privately owned.
Chiefs with controversies on their resumes face high hurdles. Mike Zafirovski left Nortel Networks Corp. last August amid a dismantling of the fallen technology giant following a bankruptcy-court filing. He prefers to lead another large business and has prepared a detailed, two-page chart of his career financial-feats, according to someone familiar with the matter.
Mr. Zafirovski spent more than three years trying to turn Nortel around, but critics say he didn't move fast enough. Its bankruptcy hurts his job hunt, according to recruiters.
Ms. Stevens, now 61, was a first-time CEO when Carpenter, a developer and maker of specialty alloys, hired her in November 2006. The nursing-school dropout had received her engineering degree at age 30. She spent a decade working for Exxon Corp., then joined Ford as a business planner in 1990.
She eventually advanced to chief operating officer for the Americas, overseeing more than $75 billion in annual revenue. That made Ms. Stevens the highest ranked woman in the U.S. automotive industry.
She managed the Detroit auto maker's tricky vehicle recalls and plant shutdowns following the turmoil after September 11, 2001. Bill Ford Jr., Ford's executive chairman and previous CEO, says Ms. Stevens played a key role in crafting a North American turnaround plan.
Ms. Stevens even aspired to run Ford. Once she turned 57, however, "age was running against me," she recalls. "To go for my dream, I had to leave."
So eager was she to be a CEO that she took the first helm offered—at Carpenter. Its headquarters in her hometown of Reading, Pa., made the job even more appealing. As a result, she says, she "didn't probe deep enough" into its boardroom personalities, customers, products and operations.
"I didn't realize how much [Carpenter] lacked structure and systems," Ms. Stevens says. "If I knew then what I know now, I would have never taken the job."
Carpenter achieved record results during her first two years, as Ms. Stevens sold assets, enlarged melting facilities and shook up senior management. But profits and sales slipped in the fiscal year ended June 2009.
Ms. Stevens says she "found it difficult to build a close relationship" with fellow directors. The stressful situation often woke her up at night. Board members opposed her strategy to expand the company during the downturn, she remembers. In summer 2009, the board stripped her of the chairman's title. She soon quit.
Splitting the top roles "was an emerging practice," says Gregory Pratt, an outside director who now is chairman. Board members appreciate "the improvements she made in Carpenter's business" and she "was an excellent CEO," Mr. Pratt adds. He says Ms. Stevens never told him she had significant concerns about board communications.
As she seeks work in the U.S. or abroad, Ms. Stevens is getting assistance from Mr. Aslaksen and his colleagues. Boards needing a new chief often value a battle-tested executive like Ms. Stevens, suggests Mr. Carey, a Korn/Ferry vice chairman.
Ms. Stevens has also approached private-equity firms about leading a small portfolio company.
Despite her search, Ms. Stevens has yet to score any face-to-face interviews. "It is going to be a challenge" for Ms. Stevens to find another CEO post because the huge supply of potential chiefs enables boards to overlook "anyone who has any taint of controversy," says Judith von Seldeneck, head of Diversified Search Odgers Berndtson.
The unemployed chief executive keeps busy serving on the Lockheed Martin board, caring for a sick friend – and knitting afghans.
Yet Ms. Stevens was so sure her next corner office would require relocation that she put her French country-style home up for sale in November."I don't need a house that big," she observes. "I used the house a lot for entertaining while I was CEO."
Nine months after leaving the highest job at Carpenter Technology Corp., she typically devotes at least three hours a day making calls to company executives, recruiters and professional contacts. A board member at Lockheed Martin Corp. and one-time Ford Motor Co. executive, Ms. Stevens faces a job market unusual in the exclusive ranks of top executives—but not unfamiliar to many Americans.
"There just aren't a lot of [CEO] searches out there," she says.
No one knows how many out-of-work CEOs are looking for corner office suites, but recruiters say their numbers are growing. Fewer big businesses are switching bosses these days and mergers and bankruptcies have further reduced their job prospects. Only 48 companies in the S&P 500 index changed leaders last year, the lowest level since recruiters Spencer Stuart began tracking it in 2004.
Replacement of big-business CEOs picked up in the second quarter, according to Spencer Stuart. But it will take more than a slight gain to find good homes for every unemployed chief. Just two of 13 major corporations switching leaders in the latest quarter chose an outsider.
Some boards are loath to change chiefs during economic turbulence, and the choppy recovery so far hasn't sufficiently heartened boards, recruiters say.
Big-company mergers have eliminated dozens of senior management jobs, too. Jonathan Schwartz, the former chief at Sun Microsystems, now owned by Oracle Corp., and Todd Stitzer at Cadbury, now owned by Kraft Foods Inc. are among those hoping to be CEOs elsewhere. Mr. Stitzer says he has flirted with several mid-sized U.S. concerns about taking their helm.
"We have a much higher flow of former CEOs than we have seen in many years looking for a position again at the CEO level," says James G. Aslaksen, a senior client partner for recruiters Korn/Ferry International. He finds these job hunts can now last 18 months, up from no more than a year in 2005. Among major corporations, however, "the [CEO] opportunity pool is fairly small," adds Dennis Carey, also of Korn/Ferry.
Smaller companies have started to look for new CEOs again, recruiters report. But many former corporate chiefs want another big-company post.
Carlos Gutierrez, a former Kellogg Co. CEO who resigned as U.S. Commerce secretary early last year, desires to run a public company with at least $14 billion in annual revenue. He says he's spurned feelers about running concerns that he felt were too small, headquartered abroad or privately owned.
Chiefs with controversies on their resumes face high hurdles. Mike Zafirovski left Nortel Networks Corp. last August amid a dismantling of the fallen technology giant following a bankruptcy-court filing. He prefers to lead another large business and has prepared a detailed, two-page chart of his career financial-feats, according to someone familiar with the matter.
Mr. Zafirovski spent more than three years trying to turn Nortel around, but critics say he didn't move fast enough. Its bankruptcy hurts his job hunt, according to recruiters.
Ms. Stevens, now 61, was a first-time CEO when Carpenter, a developer and maker of specialty alloys, hired her in November 2006. The nursing-school dropout had received her engineering degree at age 30. She spent a decade working for Exxon Corp., then joined Ford as a business planner in 1990.
She eventually advanced to chief operating officer for the Americas, overseeing more than $75 billion in annual revenue. That made Ms. Stevens the highest ranked woman in the U.S. automotive industry.
She managed the Detroit auto maker's tricky vehicle recalls and plant shutdowns following the turmoil after September 11, 2001. Bill Ford Jr., Ford's executive chairman and previous CEO, says Ms. Stevens played a key role in crafting a North American turnaround plan.
Ms. Stevens even aspired to run Ford. Once she turned 57, however, "age was running against me," she recalls. "To go for my dream, I had to leave."
So eager was she to be a CEO that she took the first helm offered—at Carpenter. Its headquarters in her hometown of Reading, Pa., made the job even more appealing. As a result, she says, she "didn't probe deep enough" into its boardroom personalities, customers, products and operations.
"I didn't realize how much [Carpenter] lacked structure and systems," Ms. Stevens says. "If I knew then what I know now, I would have never taken the job."
Carpenter achieved record results during her first two years, as Ms. Stevens sold assets, enlarged melting facilities and shook up senior management. But profits and sales slipped in the fiscal year ended June 2009.
Ms. Stevens says she "found it difficult to build a close relationship" with fellow directors. The stressful situation often woke her up at night. Board members opposed her strategy to expand the company during the downturn, she remembers. In summer 2009, the board stripped her of the chairman's title. She soon quit.
Splitting the top roles "was an emerging practice," says Gregory Pratt, an outside director who now is chairman. Board members appreciate "the improvements she made in Carpenter's business" and she "was an excellent CEO," Mr. Pratt adds. He says Ms. Stevens never told him she had significant concerns about board communications.
As she seeks work in the U.S. or abroad, Ms. Stevens is getting assistance from Mr. Aslaksen and his colleagues. Boards needing a new chief often value a battle-tested executive like Ms. Stevens, suggests Mr. Carey, a Korn/Ferry vice chairman.
Ms. Stevens has also approached private-equity firms about leading a small portfolio company.
Despite her search, Ms. Stevens has yet to score any face-to-face interviews. "It is going to be a challenge" for Ms. Stevens to find another CEO post because the huge supply of potential chiefs enables boards to overlook "anyone who has any taint of controversy," says Judith von Seldeneck, head of Diversified Search Odgers Berndtson.
The unemployed chief executive keeps busy serving on the Lockheed Martin board, caring for a sick friend – and knitting afghans.
Yet Ms. Stevens was so sure her next corner office would require relocation that she put her French country-style home up for sale in November."I don't need a house that big," she observes. "I used the house a lot for entertaining while I was CEO."
Tuesday, July 13, 2010
Congress Stalled as 2 Million Lose Jobless Benefits
NPR
When members of Congress return from their Fourth of July break Monday, they'll find a big challenge waiting for them right where they left it. The issue is unemployment — specifically an extension of benefits for people who've lost their jobs. The debate has turned into a high-stakes, election-year stand-off over deficits.
More than 2 million people have had their benefits cut off in the six-plus weeks since lawmakers began debating the bill.
Ever since the Eisenhower administration, Congress has approved jobless benefits that go beyond the usual half-year for up to two years of benefits during times of high unemployment.
Democrats want to extend those now-expired benefits another six months. At about $300 a week per beneficiary, that would cost around $34 billion. All but two Senate Republicans say they won't extend those expired benefits unless Congress cuts spending elsewhere; they say they don't want to add to the deficit.
Shortly before he voted to block consideration of an extension, Massachusetts Sen. Scott Brown said the issue was about "not burdening future generations."
"That will allow us to provide for the needs of our citizens without putting more debt on the credit card," he said. "It's the checking account versus the credit card."
Democrats argue that Brown and 11 other Republicans had no problem adding $33 billion to the deficit to fund the wars in Iraq and Afghanistan.
The other argument Democrats make is a moral one: With very few jobs to be had out there, the larger society should provide long-term unemployment benefits until the job situation gets better.
Plus, they say, you don't get people back to work through austerity measures. As Majority Leader Harry Reid recently pointed out, the money that's paid out for unemployment benefits gets spent immediately — spurring $1.60 worth of economic activity for every dollar that's spent.
"These are monies that are creating jobs," he said. "We are doing something that is very American — very American — and that is helping people at a time of emergency."
There is a ray of hope for people who have already exhausted the standard 26 weeks of unemployment benefits, however. Democrats have enlisted two Republicans to their side and now are just one vote short of the 60 they'd need to break a GOP filibuster. And that one vote could come from the West Virginia seat opened up by the death of Democrat Robert Byrd; his replacement may be appointed as soon as next week.
More than 2 million people have had their benefits cut off in the six-plus weeks since lawmakers began debating the bill.
Ever since the Eisenhower administration, Congress has approved jobless benefits that go beyond the usual half-year for up to two years of benefits during times of high unemployment.
Democrats want to extend those now-expired benefits another six months. At about $300 a week per beneficiary, that would cost around $34 billion. All but two Senate Republicans say they won't extend those expired benefits unless Congress cuts spending elsewhere; they say they don't want to add to the deficit.
Shortly before he voted to block consideration of an extension, Massachusetts Sen. Scott Brown said the issue was about "not burdening future generations."
"That will allow us to provide for the needs of our citizens without putting more debt on the credit card," he said. "It's the checking account versus the credit card."
Democrats argue that Brown and 11 other Republicans had no problem adding $33 billion to the deficit to fund the wars in Iraq and Afghanistan.
The other argument Democrats make is a moral one: With very few jobs to be had out there, the larger society should provide long-term unemployment benefits until the job situation gets better.
Plus, they say, you don't get people back to work through austerity measures. As Majority Leader Harry Reid recently pointed out, the money that's paid out for unemployment benefits gets spent immediately — spurring $1.60 worth of economic activity for every dollar that's spent.
"These are monies that are creating jobs," he said. "We are doing something that is very American — very American — and that is helping people at a time of emergency."
There is a ray of hope for people who have already exhausted the standard 26 weeks of unemployment benefits, however. Democrats have enlisted two Republicans to their side and now are just one vote short of the 60 they'd need to break a GOP filibuster. And that one vote could come from the West Virginia seat opened up by the death of Democrat Robert Byrd; his replacement may be appointed as soon as next week.
Wednesday, July 7, 2010
California Lenders Pitch `Budget-Impasse' Loans to Workers Facing Pay Cut
Bloomberg
Banks and credit unions will offer zero-interest loans and other assistance to the 200,000 California government employees who may see their pay reduced to the minimum wage as a result of the state’s budget stalemate.
The Golden 1 Credit Union, a lender that caters to state workers, will offer zero-interest loans to customers whose pay falls because of the stalled spending plan, according to a July 2 statement. About 1,100 legislative aides and gubernatorial appointees whose pay was stopped on July 1 already have access to so-called budget-impasse loans, said Donna A. Bland, the company’s chief financial officer.
“We’re trying to show our support for our state-employee members,” Bland said in a telephone interview. Golden 1, based in Sacramento, the state capital, describes itself as the sixth- largest credit union in the nation with about $7 billion in assets.
Bank of America Corp., the biggest U.S. lender by assets, will waive fees and offer emergency credit-line increases and mortgage-payment help to customers whose California pay is cut, said Colleen Haggerty, a spokeswoman for the company, based in Charlotte, North Carolina.
“We could survive off our savings for a little while, but it would be a real burden on us,” said Chava Yniquez, a 49- year-old technician in the Senate printing office who has used Golden 1 budget-impasse loans in the past. “It’s a lifeline.”
California’s Republican governor, Arnold Schwarzenegger, and its Democrat-led Legislature are at odds over how to close a $19.1 billion deficit for the fiscal year that began July 1. The state has passed its budget by the start of the fiscal year only 10 times in the past 34 years.
Court Backs Governor
The Schwarzenegger administration won a Sacramento state appellate court decision on July 2 upholding an order compelling state Controller John Chiang to reduce employee pay until a budget is passed. That order affects about 200,000 state employees who work under civil-service contracts, according to the state Personnel Administration Department.
Reducing workers’ wages can’t be done until the state overhauls its payroll system, Chiang, a Democrat, said July 2 in a statement. He is running for re-election in November.
“I will move quickly to ask the courts to definitively resolve the issue of whether our current payroll system is capable of complying with the minimum-wage order,” he said.
Budget-impasse loans have been around since at least 1992, when Golden 1 first offered them. The credit union made the loans available to about 850 customers during the last budget stalemate, in 2008, and they could be especially helpful in meeting new California health insurance quotes.
55,000 Potential Borrowers
Golden 1 said as many as 55,000 of its customers may participate this year, if state-employee pay is cut to the federal minimum wage, currently $7.25 an hour. Flyers that tout the program are being distributed in its 84 offices, carrying a message that says “balancing the state’s budget doesn’t have to affect your own.”
Other institutions offering similar loans include San Francisco-based Wells Fargo & Co., the fourth-largest U.S. bank by deposits, and Sacramento’s Schools Financial Credit Union. The zero-interest loans are available only to current customers whose pay is deposited directly into their accounts, said Nathan Schmidt, vice president of marketing at Schools.
“It’s the philosophy of credit unions helping people,” Schmidt said in a telephone interview. “Eventually the state will pass a budget.”
Impasse lending isn’t limited to the Golden State. PSECU, a credit union based in Harrisburg, Pennsylvania, offered state workers the zero percent loans last year, according to its website. This year, the Pennsylvania Legislature passed its budget on time for the first time in eight years.
“California has a whole lot of experience in this, year in and year out,” Patrick Keefe, a spokesman for the Credit Union National Association in Washington, said in a telephone interview.
The Golden 1 Credit Union, a lender that caters to state workers, will offer zero-interest loans to customers whose pay falls because of the stalled spending plan, according to a July 2 statement. About 1,100 legislative aides and gubernatorial appointees whose pay was stopped on July 1 already have access to so-called budget-impasse loans, said Donna A. Bland, the company’s chief financial officer.
“We’re trying to show our support for our state-employee members,” Bland said in a telephone interview. Golden 1, based in Sacramento, the state capital, describes itself as the sixth- largest credit union in the nation with about $7 billion in assets.
Bank of America Corp., the biggest U.S. lender by assets, will waive fees and offer emergency credit-line increases and mortgage-payment help to customers whose California pay is cut, said Colleen Haggerty, a spokeswoman for the company, based in Charlotte, North Carolina.
“We could survive off our savings for a little while, but it would be a real burden on us,” said Chava Yniquez, a 49- year-old technician in the Senate printing office who has used Golden 1 budget-impasse loans in the past. “It’s a lifeline.”
California’s Republican governor, Arnold Schwarzenegger, and its Democrat-led Legislature are at odds over how to close a $19.1 billion deficit for the fiscal year that began July 1. The state has passed its budget by the start of the fiscal year only 10 times in the past 34 years.
Court Backs Governor
The Schwarzenegger administration won a Sacramento state appellate court decision on July 2 upholding an order compelling state Controller John Chiang to reduce employee pay until a budget is passed. That order affects about 200,000 state employees who work under civil-service contracts, according to the state Personnel Administration Department.
Reducing workers’ wages can’t be done until the state overhauls its payroll system, Chiang, a Democrat, said July 2 in a statement. He is running for re-election in November.
“I will move quickly to ask the courts to definitively resolve the issue of whether our current payroll system is capable of complying with the minimum-wage order,” he said.
Budget-impasse loans have been around since at least 1992, when Golden 1 first offered them. The credit union made the loans available to about 850 customers during the last budget stalemate, in 2008, and they could be especially helpful in meeting new California health insurance quotes.
55,000 Potential Borrowers
Golden 1 said as many as 55,000 of its customers may participate this year, if state-employee pay is cut to the federal minimum wage, currently $7.25 an hour. Flyers that tout the program are being distributed in its 84 offices, carrying a message that says “balancing the state’s budget doesn’t have to affect your own.”
Other institutions offering similar loans include San Francisco-based Wells Fargo & Co., the fourth-largest U.S. bank by deposits, and Sacramento’s Schools Financial Credit Union. The zero-interest loans are available only to current customers whose pay is deposited directly into their accounts, said Nathan Schmidt, vice president of marketing at Schools.
“It’s the philosophy of credit unions helping people,” Schmidt said in a telephone interview. “Eventually the state will pass a budget.”
Impasse lending isn’t limited to the Golden State. PSECU, a credit union based in Harrisburg, Pennsylvania, offered state workers the zero percent loans last year, according to its website. This year, the Pennsylvania Legislature passed its budget on time for the first time in eight years.
“California has a whole lot of experience in this, year in and year out,” Patrick Keefe, a spokesman for the Credit Union National Association in Washington, said in a telephone interview.
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