The Shape of U.S. Labor and Manufacturing Needs to be Nipped and Tucked
According to the U.S. Government Bureau of Labor Statistics report today, the non-farm payrolls for January were essentially unchanged. Only 20,000 people lost their jobs, mostly occurring in construction, transportation, and warehousing. Last month the number of unemployed people was 14.8 million, (this was a decrease of .3%)
The report states that since December of 2007, which has been identified as the start of the recession, payroll employment dropped by 8.4 million and over the past three months there hasn't been much change.
Looking at the dollars and cents in January, the report says the average workweek for private non-farm payrolls was up by six minutes and the average hourly earnings increased by four whole cents! This isn't very encouraging news.
Now, in addition to a bunch of other data, at the bottom of the report the BLS says that the numbers from January 2005 through December 2009 were adjusted due to an updating of the seasonal adjustment and net business birth/death model calculations. For example, with the new calculations March 2009 employment was adjusted downward by a little less than a million workers and the December employment figure was reduced by almost a million and a half. Obviously trying to correctly tag numbers on a moving target is a Herculean task. Nevertheless, the big picture does tell a grim tale.
An article this week in the Wall Street Journal by Mark Whitehouse discussed radical changes occurring in U.S. manufacturing. Industrial companies are making fewer "heavy goods" and shifting to more high-tech products. Major companies like Dow Chemical are downsizing or eliminating factories. Whirlpool is cutting production by 10% because of a similar drop in demand for its appliances. Then there are the automakers who have been seriously hurt by the recession. Their restructuring and downsizing has also caused a massive ripple effect that has negatively impacted many more auto supply companies. Some high-tech companies are seeing increased demand They are staying in the U.S. and expanding production, but the manufacturing of computer chips and other electrical components is generally less labor intensive with more automated facilities.
No matter which way you slice it, the economic and employment data isn't encouraging and probably won't improve for a while. The U.S. industrial base has some serious cracks and bulges that will be repaired eventually, but it will be a painful operation.
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