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New job figures show some heat but not real job growth

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Despite gloomy expectations, last Friday’s jobless rate, released by the Bureau of Labor and Statistics, showed a brighter pattern than expected: the nation’s unemployment rate fell to its lowest level since 2008, 7 percent, a boost especially for President Obama as his signature effort in healthcare became mired last month in technical issues; in fact it is the best jobs report since he took office.

One point that should be considered is that the unemployment rate can be misleading because a decline also reflects those that have given up looking for employment.

As the Christian Science Monitor noted, “The BLS unemployment measure does not include people who have been out of work for 12 months. It does not count “discouraged” workers who have given up looking for a job.”

Yet it does give a broad picture, using household surveys, of unemployment figures at a given time, and provides a barometer, of sorts, of where trends might be glimpsed.

The BLS surveys a random sample of 56,000 US households, for those 16 years of age, or older, employed as well as unemployed, but excludes those that are neither working, nor looking for work.

It’s also important to note that full employment does not imply zero unemployment.

But, while there is expansion of the economy, growth has not been as robust as it needs to be to bring it back to full health, because the steady decline (in July it was 7.4 percent) is due to a rapid descent in the labor force, rather than job growth.

For this period, one boom area was manufacturing – 27,000 jobs -- that brought economists predicting that the Federal Reserve might begin to ease back on its stimulus efforts, albeit cautiously in the beginning of 2014.

Some including Michael Gapen a senior United States economist at Barclays told the New York Times that, “Our scenario is still March.”

However, many economists also believe that adjustment of monetary and fiscal policies can result in a trade-off between inflation and unemployment, and often the results are equally undesirable.

Known as the Phillips Curve, it was named for New Zealand Economist A.W. Phillips, it is a theory much maligned by economists like Milton Friedman, but is highly favored by Federal Reserve Chairman nominee Janet Yellen, who thinks that the central bank can play a role in having just enough inflation to help the economy.

The curve had its heyday in the 1960s albeit along a single stable one, but that was later revitalized into a cluster of Philips Curve, each reflecting a time interval.

The December report significantly shows growth in the private as well, as the public sector, despite cutbacks on the federal level.

Reflecting growth in the housing market, construction showed gains for the third month in a row, with a rebound, seemingly on the horizon, which can only help because the demand for new housing can help with a corresponding increase for new single-family home construction and sales.

Consumer confidence has abated, and even the sales figures for the recent Black Friday, just after the Thanksgiving holiday, showed a decrease despite efforts of major retailers to lure them into the stores with heavy discounting, an effort that backfired as total spending was $57.4 billion versus $59.1 billion that was forecast; with the average shopper spending $407.02 over that weekend, about 3.9 percent less than during the same weekend last year, according to the National Retail Federation.

For most Americans home ownership increases personal wealth, and as wealth increases so does consumer spending.

But, there are areas that continue to remain dismal: The jobless rate for African Americans stood at 7.3 percent in October 2013, but fell to 12.5 percent; hardly enough to show a trend, and one that caused Rep. Emanuel Cleaver to tell Bet.com that black unemployment has been “ignored.”

For the last six decades black unemployment has been double that of whites; in fact, “In 1954, the earliest year for which the Bureau of Labor Statistics has consistent unemployment data by race, the white rate averaged 5% and the black rate averaged 9.9%,” according to a study by the Pew Research Center.

Subsequently, the unemployment rate for blacks has historically remained at that level; for example a 1 percent increase in the white unemployment rate in an economic downturn is likely to be accompanied by a 2 percent rise in unemployment for black workers.

This is also true for black teenagers whose unemployment rates can fluctuate in a range of roughly 25-50 percent, depending on the state of the economy.

The overall gap only narrowed in 2009 when the recession was as its highest, and unemployment for blacks when white unemployment rose so fast, that their rate was just 1.67 higher.

While some theorize that the gap was in certain categories that lost - manufacturing for example - others showed one that focused on skills set, but the trend towards ”last hired, first fired” shows no real abatement.

For Hispanics the unemployment rate was 9.1 percent in October fell to 8.7 percent in the last quarter of 2013, also another low since 2008.

Most of the growth reflected in the report were in low-wage industries and as Fox News Latino said, “Roughly half the jobs that were added in the six months through October were in four low-wage industries: retail; hotels, restaurants and entertainment; temp jobs; and home health care workers.”

Real job growth, to be sustainable, according to some economists, must be in high-wage jobs, such as manufacturing which did show significant gains in the Friday report.

Another area of concern are the stockpiles of money that many American companies are holding, or have used it to satisfy shareholders with “stock repurchases and dividend payouts”, as Christian Weller noted for his economic snapshot for the Center for American Progress , at the end of November.

Education still remains a constant for increased and sustainable employment: Unemployment for those without a high school diploma remained at 10.9 percent versus 7.3 percent for those with, and 6.3 percent for those with some college, and 3.8 percent for those with a college degree.

For December 2013, the figure is nearly the same at 10.9, and for high school graduates with n college, the rate was identical.

And, for those aged 16 to 19, the rate still hovers at over 20 percent, 33.4 percent in contrast with 26.2 percent in October.

The high social cost on the country for unemployment can result, and has done so in increased incidences of suicide, homicides, crime, juvenile delinquency, alcoholism and heart attacks.

What will need to increase to counteract even the mild reaction to Friday’s figures are increased opportunities for education especially those for ethnic minorities for not just college graduation, but also that of high school, a problem that has been prevalent especially in the Chicago area where graduation rates reflect the nation, where in 2012, 58 percent of Latino males graduated from high school in four years, 52 percent for black males and 78 percent for whites – still an alarming gap that offers a dent in the national GDP, as the country’s largest minority group is Hispanic.

But, as the overall rate of graduation for Chicago Public Schools has increased incrementally, it still, according to the Chicago Sun-Times, “still trails the estimated national average graduation rate for incoming public school freshman of 78.2 percent, as of 2009-2010.”

And, for the nation, “improvement among Hispanic students, whose graduation rates surged 10 percent to 71.4 percent between 2006 and 2010, the last year for which data was available,” was welcomed according to the Chicago Tribune.

But overall the rates are not what they should be, said U.S. Department of Education secretary Arne Duncan, who also noted that that dropout rates “remained ‘unsustainably high for a knowledge-based economy."’

While these figures provoke comment there is little change that has occurred to keep vulnerable people from the unemployment rolls, as they attempt to find work in an essentially jobless recovery, and unless politics aligns itself with policy, the next economic swing leaves vulnerable populations, especially blacks and Hispanics at a distinct disadvantage.

And, job creation remains elusive, especially for those in lower paying jobs that still have not made the change to higher skill levels, what economists call structural unemployment, where there is a disconnect between job skills that employers seek versus the job skills that are actually possessed.

Last year, U.S. Rep. Jan Schakowsky, (D-Chicago) told me, in part, after the bump in the March job gains: “We’ve had two years of consistent job growth with 3 million jobs created in the last 12 months. I believe the economy is steadily climbing out of the Great Recession and heading in a positive direction, but the March numbers show that we cannot lose focus on job creation.”

For this year, Rep. Schakowsky’s reaction was not received by publication date.

Clearly, however, these figures show the alarming need for educational intervention in a society that is increasingly knowledge based.

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